Shanthilal D Jain Vs DCIT (ITAT Chennai)
ITAT Chennai held in the case of Shanthilal D Jain Vs DCIT that Penalty under Section 271B for failure to get account audited not leviable when books of accounts are not maintained.
Facts- ld.CIT-DR relied on the order of CIT(A) and stated that the assessee has not maintained any books of account and the alleged books of account as referred by assessee before AO as well as before CIT(A) is only a hard disk which was seized, but this hard disk, according to ld.CIT-DR, contains incomplete tally package which was recovered during the course of search throwing light on incriminating material in the shape of cash credits, sundry loans and bogus purchases made from various parties. The ld.CIT-DR stated that the ld. counsel for the assessee himself admitted the fact while arguing the appeals relating to penalty u/s.271A & 271B of the Act in regard to various appeals of group cases regarding these two penalties agitated by assessee, the ld.counsel admitted that in these two penalties, the assessee has not maintained the books of account and hence, penalty u/s.271A can be uphold in relation to abated assessments but ld. counsel requested that in regard to unabated assessments, the issue is as regards to assumption of jurisdiction in view of the decision of Hon’ble Bombay High Court in the case of Continental Warehousing Corporation, supra. The ld.CIT-DR contented that the assessee before CIT(A) could not explain the nature of additions made in the relevant assessment years in regard to addition of cash credits, sundry loans and creditors added u/s.68 of the Act and bogus purchases. The ld.counsel for the assessee in reply further reiterated the same arguments.
Conclusion- The Hon’ble Allahabad High Court in the case of CIT vs. S.K. Gupta & Co., (2010) 322 ITR 86, Hon’ble Madhya Pradesh High Court in the case of Bharat Construction Co. vs. ITO, (1999) 153 CTR 414 and Hon’ble Gauhati High Court in the case of Surajmal Parsuram Todi vs. CIT, (1996) 222 ITR 691 has categorically held that once books of account are not maintained and consequently penalty u/s.271A of the Act is levied and confirmed, no penalty u/s.271B of the Act for failure to get the accounts audited u/s.44AB of the Act be levied.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
These appeals filed by three different assessees are arising out of different orders of Learned Commissioner of Income Tax (Appeals)-18, Chennai in ITA Nos.1025 to 1031/15-16 dated 21.05.2019, 856 to 862/15-16 dated 20.05.2019, 849 to 855/15-16 dated 20.05.2019, 997, 999 to 1001/15-16, 841 to 844/15-16, 845 to 848/15-16 all dated 24.06.2019, 1002 to 1007/15-16 dated 30.07.2019, 895,897,913,915,917,919/15-16 & 920,918,916,914, 912/15-16 dated 22.07.2019 . The assessments were framed by the DCIT, Central Circle – 2(1), Chennai for the relevant assessment years 2007-08 to 2013-14 u/s. 153A / 153C of the Income Tax Act, 1961 (hereinafter ‘the Act’) vide orders of even date 31.03.2015 / 30.03.2015 and for the same assessment orders, penalty under dispute was levied u/s.271A / 271B of the Act vide orders of even date 31.08.2015 / 10.09.2015 / 30.09.2015.
2. At the outset, it is noticed that all the appeals of assessees Shri Shanthilal D Jain and Smt. Sharmila S Jain are delayed by 7 days to 138 days. The assessees have filed condonation petitions supported by affidavits for condoning the delay and admitting the appeals. The ld.counsel for the assessee drew our attention to the affidavit filed in one of the appeal in ITA No.429/CHNY/2020 for assessment year 2008-09, wherein one of the assessee Smt. Sharmila S Jain filed affidavit and delay was to the extent of 138 days. In the affidavit, the facts stated is that the order of CIT(A) – 18, Chennai dated 30.07.2009 was received on 06.08.2019. The ld.counsel stated that the appeal should have been filed before the Tribunal within 60 days i.e., on or before 05.10.2019, but appeal was filed only on 20.02.2020 with a delay of 138 days. These are admitted facts and there is no dispute. The ld.counsel for the assessee stated the reasons submitted in para 3 & 4 of the affidavit. It was stated that the assessee’s husband was handling the tax matters and there was frequent change in authorized representative when assessee’s case travelled from assessment level to the first appellate level. It was stated that when the first appellate authority passed the order again there was change in counsel and now, the present counsel advised us to collect the CIT(A) orders from the earlier counsel and they could gather those papers with great difficulty as the earlier counsel wanted to settle the fee bills. Accordingly, the appeal papers were gathered and due to frequent change of counsels, these appeals were filed belatedly by 138 days as argued by ld.counsel.
2.1 When these facts were confronted to ld. Senior DR, he only opposed the condonation of delay but could not controvert the above fact situation. In this group of appeals, he stated that in all the appeals, there is a delay ranging from 7 days to 138 days and it is not possible that all the appeals were filed with a delay without reasonable cause. In term of that, the ld. Senior DR opposed the condonation of delay.
2.2 We have heard rival contentions and gone through the condonation petition along with affidavit. We have gone through the reasons cited by ld. counsel and noted that the reasons seems sufficient in view of the length of the delay i.e., 7 days to 138 days in all these appeals. As the assessee is able to explain the delay, hence we condone the delay and admit these appeals for adjudication. This decision will apply in all the appeals for condonation of delay.
3. First, let us take the following 8 appeals regarding quantum addition and where the assessees have raised the jurisdictional issue that these assessments are unabated and assumption of jurisdiction by the AO u/s.153A / 153C of the Act is without jurisdiction, as no search material was found or seized during the course of search.
