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Before: Shri Laliet Kumar & Shri Dr. Mitha Lal Meena
Per Shri Laliet Kumar, J.M:
The present appealsare being filed by the assessee feeling aggrieved by the
order passed by the Commissioner appeal on 29.01.2016 and for the
assessment year 2008-2009 and 2009-10 on the following ground :
“ITA NO 298/AG/16 on facts and circumstances the case the learned CIT appeal erred in confirming penalty ₹ 42151/under section 271 B in the legal and bad in law.”
“ITA NO 297/AG/16 on facts and circumstances the case the learned CIT appeal erred in confirming penalty ₹ 100,000/under section 271 B in the legal and bad in law.”
Assessee is an Individual by status running a Proprietorship concern in the name of M/s Pankaj Dairy & Food Products, Dal Bazar, Gwalior (M.P) engaged in trading of Ghee. 3. A Survey under section 133A was conducted on 06.05.2008 wherein Assessee surrendered Total amount of Rs.35,00,000/ -The breakup of Surrender , in the hands of the assessee as mentioned in the Assessment Order was:
(a) Under the head 'Stock' ....................................................Rs.3,00,000/- (b) Under the head 'Investment in Property ......... ..Rs..1,35,000/- (c) Under the head 'On account of Loose Papers' .... Rs.10,00,000/- 4. Since, no Return of Income was filed by the assessee under section 139, Notice under section 148 was issued in the name of the assessee on 17.09.2010, and
ultimately on 28.07.2011 assessee filed Return of Income. In between Notices under section 142(1) were also issued to the assessee which remained
uncomplied with therefore, Notice under section 271(1)(b) were also issued to the assessee.
Thereafter, a Notice under section 142(1) along with a detailed Questionnaire was issued to the assessee fixing compliance on 28.11.2011. In response to Assessee along with his Chartered Accountant appeared before the AO on 12.12.2011, filed written reply along with Audit Report offering a sum of Rs14,33,333/-. The Assessment came to be completed under section 143(3) of the Act vide Assessment Order dated 27.12.2011 making the following minor additions: (a) Difference of amount surrendered during survey and as offered in the Return of Income: Rs.1667/- (b)Ad-hoc disallowance for personal use of Car Rs.12,920 (c) Ad-hoc disallowance for personal use of Telephone Rs.3,241/- ( a ) H o u s e h o l d W i t h d r a w a l s R s . 1 1 , 0 5 0 / -
The ld. AR had submitted that on 22 September 2008, the assessee filed a letter requesting the assessing officer to supply the copy of the seized document so as to enable the assessee to file the audit report and return of income before the last date of filing of the return of income. 6. In response to the letter of 22 September 2008 the learned assessing officer has written to the assessee vide letter dated 25 September 2008, that the Penalty under section 271B was initiated and Notice dated 27.12.2011 “you are requested to make necessary arrangement (bring photocopy machine and papers ) for taking photocopy of impounded books of account/documents/vouchers from this office as early as possible.
The assessee vide letter dated 30 September 2008 had requested the assessing officer to extent the time of furnishing the audited books of account as the documents are already in custody of the assessing officer. 8. The above said backdrop it was submitted by the learned AR for the assessee that the assessing officer had issued a Notice dated 25.06.2012. The Show Cause Notice was replied by the assessee vide his Reply dated 27.06.12. However, the submission advanced by the assessee did not find favour with the view held by the Assessing Officer who vide his Order dated 28.06.12 imposed a Penalty of Rs.42,151/- holding that assessee without any reasonable cause has committed the default by not getting the accounts audited. He also held that assessee has not made any request for the photocopy of the impounded documents and the case is being represented by a Chartered Accountant since beginning the work of Audit should have been assigned to him. 9. In first appeal before the Ld CIT(Appeals) detailed submission was filed and in the light of precedents it was requested that the Penalty may kindly be deleted. However, the Ld CIT(A) Vide his appellate order dated 29.01.2016 approved the action of the AO holding that Survey was conducted on 06.05.2008 and Return was due to be filed by 30.09.2008. The assessee had ample time to getXerox copies of the documents impounded by the Department but no such application or attempt was made by the assessee. The Ld CIT(A) further held that assessee is assisted by his consultant since beginning and further assessee has did not bother to file even any evidence for the action taken against him by the Food Department . The Ld CIT(A) further noted that it is a fact noted by the AO that assessee has been absconding to avoid penal action against him by the Police. Thus, Ld CIT(A) confirmed penalty of Rs. 42,151/- 10. Feeling aggrieved by the order passed by the lower authorities the assessee is in appeal before us on the grounds mentioned hereinabove in respect of both the assessment year . 11. The ld. AR for the assessee had submitted that the action on the part of authorities below were highly unjustified in levying and confirming the
penalty holding that assessee did not file any Application prior to 30.09.2009 to get Xerox copies of the impounded material without looking to the records and without requiring the assessee that the reply furnished requires to be substantiated with evidence and straightway going ahead with confirmation of AO's order. . 12. The ld. AR has submitted that the order is contrary to the record as mentioned hereinabove the application was made by the assessee for seeking the record of the seized material on the 2 September 2008 thereafter the assessee had also requested the assessing officer to extent the date of filing of the audited account for a period of 3 months vide letter dated 30 September 2008 .Ar submitted that again on 29.12.2008, 20.01.2009and 10.02.2009request was made before the AO to issue copies of seized Books of Accounts and documents seized from the business premises of the Assessee. 13. Ld AR relied upon the following decisions in support of his case a. ITO Vs Babu Lal Jain reported as (2001) 251 ITR 0656 (P&H) b. Raman Gandotra Vs Dy. CIT reported as (2015) 45 CCH 0297 c. Sameer Mavji Patel Vs. Deputy Commissioner of Income Tax, Mumbai reported as I.T.A No. 414/Mum/2012 vide order dated 31.01.2013 d. Staywell Hotels (P) Limited Vs CIT reported as (2005) 3 TMI 47 (M.P) (PBP , e. Hindustan Steels Ltd. Vs. State of Orissa reported in (1972) 83 ITR 26 (S.C.) f. CIT Vs Triumph International Finance (P) Limited reported in (2012) 251 CTR (Boni) 253 (PBP ) g. In the case of CIT Vs Tea King (2000) 153 CTR 0413 the Hon'ble Gujarat High Court had held that where Penalty under section 271B was already levied for preceeding Assessment Year in that event for immediately succeeding year no penalty for the same default cannot be levied.
h. In the case of Vamana Appanna& Sons Vs. ACIT (1996) 15 CCH 0325 (HybdTrib) the Hyderabad Bench of the Hon'ble Tribunal following the Apex Court Judgement in the case of Hindustan Steel Ltd. vs. State of Orissa (1972) 83 ITR 26 (SC) held the similar view: "The assessee had advanced certain circumstances under which there was a delay in obtaining tax audit report and when this fact was not disputed there is no justification in levying penalty. Apart from that, the orders of this Tribunal filed in the paper-book relied upon by the counsel for the assessee supports the contention of the assessee that the delay in finalization of the accounts for the immediately preceding year as well as obtaining tax audit report for that year is sufficient cause for the delay in obtaining tax audit report for subsequent assessment years. The delay in obtaining the tax audit report for the assessment years in question was due to delay in obtaining tax audit report for the immediately preceding assessment years. Unless the accounts arefinalised and the tax audit report is obtained for the earlier assessment years it is neither possible nor conceivable to finalisethe accounts as well as to obtain the tax audit report for subsequent years. Admittedly, the tax audit report for the asst. yr. 1985-86 was obtained by the assessee in November, 1990. Immediately thereafter the tax audit report for the asst. yr. 1986-87 was obtained by May, 1991, and within one or two months for the subsequent years. The delay in obtaining the tax audit report for the assessment years in question was clearly due to delay in obtaining tax audit report for the asst. yr. 1985-86. On the above circumstances there isno justification in levying penalty under s. 271B."
On the other hand the ld. DR for the revenue had submitted that the order
passed by the lower authorities in accordance with law and no
interference is required. The ld. DR had drawn our attention to the reply
filed by the assessee before the Commissioner appeal wherein it was
submitted as under
“ In fact the department carried survey proceedings in the premises of the appellant u/s 133A on 06/05/2008 wherein all books of accounts, bill, vouchers including computer was impounded by the Deptt. and were taken all these documents in the custody of the Deptt. Simultaneously proceedings if criminal nature carried on against the appellant by the food department and local administration, which made the appellant to abscond resulting in closure of the business activities. This ultimately resulted in delay in obtaining copies of seized material, which were necessary for completion of accounts and preparation of Audit Report. The learned ITO did not accept this as a reasonable cause became in his opinion he had engaged a C.A. who could perform these duties. The duty of a C.A. is to audit from the closed books of accounts and represent the case. He cannot be accepted to have total knowledge of entries which are essentially require for finalization of accounts. Even the documents are received by the appellant himself from the Deptt. and not by C.A. because appellant needs to identity what is needed.”
Further he had also drawn our attention to paragraph 5 of the order
passed by the Commissioner appeal to the following effect : “I have considered the facts of the case, the aforesaid submission made by the appellant as well as perused the AO's order. It is an admitted fact in the instant appeal that the appellant could not get its accounts audited on before the due date of filing return u/s 139(1) of the Act and thus violated the provisions of section 44AB of the Act. This makes the assessee liable for penalty u/s 271B of the Act. The question remains whether the appellant cannot be said to have reasonable cause for not getting the account audited within the prescribed time limit. Survey operations were conducted on 6.5.2008, whereas return for the year consideration was due on 30.9.2008. Thus, the assessee had ample
amount of time to get the copies of books/documents impounded by the Department, but no such application or attempt was ever made by the appellant. In this regard, the AO has duly noted that the appellant is assisted by its consultant since beginning. Further, the appellant brushedaside, any compliance whatsoever in the garb of action taken by the Food Department, however it did not bother file even any evidence for the action taken against it by the Food Department. It is also a fact that is recorded by the AO that the appellant has been absconding to evade the impending penal action against it by the Police Authorities. In such a circumstance, where it is seen that the appellant behavior does not show even a wink of its intention to make compliance as it did not even file the application for having the copies of its documents and for which it has availed offsufficient amount of time therefore it cannot be said that it was prevented by reasonable cause for not getting the accounts audited within the prescribed time limit.Hence the impugned penalty of Rs. 1,00,000/- imposed u/s 271B of the Act is held to be justified and accordingly confirmed.”
We have heard the rival contention of the parties and perused the material
available on record. The penalty under section 271B is leviable on on such
assessee failed to get his account audited respect of previous years or
furnish report of such audit as required under section 44 AB.
Section 273B provided an exception to section 271B, and laid down that
the penalty is not impossible if there was a reasonable cause for the
failure on the part of the assessee to get its account audited in respect of
the previous year.
In the present case it was the case of the assessee that the assessee had
demanded the documents seized by the authorities during the course of
survey as they were not provided by the authorities,therefore there was
reasonable cause for not filling the audited accounts. further it was
submitted that the police authorities were also searching for the assessee
on account of some criminal matter and as such he was not in the town
for getting the documents from the income tax authorities and therefore
the accounts were not audited. 18. As mentioned in the assessment order, the assessee had got its account
audited only on 25.3.2011 whereas the accounts were required to be
audited up to 30.9.2008. Undoubtedly a request was made for supply of
the document by the assessee on 22 September 2008 and the assessing
officer in response thereto had asked the assessee to collect the
documents by 25 September 2008. However despite the communication
by the assessing officer asking the assessee to collect the documents after
getting them photocopied the assessee chooses not to collect the
documents and file the audited accounts. The assessee vide letter the date 30 September 2008 had asked for 3 months’ time for filing the audited
reports/documents however the accounts were audited only
on25.3.2011. In view of above said facts if we look into the conduct of the
assessee then it is clear that assessee had not filed the audited account
within the 3 months as sought by the assessee after 30 September 2008
and the audited accounts were only filed on 25 March 2011. In view of the above are we do not find any reason much less plausible reason or cause for not filing the audited account within time.. If the assessee had filed the audited accounts within the 3 months after 30 September 2008 then it would be a reasonable cause for not filing the audited accounts but the assessee had taken more than 3 years to file the audited accounts, which in our view, is not in accordance with law. We may point out that the judgements relied upon by the ld. AR for the assessee are not applicable to the facts of the present case as the facts in all these decisions were entirely different. In the result the appeal of the assessee is required to be failed and accordingly we dismiss both the appeals. 19. In the result the appeals of the assesseeare dismissed. Order pronounced in the open court on 14/10/2019.
Sd/- Sd/- (Dr. M.L. Meena) (Laliet Kumar) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKV* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT Sr. PRIVATE SECRETARY ITAT, AGRA