Income Tax Appellate Tribunal - Hyderabad
Apoorva Medical & Surgical Agencies , ... vs Income Tax Officer, Ward-2, ... on 15 July, 2021
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IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH "SMC", HYDERABAD
BEFORE SHRI A. MOHAN ALANKAMONY,
ACCOUNTANT MEMBER
ITA No.1430/Hyd/2019
AY: 2015-16
Apoorva Medical & Surgical VS. Income Tax Officer,
Agencies, Ward-2,
Mahaboobnagar, Mahaboob Nagar.
Telangana-509001.
PAN: AANFA 4258 M
(Appellant) (Respondent)
Assessee by: Sri Mohd. Afzal
Revenue by: Sri A.P. Babu, DR
Date of hearing: 01/07/2021
Date of pronouncement: 15/07/2021
ORDER
PER A. MOHAN ALANKAMONY, AM.:
This appeal is filed by the assessee against the order of the ld. CIT (A)-4, Hyderabad in appeal No. 4/10393/18-19/W-2, Mahabubnagar/CIT(A)-4/Hyd/19-20, dated 28/06/2019 passed U/s. 271B r.w.s 250(6) of the Act for the AY 2015-16.
2. The assessee has raised six grounds in its appeal however, the crux of the issue is that:
"The Ld. CIT(A) has erred in sustaining the levy of penalty amounting to Rs. 1,50,000/- by the Ld. A.O. invoking the provisions of section 271B of the Act."2
3. Brief facts of the case are that the assessee is a firm engaged in the business of wholesale pharmaceutical distribution. The assessee filed its return of income for the AY 2015-16 on 11/02/2017 declaring total income of Rs. 1,90,480/-. The return was processed U/s. 143(1) and the assessee's case was taken up for scrutiny under CASS by issue of notice U/s. 143(2) of the Act. During the scrutiny proceedings, it was observed by the Ld. A.O. that the assessee has not filed its Audit Report within the specified time limit ie., on or before 31/10/2015. Since there was delay in filing the Audit Report and in the absence of justifiable cogent reasons for the delay, the Ld. A.O levied penalty invoking the provisions of section 271B of the Act @ 0.5% of the gross turnover of Rs. 3,10,75,357/- which works out to Rs.1,55,376/- [rounded off to Rs. 1,50,000/-]. Aggrieved, the assessee filed an appeal before the Ld. CIT(A).
4. Before the Ld. CIT (A), the assessee made detailed submissions citing the reasons for the delay in obtaining the audit report ie., beyond 31/10/2015 and belated filing of the Audit Report U/s. 44AB of the Act. The relevant portion of the assessee's submissions is extracted by the CIT (A) in para 7 of his order. However, the Ld. CIT (A) did not consider the submissions of the assessee and dismissed the appeals of the assessee by agreeing with the view taken by the Ld. AO. Aggrieved, the assessee is in appeal before the Tribunal.
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5. At the outset, Ld. AR submitted before us that there was an internal dispute among the partners of the firm which caused the delay in finalization of accounts beyond the period specified U/s. 139(1) of the Act. Further during the relevant assessment year, the assessee had faced difficulties in its business because of disputes among the partners and moreover the accountant of the assessee-firm left his job assuming that the business of the firm may collapsed. It was further submitted that in view of these facts the assessee was unable to co-ordinate with the Auditor's office in time and therefore, the Audit could not be completed within the stipulated time and thus there was delay in filing the Audit Report. Further, Ld. AR submitted that subsequently the assessee filed its return of income and Audit Report U/s. 44AB of the Act for the relevant AY on 23/01/2017 well before the end of the assessment proceedings. However, without considering the explanation of the assessee the Ld. AO as well as the Ld. CIT(A) imposed / sustained the penalty. The ld. AR further pleaded before us that non-filing of the Audit Report within the stipulated time was beyond the control of the assessee hence a lenient view may be taken and grant relief to the assessee. The Ld. DR vehemently relied on the orders of the Ld. Revenue Authorities and pleaded for confirming their orders.
6. I have heard the rival submissions and carefully perused the materials on record. On perusing the facts of the case, I find that the assessee had a reasonable cause for the delay in filing the Audit Report. 4 Moreover, he had filed the Audit Report well before the completion of the assessment proceedings as the date of the assessment order is 15/12/2017. Therefore, I am of the considered opinion that penal action U/s. 271B of the Act in the case of the assessee would not be appropriate. Hence, taking strength from section 273B of the Act, I hereby delete the penalty levied on the assessee for Rs. 1,50,000/- invoking the provisions of section 271B of the Act. It is ordered accordingly.
7. In the result, appeal of the assessee is allowed.
Pronounced in the open Court on the 15 th July, 2021.
Sd/-
(A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER Hyderabad, Dated: 15th July, 2021.
OKK Copy to:-
1. Apoorva Medical & Surgical Agencies C/o. Mohd. Afzal, Advocate, 402, Sherson's residency, 11-5-465, Criminal Court Road, Red Hills, Hyderabad - 04.
2. Income Tax Officer, Ward-2, Bhaskara Towers, Srinivasanagara Colony, Main Road, Yenugonda, Mahaboob Nagar.
3. The CIT (A)-4, Hyderabad.
4. The Pr. CIT-4, Hyderabad.
5. The DR, ITAT, Hyderabad.
6. Guard File.