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Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN
आदेश / O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER:
The assessee filed this appeal against the Order of the CIT(A)-5, Chennai, in dated 07.12.2016.
Mr.Natarajan Nallathambi, Proprietor of M/s.OPS Firm, a dhall merchant filed his return for the ay 2013-14 on 30.09.2013 admitting a ITA No.361/Mds/2017 :- 2 -:
total income of Rs.5,59,330/-. The AO found that the turnover of the assessee company is at Rs.4,24,45,140/-. As per Sec.44AB, the assessee has to furnish a tax audit report on or before 30.09.2013 but he has not done so. The AO served a notice u/s.271B on 08.01.2015 calling for assessee’s objections. The assessee replied that for the tax audit report there was an action either e-filing or file manual in the tapal. He normally checks for filing which is normally recorded in the computer with date of report, date of filing, etc. As there was a hard disk crash, the data was lost and the tax audit report was not filed inadvertently. On receipt of the notice, we found the omission and we are filing herewith tax audit report in Form-3CB and Form-3CD. Kindly consider the omission as a mistake without any deliberate intention and condone the delay/filing the tax audit report. Dissatisfied, the AO levied penalty u/s.271 at Rs.1,50,000/-.
Aggrieved, the assessee filed an appeal before the Ld.CIT(A).
The statutory Auditor of the assessee pleaded before the Ld.CIT(A) that there was a crash in his computers leading to data being corrupted which could not be retrieved immediately. He had a heart attack in the year 2011. Since then he could not attended to his work regularly and had to depute his sub-ordinates and was supervising the work done them.
Thus, there was a lack of follow up due to his illness. The hard disk containing the data was sent to Bangalore for data recovery which was not received for long time. Even manual tax audit report could not be filed as tax audit report compulsorily has to be e-filed. On receipt of notice from ITA No.361/Mds/2017 :- 3 -: the AO, the data relating to the assessee was once again fed and he filed the tax audit report on 20.10.2014 along with a letter explaining the reason for not filing. On receipt of hard disk and data, e-filed the tax audit report on 03.03.2015. The statutory auditor pleaded that he has filed assessee’s return on 30.09.2013, after audit, within the date. All the taxes were paid and no taxes are due A manual tax audit report was also filed on 20.10.2010 as soon as the receipt of penalty notice from the AO dated 08.10.2014, there was no loss of revenue to the Department and non-filing of tax audit report was only a technical error as the assessee has given the details relating to tax audit report date, name of the auditor, etc, in his return of income. Similar default in filing the tax audit report happened in his wife Mrs.Nallathambi Kasturi PAN AAIPK 7859 B also for this AY, the AO levied penalty u/s.271B in her case, which was confirmed by the Ld.CIT(A). However, when she made an appeal to ITAT, Chennai, the Hon’ble ITAT struck down the penalty etc. However, the Ld.CIT(A) dismissed the appeal for the reason, inter-alia, that the assessee has not stated the ill-health of the auditor before the AO. Aggrieved, the assessee filed this appeal pleading, inter-alia, that the Ld.CIT(A) failed to see the reason delay in filing the tax audit report, though all the facts are available with him. The assessee had no control over filing the tax audit report and it was not his fault for delay in e-filing tax audit report by the auditor. Moreover, the assessee is a very senior citizen, aged about 74 years, also has age related problems and he could not follow up filing of audit report. The assessee’s present health condition is more precarious
ITA No.361/Mds/2017 :- 4 -: as he had heart attack in May, 2016. The AO failed to agree that there was a reasonable cause in the delay in filing of tax audit report by the Auditor as he has also fallen ill and could not attend office regularly, there was malfunctioning of computer and loss of data due to hard disk crash, etc. The Ld.CIT(A) also failed to consider the reasonable cause, etc.
Further, he relied upon various case laws viz. Gayathri Coal Supply Co-63- ITD-237, Aman Kumar Gupta Vs. ITO., ITAT-Chandigarh, CIT Vs. L.S.Lakshmanaswamy, High Court of Madras, CIT Vs.U.P.Rajya Sahakari Evam Bhoomi Vikas Limited [2013] 353 ITR 152 (All), Rajasthan State Electricity Board Vs. ITAT [2003] 262 ITR 262/130 Taxman, Thanjavur Silk Handloom Weavers Cooperative Production & Sales Society Limited Vs. Union of India [2003] 263 ITR 334/132 Taxman 846, etc.
We have heard the rival contentions, perused the material placed on record and the judicial decisions cited supra. The assessee is an individual engaged in the dhall merchandise and his accounts were audited u/s.44AB. The assessee regularly filing returns but for ay 2013-14, though the accounts were audited the tax audit report was not submitted along with return of income but was submitted as soon as the AO issued show cause notice for the levy of penalty u/s.271B. The AO has also accepted his return and its results. The Ld.AR supported his arguments with the medical reports from the hospitals where the Chartered Accountant undergone treatment. On similar facts, this tribunal in the case of Smt.Nallathambi Kasthuri, assessee’s wife, in ITA
ITA No.361/Mds/2017 :- 5 -:
No.1371/Mds/2016 dated 16.01.2017 held that “the circumstances were beyond the control of the assessee though Return of income was filed on 09.10.2013, the Ld. AR explained that due to technical difficulties and Hard Disk crash the information could not be filed immediately and the Chartered Accountant handling the case was passing through major illness. Therefore, we found there is a reasonable cause in the action of the assessee for not filing the Audit report along with the Return of income and the assessee has flied the Return of income and paid the Income Tax before Filing the Tax Audit report. Considering the Apparent facts and the Reasonable cause of illness of Chartered Accountant and technical software problems and judicial decisions, we set aside the order of CIT(A) and direct the Assessing Officer to delete the penalty and the grounds of the assessee are allowed”.
Since the facts are similar, following the above decision, we set aside the order of the Ld.CIT(A) and direct the AO to delete the penalty and the grounds of the assessee are allowed.
In the result, the assessee’s appeal is allowed
Order pronounced in the Open Court on August 1st, 2017, at Chennai.