NICON INFRA LLP,MUMBAI vs. ADDLL/JY/DCIT/ITO, NFAC, DELHI

ORDER PER GAGAN GOYAL, A.M: This appeal by the assessee is directed against the order of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as [‘NFAC’] dated 28.12.2021 passed under section 250 of the Income Tax Act, 1961 (hereinafter referred to as [‘the Act’] for the Assessment Year (AY) 2018-19. The assessee has raised the following grounds of appeal:

at or before the hearing of the appeal.”

2. Brief facts of the case are that the assessee is a limited liability partnership (LLP) governed by LLP Act, 2008. Assessee LLP Filed its return of income on 26-09- 2018, admitting total income at NIL and carry forward depreciation loss at Rs 40729/- and business loss of Rs 32,87,558/-. Assessee case was selected of scrutiny, during the assessment proceedings AO observed that as the assessee is not following in the category of assessee liable for tax audit hence due date in the case of assessee will be 31-july-2018, whereas assessee filed its return of income on 26-09-2018.

3. Treating the return as belated return u/s 139(4) r.w.s. 80 of the I.T. Act. The AO disallowed the carry forward loss amounting to Rs 32, 87,558/-. And allowed only Rs 40,729/- to be carry forward as depreciation loss. We observed that nowhere in the assessment order assessing officer mentioned the reasons for not allowing carry forward of business loss amounting to Rs 32,87,558/-.

4. As a matter of fact, assessee is not liable for tax audit u/s 44AB as assessee is not exceeding the threshold limit of turnover/revenue. But assessee is liable for Audit, under Rule 24(8) r.w.s. 34 of LLP Act, 2008. As per Rule 24(8) of the LLP Rules, 2009 assessee is liable for audit in case of entity exceeding turnover of Rs 40 lakhs or partner’s contribution exceeds Rs 25 lakhs in the relevant FY. In the case of assessee, its turnover was not exceeding 40 lakhs, but partner’s contribution was exceeded by Rs 25 lakhs. Hence assessee get his accounts audited as per Rule 24(8) and uploaded the same on the site of Registrar of Companies (ROC). As per the provisions of section 44AB it is prescribed as under: “That in a case where such person is required by or under any other law to get his accounts audited, it shall be sufficient compliance with the provisions of this section, if such person gets the accounts such business audited under such law before the specified date and furnishes by that date the report of the audit as required under such law and a further report by an accountant in the form prescribed under this section.”

iv) The relevant information about audit details in ITR-5 assessee has furnished vide column-e like assessee mentioned the Act with section under which audit has been conducted. The only information which assessee has not submitted was date of furnishing the audit report. The same can’t be furnished because any audit report conducted under any other law, other than Sec. 44AB of the I.T Act, system doesn’t accept. Hence assessee was not able to furnish this information without any of his fault; v) In absence of this only information AO treated the assessee as not falling in Sec. 44AB consequently treated the return of the assessee as belated return u/s. 139(4) and disallowed the claim of business loss to be carry forward amounting to Rs 32,87,558/- and further levied a penalty of Rs 1000/- u/s 234F; vi) All the documents of the paper-book were duly furnished before the authorities below also as certified by the assessee before us.