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Income Tax Appellate Tribunal, BANGALORE BENCHES “ A ” BENCH: BANGALORE
Before: SHRI A.K. GARODIA & SHRI PAVAN KUMAR GADALE
O R D E R
PER SHRI PAVAN KUMAR GADALE, JM :
The assessee has filed an appeal against the order of Commissioner of Income Tax-2, Panaji passed under Section 271B and 250 of the Income Tax Act, 1961 ('the Act').
The assessee has raised the following grounds of appeal :
The assessee also has raised additional grounds of appeal which read as under: :
At the time of hearing the ld. AR made submission on additional grounds of appeal
and the revenue has no serious objection, accordingly they are admitted and heard.
5. The Brief facts of the case are that the assessee is engaged in civil contract works and filed the Return of Income under Section 139(1) of the Act on 31.3.2015 disclosing total income of Rs.2,90,00,230. There was a search and seizure operation under Section 132 of the Act in the name of N B Hiremath on 11.3.2015 and the provisions of Section 153A of the Act applied. Accordingly, Notice under Section 153A of the Act was issued to the assessee to file the Return of Income. In compliance the assessee filed the Return of Income on 31.8.2015 with total income of Rs.4,40,82,570. Subsequently Notice under Section 143(2) and 142(1) of the Act were issued. In response, the learned Authorised Representative appeared from time to time and filed the details. Whereas the Assessing Officer considering the statements of assessee and the material in respect of unexplained investment in properties and the undisclosed income of the assessee, assessed the total income of Rs.4,40,82,570 and passed the order under Section 153A r.w.s. 143(3) of the Act dt.30.11.2016. Subsequently, the Assessing Officer issued penalty notice under Section 271B of the Act and the case was 8.5.2017 as the assessee has filed the Return of Income on 31.3.2015 which is beyond the time limit stipulated under Section 139(1) of the Act. As the turnover of the assessee during the F.Y. 2013-14, is exceeding Rs.1 Crore therefore provisions of Section 44AB of the Act shall be attracted and the assessee should get the books of accounts audited before the specified date and submit Audit Report before the due date under Section 139(1) of the Act. Since there is a failure on the part of the assessee in getting the Books of Accounts audited, hence the penalty under Section 271B of the Act is initiated. In response to the letter dt.8.5.2015, the explanations are offered by the assessee vide letter dt.15.5.2015 which is read as under :
The Assessing Officer rejected the explanations, the assessee has not filed the Audit Report before the due date and there is no reasonable cause for not filing the Audit Report within the specified time limit and levied penalty ofRs.1,50,000 under Section 271B and passed the order on 31.5.2017. Aggrieved by the order, the assessee has filed an appeal with the CIT(Appeals). Whereas the CIT(Appeals) confirmed the penalty order and dismissed the assessee's appeal. Aggrieved by the order of CIT(Appeals), the assessee has filed an appeal with the Tribunal.
At the time of hearing, the learned Authorised Representative submitted that the CIT(Appeals) erred in confirming the penalty without considering the explanations made by the assessee and further the penalty is levied for not complying with filing of Audit Report within the time prescribed under Section 139(1) of the Act. The learned Authorised Representative relied on the observations of CIT(Appeals) order at para 3.7 where the assessee is in the civil contract works and having a turnover exceeding the limit prescribed under Section 44AB of the Act. The contention of the learned Authorised Representative that due to mismatch of TDS in Form 26AS and the Accountant of the assessee has left the office therefore the assessee was not having assistance of Accountant and finally Management obtained the Audit Report on 22.11.2014. The learned Authorised Representative emphasized that the penalty proceedings are independent and are not automatic and also there is a Reasonable cause under Section 273 of the Act as the assessee is a partnership firm and having contracts with Government departments and the ld.AR prayed that there is no wanton act on the part of assessee not to get the Books of Accounts audited and supported the case with Paper Book along with letters addressed by the assessee to the Show Cause Notice and Reminders with Government department for rectification of mismatch of income. Contra, the learned Departmental Representative supported the orders of CIT(Appeals).
We heard the rival contentions and perused the material on record. Prima facie, the sole matrix of the disputed issue being levy of penalty under Section 271B for not getting the Books of Accounts audited under Section 44AB and not filing the Audit Report within time prescribed under Section 139(1) of the Act. The contentions of the learned Authorised Representative that the assessee firm is in civil contract business and regular in filing the Return of Incomes and there are Bona fide reasons and causes for not getting the accounts audited within the time limit. As the Accountant who was working with the assessee's firm has left the services without finalizing the accounting works and hence auditing work couldnot be completed. The learned Authorised Representative demonstrated the copy of Affidavit of the Accountant and read paras 8 & 9 on leaving the job by him which cannot be disputed. Further in respect of mismatch of TDS credit, the assessee has been following with the Chief Engineer Office, PWD, Bangalore for rectification of TDS during the period. Therefore the Books of Accounts could not be completed/finalised. We found that the assessee firm has made sincere attempts for rectification of TDS credit and therefore the Return of Income was filed belatedly. We found the arguments and submissions of the assessee are realistic and unambiguous. The assessee firm is having huge turnover and due to mismatch of income the Books of Accounts could not be audited within the time limit. Whereas the ld. AR has demonstrated with the Affidavit of the Accountant and the reminder letters on attempts to curtail the mismatch. We found there is a reasonable and sufficient cause in getting the Books of Accounts audited. Accordingly, we are of the opinion that the penalty levied by the Assessing Officer cannot be sustained considering the facts and material demonstrated in the course of hearing proceedings. Accordingly we direct the Assessing Officer to delete the penalty and allow the grounds of appeal of the assessee.