Case Law Details
Iyergopal Ashokkumar Vs ITO (ITAT Chennai)
In this case, the penalty was levied under section 271 B of the Act on the ground that tax audit report under section 44AB of the Act was not filed by the assessee before filing of return of income and no explanation was given. The Assessing Officer has further stated that quantum addition settled under VSVS is different from levy of penalty under section 271 B of the Act. We find that the Assessing Officer has correctly decided the issue. Under these facts and circumstances of the case, the ld. CIT(A) ought to have been adjudicated the penalty levied under section 271 B of the Act on merits of the case instead of dismissing the appeal as infructuous. In our opinion, the order of the ld. CIT(A) is not correct. Therefore, we set aside the order of the ld. CIT(A) and direct the ld. CIT(A) to adjudicate the appeal filed against levy of penalty as to whether penalty is leviable under section 271 B of the Act or not in accordance with law by affording an opportunity of being heard to the assessee.v
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals), (National Faceless Appeal Centre) [NFAC], Delhi dated 14.12.2022 relevant to the assessment year 2015-16.
2. The appeal filed by the assessee is delayed by two days in filing the appeal before the Tribunal. The ld. Counsel for the assessee has filed a petition for condonation of delay against which, the ld. DR has not objected. Since the assessee was prevented by reasonable cause, we hereby condone the delay of two days in filing the appeal and admit the appeal for adjudication.
3. Brief facts of the case are that the assessee has not filed his return of income for the assessment year 2015-16 under section 139 of the Income Tax Act, 1961 [“Act” in short]. A recovery survey was conducted in the business premises of the assessee on 19.02.2019. During the course of survey proceedings, printouts of final accounts available in computers of the assessee was taken which revealed that the assessee had taxable income of ₹.12,79,283/-. Based on the information, the case was reopened under section 147 of the Act and notice under section 148 of the Act was issued on 19.03.2019. In response, the assessee filed return of income on 21.03.2019 with a total income of ₹.25,65,692/-. After following due procedures, the Assessing Officer has completed the assessment order under section 143(3) r.w.s. 147 of the Act dated 12.2019 by assessing the total income of the assessee at ₹.51 ,34,800/-.
4. In the assessment order, the Assessing Officer has noted that the assessee’s turnover was more than ₹. 1 crore, and the assessee was required to be maintained books of accounts as mandated by section 44A of the Act. Hence, the Assessing Officer has initiated penalty proceedings under section 271B of the Act for failure to furnish the tax audit report under section 44AB of the Act within due date. Accordingly, the Assessing Officer issued notice under section 271B of the Act and directed the assessee to furnish proper explanation and justification along with all necessary evidences for not getting the accounts audited/for failure to furnish tax audit report as required under section 44AB of the Act. The Assessing Officer issued a show-cause notice on 09.03.2021 affording an opportunity to the assessee to show cause as to why order imposing penalty under section 271B of the Act should not be passed. However, there was no response from the assessee. A reminder notice dated 29.10.2021 was issued offering one more opportunity to the assessee. The assessee has not responded to the reminder notice. Therefore, the case was referred to the DVU and the ex-parte letter sent compliance date was given as 15.02.2022. The assessee replied to this letter on 16.02.2022 stating in his reply that the assessee has opted for VSV Scheme and also submitted Form-5. By following CBDT Circular No. 21/2020 dated 04.12.2020 for clarification on provisions of DTVSVS 2020 as well as considering the reply to question 80 that the quantum is different from penalty even after quantum addition is settled under VSVS, the Assessing Officer was of the opinion that the penalty under section 271 B of the Act cannot be waived. Accordingly, the Assessing Officer has levied penalty under section 271 B of the Act as the assessee has failed to give any specific reasonable cause to explain the delay in getting its accounts audited.
5. On appeal, the ld. CIT(A) dismissed the appeal of the assessee as infructuous on the ground that this appeal is filed against VSVS
6. The ld. Counsel for the assessee has submitted that under VSVS quantum addition has been settled and the appeal filed against levy of penalty being independent, the ld. CIT(A) was wrong in rejection of appeal and dismissing the appeal as infructuous.
7. On other hand, hand, the ld. DR supported the order passed by the Assessing Officer.
8. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. In this case, the penalty was levied under section 271 B of the Act on the ground that tax audit report under section 44AB of the Act was not filed by the assessee before filing of return of income and no explanation was given. The Assessing Officer has further stated that quantum addition settled under VSVS is different from levy of penalty under section 271 B of the Act. We find that the Assessing Officer has correctly decided the issue. Under these facts and circumstances of the case, the ld. CIT(A) ought to have been adjudicated the penalty levied under section 271 B of the Act on merits of the case instead of dismissing the appeal as infructuous. In our opinion, the order of the ld. CIT(A) is not correct. Therefore, we set aside the order of the ld. CIT(A) and direct the ld. CIT(A) to adjudicate the appeal filed against levy of penalty as to whether penalty is leviable under section 271 B of the Act or not in accordance with law by affording an opportunity of being heard to the assessee.
9. In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on 12th April, 2023 at Chennai.
