Income Tax Appellate Tribunal - Ahmedabad
Parishram Transport, Navsari vs Assessee on 29 March, 2006
-1-
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD BENCH "D" AHMEDABAD
Before S/Shri Bhavnesh Saini, JM and D.C.Agrawal, AM
ITA No.1223/Ahd/2010
Asst. Year :2005-06
M/s Parishram Transport, 6, Vs. The Income-tax
Indraprastha Apt., Nr. Naranlal Officer, Ward-3,
Hall, Zaveri Sadak, Navsari- Navsari.
396445.
(Appellant) (Respondent)
..
Appellant by :- Shri Tushar P. Hemani, AR
Respondent by:- Shri S. K. Meena, Sr.DR
ORDER
Per D.C. Agrawal, Accountant Member.
This is an appeal filed by the assessee against levy of penalty under section 271B for a sum of Rs.56,862/- confirmed by the ld. CIT(A).
2. The assessee is a partnership firm. It filed return of income on 31.3.2006 declaring total income of Rs.3,08,610/- along with audited accounts. The return was accepted under section 143(1). The assessee is a transport commission agent and has taken transport commission contract from Hindustan Petroleum Corporation Ltd. (H.P.C.L. in short) for transportation of gas cylinders from one place to another. The return of income was filed beyond the prescribed time, therefore, it was inferred that assessee firm failed to comply with the provisions of section 44AB as audited accounts and audit reports were not filed within the stipulated time. The AO noticed that total contract receipts of the assessee are of ITA No.1223/Ahd/2010 Asst. Year2005-06 Rs.1,13,72,397/- on which TDS of Rs.2,54,127/- was made. According to the AO the accounts of the assessee should have been audited by 31.10.2005 but the return of income as well as audit reports under section 44AB was filed on 31.3.2006. The auditors report was dated 29.3.2006. The AO sought to levy penalty under section 271B on the assessee firm. It was explained that assessee firm is managed by semi illiterate persons who have no knowledge of legality of the provisions. The assessee firm does not own any vehicles but hires the vehicles from other and put it on job of transportation of gas cylinders for H.P.C.Ltd. The AO, however, did not agree. According to him the assessee has received the payment from HPCL as contractor as indicated from TDS certificate. Secondly HPCL is shown as debtor in the books of the assessee for Rs.15.22 lacs which was out of total contract receipts. Since the total contract receipts were to the tune of Rs.1,13,72,397/- it cannot be said that assessee's turnover is less than Rs.40 lacs on the pretext that it is earning only commission on such transportation. The provision of section 44AB is an old provision inserted with effect from 1.4.1985 when it is known to every one. The audit report is required to be filed by the prescribed date. The assessee has not submitted any reasonable cause for failure to get accounts audited in time. Accordingly he levied penalty of Rs.56,862/-.
3. The ld. CIT(A) confirmed the levy of penalty on the ground that assessee is a habitual offender and does not get accounts audited year after year. He upheld the reasoning given by the AO while confirming the levy of penalty.
4. Before us, the ld. AR for the assessee submitted that assessee is only commission agent and his turnover of commission does not exceed Rs.40 lacs. Further the accounts for the Asst. Year 2004-05 were not 2 ITA No.1223/Ahd/2010 Asst. Year2005-06 finalized in time and, therefore, accounts for Asst. Year 2005-06 could also not be finalized and audit could be done only after accounts are final for Asst. Year 2004-05. According to the ld. AR assessee carries a bona fide belief that provisions of section 273 B would not be applicable as his commission income does not exceed Rs.40 lacs. He referred to a decision in CIT vs. Tea King (2002) 123 Taxman 162 (Guj) in which accounts not got audited in the previous year was treated as reasonable cause for not levying penalty in the relevant Asst. Year.
5. On the other hand, the ld. DR submitted that assessee has received a sum of Rs.1.13 crores from HPCL and TDS has been made thereon and on this basis accounts have been finally got audited by 29.3.2006 and submitted the report by 31.3.2006, therefore, the plea of the assessee that assessee's commission income is only less than Rs.40 lacs and, therefore, accounts are not required to be audited should not be accepted. Secondly, the assessee is in the line of business for long and it is getting accounts audited from year to year and, therefore, it cannot be said that assessee was not aware of necessity to get the accounts audited. The ld. DR finally submitted that ignorance of law is no excuse when it comes to comply with the provisions of law. The assessee is not new in the business.
6. We have considered the rival submissions and perused the material on record. In our considered view there is no case for interference in the order of ld. CIT(A). The assessee's contract receipts are Rs.1.13 crores which is above limit of Rs.40 lacs. Whether final income is less than Rs.40 lacs or not cannot be a criteria under section 44AB. It is because what assessee is paying is debited in the profit and loss account as an expenditure and it is not a case that assessee is arranging the meeting of HPCL and the transporters who were working for HPCL and for 3 ITA No.1223/Ahd/2010 Asst. Year2005-06 arranging such transporter assessee is earning commission. On the other hand, facts are that contract is awarded to the assessee by HPCL and total contract receipts are Rs.1.13 crores. The assessee has on his own behalf given sub contract to other parties and also deducted tax therefrom out of such payment to those parties. Therefore, it is not a business between HPCL and the sub-contractors and assessee is acting only as a middleman for earning commission but it is a full fledged business of the assessee with the HPCL i.e. receipt from it and getting the work done by employing other parties of his own choice. In fact accountability for completing the work for HPCL lies on the assessee and not on the sub- contractor as sub-contractors are only responsible to the assessee. This argument of the assessee is further defeated by his own conduct in the past and in the current year when it has got accounts audited. Delay in auditing accounts is not equivalent to not having any obligation in getting the accounts audited. No case is made out by the assessee that it has no obligation to get accounts audited on its own and that he is getting its accounts audited, without any legal obligation. We, therefore, reject all the arguments of the ld. AR that since assessee's turnover is less than Rs.40 lacs and hence there is no requirement to get accounts audited.
7. The other argument of the ld. AR that its accounts were not finalized for Asst. Year 2004-05 and, therefore, audit of accounts for Asst. Year 2005-06 got delayed also cannot be accepted because no such data has been given by the assessee. It has not put on record as to when the accounts for Asst. Year 2004-05 were finalized when the return of income was filed and when the audit report under section 44AB was filed for Asst. Year 2004-05. Further whether AO has not taken any action under section 271B in spite of delay in submitting the audit report under section 271B. In absence of such data we are unable to apply the decision 4 ITA No.1223/Ahd/2010 Asst. Year2005-06 referred by the ld. AR. We, therefore, the reject the arguments of the assessee that delay in submitting the audit report for Asst. Year 2005-06 on account of delay in finalizing accounts for Asst. Year 2004-05. Thus in our considered view, no case is made out by the ld. AR which could be seen whether it is a reasonable or not. In any case whatever is submitted as argument before us cannot be treated as reasonable explanation. We accordingly confirm the levy of penalty. The appeal filed by the assessee is dismissed.
8. In the result, the appeal filed by the assessee is dismissed.
Order was pronounced in open Court on 22/10/10.
Sd/- Sd/-
(Bhavnesh Saini) (D.C. Agrawal)
Judicial Member Accountant Member
Ahmedabad,
Dated : 22/10/10.
Mahata/-
Copy of the Order forwarded to:-
1. The Assessee.
2. The Revenue.
3. The CIT(Appeals)-
4. The CIT concerns.
5. The DR, ITAT, Ahmedabad
6. Guard File.
BY ORDER,
Deputy/Asstt.Registrar
ITAT, Ahmedabad
5
ITA No.1223/Ahd/2010
Asst. Year2005-06
1.Date of dictation 18/10/2010.
2.Date on which the typed draft is placed before the Dictating 21/10/2010 Member................Other Member................
3.Date on which the approved draft comes to the Sr.P.S./P.S.............
4.Date on which the fair order is placed before the Dictating Member for pronouncement..............
5.Date on which the fair order comes back to the Sr.P.S./P.S...............
6.Date on which the file goes to the Bench Clerk...........
7.Date on which the file goes to the Head Clerk.............
8.The date on which the file goes to the Asstt. Registrar for signature on the order........................
9.Date of Despatch of the Order.................
6