SH. DINESH KUMAR,FARIDABAD vs. ITO, FARIDABAD

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ITA 5586/DEL/2013Status: DisposedITAT Delhi14 October 2015AY 2005-064 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that while there was a failure to produce books of accounts, the assessee had provided a reasonable cause by explaining the circumstances of the accountant's disappearance. Therefore, the penalty was not sustainable under Section 273B.

What were the facts?

The assessee, a truck business owner, failed to produce books of accounts during assessment proceedings, citing a change of accountant who allegedly absconded with them. The Assessing Officer (AO) and CIT(A) levied a penalty for non-compliance with notices.

What were the issues?

Whether the assessee had a reasonable cause for non-production of books of accounts, and if so, whether the penalty under Section 271(1)(b) was rightly imposed.

Which sections of the Income-tax Act were involved?

Section 271(1)(b),Section 142(1),Section 273B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘B’, NEW DELHI

For Respondent: Shri Hemant Gupta, Sr. DR
Hearing: 12.10.2015Pronounced: 14.10.2015

ORDER Per Prashant Maharishi, AM:

1.

This appeal is filed by assessee against the order of CIT (A), Faridabad dated 22.06.2013 confirming penalty u/s 271(1) (b) of the Income Tax Act ( The Act) of Rs 10.000/-. 02. Brief facts of the case are that assessee is an individual carrying on business of running of trucks. He filed his return of income on 25.10.2005 showing income of Rs 153560/-. His case was selected for scrutiny and in assessment proceedings he was asked to produce books of accounts for which he replied that there is change in accountant and old accountant has ran away with the books of accounts, therefore he is unable to produce the same. Hence, AO passed assessment order u/s 143 (3) of the act determining total income of Rs 875100/- making addition to the total income. He further initiated penalty proceedings u/s 271(1) (b) of the act for not maintaining books of accounts and non compliance with notice u/s 142(1) of The Act issued on 10.12.2007. In response to that notice assessee did not submit any reasonable cause but pleaded that appeal before CIT (A) is pending. Hence AO levied penalty of Rs 10,000/- u/s 271(1) (b) of the act. Against this order assessee preferred an appeal before CIT (A) who in turn confirmed the penalty and therefore assessee has filed this appeal.

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.

6.

In the result appeal of the assessee is allowed.

(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

2.

Draft placed before author 12/10/2015

3.

Draft proposed & placed before the second member

4.

Draft discussed/approved by Second Member.

5.

Approved Draft comes to the Sr.PS/PS

6. Kept for pronouncement on

7.

File sent to the Bench Clerk

8.

Date on which file goes to the AR

9.

Date on which file goes to the Head Clerk.

10.

Date of dispatch of Order.

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