Case Law Details

Case Name : M/s. Johns Biwheelers Vs ACIT (ITAT Cochin)
Appeal Number : I.T.A. No. 411/Coch/2018
Date of Judgement/Order : 05/02/2019
Related Assessment Year : 2013-14
Courts : All ITAT (6435) ITAT Cochin (112)

M/s. Johns Biwheelers Vs. ACIT (ITAT Cochin)

In this case, the assessee was required to get his books of account audited and filed along with the return of income u/s. 44AB within the due date of 30/09/2013 for the assessment year 2013-14. However, the audit report was furnished only on 28/03/2014. The contention of the Ld. AR was that the delay in filing the return of income was due to damage to computer system due to virus infection which is a reasonable cause as prescribed u/s. 273B of the I.T. Act.

From the material available on record, we are of the view that the assessee got his books of accounts audited on 28/03/2014 which was made available to the Assessing Officer and no prejudice has been caused to the Revenue. Now the short question that arises is whether in this scenario, penalty u/s. 271B of the Act can be levied or not. In our considered opinion, the assessee had only committed technical venial breach which does not create any loss to the exchequer as the audit report was available to the Assessing Officer before the completion of the assessment proceedings. The Madras High Court in the case of CIT vs. A.N. Arunachalam (208 ITR 481) in the context of filing of audit report for claiming deduction u/s. 80J of the Act, observed that once audit report has been made available before the Ld. Assessing Officer before the completion of assessment proceedings, the assessee should be granted deduction u/s. 80J of the Act. We observe that this judgment was rendered in the context of adjudication of quantum of deduction claimed by the assessee. Hence, the said analogy can very well be drawn and used in the penalty proceedings like that of the assessee. To sum up, we hold that the assessee had committed only technical venial breach for which he cannot be penalized. In view of the above, we are inclined to delete the penalty made by the assessee u/s. 271B of the Act.

FULL TEXT OF THE ITAT JUDGEMENT

This appeal filed by the assessee is directed against the order of the CIT(A), Kottayam dated 06/08/2018 and pertains to assessment year 2013-14.

2. The only issue in this appeal is with regard to levy of penalty u/s. 271B of the Act.

3. The facts of the case are that the gross receipts from business of the assessee for the relevant assessment year was Rs.74,59,70,875/- and therefore, was liable to get its accounts audited as per the provisions of section 44AB of the Act on or before the due date of filing of return of income, i.e. 30/09/2013. However, the assessee got its accounts audited only on 28/03/2014. Therefore, there was delay in getting the accounts audited and penalty u/s. 271B was levied for failure to comply with the provisions of section 44AB of the Act subject to provisions of section 273B of the Act, i.e. reasonable cause for the delay. Hence, the Assessing Officer levied penalty of Rs.1,50,000/- u/s. 271B of the Act.

4. On appeal, the CIT(A) confirmed the levy of penalty u/s. 271B of the Act.

5. Against this, the assessee is in appeal before us. The Ld. AR submitted that due to virus infection in the computer system, the data got erased and no back up date was maintained. The Ld. AR relied on following decisions wherein it was held that filing of report is only directory and not mandatory:

a) CIT vs. Malayalam Plantations (103 ITR 835)

b) ACIT vs. Amar Chand Raj (89 ITD 96)

c) Prem Prakash Senapati vs. ITO (ITAT, Cuttack in ITA 459 & 185/CTK/2017).

It was also submitted that there was a reasonable cause for the delay within the meaning of s.273B of the Act.

6. The Ld. DR relied on the order of the CIT(A).

7. We have heard the rival submissions and perused the record. In this case, the assessee was required to get his books of account audited and filed along with the return of income u/s. 44AB within the due date of 30/09/2013 for the assessment year 2013-14. However, the audit report was furnished only on 28/03/2014. The contention of the Ld. AR was that the delay in filing the return of income was due to damage to computer system due to virus infection which is a reasonable cause as prescribed u/s. 273B of the I.T. Act. The Ld. AR relied on the following judgments in support of his contentions:

i) CIT vs. Malayalam Plantations Ltd. (1976) (103 ITR 835) (Ker.)

ii) ACIT vs. Amar Chand Raj Kumar (2004) (89 ITD 96)(ITAT, Chandigarh)

iii) Prem Prakash Senapati vs. ITO (ITA No.459&185/CTK/2017 dated 17/04/2018) )(ITAT, Cuttack).

7.1 From the material available on record, we are of the view that the assessee got his books of accounts audited on 28/03/2014 which was made available to the Assessing Officer and no prejudice has been caused to the Revenue. Now the short question that arises is whether in this scenario, penalty u/s. 271B of the Act can be levied or not. In our considered opinion, the assessee had only committed technical venial breach which does not create any loss to the exchequer as the audit report was available to the Assessing Officer before the completion of the assessment proceedings. The Madras High Court in the case of CIT vs. A.N. Arunachalam (208 ITR 481) in the context of filing of audit report for claiming deduction u/s. 80J of the Act, observed that once audit report has been made available before the Ld. Assessing Officer before the completion of assessment proceedings, the assessee should be granted deduction u/s. 80J of the Act. We observe that this judgment was rendered in the context of adjudication of quantum of deduction claimed by the assessee. Hence, the said analogy can very well be drawn and used in the penalty proceedings like that of the assessee. To sum up, we hold that the assessee had committed only technical venial breach for which he cannot be penalized. In view of the above, we are inclined to delete the penalty made by the assessee u/s. 271B of the Act.

8. In the result, the appeal of the assessee is allowed.

Order pronounced in the open Court on this 5th February, 2019

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