M/s GI Systems Org.(India) Pvt. Ltd, Hyderabad v. ITO, Hyderabad

ITA 156/HYD/2010 | 2003-2004
Pronouncement Date: 25-03-2011 | Result: Dismissed

Appeal Details

RSA Number 15622514 RSA 2010
Assessee PAN AABCG2157J
Bench Hyderabad
Appeal Number ITA 156/HYD/2010
Duration Of Justice 1 year(s) 1 month(s) 27 day(s)
Appellant M/s GI Systems Org.(India) Pvt. Ltd, Hyderabad
Respondent ITO, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 25-03-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 25-03-2011
Date Of Final Hearing 17-03-2011
Next Hearing Date 17-03-2011
Assessment Year 2003-2004
Appeal Filed On 29-01-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B' HYDERABAD BEFORE SHRI G.C. GUPTA VP & SHRI CHANDRA POOJARI AM I.T.A. NO. 156/HYD/2010 (ASSESSMENT YEAR 2003-04) I.T.A. NO. 157/HYD/2010 (ASSESSMENT YEAR 2005-06) M/S. GI SYSTEMS ORG. (INDIA) PVT. LTD. HYDERABAD PAN: AABCG 2157 J VS. INCOME - TAX OFFICER WARD-2(2) HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SHRI SAI PRASAD RESPONDENT BY: SHRI K.E. SUNIL BABU O R D E R PER CHANDRA POOJARI AM: BOTH THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS OF THE CIT(A)-III HYDE RABAD DATED 15 TH DECEMBER 2009 FOR ASSESSMENT YEARS 2003-04 AND 2005-06. SINCE COMMON ISSUES ARISE IN BOTH THE SE APPEALS THESE WERE HEARD TOGETHER AND ARE BEING DI SPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE . 2. THE ONLY GRIEVANCE OF THE ASSESSEE IN THESE TWO APPEALS IS WITH REGARD CONFIRMING THE PENALTY BY TH E CIT(A) THAT WAS LEVIED BY THE ASSESSING OFFICER U/S. 271BA OF THE INCOME-TAX ACT 1961. 3. FACTS IN BOTH THE ASSESSMENT YEARS ARE SIMILAR AND FOR BREVITY WE ILLUSTRATE THE FACTS RELATING TO A. Y. 2003-04. I.T.A. NOS. 156&157/HYD/2010 M/S. GI SYSTEMS ORG. (INDIA) PVT. LTD. ============================ 2 THE ASSESSEE HAS FILED ITS RETURN OF INCOME FOR THE A.Y. 2003-04 ON 1 ST DECEMBER 2003 SHOWING INCOME OF RS. 53 750. THE ASSESSEE HAS ENTERED INTO AN AGREEMEN T WITH GLOBAL INFO SYSTEMS INC. USA FOR PROVIDING MEDICAL TRANSCRIPTION SERVICES AND DURING THE PREVIOUS YEAR IT HAS MADE INTERNATIONAL TRANSACTIONS FOR AN AMOUNT OF RS . 1 09 41 882 WITH THE SAID CONCERN. IN VIEW OF SUCH INTERNATIONAL TRANSACTIONS MADE BY THE ASSESSEE DUR ING THE PREVIOUS YEAR AS PER THE PROVISIONS OF SECTION 92E OF THE ACT IT WAS REQUIRED TO OBTAIN AND FURNISH A REPORT FROM AN ACCOUNTANT IN THE PRESCRIBED FORM NO. 3CEB ON OR BE FORE THE SPECIFIED DATE. HOWEVER THE ASSESSEE HAS NOT FURNISHED THE SAID REPORT IN THE PRESCRIBED FORM AS REQUIRED U/S. 92E OF THE ACT FOR THIS ASSESSMENT YE AR THE ASSESSING OFFICER HAS INITIATED PENALTY PROCEEDINGS UNDER SECTION 271BA OF THE ACT. ACCORDINGLY THE ASSESSI NG OFFICER ISSUED A SHOW-CAUSE NOTICE U/S. 274 R.W.S. 271BA OF THE ACT TO THE ASSESSEE ON 24.6.2008 REQUIRING I T TO EXPLAIN AS TO WHY FOR THE FAILURE ON ITS PART TO CO MPLY WITH THE PROVISIONS OF SEC. 92E OF THE ACT PENALTY SHOU LD NOT BE LEVIED. LATER THE ASSESSING OFFICER HAS ISSUED AN OTHER SHOW-CAUSE NOTICE IN THIS REGARD ON 19.12.2008. IN RESPONSE TO THIS AS NOTED BY THE ASSESSING OFFICER THOUGH THE AR OF THE ASSESSEE HAS APPEARED BEFORE HIM AND DISCUSSED THE MATTER HE HAS NOT FURNISHED ANY WRIT TEN I.T.A. NOS. 156&157/HYD/2010 M/S. GI SYSTEMS ORG. (INDIA) PVT. LTD. ============================ 3 EXPLANATION. UNDER THESE CIRCUMSTANCES THE ASSESSI NG OFFICER CONCLUDED THAT THERE WAS NO REASONABLE CAUS E FOR THE FAILURE ON THE PART OF THE ASSESSEE TO FILE THE REQUIRED STATUTORY REPORT IN FORM NO. 3CEB AS REQUIRED U/S. 92E OF THE ACT. THE ASSESSING OFFICER THUS HELD THAT THE ASSESSEE IS LIABLE FOR PENALTY U/S. 271BA OF THE ACT AND LEV IED PENALTY OF RS. 1 00 000 U/S. 271BA ON THE ASSESSEE VIDE ORDER DATED 30.12.2008. 4. ON APPEAL THE CIT(A) CONFIRMED THE PENALTY FOR BOT H THE YEARS. AGGRIEVED BY THE ORDER OF THE CIT(A) T HE ASSESSEE IS IN APPEAL BEFORE US. 5. FOR THE A.Y. 2003-04 THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT DUE TO CLERICAL ERROR THE A SSESSEE HAS NOT FURNISHED THE REQUIRED AUDIT REPORT U/S. 3C EB OF THE ACT AND FURTHER SUBMITTED THAT THERE WAS NO LOS S OF REVENUE TO THE DEPARTMENT ON ACCOUNT OF NON FURNISH ING OF THE SAID AUDIT REPORT AS THE ASSESSMENT WAS COMPLET ED WITH NO ADDITION. HE FURTHER CONTENDED THAT INITIA TION OF PENALTY PROCEEDINGS IS BARRED BY LIMITATION. HE SU BMITTED THAT ALL THE RELATED INFORMATION FOR THE PURPOSE OF ASSESSMENT HAS BEEN FURNISHED BY THE ASSESSEE. SIM ILAR SUBMISSION IS MADE FOR THE A.Y. 2005-06. HE RELIED ON THE JUDGEMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. HENSONS INDUSTRIES 251 ITR 693 WHEREIN IT WAS HELD I.T.A. NOS. 156&157/HYD/2010 M/S. GI SYSTEMS ORG. (INDIA) PVT. LTD. ============================ 4 THAT MERE FACT THAT THE ASSESSEE FAILED TO ENCLOSE THE AUDIT REPORT ALONG WITH THE RETURN ITSELF WOULD NOT DISEN TITLE IT TO THE BENEFIT UNDER SECTION 80HH. IF IT FILES THE AU DIT REPORT BEFORE THE ASSESSMENT ORDER IS PASSED IT WILL BE E NTITLED TO DEDUCTION. ADMITTEDLY IN THIS CASE THE ASSESSEE FILED THE AUDIT REPORT BEFORE CONCLUSION OF THE ASSESSMENT PR OCEEDINGS FOR THE A.YS. 1981-82 AND 1984-85. AS REGARDS THE A.Y. 1979-80 ALSO IT WAS FILED IN THE RE-ASSESSMENT PRO CEEDINGS IN RESPONSE TO THE SHOW-CAUSE NOTICE U/S. 148. THE ASSESSEE WAS THEREFORE ENTITLED TO THE SPECIAL DE DUCTION U/S. 80HH. FURTHER HE RELIED ON THE JUDGEMENT OF THE SUPREME COURT IN THE CASE OF HINDUSTAN STEEL LTD. VS. STATE OF ORISSA 83 ITR 26 WHEREIN THE SUPREME COUR T HELD AS UNDER: AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMINAL PROCEEDING AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. 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 WHERE THE BREACH FLOWS FROM A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. I.T.A. NOS. 156&157/HYD/2010 M/S. GI SYSTEMS ORG. (INDIA) PVT. LTD. ============================ 5 6. FURTHER REGARDING ASSESSMENT YEAR 2005-06 HE SUBMITTED THAT THERE IS NO ASSESSMENT U/S. 143(3) A ND ONLY RETURN WAS PROCESSED U/S. 143(1) AND THEREAFTER THE RE WAS RE-ASSESSMENT U/S. 147 ONLY AND THE REPORT WAS FURN ISHED DURING THE RE-ASSESSMENT. 7. THE LEARNED DR BEFORE US RELIED ON THE FOLLOWING JUDGEMENTS FOR THE PROPOSITION THAT THE ASSESSEE SH ALL SHOW THE REASONABLE CAUSES FOR NOT FILING THE AUDIT REPORT U/S. 92E WITHIN THE STIPULATED TIME. ACCORDING TO THE LEARNED DR THE ASSESSEE IS NOT HAVING ANY REASONABL E CAUSE AND THE EXPLANATION GIVEN BY THE ASSESSEE IS TOO GENERAL IN NATURE: A. SHRI JAGDISH PRASAD CHOWDHURY 211 ITR 472 B. CIT VS. TARANATH TANDON 203 ITR 871 (RAJ) C. WOODWARD GOVERNOR INDIA PVT. LTD. VS. CIT 253 ITR 745 (DEL) 8. WE HEARD BOTH THE PARTIES AND ALSO PERUSED THE MATERIAL ON RECORD. SECTION 271BA READS AS FOLLOWS : 271BA. IF ANY PERSON FAILS TO FURNISH A REPORT FROM AN ACCOUNTANT AS REQUIRED BY SECTION 92E THE ASSESSING OFFICER MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY A SUM OF ONE HUNDRED THOUSAND RUPEES. 9. SECTION 92E READS AS FOLLOWS: 92E . EVERY PERSON WHO HAS ENTERED INTO AN INTERNATIONAL TRANSACTION DURING A PREVIOUS YEAR SHALL OBTAIN A REPORT FROM AN ACCOUNTANT AND FURNISH SUCH REPORT ON OR BEFORE THE SPECIFIED DATE IN THE PRESCRIBED FORM DULY SIGNED AND VERIFIED IN THE PRESCRIBED MANNER BY SUCH I.T.A. NOS. 156&157/HYD/2010 M/S. GI SYSTEMS ORG. (INDIA) PVT. LTD. ============================ 6 ACCOUNTANT AND SETTING FORTH SUCH PARTICULARS AS MAY BE PRESCRIBED. 10. ADMITTEDLY IN THIS CASE THE ASSESSEE DID NOT COMPLY WITH THE REQUIREMENTS OF THE ABOVE PROVISIONS OF SE CTION 93E. THE MAIN CONTENTION OF THE ASSESSEES COUNSEL HEREIN IS THAT THE ASSESSEE IS HAVING REASONABLE CAUSES FO R NOT FILING THE AUDIT REPORT AS PRESCRIBED BY SECTION 92 E OF THE ACT. THE REASON WHICH THE ASSESSEE HAS GIVEN HEREI N IS THAT DUE TO CLERICAL ERROR THE REPORT COULD NOT BE FILED. HOWEVER THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE B EFORE US WHAT IS THE NATURE OF THE CLERICAL ERROR. WHEN THE ASSESSEE HAS FILED THE RETURN OF INCOME AFTER DULY AUDITED B Y THE CHARTERED ACCOUNTANT WHAT PREVENTED THE ASSESSEE T O PREPARE THE AUDIT REPORT U/S. 92E IS ALSO NOT CLEAR FROM THE ARGUMENT OF THE ASSESSEE. THE ASSESSEE HAS BEEN AS SISTED BY COMPETENT LEGAL PROFESSIONALS AND CHARTERED ACCOUNTANTS AND WE DO NOT FIND ANY REASON AS TO HOW THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE TO PREPA RE THE AUDIT REPORT FROM CHARTERED ACCOUNTANT AND FURNISH THE SAME TO THE AUTHORITIES AS STIPULATED U/S. 92E. TH E REASON GIVEN BY THE ASSESSEE HEREIN IS TOO GENERAL IN NATU RE AND THE FAILURE TO FURNISH THE AUDIT REPORT AS PER THE PROVISIONS OF SECTION 92E IS TOTALLY ATTRIBUTABLE TO THE GROSS NEGLIGENCE OF THE ASSESSEE AND THERE IS NO GOOD AND SUFFICIENT REASON IN NOT FILING THE AUDIT REPORT WITHIN THE STIPULATE D TIME. I.T.A. NOS. 156&157/HYD/2010 M/S. GI SYSTEMS ORG. (INDIA) PVT. LTD. ============================ 7 THE ASSESSEE HEREIN COULD NOT SHOW ANY REASONABLE C AUSE IN NOT FILING OF THE AUDIT REPORT IN TIME. 11. THE ASSESSEE RELIED ON THE JUDGEMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF HENSON IND USTRIES (SUPRA). IN THAT CASE IT WAS HELD THAT THE MERE FA CT THAT THE ASSESSEE FAILED TO ENCLOSE AUDIT REPORT ALONG WITH THE RETURN ITSELF WOULD NOT DISENTITLED HIM TO CLAIM TH E BENEFIT AND ON THE OTHER HAND IF HE FILES THE AUDIT REPOR T BEFORE THE ASSESSMENT ORDER IS PASSED HE WILL BE ENTITLED TO DEDUCTION. THIS JUDGEMENT IS DELIVERED IN THE CONT EXT OF ALLOWABILITY OF BENEFIT U/S. 80HH. WE CANNOT COMPA RE THE BENEFICIAL PROVISIONS OF 80HH TO THE PENAL PROVISIO NS OF SECTION 271BA. FURTHER IN THE PRESENT CASE THE AS SESSEE HAS NOT PLACED ANY EVIDENCE THAT IT WAS FILED BY TH E ASSESSEE BEFORE COMPLETION OF THE ASSESSMENT U/S. 1 43(3) OR 143(1). THE FILING OF AUDIT REPORT DURING THE A SSESSMENT U/S. 148 DOES NOT CURE THE MISTAKE COMMITTED BY THE ASSESSEE. FROM THIS WE CAN INFER THAT THE ASSESSEE HAS NOT FILED THE REPORT U/S. 92E BEFORE THE ASSESSING OFFI CER ON OR BEFORE THE COMPLETION OF ASSESSMENT U/S. 143(3) OR PROCESSING THE RETURN U/S. 143(1) OF THE ACT. HAD IT FILED THE REPORT U/S. 92E WE ARE COMPLETELY IN AGREEMENT WITH THE PROPOSAL THAT THE PENALTY CANNOT BE LEVIED. AD VERTING TO THE FACTS IN THE PRESENT CASE THE ASSESSEE HAS N OT FILED I.T.A. NOS. 156&157/HYD/2010 M/S. GI SYSTEMS ORG. (INDIA) PVT. LTD. ============================ 8 THE AUDIT REPORT U/S. 92E BEFORE COMPLETION OF REGU LAR ASSESSMENT OR PROCESSING THE RETURN AS THE CASE MAY BE AND THE ASSESSEE HAS NOT SHOWN REASONABLE CAUSES FO R NOT FILING THE AUDIT REPORT WITHIN THE STIPULATED TIME. 12. THOUGH THE ASSESSEE ARGUED BEFORE THE CIT(A) THAT INITIATION OF PENALTY PROCEEDINGS IS BARRED BY LIMI TATION HOWEVER IT COULD NOT SHOW AS TO HOW THE INITIATION OF PENALTY PROCEEDINGS IS BARRED BY LIMITATION. 13. IN VIEW OF THE FOREGOING DISCUSSION AND ON THE FACT S AND CIRCUMSTANCES OF THE CASE WE DO NOT FIND ANY I NFIRMITY IN THE ORDERS OF THE CIT(A). ACCORDINGLY THE ORDE RS OF THE CIT(A) FOR BOTH THE ASSESSMENT YEARS ARE CONFIRMED. 14. IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE STA ND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH MARCH 2011. SD/ - (G.C. GUPTA) VICE PRESIDENT SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD DATED 25 TH MARCH 2011 TPRAO I.T.A. NOS. 156&157/HYD/2010 M/S. GI SYSTEMS ORG. (INDIA) PVT. LTD. ============================ 9 COPY FORWARDED TO: 1. M/S. G.I. SYSTEMS ORG. (INDIA) PVT. LTD. C/O. M/S. CH. PARTHASARATHY & CO. 1-1-298/2/B/3 1 ST FLOOR SOWBHAGYA AVENUE STREET NO. 1 ASHOK NAGAR HYDERABAD-20. 2. THE INCOME-TAX OFFICER WARD 2(2) HYDERABAD. 3. THE CIT(A)-III HYDERABAD 4 THE CIT-II HYDERABAD 5. THE DR B BENCH ITAT HYDERABAD