MADINA RICE MILL PVT. LTD.,KOLKATA vs. ACIT, CENTRAL CIR. 4(4) , KOLKATA

As the captioned appeals relates to same assessee and similar grounds of appeal have been raised, these appeals

Perusal of grounds reveals that common grievance of the assessee is against the finding of learned CIT (A) confirming the levy of penalty u/s 271A of the Income-tax Act, 1961 (the Act) for the alleged failure to keep, maintain or retain books of accounts, documents, etc. Since the issue raised is common, we for the purpose of adjudication take up the facts of ITA No. 802/KOL/20024, for A.Y. 2013-14, and shall apply our decision mutatis mutandis to all the remaining captioned appeals.

Assessee has raised following grounds of appeal in ITA No. 802/KOL/2024 for A.Y. 2013-14: -

Brief facts of the case are that the assessee is a Private Limited Company engaged in the business of running rice mill. The return of income for A.Y. 2013-14 filed on 30th September, 2013, declaring income of ₹1,45,910/-. Survey was conducted u/s 133A of the Act on 28th February, 2020, followed by issue of notices u/s 148 of the Act on 26th March, 2021, for the alleged escapement of income followed by carrying out the proceedings, during the course of which assessee failed to produce the books of accounts. The learned Assessing Officer rejected the books u/s 145(3) of the Act and made certain additions completing the assessment on 21st March, 2022. As the assessee could not produce the books of account, ld. AO initiated the penalty proceedings u/s 271A of the Act by issuance of notice u/s 274 of the Act. Thereafter, penalty proceedings were carried out, during the course of which assessee submitted that it maintains books of account which were duly audited but

The learned Counsel for the assessee vehemently argued referring to the detailed written submissions filed before the lower authorities and filed before us along with referring to the paper book containing 61 pages for A.Y. 2013-14 and similar paper books have also been filed for the remaining years. The learned counsel for the assessee submitted that the assessee maintains regular books of accounts and same were duly audited for each year and tax audit reports were filed with the department/ uploaded on the income tax portal. Books of accounts were produced before the learned AO during the penalty proceedings. He also submitted that the assessment proceedings were carried out during the period when the country was passing through Covid pandemic. One of the Directors, who was severely affected with Covid, also died. Even the learned Authorized Representative was diagnosed with Covid and was

On the other hand, the learned Departmental Representative vehemently argued and supporting the orders of the lower authorities.

We have heard the rival contentions and perused the records available on record. The sole issue for our consideration is that whether the learned CIT (A) erred in confirming the levy of penalty of ₹25,000/- u/s 271A of the Act. Before us, the learned counsel for the assessee has placed sufficient evidence to prove that the assessee is regularly maintaining books of accounts and they are audited by the Chartered Accountants and tax audit reports for the year under consideration as well as the remaining years under appeal have been either filed with the Income Tax Department before the due date or have been uploaded on the Income Tax portal before the due date prescribed under the Act. This fact that the assessee is filing the tax audit report along with its return of income has not been disputed by the Revenue authorities. It is an admitted fact that for carrying out tax audit, books of account and all related documents are must without which the auditor cannot prepare tax audit report. Also, the assessee being a Private Limited Company is required to furnish annual report along with its audited financial statements with the Ministry of Corporate Affairs. So, prima facie, the learned

Coming to the alternate contentions of the assessee that assessee deserves immunity from levy of penalty in terms of Section 273B of the Act as there was a reasonable cause for the alleged failure of not placing books of account before the assessing authority during the course of assessment proceedings. We find that the assessment proceedings, were initiated by issue of notice u/s 148 of the Act on 26th March, 2021 and at that point of time, country was passing through a severe wave of Covid 19 Pandemic. The period of Covid which began from March 2020, finally ended in March, 2022. Details have been filed before us demonstrating that one of the key persons, Director Mr. SK Iqbal Hussain, who was affected from Novel Corona Virus and due to the severe infections, he died on 30th May, 2021. Since Mr. Iqbal Hussain, who was the key person looking after the taxation matters proper compliance could not been made before the AO. Later on, Mr. Somnath Ghosh, appointed as Authorized Representative of the assessee. He too got infected with Corona Virus and admitted to Apollo Hospital and he remained ill for a long time. The assessment order has been framed on 31st March, 2022, and that the various opportunities which were granted by the AO for furnishing the books of accounts were falling during the Covid Period only. All these facts clearly indicate that the assessee had

We therefore, under the given facts and circumstances find that firstly, the assessee is maintaining regular books of accounts as provided u/s 44AA of the Act, which are duly audited and that the audit reports have been furnished regularly, therefore, there is no case of invoking of Section 271A of the Act as there is no failure on the part of the assessee to maintain proper books of accounts. Even otherwise, the assessee deserves immunity u/s 273B of the Act from levy of penalty as there was a reasonable cause for the said failure provided u/s 271 of the Act. We therefore, set aside the finding of the learned CIT (A) and delete the impugned penalty of ₹25,000/- levied u/s 271A of the Act and allow the grounds of appeal raised by the assessee for A.Y. 2013-14.

In the result, all the appeals of the assessee in ITA No. 802 to 806/KOL/2024 for A.Y. 2013-14 to A.Y. 2017-18, are allowed