Case Law Details
Sameer Mavji Patel Vs DCIT (ITAT Mumbai)
In the case of Sameer Mavji Patel vs. DCIT, the Income Tax Appellate Tribunal (ITAT) Mumbai dealt with the issue of a penalty imposed under Section 271B of the Income Tax Act for late submission of a tax audit report. Patel, engaged in garment manufacturing, was subjected to a survey under Section 133A. Due to delays in receiving a stock statement prepared during the survey, Patel’s audit report was submitted late, leading to a penalty of ₹1 lakh by the Assessing Officer (AO). Patel argued that the delay in receiving the stock statement hindered the timely finalization of accounts. Although the Commissioner of Income Tax (Appeals) acknowledged the delay, he upheld the penalty, stating that the delay was not fully substantiated. However, the ITAT found that Patel had indeed faced delays in obtaining the necessary stock statement from the Department, which constituted a reasonable cause for the late submission. Consequently, the ITAT canceled the penalty, ruling in favor of Patel.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal filed by the assessee is directed against the order of learned CIT(Appeals)-22, Mumbai dated 25-11-2011 whereby he confirmed the penalty of Rs.1,00,000/- imposed by the AO u/s 271B.
2. The assessee in the present case is an individual who is engaged in the business of garment manufacturing and wholesale trading. A survey u/s 133A was carried out at the business premises of the assessee including office, showroom as well as godowns on 12-03-2007. Thereafter the return of income for the year under consideration was filed by the assessee on 28-03-2008 declaring total income of Rs.60,37,701/-. On verification of the relevant details, the AO noticed that the assessee has filed the tax audit report on 15-04-2008 i.e. beyond the time limit prescribed under the provisions of section 44AB. He, therefore, issued a notice requiring him to show cause as to why penalty u/s 271B should not be imposed for the delay in filing the tax audit report. In reply, it was submitted on behalf of the assessee that a stock statement was prepared during the course of survey running into about 700 pages and since there was a considerable delay in receiving a copy of the said statement, the accounts for the year under consideration could not be finalized and could not be got audited. According to the AO, there was, however, no connection between the assessee getting his accounts audited and receiving the copy of stock statement prepared during the course of survey from the Department. He held that the assessee ought to have got his accounts audited on the stock reflected in his books of accounts as on 31-03-2007 and the delay in getting the accounts audited for the year under consideration was not attributable to the delay in receiving the copy of stock statement prepared during the course of survey. He, therefore, held that there was no sufficient cause for the delay on the part of the assessee in complying with the requirements of section 44AB and it was a fit case for levy of penalty u/s 271B. Accordingly, penalty of Rs.1,00,000/- was imposed by the AO u/s 271B of the Act for the failure of the assessee to comply with the provisions of section 44AB.
3. The penalty imposed by the AO was challenged by the assessee in an appeal filed before the learned CIT(Appeals) and the submissions made before the AO were reiterated on behalf of the assessee before the learned CIT(Appeals). It was contended that in the absence of the copy of stock statement prepared during the course of survey being made available to the assessee, finalization of accounts for the year under consideration as well as getting the same audited was not possible and as such the delay in getting the copy of the said statement from the Department constituted a sufficient cause which prevented the assessee from complying with the requirement of section 44AB.
4. The learned CIT(Appeals) did not find merit in the submissions made on behalf of the assessee and confirmed the penalty imposed by the AO u/s 271B for the following reasons given in paragraph No. 4 of his impugned order :
“ I have gone through the assessment order, perused the submissions made by the appellant and also discussed the case with the A.R. of the appellant. However, on perusal of the penalty order and the documents filed by the appellant it is noticed that return of income was to be filed by 31.10.2007 u/s. 139(1) of Income Tax Act. Accordingly, the accounts were also to be got audited by 31.10.2007 u/s 44AB. The appellant claims that he had filed letter dated 8.10.2007 before the A.O. for providing stock statements. On perusal of this letter, the contention of the appellant is found to be correct. However, on being specifically asked the appellant failed to prove that the copies of the stock statement were not provided before 31.10.2007. In this situation, the claim of the appellant that there was a reasonable cause for not getting accounts audited has not fully been substantiated. The appellant also stated that in assessment order in para 6, A.O. has stated that statements were supplied to the appellant on 26.11.2009. However, it is not factually correct since in the assessment order what is mentioned to be supplied is the statement recorded on oath and not stock statements. In view of these facts, I agree with the A.O. that there was no reasonable cause for non imposition of penalty u/s 271B as mentioned in 273B and hence the penalty of Rs.1,00,000/- imposed by A.O. is upheld.”
Aggrieved by the order of the learned CIT(Appeals), the assessee has preferred this appeal before the Tribunal.
5. We have heard the arguments of both the sides and also perused the relevant material on record. It is observed that the reason given by the assessee while explaining the delay in furnishing the audit report within the time limit as prescribed in section 44AB being delay in getting the copy of stock statement prepared during the course of survey, was not accepted by the AO as sufficient cause as according to him, there was no connection between the assessee getting his accounts audited and receiving the copy of stock statement prepared during the course of survey. The learned CIT(Appeals), on the other hand, seems to have agreed with the assessee that the delay in getting the copy of stock statement prepared during the course of survey was a reasonable cause for not getting the accounts audited. He, however, has held that the claim of the assessee of not getting the copy of stock statement prior to the due date of filing the audit report i.e. 31-10-2007 was not fully substantiated. In this regard, the learned counsel for the assessee has prepared and furnished a statement giving sequence of events which shows that a request to provide the copy of stock statement was made by the assessee to the AO on 08-10-2007 while the said copy was provided by the AO only in February, 2008. He has also filed an affidavit of the assessee affirming on oath that request for the copy of stock statement was made to the AO orally from time to time after the survey before putting such request finally in writing vide letter dated 08-10-2007. The assessee has also affirmed on oath that the copy of stock statement prepared during the course of survey was finally provided by the AO to him only in the month of February, 2008 and immediately thereafter the accounts for the year consideration were got audited in the month of March, 2008 and the physical copy of audit report was submitted on 15-04-2008. In our opinion, these assertions made by the assessee on oath in the affidavit are sufficient to show that there was a delay in getting the copy of stock statement prepared during the course of survey from the Department and this delay constituted a reasonable cause for the failure of the assessee in getting the accounts audited in time and furnishing the report of such audit within the period prescribed u/s 44AB. In that view of the matter, we cancel the penalty imposed by the AO and confirmed by the learned CIT(Appeals) u/s 271B and allow this appeal of the assessee.
6. In the result, the appeal of the assessee is allowed. Order pronounced on this 31st day of January, 2013.
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