KOYNA GLASS WORKS P.LTD,MUMBAI vs. ITO WD 1(2)(2), MUMBAI

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ITA 4827/MUM/2011Status: DisposedITAT Mumbai21 October 2015AY 2000-013 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 the Assessing Officer failed to obtain prior approval from the Joint Commissioner as required by section 274 of the Income Tax Act before levying the penalty. Therefore, the penalty was bad in law.

What were the facts?

The assessee failed to get its accounts audited despite a turnover exceeding Rs. 6 Crores for the Assessment Year 2000-01. This led to the levy of penalty under section 271B of the Income Tax Act.

What were the issues?

Whether the penalty levied under section 271B is valid when the Assessing Officer failed to obtain prior approval from the Joint Commissioner as mandated by section 274.

Which sections of the Income-tax Act were involved?

Section 271B,Section 44,Section 274

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES “A”, MUMBAI

Before: Shri G S Pannu, AM & Shri Sanjay Garg, JM

For Appellant: Shri Vimal Punmiya
For Respondent: Shri E Shridhar
Hearing: 28.07.2015Pronounced: 21.10.2015

Per Sanjay Garg, Judicial Member:

1.

The present appeal filed by the assessee is directed against the order of the CIT(A) -2, Mumbai, dated 03.03.2011 pertaining to A.Y. 2000-01.

2.

The assessee in this appeal has agitated the levy of penalty under section 271B of the Income tax Act for non compliance of the provisions of section 44 of I.T.Act by the Assessing Officer holding that the assessee had failed to get his accounts audited in respects of previous year despite its turnover of more than Rs.6 Cores.

ITA 4827/Mum/11 Koyna Glass Pvt. Ltd.

3.

The learned AR of the assessee, at the outset, has stated that in this case, the Assessing Officer has failed to take necessary prior approval from Joint Commissioner of Income Tax as per the provisions of section 274 of the I.T.Act. The learned DR could not disprove or deny this fact on the file.

The penalty levied by the lower authorities is thus bad in law as the same being hit by the provisions of section 274 of the Act as the amount of penalty exceeds twenty thousand rupees and the Assessing Officer was required to get the prior approval of the Joint Commissioner before proceeding to levy the penalty under section 271B of the Act. The case is squarely could by the order of the co-ordinate Benches of this Tribunal dated 20.05.2015 in the case of M/s. Precision Shears & Knives Pvt. Ltd. for A.Y. 2000-01, wherein it has been held as under:

“8.1 A perusal of the above section clearly shows that the AO had to take permission from the Joint Commissioner before levying the penalty as the amount exceeded Rs.10,000/-. There is nothing in the order of the penalty which could show that the ITO has taken prior permission from the Joint Commissioner. When a statute required a thing to be done in a certain manner, it shall be done in that manner alone. When a particular authority has been designated to record his satisfaction on any particular issue, then it is that authority along who should apply his independent mind to record his satisfaction and satisfaction so recorded should be independent and not borrowed or dictated satisfaction. Considering the facts of the case, in the light of the provisions of Sec. 274 of the Act, we have no hesitation to hold that the AO has levied penalty in contravention to the provisions of Sec. 274 of the Act and, therefore, the order of the First

ITA 4827/Mum/11 Koyna Glass Pvt. Ltd.

Appellate authority is liable to be set aside. We direct the AO to delete the penalty so levied.”

In view of the above decision of the Tribunal, the penalty levied by the lower authorities is not sustainable in the eyes of law and the same is accordingly ordered to be deleted.

4.

In the result, the appeal of the assessee is hereby allowed.

Order pronounced in the open court on 21st October, 2015.

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