Loading judgment…
Facts
The assessee filed an appeal against a penalty order under Section 271B of the Income Tax Act, 1961, for the assessment year 2009-10. The penalty was imposed for failure to get accounts audited under Section 44AB. The assessee argued that it acted as an agent for the Food Corporation of India (FCI) in purchasing wheat, and thus the turnover did not belong to it, making Section 44AB inapplicable.
Held
The Tribunal found merit in the assessee's submission, noting that the assessee acted as an agent for FCI and the purchases were not for its own account. Consequently, the provisions of Section 44AB were not applicable to the assessee.
Key Issues
Whether penalty under Section 271B is leviable when the assessee acted as an agent for FCI and the turnover was not its own.
Sections Cited
271B, 44AB, 147, 142(1), 144, 254, 274
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: DR. ARJUN LAL SAINI, AM. &
आदेश / O R D E R Per, Dr. A. L. SAINI AM; Captioned appeal filed by the assessee, pertaining to assessment year (A.Y.) 2009-10, is directed against the order passed by the Learned Commissioner of Income Tax (Appeal), vide order dated 30.11.2023, which in turn arises out of a penalty order passed by Assessing officer u/s 271B of the Income Tax Act, 1961, vide order dated 03.03.2022.
Grievances raised by the assessee, are as follows:
SHREE KARMAL KOTDA JUTH SEVA SAHAKARI MANDALI LIMITED. “1. Ld. CIT(A) erred in law as well as on facts in confirming penalty of Rs. 1,00,000/-, out of Rs. 1,50,000/- imposed by the ld. assessing officer, under section 271B of the Income tax Act.”
When the matter was called for hearing, the learned Counsel for the assessee, at the outset submitted that the appeal has been filed by the assessee belatedly. The learned Counsel adverted our attention to the affidavit filed in this regard citing reasons for condonation of delay and urged for a benign view and sought condonation of delay of 102 days in filing the appeal before the Tribunal. The Ld. Counsel for the assessee, submitted the sufficient cause of delay stating that due to heavy rain and mistake of the advocate of the assessee, the appeal could not be filed on time before the Tribunal and therefore this delay of 102 days, may be condoned in the interest of justice.
On the other hand, Learned DR for the revenue, opposed the prayer of the assessee for condonation of delay and stated that, assessee has failed to explain the sufficient cause. The learned DR further stated that delay should not be condoned and appeal of the assessee may be dismissed.
We have heard both the parties on this preliminary issue. A perusal of the affidavit gives us an impression of existence of mitigating circumstances to enable us to exercise our discretion in favour of the assessee. Accordingly, the delay is condoned.
The relevant material facts, as culled out from the material on record, are as follows. In assessee`s case the information was received from credible sources SHREE KARMAL KOTDA JUTH SEVA SAHAKARI MANDALI LIMITED. that the assessee had received gross receipt of Rs. 3,82,31,996/- from Food Corporation of India (FCI) on which TDS was deducted of Rs. 15,63,741/- (as per Form 26AS) during financial year 2008-09. On verification of record, it was noticed that the assessee had not filed any return of income for assessment year(A.Y.) 2009-10. Therefore, the case was reopened u/s 147 of Act and notice u/s 148 of the Act was issued on 17/10/2013, and duly served upon the assessee. However, the assessee had not filed return of income in response to this notice. Thereafter, various notices u/s 142(1) of the Act were issued to the assessee. However, the assessee had not complied any of the notices. Therefore, the Scrutiny Assessment was finalized u/s 144 r.w.s. 147 of the Act, on 17/03/2015, determining assessed income of Rs. 3,82,32,000/- after making addition on account of undisclosed income of Rs. 3,82,31,996/-.
Aggrieved by the order of the assessing officer, the assessee had filed an appeal before Ld. CIT(A). The Ld. CIT(A)-1, Rajkot vide its order dated 10/10/2016 has partly allowed the appeal of the assessee and restricted the addition at Rs. 7,64,640/- @2% of Gross receipt. Aggrieved by the order of Ld. CIT(A), the revenue had filed an appeal before Hon'ble ITAT. The Hon'ble ITAT, Rajkot Bench, vide its order dated 28/01/2020, had restored the matter to the file of the assessing officer for adjudicating de-novo and the assessee was directed to make compliance before the assessing officer in the set aside assessment proceedings.
During the set aside proceedings, the assessee did not furnish any reply/details despite being various opportunities. Hence, assessment was completed u/s 144 r.w.s. 254 on 25.09.2021 determining total income at Rs. 30,58,560/- and penalty proceedings u/s 271B of the Act were also initiated vide notice u/s 271B r.w.s. 274 dated 26.09.2021 and imposed penalty under section 271B of the Act to the tune of Rs.1,50,000/-.
SHREE KARMAL KOTDA JUTH SEVA SAHAKARI MANDALI LIMITED.
Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal before the Ld. CIT(A), who has reduced the penalty from Rs.1,50,000 to Rs.1,00,000/-. During the appellate proceedings, the assessee argued that threshold limit for gross receipts for audit under section 44AB of the Act, was only Rs.40,00,000/- as against one crore considered by the assessing officer. Besides, the assessing officer can levy maximum penalty under section 271B of the Act to the tune of Rs.1,00,000 only. Hence, the penalty was reduced by the ld. CIT(A) to Rs.1,00,000/- 10. Aggrieved by the order of the Ld CIT(A), the assessee is in further appeal before us. 11.We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. 12.The ld. Counsel for the assessee, argued that during the penalty proceedings, assessee’s case was reopened u/s 147 of the Income Tax Act, 1961 and assessing officer made addition based on form 26AS of its entire receipts mentioned in form 26AS, which was restricted by CIT(A) at 2% to 7,64,640/-, and also directed to allow TDS credited in form 26AS. Therefore, the penalty and the threshold amount of the addition both were reduced by the ld. CIT(A) and therefore, on estimated addition, the penalty should not be levied. Besides, whatever purchases were made by the assessee, are for the Food Corporation of India,(FCI), and not his own account, therefore, the turnover does not belong to the assessee, it belongs to the food Corporation of India, hence, assessee is not SHREE KARMAL KOTDA JUTH SEVA SAHAKARI MANDALI LIMITED. liable to get his accounts audited under section 44AB of the Act, therefore, penalty should be deleted. 13.On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity.
We have considered the submissions of both the parties, and we find merit in the submissions of learned Counsel for the assessee to the effect that the assessee was working for Food Corporation of India and he used to purchase wheat for Food Corporation of India, therefore assessee worked as an agent or facilitator only. Hence the entire turnover belongs to the Food Corporation of India, therefore assessee is not liable to get his accounts audited under section 44AB of the Act. The assessee was a purchaser of wheat for the Government of India,( Food Corporation of India), as specified byFood Corporation of India, and as per the agreement, between assessee and Food Corporation of India, therefore, the provisions of section 44AB of the Act is not applicable in the assessee`s case under consideration. Whatever purchases were made by the assessee were only for the Food Corporation of India (FCI), and not his own account, that is, assessee was not owner of the purchases made by him.Based on this factual position, the Penalty should not be imposed on the assessee. Hence, we are not inclined to accept the contention of the Assessing Officer in any manner and hence the penalty so imposed is deleted. Accordingly, we quash the penalty order and hence this ground of the assessee is allowed.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 18/ 03/2025.