BHAVISHABEN BHAJIAWALA,SURAT vs. INCOME TAX OFFICER, WARD-2(3)(1), SURAT

Brief facts of the case are, the assessee is an individual and working as an agent of Surat District Co-operative Milk Producers Union Ltd, popularly known as SUMUL Dairy. The assessee was selling the milk pouches of 500 ml and earning the commission income from such sales to the end customer. The assessee earned commission/trade discount from SUMUL Dairy of Rs. 5,36,844/-. The assessee deposited of Rs. 1,15,83,240/- during the year which was from the receipt of Milk Pouches sold to the regular customers on retail basis. The assessment was reopened and a notice u/s 148 of the Act was issued on 23.03.2023. The assessee filed her return of income on 27.02.2024 declaring total income of Rs. 2,90,200/-. The assessee filed as follows: (1) Copy of Profit and Loss A/cs, Balance Sheet and Capital A/cs for the year ended on 31-03-2019 (2) Copy of computation of Income for the AY 2019-20 (3) Copy of Bank Book for the year ended on 31-03-2019 (4) Copy of Bank Statement maintained with the Surat District Co- operative Bank Ltd (5) Copy of Cash Book for the year ended on 31-03-2019 (6) Copy of Ledger accounts from the SUMUL Dairy (7) Copy of Statement Showing the Commission Income/Trade Discount received from SUMUL Dairy from the Books of SUMUL Dairy.

Aggrieved against the penalty order, assessee filed an appeal before ld. CIT(A) who has also dismissed the appeal for non prosecution.

Aggrieved against the exparte appellate order, assessee is in appeal before us, raising following Grounds of Appeal:- 1. On the facts and in the circumstances of the case as well in law, the learned CIT (Appeals) has erred both on facts and in law in deciding the appeal ex-parte in violation of the principles of natural justice and without granting to the assessee a fair, proper and meaningful opportunity of being heard and the inferences of the CIT (Appeals) that the appellant is not interested in pursuing the appeal is without jurisdiction, perverse, invalid, arbitrary, bad in law and hence, liable to be struck down. 2. On the facts and in the circumstances of the case as well in law, the learned CIT (Appeals) has erred both on facts and in law in confirming the penalty levied u/s 271B of the Act on account of failure to get accounts audited u/s 44AB of the Act and hence, the order of both the lower authority lacks standing in the eyes of law and therefore, liable to be struck down. 3. Your appellant further reserves his rights to add, alter, amend or modify any of the aforesaid grounds before or at the time of hearing of an appeal.

We have heard rival submissions and perused the materials available on record. It is undisputed fact, the assessee has not filed return of income for A.Y 2019-20 which has resulted in reopening of the assessment but in the reassessment also the ld. AO concluded accepting the returned of income filed by the assessee namely commission income earned on sale of Milk Pouches. Though, the penalty is being levied u/s 271B for not getting the books audited, the assessee during the penalty proceedings submitted all the relevant details, materials explaining the nature of business and commission earned and requested to drop the penalty proceedings and the reasonable cause for the failure to get its book audited. The same was not considered by the AO as well as by ld. CIT(A). Section 273B of the Act clearly provides any ‘reasonable cause’ explained by the assessee is a ground to drop the penalty proceedings. This was not considered by the lower authorities especially in a case where there is no addition made in the re-assessment proceedings. Therefore, we hereby direct the JAO to delete the penalty levied u/s 271B of the Act. Thus, the Grounds raised by the assessee are hereby allowed.

In the result, the appeal filed by the assessee is allowed.

Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Surat 6. Guard file. By order/आदेश से,