M/S MUKHERJEE ENTERPRISE,KOLKATA vs. I.T.O WD - 33(3),KOLKATA, KOLKATA

This appeal by the assessee is arising out of order of Commissioner of Income Tax (Appeals)-XIX, Kolkata in appeal No.28/CIT(A)-XIX/Wd- 33(3)/Kol/12-13 dated 14.01.2013. Assessment was framed by ITO Ward- 33(3), Kolkata u/s 143(3)/145(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 29.12.2006 for assessment year 2004-05. Penalty imposed by Assessing Officer u/s 271A of the Act vide order dated 08.04.2010.

Issue raised by assessee in this appeal is that Ld. CIT(A) erred in confirming the penalty imposed by Assessing Officer u/s 271A of the Act for failure to produce the books of account. The relevant facts of the present case are that assessee is a partnership firm and is acting as government contractor M/s Mukherjee Enterprise v. ITO, Wd.33-(3) Kol. Page 2 and assessment framed u/s 143(3) of the Act. During the course of assessment proceedings assessee failed to produce its books of account at the time of verification as desired by AO. Due to non-production of its books of account AO initiated penalty proceeding u/s 271A of the Act and issued notice u/s. 274 of the Act as to why levy of penalty should not be imposed for non- production of books of account. During assessment proceedings, AO issued notices upon assessee but the assessee did not comply. Finally, AO imposed penalty u/s 271A of the Act.

Aggrieved, assessee preferred appeal before Ld. CIT(A) who confirmed the action of AO by observing as under:- “13. The submission of the AR is given due consideration and I am unable to except the AR line of submission that the books of account lost in AY 95-96 may be the reason for non-production of books of account for Assessment Year 2004-05 which is under consideration. On the contrary before AO the AR has taken plea that accountant was not well. However, this also remained unsubstantiated. 14. On perusal of these details I do not find that the appellant was able to establish the existence of any reasonable cause for non-production of books of account. In view of above sated facts the penalty imposed u/s. 271A of Rs.25,000/- is upheld on merit. The AR all the other grounds are linked with imposition of such penalty which is initiated as per law and therefore I do not find any infirmity in the penalty order imposed u/s. 271A.”

Being aggrieved by this order of Ld. CIT(A) assessee preferred second appeal before us on the following ground of its appeal:- “1. That on the facts and in the circumstances of the case Learned Commissioner of Income Tax (Appeals)-XIX, Kolkata grossly erred in law in rejecting assessee/appellant’s explanation in the matter of existence of reasonable cause for inability to produce Books of Accounts.

Shri Gauri Prasad Sen, Ld. Authorized Representative appearing on behalf of assessee and Shri Vivek Verma, Ld. Departmental Representative appearing on behalf of Revenue.

We have heard rival contentions of both the parties and perused the materials available on record. Ld. AR submitted paper book which is running from pages 1 to 7 and drew our attention at page 4 of the paper book, wherein the complaint was filed to police station for loss of such documents, same is reproduced below:- “ MUKHERJEE ENGINEER CONSTRUCTOR CONSULTANT & DESIGNER ENTERPRISE, 63/4, HARISH CHATTERJEE STREET, CALCUTTA – 700025 PHONE : 455-2932, 455-2906 Ref. Date 9.3.2004 To The Officer-in-charge Received at 3,30 hrs. Kalighat Police Station M.L.Ghosh, on 09.03.04 Kolkata – 700 026 KALIGHAT POLICE STATION Sir, CALCUTTA-28 This is to inform you that in the month of July, 2002 there was some dispute in the constitution of our business. After that we discovered that few documents are not available in our office. This is for your information and record please. Thanking you, Yours faithfully, For Mukherjee Enterprise Sd/- Ranjan Mukherjee PARTNER”

On the contrary, Ld. DR vehemently relied on the orders of authorities below.

From the aforesaid discussion, we find that penalty imposed by AO on account of non-production of the books of account of assessee and it was also confirmed by the ld. CIT(A). The ld. AR submitted that the books of accounts were lost therefore the same were not produced before the AO. We find that M/s Mukherjee Enterprise v. ITO, Wd.33-(3) Kol. Page 4 the reason mentioned by the ld. AR for not producing the books of accounts holds merit. Therefore we deem it proper to delete the penalty imposed by the AO in terms of the provisions of Section 273B of the Act which reads as under: “273B. Notwithstanding anything contained in the provisions of [clause (b) of section 271B [section 271BA], [section 271BB] section 271C, [section 271CA,] section 271D, section 271E, [section 271F, [section 271FA,] [section 271FAB,] [section 271FB,] [section 271G]] [section 271GA,] [section 271H,] [section 271-I,] clause (c) or clause (d) of sub- section (1) or sub-section (2) of section 272 (a), sub-section (1) of section 372AA] or [section 272B or] [sub-section (1) [or sub-section (1A)] of section 272BB or] [sub-section (1) of section 272BBB or] clause (b) of sub-section (1) or clause (b) or clause (c) of sub-section (2) of section 273, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure.]”

On perusal of above section 273B of the Act we find that penalty shall not imposed if there was reasonable cause for failure on the part of assessee. In the case in hand the plea of the assessee that the books of accounts have lost which is duly supported with the police complaint appears a reasonable reason. Therefore in our considered view, we deem it fit to grant immunity from the penalty imposed by Assessing Officer and subsequently confirmed by Ld. CIT(A). Hence, considering the facts and totality of case, we reverse the orders of authorities below and delete the penalty imposed by AO accordingly.

In the result, assessee’s appeal is allowed. Order pronounced in the open court 20/01/2016 Sd/- Sd/- (N.V.Vasudevan) (Waseem Ahmed) (Judicial Member) (Accountant Member) Kolkata, *Dkp �दनांकः- 20/01/2016 कोलकाता । M/s Mukherjee Enterprise v. ITO, Wd.33-(3) Kol. Page 5