Income Tax Appellate Tribunal - Mumbai
Sri Ganpathi Swamiji Construciton, ... vs Asst Cit Cen Cir 2, Thane on 10 October, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
"G" BENCH, MUMBAI
BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND
SHRI RAJESH KUMAR, ACCOUNTANT MEMBER
ITA no.2108/Mum./2013
(Assessment Year : 2006-07)
Shri Ganpathi Swamiji Construction
5, Jolly Bhawan no.2
Ground Floor, 7, New Marine Lines ................ Appellant
Churchgate, Mumbai 400 020
PAN - AASFS3602E
v/s
Asstt. Commissioner of Income Tax
................ Respondent
Central Circle-2, Thane
ITA no.2109/Mum./2013
(Assessment Year : 2006-07)
Shri Ganpathi Swamiji Construction
5, Jolly Bhawan no.2
Ground Floor, 7, New Marine Lines ................ Appellant
Churchgate, Mumbai 400 020
PAN - AASFS3602E
v/s
Asstt. Commissioner of Income Tax
................ Respondent
Central Circle-2, Thane
Assessee by : None
Revenue by : Shri V. Vidhyadhar
Date of Hearing - 12.09.2017 Date of Order - 09.10.2017
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Shri Ganpathi Swamiji Construction
ORDER
PER SAKTIJIT DEY, J.M.
These two appeals by the same assessee are against two separate orders of the learned Commissioner (Appeals)-1, Thane, confirming penalty imposed under section 271B and 271A of the Income-tax Act, 1961 (for short "the Act") for the assessment years 2006-07 and 2007-08 respectively.
ITA no.2108/Mum./2013
2. In this appeal, the assessee has challenged the imposition of penalty under section 271B of the Act.
3. Brief facts are, the assessee is a partnership firm. For the assessment year under dispute, the assessee did not file its return of income under section 139 of the Act. Therefore, the Assessing Officer re-opened the assessment under section 147 of the Act and due to non-compliance of the assessee completed the assessment under section 144 r/w section 147 of the Act, determining the total income at ` 62,94,628. During the assessment proceedings, the Assessing Officer noticed that the assessee is engaged in the business of civil contractor and has shown a turnover of ` 1,22,73,640. Therefore, in terms of section 44AB of the Act, the assessee was required to get his accounts audited which the assessee has failed to do. Accordingly, he initiated 3 Shri Ganpathi Swamiji Construction proceedings for imposition of penalty under section 271B of the Act. As observed by the Assessing Officer, in response to the show cause notice issued under section 271B r/w section 274 of the Act, the assessee did not file any reply. Accordingly, the Assessing Officer proceeded to pass an order imposing penalty of ` 61,368 under section 271B of the Act. Though, the assessee challenged the imposition of penalty before the learned Commissioner (Appeals), however, the learned Commissioner (Appeals) confirmed the imposition of penalty.
4. When the appeal was called for hearing, no one was present for the assessee. Therefore, we proceed to dispose off the appeal ex- parte qua the assessee after hearing the learned Departmental Representative.
5. Heard the learned Departmental Representative and perused the material on record. Though, it may be a fact that in response to the show cause notice issued by the Assessing Officer the assessee did not explain the reasons for failure to get the account audited in terms of section 44AB of the Act, however, before the learned Commissioner (Appeals), it was explained by the assessee that due to serious illness suffered by a partner, Shri A.C. Chenna Reddy, and his hospitalization, he was not able to get the accounts audited. It was further submitted that due to non-payment of audit fees, the auditor was also not co- 4
Shri Ganpathi Swamiji Construction operating in auditing the account. The aforesaid submissions made by the assessee was also supported through Affidavit of the Managing Partner as well as the documentary evidence in support of illness. Though, the learned Commissioner (Appeals) has referred to the affidavit of the managing partner and has also taken note of his illness, however, he has rejected such claim / evidence on the reasoning that they were not produced before the Assessing Officer. In our considered opinion, when the assessee has filed an affidavit of the managing partner and has produced documentary evidence to show that the managing partner was suffering from illness which prevented him from getting books audited such explanation has to be accepted unless they are proved to be false. The learned Commissioner (Appeals) has not provided any reasonable basis for rejecting the explanation of the assessee. Therefore, we are inclined to set aside the impugned order of the learned Commissioner (Appeals) and delete the penalty imposed under section 271B of the Act.
6. In the result, assessee's appeal is allowed.
ITA no.2109/Mum./2013
7. In this appeal, the assessee has challenged imposition of penalty under section 21A of the Act.
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Shri Ganpathi Swamiji Construction
8. Brief facts are, the assessee a partnership firm did not file any return of income voluntarily under section 139 of the Act. Therefore, the Assessing Officer re-opened the assessment under section 147 of the Act and in the absence of necessary compliance by the assessee to statutory notice issued by him, the Assessing Officer completed the assessment under section 144 r/w section 147 of the Act determining the total income at ` 17.50 lakh. During the assessment proceedings, the Assessing Officer being of the opinion that the assessee being engaged in the business as a civil contractor was required to maintain books of account as per section 44AA which it has failed to do initiated proceedings for penalty under section 271A of the Act. As observed by the Assessing Officer, in response to the show cause notice issued under section 274 r/w section 271A of the Act, the assessee did not file any show cause, therefore, the Assessing Officer proceeded to pass an order imposing penalty of ` 25,000 under section 271A of the Act. Though, the assessee challenged the imposition of penalty by filing an appeal, however, the learned Commissioner (Appeals) also confirmed the imposition of penalty.
9. When the appeal was called for hearing, no one was present for the assessee. Therefore, we proceed to dispose off the appeal ex- parte qua the assessee after hearing the learned Departmental Representative.
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Shri Ganpathi Swamiji Construction
10. Heard the learned Departmental Representative and perused the material on record. As could be seen, before the first appellate authority the assessee had submitted that during the relevant period, the assessee had no business activity, hence, had not maintained any books of account. It was further submitted that the additions made by the Assessing Officer in the assessment order were also deleted and assessee's income was treated as Nil. The assessee has also submitted that due to ill health of the Managing Partner, the business was completely shut down. The learned Commissioner (Appeals) as it appears, has rejected the aforesaid contention of the assessee merely for the reason that assessee did not brought this contention before the Assessing Officer. In our view, the explanation furnished by the assessee deserves to be considered in view of the fact that the additions made by the Assessing Officer were deleted in appeal and its income was accepted as nil. If the assessee had no business activity, there was no need to maintain the books of account. The learned Commissioner (Appeals) has not recorded any finding that the explanation submitted by the assessee was not genuine or were found to be false. In these circumstances, imposition of penalty under section 271A is not proper. Accordingly, we delete the penalty imposed of ` 25,000.
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Shri Ganpathi Swamiji Construction
11. In the result, both the appeals are allowed.
Order pronounced in the open Court on 09.10.2017 Sd/- Sd/-
RAJESH KUMAR SAKTIJIT DEY
ACCOUNTANT MEMBER JUDICIAL MEMBER
MUMBAI, DATED: 09.10.2017
Copy of the order forwarded to:
(1) The Assessee;
(2) The Revenue;
(3) The CIT(A);
(4) The CIT, Mumbai City concerned;
(5) The DR, ITAT, Mumbai;
(6) Guard file.
True Copy
By Order
Pradeep J. Chowdhury
Sr. Private Secretary
(Dy./Asstt. Registrar)
ITAT, Mumbai
.