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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI AMITABH SHUKLA
आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the
Learned Commissioner of Income Tax (Appeals)-/NFAC, (hereinafter in
short ‘the Ld.CIT(A)’), Delhi, dated 14.12.2023 for the Assessment Year
(hereinafter in short ‘AY’) 2012-13 confirming the penalty levied u/s.271B
of the Income Tax Act, 1961 (hereinafter in short ‘the Act’).
The brief facts are that the assessee had filed return of income
(RoI) on 20.10.2012 admitting income of Rs.2,86,289/-. He is a dealer of
Samsung Mobile Phones, Vodafone, SIM Cards, etc., in the name of
M/s.N.R.Kuppuswamy Traders. The AO issued notice u/s.148 of the Act
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on 29.03.2019 and finding no response, passed an order on 06.12.2019
u/s.144 of the Act, assessing income at Rs.2,47,54,220/-. Later, on
17.03.2021, the AO reduced re-assessed income u/s.154 of the Act, to
Rs.1,10,51,892/-. The AO noted that assessee had turnover of
Rs.1,07,14,411/- when he filed RoI on 20.10.2022; and since assessee
failed to get his accounts audited u/s.44AB and didn’t file Tax Audit
Report (TAR) along with return of income, he levied penalty of
Rs.1,28,056/- u/s.271B of the Act.
Aggrieved, by the levy of penalty u/s.271B of the Act, the assessee
preferred an appeal before the Ld.CIT(A), who confirmed the same, which
action has been impugned before us.
We have heard both the parties and perused the material available
on record. We note that assessee had filed return of income for AY 2012-
13 on 20.10.2012 declaring total income of Rs.2,86,289/-. Thereafter,
assessment order was passed on 06.12.2019 u/s.144 r.w.s.147 of the
Act, making some addition which was later reduced by order u/s.154 of
the Act on 17.03.2021. Thereafter, the AO initiated penalty proceedings
u/s.271B of the Act, since, he noted that in the return filed on
20.10.2022, the assessee had shown his turnover of Rs.1,07,14,411/-
and failed to get his accounts audited u/s.44AB of the Act; and
consequently, the AO issued notice to the assessee ‘as to why’ the
ITA No.104/Chny/2024 (AY 2012-13) Subramanian Rathinakumar :: 3 ::
penalty should not be imposed upon him. Then, assessee replied that the
assessee’s Auditor, Shri C.K.Padmanabhan, CA had expired on
20.07.2014 and before that he always used to comply with the
requirement of law and used to file the TAR when ever it was necessary;
and to support this fact brought to the notice of the AO that the said
Auditor has certified the trading P & L A/c for the year ending 31.03.2012,
as well as the capital account of the assessee (refer Page No.24 & 25 of
the paper book) and also the statement of income tax which has been
certified by the Auditor (refer Page No.26 of PB as well as the copy of ITR
filed Page No.1-23 of Paper Book) and also brought to AO’s notice that
the same Auditor has filed the Audit Report for subequent AY 2013-14
(refer Page No.28 of Paper Book). And according to the assessee, after
the demise of Shri C.K.Padmanabhan on 20.07.2014, a new Auditor was
appointed, Shri Chettiyappan Vadivel who filed Audit Report for AY 2014-
Thus, according to the assessee, he was of the bona fide belief that,
earlier Auditor, Shri C.K.Padmanabhan ought to have filed the Audit
Report for AY 2012-13 because auditor has himself certified that assesse’s
turnover was more than Rs.1 Cr [P&L A/c for the year ending 31.03.2012,
refer Page No.24 PB]. Further, according to Ld AR, if the AO had taken
action at the earliest [for the alleged non-filing of TAR] within a
reasonable time and then, the Auditor could have answered the question
as to whether assessee’s return was filed along with TAR. The delay of
ITA No.104/Chny/2024 (AY 2012-13) Subramanian Rathinakumar :: 4 ::
more than eight years in initiating the ibid penalty, according to assessee
has caused the assessee from ascertaining as to whether TAR was filed
along with RoI for AY 2012-13. Before the Ld.CIT(A) also, the assessee
reiterated the contention that the Auditor, Shri C.K.Padmanabhan would
have definitely filed the TAR for AY 2012-13; and filed the proof of filing
TAR for AY 2013-14, which fact itself shows that his Auditor would not
have failed to file the TAR for AY 2012-13. And the assessee also
admitted that he was depending upon the Auditor for filing of return/TAR;
and that Auditor’s office kept copies of relevant/income tax documents;
and due to efflux of time and since the Auditor had passed away, the staff
was also not able to provide the copy of the TAR. Therefore, assessee
prayed that there is reasonable cause for non levy of penalty as provided
in Sec.273B of the Act.
Per contra, the Ld.DR does not want us to interefere with the
penalty action of the AO/Ld.CIT(A). We find that this is a peculiar case,
the assessee had filed his RoI on 20.10.2012 declaring Rs.2,86,289/- and
has shown turnover of more than Rs.1 Cr. (P&L Account certified by his
Auditor, Shri C.K.Padmanabhan shows the turnover at Rs.1,07,14,411/-)
and the AO imposed penalty on 16.03.2022 [after ten years of filing
return] blaming assessee for non-filing TAR along with RoI. In this
regard, assessee has brought to the notice of authorities below that the
Auditor/CA who has audited his books has passed away on 20.07.2014
ITA No.104/Chny/2024 (AY 2012-13) Subramanian Rathinakumar :: 5 :: and before that he has audited his accounts for earlier years including AY 2013-14. And since, assessee has entrusted the auditing/compliance of Income Tax aspects to auditor, he was sure that Shri C.K.Padmanabhan ought to have filed the TAR well within time. But, since the AO initiated penalty after ‘8’ years, assessee was not able to get a copy of TAR from the office of late Shri C.K.Padmanabhan. In the aforesaid peculiar factual circumstances, the benefit of doubt is given to assessee and deem it appropriate not to levy penalty u/s.271B of the Act.
In the result, appeal filed by the assessee is allowed.
Order pronounced on the 05th day of July, 2024, in Chennai.
Sd/- Sd/- (एबी टी. वक�) (अिमताभ शु�ा) (AMITABH SHUKLA) (ABY T. VARKEY) लेखा सद�य/ACCOUNTANT MEMBER �याियक सद�य/JUDICIAL MEMBER चे�ई/Chennai, �दनांक/Dated: 05th July, 2024. TLN, Sr.PS आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF