SH. DINESH KUMAR,FARIDABAD vs. ITO, FARIDABAD

ORDER Per Prashant Maharishi, AM:

3. Ld AR of the assessee submitted that there was a change in the accountant and old accountant ran away with the books of accounts and therefore assessee could not produce same before AO. She further submitted that tax audit report was furnished by the assessee which are audited therefore the books of accounts were in existence but as the same were in possession of the accountant, assessee could not produce the same. She therefore pleaded that there was a reasonable cause for non compliance and penalty is erroneously levied by AO and confirmed by CIT (A).

4. Ld DR relied on the order of lower authorities.

5. We have carefully considered the rival contention and orders of lower authorities. In this case AO has treated the non production of books of accounts by the assessee as non compliance of notice u/s 142(1) and therefore has held that there is a failure u/s 271(1) (b) of the act and no explanation was furnished by assessee the penalty was levied of Rs 10,000/. CIT (A) also confirmed the penalty holding that there was a failure on the part of assessee in non production of books of accounts during the course of assessment proceedings. Thus assessee has failed to comply with the notices u/s 142(1) of the act. We also concur with the opinion of lower authorities that there is a failure on part of the assessee in not producing the books of accounts which is asked for by AO by issuing various notices. However both the lower authorities lost sight of the provisions of section 273B of the act which provides that certain specified penalty defaults cannot be imposed on assessee if the assessee shows that there was a reasonable cause for the said failure. In this case the assessee has repeatedly stated that there was a change in the accountant and old accountant has ran away with the books of accounts and therefore the assessee was not in a position to submit the books of accounts of the business before AO. This fact was submitted before AO in response to the notice asking for the books of accounts. Therefore it is also not the case that assessee has not explained the reason that why it is not in a position to submit / produce the books of accounts. In fact the books of Page 2 of 4 accounts were maintained by the assessee is an uncontroverted fact and assessee submits that it failed to submit/ produce the books of accounts before AO because it was not in possession of assessee but with the old accountant. Further during assessment proceedings assessee has attended and submitted the explanation for the same. Therefore we are of the view that there was a reasonable cause for the alleged default for which no penalty can be levied on the assessee. In the result we are of the view that AO and CIT (A) erred in levying and confirming the penalty respectively and hence we cancel the penalty levied of Rs 10,000/- on assessee u/s 271(1) (b) of the act.

(Order pronounced in the Open Court on 14/10/2015.)

Sd/- Sd/- (A.T.Varkey) (Prashant Maharishi) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 14 /10/2015 *B. Rukhaiyar* Copy forwarded to: 1. Appellant a 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR.ITAT AR, ITAT

Date Initial 1. Draft dictated on 12/10/2015

6. Kept for pronouncement on