SUSHIL KR. HAZRA,KOLKATA vs. ITO, WD-22(2), KOLKATA, KOLKATA

This appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax(Appeal)-6, Kolkata in appeal No. 53/CIT(A)-6/Kol/Wd.-55(4)/10-11 dated 30.12.2014 for the assessment year 2008-09 confirming the levy of penalty u/s 271B of the Income Tax Act, 1961 (in short “the Act”) Act amounting to Rs. 1 lac. by the Income Tax Officer, Ward-55(4), Kolkata (in short the “Ld AO”).

The only issue to be decided in this appeal is as to whether the Ld. CIT(A) was justified in confirming the levy of penalty u/s 271B of the Act in the facts and circumstances of the case.

The brief facts of this issue is that the assessee is a very old assessee carrying on wholesale business in Medicine under the name and style of M/s Hazra Medical Agency. The assessee has been filing his return for the earlier years voluntarily within the due date prescribed for the relevant period. During the financial year 2008-09, the 2 Sushil Kumar Hazra A.Yr.2008-09 assessee was bed ridden and due to acute sickness followed by waist spondolytis from August 2008 to 2nd week of January, 2009, the assessee was forced to close his normal business activities during this period and accordingly could not submit the return of income for the assessment year 2008-09 in time. However, he managed to get his accounts audited and tax audit report in Form 3CB and 3CD was obtained in time on 30.09.2008. The assessee filed his return of income belatedly on 05.01.2009 voluntarily after paying all the taxes. The said return was duly processed u/s 143(1) of the Act. The Ld. AO initiated penalty proceedings u/s 271B of the Act on the ground that the assessee’s turnover is more than 40 lacs and accordingly he is liable for tax audit u/s 44AB of the Act and that the said tax audit report is to be filed on or before due date of filing of return of income by the assessee, failing which penalty u/s 271B of the Act would be exigible. The Ld. AO observed that in the instant case, though the assessee had obtained the tax audit report on 30.09.2008 but had enclosed the same along with the return of income filed on 05.01.2009 which was beyond the due date prescribed u/s 139(1) of the Act. Accordingly, he initiated penalty proceedings u/s 271B of the Act. The assessee replied that due to acute sickness he could not file the return in time even though the accounts were duly audited and tax audit report was obtained well within time. The assessee also placed reliance on CBDT Circular No. 5 of 2007 dated 26.07.2007 wherein the Board had clearly clarified that the audit report need not be enclosed along with return of income and it is enough if the said accounts were duly audited within time and ready for furnishing before the Ld. AO as and when called for during the assessment proceedings. Accordingly, the assessee stated that he was prevented from reasonable cause for not furnishing the audit report as he was not able to move physically and his family members were tremendously worried about his acute physical trouble, and that the same also forced the assessee to close his normal business activity from 1st week of August, 2008 to early 2nd week of January, 2009 sustaining huge financial loss. It was also submitted that due to non-payment of monthly salary in time, his accountant also left the job without any notice to that effect. Hence, in these 2

None appeared on behalf of both the parties.

We have perused the material available on record. It is not in dispute that the tax audit report was obtained on 30.09.2008 which is within time. It is not in dispute that the assessee was indeed suffering from acute physical trouble which is supported by medical certificate placed before the Ld. AO. We find that the Ld. CIT(A) had confirmed the penalty u/s 271B of the Act by placing reliance on the decision of Hon’ble Calcutta High Court in the case of CIT vs. Capital Electronics reported in 261 ITR 4. We find that in the facts before the Hon’ble High Court the assessee had not produced any reasons for the delay in submission of audit report and accordingly, the Hon’ble High Court held that there was no reasonable cause adduced by the assessee in terms of Section 273B and confirmed the levy of penalty. We find that in the instant case, the assessee had indeed given substantial reasons for the delay in submission of the tax audit report, even though the said report was duly obtained within time on 30.09.2008. The reasons adduced by the assessee for the delay are not reiterated herein for the sake of brevity. We find from the orders of the lower authorities that the reasons adduced by the assessee were not disbelieved by the Revenue and taking into account

In the result, the appeal of the assessee is allowed.