Income Tax Appellate Tribunal - Ahmedabad
Babulal Gopiram Meena,, Ahmedabad vs Assessee on 30 September, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "SMC" BENCH
(BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER
& SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER)
ITA No: 2766/AHD/2013
(Assessment Year: 2010-11)
Shri Rajkumar Shriram V/S Income Tax Officer, Ward-
Meena C/o M/s. R.K. 2 (3), Bhavnagar
Transport, Rajkot
Highway, Vertej,
Bhavnagar
PAN No. AKRPM3440R
(Appellant) (Respondent)
ITA No: 2767 & 2768/AHD/2013
(Assessment Year: 2008-09 & 2010-11)
Shri Babulal Gopiram V/S Income Tax Officer, Ward-
Meena C/o. M/s. Delhi 7 (2), Bhavnagar
Haryana Roadlines, Vertej,
Nanikhodiyar, Bhavnagar
PAN No. AHFPM9963L
(Appellant) (Respondent)
Appellant by : Shri U.S. Bhati, AR
Respondent by : Shri Somogyan Pal, Sr. D.R.
(आदे श)/ORDER
Date of hearing : 28-09-2015
Date of Pronouncement : 30 -09-2015
2 ITA Nos. 2766 to 2768/Ahd/2013
. A.Ys. 2008-09 & 2010-2011
PER ANIL CHATURVEDI, ACCOUNTANT MEMBER
1. These 3 appeals filed by the Assessee are against the order of CIT(A)-XX, Ahmedabad dated 30.09.2013 for A.Y. 2008-09 & 2010-2011.
2. Before us, at the outset the ld. A.R. submitted that though the appeals of two different Assessee relates to 2 different assessment years but the facts and circumstances of all the cases are similar except for the assessment years and amounts and the submissions are also common for all the appeals and therefore all the appeals can be heard together. Ld D.R did not object to the aforesaid submissions of Ld. A.R. We therefore proceed to dispose of all the appeals together for the sake of convenience and thus proceed with the facts in A.Y. 2010-11 in ITA No. 2766/Ahd/2013.
3. Assessee is an individual stated to be engaged in the business of goods transport agency in the name of his proprietary concern M/s. R.K. Transport Company. Assessee filed his return of income for A.Y. 2010-11 on 04.01.2011 declaring total income of Rs. 4,78,250/-. The case was selected for scrutiny and thereafter the assessment was framed under section 143(3) vide order dated 31.12.2012 and the total income was assessed at Rs. 4,78,250/-. A.O noted that the gross receipts of the assessee was Rs. 1,82,04,414/- and therefore the Assessee was required to get his accounts audited u/s. 44AB of the Act since the Assessee had failed to furnish the audit accounts, he was of the view that Assessee was liable for penalty u/s. 271B of the Act. He accordingly vide order dated 28.12.2012 levied penalty of Rs. 91,022/- being .5% of the gross receipts as penalty u/s. 271B of the 3 ITA Nos. 2766 to 2768/Ahd/2013 . A.Ys. 2008-09 & 2010-2011 Act. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who dismissed the appeal of the Assessee by holding as under:-
4.5 I have carefully considered the facts of the case and submissions made by the appellant. In this case, penalty u/s. 271B of the I.T. Act has been levied for the reason that the books of accounts of the appellant has not been got audited u/s.44AB of the Act although the turnover/gross receipt during the year under consideration was at Rs.
1,82,04,414/- i.e. above Rs.40 lakhs. It is very much apparent that as per Form No.26AS statement which shows the gross receipts and TDS, the gross receipt were at Rs. 1,82,04,414/- while it has shown the net receipts of Rs.l1,34,194/- in the profit & loss account. The appellant has contended that he has worked as a commission agent and hence his turnover can be taken up to the amount of commission receipts only is not correct.
4.6. In fact, the appellant has worked as transport contractor for various parties and provided the transport facilities for which all the payments were received by the appellant from those parties and in turn the freight payment were made to various truck owners or transporters whose vehicles were used. As per accounting system all the receipt of freight and the payments made out of them ought to have been shown in the profit & loss account, like in the normal business sales and purchases are shown. But to avoid the requirements of provisions of Section 44AB those freight receipts and payments were shown in the separate freight account bypassing the profit & loss account and the net result of the freight account was transferred to profit & loss account. So when all the payments were received by the appellant on which TDS has been made by the parties U/S.194C of the Act and all the receipts and payments have been routed through the books of accounts and bank account of the appellant then absolutely those were the turnover of the assessee or could be the gross receipts of the appellant. The credit of the TDS has also been claimed by the appellant.
4.7. It is needless to mention that, in view of the provisions of Section 44AB, even though the gross receipts are more than 40 lakhs in any previous year the assessee is liable to get his accounts audited. Even if the assessee's freight payments are not treated as turnover then also those can be termed as gross receipts on which provisions of Section 44AB of the I.T. Act were applicable. ---Appellant's main contention is that he has 4 ITA Nos. 2766 to 2768/Ahd/2013 . A.Ys. 2008-09 & 2010-2011 worked as commission agent on behalf of the various parties is found not correct for the reason that the customers/parties have made the payment to the appellant by deducting the TDS U/S.194C of the Act treating the same as contract between the two or more. If the nature of the receipts was the commission then the TDS would have been made u/s. 194H of the Act and not U/S.194C of the Act. So the contention of the assessee being commission agent is not true. Moreover, no such details are available to state that the appellant has charged a fixed rate or fixed percentage of the freight amount from the customers as commission. Moreover, the amount charged from party to party might be varied. Hence, it could not be said that the assessee was working as a commission agent. In the Circular No.715 dtd.8.8.1995 of the CBDT (Q.No.6 & 9) it has been held that Lorry Receipt (L.R) was to be treated as a contract between the appellant and the customers and the TDS was to be made as per provisions of Section 194C of the Act. Hence every receipt from the customers was a contract receipt and the same is definitely forming part of the turnover.
4.8. Assessee's contention that it had worked as a Kacha Adatia is also not on the parity for the reason that terms of kacha adatia and pakka adatia are used in the business of trading of goods and never been used in the service sectors like appellant. Hence no analogy therefrom can be derived and applied on the business of the appellant as their nature of work is different. In this regard, appellant has relied upon two decisions of Hon'ble ITAT viz. Anoop Kumar Beri Vs. ACIT 97 TTJ 275 (2005) (Delhi) and Income- tax Officer Vs. Bindra Ban Bansi Lal 90 TTJ 747 (2004) (Amrutsar) stating that the assessee was having a bonafide belief that such receipts were not to be included for the purpose of determining the obligation of audit u/s.44AB and same constituted a reasonable cause for not getting the account audited.
4.9. However, at the same time it has been noticed that the Hon'ble ITAT Vizag Bench in the case of Ashok Transport, Guntur Vs. DIT in ITA No.322 & 344/Viz/2011 dtd. 3.5.2013 has clearly held that the provisions of Section 44AB of the I.T. Act are clearly applicable and penalty u/s.271B is attracted if audit is not made to the accounts of the appellant. Relevant portion is reproduced as under:-
"6. We have heard the Ld. D.R. in this regard. The revenue placed reliance on the decision of Chandigarh Bench of ITAT in the case of Sardari Lal Oberai Vs. ITO 5 ITA Nos. 2766 to 2768/Ahd/2013 . A.Ys. 2008-09 & 2010-2011 (2007) 106 TTJ (Chd) 1033, wherein the Tribunal has taken the view that the transport charges received by a transport contractor shall constitute turnover and hence penalty u/s.27IB is leviable. The Id. D.R. further pointed out that the very fact that the customers of the assessee had deducted tax at source u/s.1940 of the Act clearly show that the assessee has undertaken transport contracts from its customers and hence, the transport charges received by the assesseee from them shall constitute his turnover. The Learned D.R. further submitted that the Learned CIT(A) has misdirected himself in accepting the contention of the assessee that he has paid the transport charges to the concerned lorry owners after retaining his commission/brokerage and hence the brokerage income alone shall constitute the turnover of the assessee. The Learned D.R. submitted that the assessing officer has made enquiries with the customers of the assessee and brought out on record that they had dealings only with the assessee and not with the lorry owners.
7. We find force in the said contentions of the Learned D.R. We notice that the Ld. CIT(A) has deleted the penalty on the ground that the assessee has paid the transport charges to the concerned owners of the vehicle. However, the contentions raised by Learned D.R. show that in view taken by the ld. CIT(A) is against the facts available on record. We also notice that the assessee has failed to show that there was reasonable cause in not getting his accounts audited.
Accordingly, we are unable to sustain the orders passed by Learned CIT(A). Accordingly, we reverse the orders of the Ld.CIT(A) in both the years and restore the penalty levied by the assessing officer u/s.271B of the Act in both the years. Since we have allowed the appeals filed by the revenue, the cross objections filed by the assessee are liable to be dismissed. "
In another case namely Sardarilal Oberoi Vs. ITO 106 TTJ 1033, Hon'ble ITAT, Chandigarh 'B' Bench has also confirmed the same views that the transport receipt were to be included in the total turnover for applying the provisions of Section 44 AB of the Act.
4,10. The A.R. of the appellant has relied upon the judgment of Hon'ble Punjab & Haryana High Court in the case of CIT Vs. Ashoka Dairy which was in support of the reasonable cause but facts of that case are totally different from the facts of the present 6 ITA Nos. 2766 to 2768/Ahd/2013 . A.Ys. 2008-09 & 2010-2011 case. In the cited case there was delay in filing of the audit report while in our case no audit report as such has been filed at all. Moreover, the delay in that case was on account of leaving service by the accountant, partners not well educated and one of the partners ill etc. while in our case neither of the reasons are on record along with the evidences. Even though those were not existing in the present case for not getting the accounts audited till the date. So reliance of the A.R. is misplaced. Further, it was pleaded that non audit of the books of accounts was a technical or venial breach of provisions is also not acceptable for the reason that it was not a technical breach rather it was a well thought planning. In this way the revenue is losing at both the ends because of the practice being followed. On the one side appellant is claiming the credit of the TDS of which no corresponding income has been offered by him in his return of income and ultimately getting refund of such TDS. On the other side, many of the truck owners might not have filed their returns of income as not warranted due to claim of credit by appellant and they remained out of reach of the Department. In this way the income which was liable to be taxed in their hands remained untaxed in their hands. As against the IDS they got the reimbursement of money equivalent to the TDS from the appellant. In other words those truck owners have not lost any money so far as TDS amount is concerned and at the same time they have not offered the income by filing their returns of income.
4.11. Further, the appellant's claim that they were not responsible for other truck or goods being carried in truck is not relevant to decide the obligation of getting the audit done of his books of accounts. Although, it may be relevant to decide the transport charges from the parties but it not significant for the penalty proceedings under consideration.
4.12. The A.R. of the appellant has taken the comparison of the share brokers cases claiming the appellant's case on parity is also not acceptable for the reason that share brokers are officially governed by rules of stock exchange and other related laws thereby their brokerage is also fixed and in no case they can deviate from such rates but in the appellant's case there is nothing on record to show that they have charged/paid the uniform commission rate from each of the parties and they were not governed by any of the Rules and Laws by which those can be taken at par with the case of share brokers. In 7 ITA Nos. 2766 to 2768/Ahd/2013 . A.Ys. 2008-09 & 2010-2011 the cases of share brokers, no credit of TDS is claimed by them as is being done in the case of appellant.
4.13. The A.R. of the appellant has relied on the cardinal principle of law that penalty is not leviable in a case of debatable issue but the same is not convincing as there cannot be any debate over the gross receipts which has came to the coffers of the appellant and deposited in his bank account and subsequently the payments to various transporters were made therefrom. There is no reasonable cause in view of the provisions of Section 273B which prevented the assessee not to get his books of accounts audited. There can be reasonable cause for a particular year but it cannot be so constantly for all the years. 4.14. Further, appellant's submission that as per the judgment of Hon'ble Supreme Court in the case of CIT Vs. Vegetable Product Ltd. where in the Hon'ble court finds that a language of taxing provision is ambiguous or capable of more meanings than one, then the court to adopt that interpretation which favours the assessee where the provision relate to the imposition of penalty, is also not in context for the reason that neither under the provisions of Section 44AB nor U/S.271B there was any ambiguity in the languages of the Sections or in interpretation of the sections. Hence the judgment of the Hon'ble Supreme Court is not application over the facts.
4.15. The Id.A.R's submission that the A.O. has accepted the brokerage income shown by the appellant in his return of income in assessment order. Now he cannot be allowed to deviate from the stand and impose penalty by treating whole freight receipt as turnover of the appellant. The submission is also not fc relevant for the reason that either the assessee has to show his net income in his profit & loss account or he has to show gross freight receipt in credit side of the profit & loss account and freight payments in debit side but either way the quantum of total income would not get changed. Hence assessment made on total income remains same whether there happens to be default u/s.44AB or not. 4.16. As claimed the freight payments to the truck owners cannot be taken as such the reimbursement of the expenditures. In fact in the gross receipts of the appellant and freight payments out of them are two different aspects and the amount involved in support of transactions are also different, so it cannot be said that those were the reimbursements. The decisions of the Hon'ble ITAT, Chandigarh bench in the case of Sardarilal Oberoi Vs. ITO and Hon'ble ITAT Vizag Bench in the case of Ashok Transport 8 ITA Nos. 2766 to 2768/Ahd/2013 . A.Ys. 2008-09 & 2010-2011 Vs. DIT have crucially dealt the issue involved in the appellant's case and decides the preposition and accordingly the appellant was under obligation to get his accounts audited u/s.44AB of the Act and consequently liable for the penalty u/s.271B. Various case laws relied upon by the appellant are not identical to the facts of the case. Hence not squarely applicable.
4.17. In view of the above, contentions of the appellant is not accepted. Thus, the penalty levied by the A.O. for not getting accounts audited u/s.44AB of the I.T. Act is correct and the same is confirmed.
4. Aggrieved by the aforesaid order of ld. CIT(A), Assessee is now in appeal before us and has raised the following effective ground:-
1. The ld. CIT(A) erred in law and on facts in confirming the penalty amounting to Rs.
91,022/- u/s. 271B of the Income Tax Act, 1961.
5. Before us, ld. A.R. reiterated the submissions made before A.O and ld. CIT(A) and further submitted that Assessee is engaged in the business of transport on commission basis and does not own any trucks and acts merely as a booking agent. He further submitted that Assessee was under a bona fide belief that provisions of Section 44AB were not attracted in his case and the basis of conclusion was Circular No. 452 dated 17th March, 1986 issued by CBDT. He further submitted that the lack of knowledge of what "constitutes turnover" vis-à-vis accounting procedure and provisions of Income Tax Act, 1961 constitute "reasonable cause" within the meaning of Section 273B. He further placed reliance on the various decisions cited before ld. CIT(A) and also the decisions of Co-ordinate Bench of Tribunal in the case of Saiyad Saukatli Saiyadmiya vs. ITO ITA No. 3168/A/2011 order dated 9th May, 2014 which is reported in (2014) 40 CCH 214 Ahd Trib. He 9 ITA Nos. 2766 to 2768/Ahd/2013 . A.Ys. 2008-09 & 2010-2011 also placed on record the copy of the aforesaid order. The ld. D.R. on the other hand supported the order of A.O and ld. CIT(A).
6. We have heard the rival submissions and perused the material on record. The issue in the present case is about levy of penalty u/s. 271B on account of non audit of the accounts by the Assessee. Before us, it is assessee's submission that he was under bona fide belief that he was not required to get the accounts audited in view of CBDT Instruction No. 452 dated 17th March, 1986 and the various decisions relied upon by him. No material has been placed on record by Revenue to demonstrate that the aforesaid belief of the Assessee was not a bona fide belief. A reading of Section 271B makes it clear that the imposition of penalty is not mandatory as the word used is "may" meaning thereby that a discretion is conferred on the A.O to impose or not to impose the penalty. Further the provision with respect to imposition of penalty is not mandatory in view of the provision contained in Section 273B of the Act which interalia provides that notwithstanding the provisions of Section 271B, 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 failure. In the present case, the Assessee was having a bona fide belief that he was not required to get his books audited under 44AB in view of the CBDT Circular (supra). In such a situation, we are of the view that there was a reasonable cause on the part of the Assessee for not getting the books audited. Further it is a settled law that when there is a technical or venial breach of the provisions of law, the ends of justice requires that discretion should not be exercised in favour of punishing a minor default and for which we get support from the decision of Hon'ble Apex Court in the case of Hindustan 10 ITA Nos. 2766 to 2768/Ahd/2013 . A.Ys. 2008-09 & 2010-2011 Steel Ltd. vs. State of Orissa (1972) 83 ITR 26 (SC) whereby Hon'ble Apex Court has held as under:-
"Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty when there is a technical or venial breach of the provisions of the Act or were the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute."
7. Considering the totality of the facts and relying on the aforesaid decision of Hon'ble Apex Court, we are of the view that in the present case the levy of penalty u/s. 271B of the Act was not justified and therefore direct its deletion. Thus the ground of Assessee is allowed.
8. In the result, the appeal of Assessee is allowed.
Now we take up Assessee's appeal in ITA No. 2767 & 2768/Ahd/2013 for A.Y. 2008-09 & 2010-2011.
9. In the present cases, since both the parties have admitted that the facts and circumstances of the case are identical to that in ITA No. 2766/Ahd/2013 which we have decided hereinabove, we therefore for the reasons stated hereinabove while deciding the appeal for A.Y. 2010-11 in ITA No. 2766/AHD/2013 (supra) and for similar reasons allow the grounds of Assessee in the present two appeals.
11 ITA Nos. 2766 to 2768/Ahd/2013. A.Ys. 2008-09 & 2010-2011
10. In the result, all the appeals of Assessee are allowed.
Order pronounced in Open Court on 30 - 09 - 2015.
Sd/- Sd/-
(RAJPAL YADAV) (ANIL CHATURVEDI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad: TRUE COPY
Rajesh
Copy of the Order forwarded to:-
1. The Appellant.
2. The Respondent.
3. The CIT (Appeals) -
4. The CIT concerned.
5. The DR., ITAT, Ahmedabad.
6. Guard File.
By ORDER
Deputy/Asstt.Registrar
ITAT,Ahmedabad