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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI DUVVURU RL REDDY, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
(धििाधरणिरध/ Assessment Year: 2018-19) Zoyeb Hyderabadwala v. ITO – Ward – 1(2) 27-32-9, Ground Floor Direct Taxes Building, MVP Double Road 75 Feet Road, Visakhapatnam – 530001 Andhra Pradesh Besides Gayatri College, MVP Colony Visakhapatnam – 530017 [PAN : AAAPZ3387M] Andhra Pradesh (अपीलार्/ Appellant) (प्र्/ Respondent) यरद्त्य्पयतय्यिध/ Assessee Represented by : Shri C. Sanjeev Rao, AR र्जसय्पयतय्यिध/ Department Represented by : Dr. Aparna Villuri, Sr.AR सु्व्ईसम्पहो्ेय्यतयि/ Date of Conclusion of Hearing : 08.08.2024 घोषण्य्त्र्ख/Date of Pronouncement : 05.09.2024 आदेश/O R D E R
PER SHRI S BALAKRISHNAN, ACCOUNTANT MEMBER:
This appeal is filed by the assessee against order of Learned Commissioner of Income Tax (Appeals), NFAC, Delhi [hereinafter in short “Ld.CIT(A)”] vide DIN & Order No. ITBA/NFAC/S/250/2024- Zoyeb Hyderabadwala 25/1064955464(1) dated 17.05.2024 for the A.Y. 2018-19 arising out of the penalty order passed under section 271B of Income Tax Act, 1961 (in short ‘Act’) dated 21.12.2021.
Brief facts of the case are that, assessee filed return of income admitting total income at Rs. 31,07,860/- for the A.Y. 2018-19 on 04.12.2018. The case was selected for scrutiny and the assessment was completed under section 143(3) r.w.s. 144B of the Act dated 05.06.2021 determining the total income at Rs. 84,79,027/-. Assessing Officer noticed that the assessee has total sales / turnover / gross receipts for the year exceed the prescribed limit under section 44AB of the Act. Therefore, the Assessing Officer considered that assessee is required to get his books of accounts audited in terms of provisions of section 44AB of the Act and file the audit report as required within the due date under section 139(1) of the Act. However, it was noticed that assessee has filed the audit report on 04.12.2018 which is beyond the extended due date of 31.10.2018. The Assessing Officer thereafter issued show cause notice on 05.06.2021. In response, assessee submitted that the audit report in the Form - 3CB and Form - 3CD was filed on 04.12.2018. Assessing Officer rejected reply of the assessee and proceeded to levy
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Aggrieved by the penalty order, assessee filed an appeal before Ld.CIT(A). The Ld.CIT(A) considering the submissions and reply by relying on various judicial pronouncements sustained the penalty order by dismissing the appeal of the assessee.
Being aggrieved by the order of the Ld.CIT(A), assessee is in appeal before us by raising following grounds of appeal: -
1. That the learned Commissioner of Income-tax (Appeal), [for brevity CIT (A)'] Income-tax Department, Delhi erred in upholding the order of learned Assessing Officer (for short' AO') and confirming the penalty, ignoring the facts are bad in law and arbitrary.
2. That the Learned CIT (A) erred in confirming the penalty of Rs.1,50,000/- made by the learned AO though the appellant had adduced the evidences and explained the circumstances of delay in filing the audit report under Section 44AB within time 3. Each one of the above grounds of appeal
is without prejudice to each other.
4. That the appellant craves leave to add/alter any of the grounds of appeal on or before the time of hearing.”
The only issue emanating from the grounds of appeal
raised by the assessee is with respect to confirming of penalty by the Ld.CIT(A) for failure of the assessee to file the audit report within the extended due date i.e., 31.10.2018. Page No. 3 Zoyeb Hyderabadwala
6. The Ld.AR submitted that assessee could not file the audit report before the extended due date i.e., 31.10.2018, due to the fact that the invoices and other records were destroyed by the white ants, and the appellant had reconstructed the books of accounts after 26.11.2018 for submission to the Chartered Accountant for completion of the audit. Ld.AR pleaded that there is a sufficient reasonable cause for the assessee for not filing the audit report under section 44AB within the time limit prescribed. He therefore pleaded to delete the penalty.
Per contra, Ld. DR heavily placed reliance on the orders of the revenue authorities.
We have heard both the sides and perused the material available on record. Admittedly assessee has not completed the audit of the books of accounts under section 44AB of the Act for the impugned assessment year. Submission of the assessee is that the invoices and other records are destroyed by the white ants forcing the assessee to reconstruct the books of accounts for submitting to the Chartered Accountant for getting the books of account audited under section 44AB of the Act, hence there is delay in filing the audit report under section 44AB of the Act. For Reference we extract below Section 44AB of the Act.
Page No. 4 Zoyeb Hyderabadwala “44AB. Audit of accounts of certain persons carrying on business or profession. Every person,— (a) carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds one crore rupees in any previous year [***]: [Provided that in the case of a person whose— (a) aggregate of all amounts received including amount received for sales, turnover or gross receipts during the previous year, in cash, does not exceed five per cent of the said amount; and (b) aggregate of all payments made including amount incurred for expenditure, in cash, during the previous year does not exceed five per cent of the said payment, this clause shall have effect as if for the words "one crore rupees", the words "[ten] crore rupees" had been substituted:] [Provided further that for the purposes of this clause, the payment or receipt, as the case may be, by a cheque drawn on a bank or by a bank draft, which is not account payee, shall be deemed to be the payment or receipt, as the case may be, in cash; or] (b) carrying on profession shall, if his gross receipts in profession exceed fifty lakh rupees in any previous year; or (c) carrying on the business shall, if the profits and gains from the business are deemed to be the profits and gains of such person under section 44AE or section 44BB or section 44BBB, as the case may be, and he has claimed his income to be lower than the profits or gains so deemed to be the profits and gains of his business, as the case may be, in any previous year; or (d) carrying on the profession shall, if the profits and gains from the profession are deemed to be the profits and gains of such person under section 44ADA and he has claimed such income to be lower than the profits and gains so deemed to be the profits and gains of his profession and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year; or (e) carrying on the business shall, if the provisions of sub-section (4) of section 44AD are applicable in his case and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year, get his accounts of such previous year audited by an accountant before the specified date and furnish by that date the report of such audit in Page No. 5
A plain reading of the above section, it is noticed that the assessee is required to get his books of account audited before the specified date and such report shall be duly signed and verified by such Accountant as prescribed. However, under exceptional circumstances, when assessee provides a reasonable and sufficient cause, the delayed filing of the audit report may be condoned. In the instant case, assessee has stated that books of accounts are destroyed by white ants and the audit report of the books of accounts was commenced after 26.11.2018 only. Section 273B provides that no penalty thereby imposable on the assessee, if the assessee proves that there is a reasonable cause for the said failure. However, assessee was not able to submit any evidences to show that assessee is having a reasonable cause showing that the books of accounts have been destroyed by the white ants. Further in our opinion the cause adduced by the assessee could not be considered as reasonable cause. In the absence of assessee not being able to demonstrate reasonable cause the non-filing of audit report attracts provisions of section 271B of the Act, in our considered opinion. Therefore, we have no hesitation to confirm the penalty levied under section 271B of the Act by the Ld. Assessing Officer and we do not find
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In the result, appeal of the assessee is dismissed. Order pronounced in the open court on 05th September, 2024.
Sd/- Sd/- (दुव्वआर.एलरेड्) (एसब्ल्यृष्) (DUVVURU RL REDDY) (S. BALAKRISHNAN) नाधयकसदस/JUDICIAL MEMBER लेखासदस/ACCOUNTANT MEMBER Dated :. 05.09.2024 Giridhar, Sr.PS आदेशय्पयतयलयिअगेयषत/ Copy of the order forwarded to :- 1. य्ि्धारत्/ The Assessee : Zoyeb Hyderabadwala 27-32-9, Ground Floor 75 Feet Road, Visakhapatnam – 530001 Andhra Pradesh 2. र्जस/ The Revenue : ITO – Ward – 1(2) Direct Taxes Building, MVP Double Road Besides Gayatri College, MVP Colony Visakhapatnam – 530017 Andhra Pradesh 3. The Principal Commissioner of Income Tax 4. यवभ्ग्ापयतय्यि, आयकरअपीलीयअधिकरण, धिशाखापटणम/ DR, ITAT, Visakhapatnam 5. The Commissioner of Income Tax 6. ग्रधफ़्ईल/ Guard file //True Copy// आदेश््ुस्र/ BY ORDER Sr. Private Secretary ITAT, Visakhapatnam
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