M/s. Rajwani Synthetics Pvt. Ltd.,, Surat v. The Income tax Officer, Ward-4(1),, Surat

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE S/SHRI MAHAVIR SINGH JM. AND A. N. PAHUJA A.M. RAJWANI SYNTHETICS (P) LTD. 320 SHALIMAR MARKET RINGH ROAD SURAT. V/S . INCOME-TAX OFFICER WARD 4(1) AAYKAR BHAWAN MAJURA GATE SURAT. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI HARDIK VORA AR RESPONDENT BY:- SHRI B. D. BAROT SR.DR O R D E R PER MAHAVIR SINGH JUDICIAL MEMBER. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-III SURAT DATED 20.8.2006 FOR ASST. YEAR 2 000-01. THE IMPUGNED PENALTY U/S 271B OF THE INCOME-TAX ACT 1961 (HEREI NAFTER REFERRED TO AS THE ACT) WAS LEVIED BY THE ITO WD-4(1) SURAT VIDE O RDER DATED 2.3.2006. 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IN THIS AP PEAL IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE LEVY OF PENALTY BY T HE ASSESSING OFFICER U/S 271B OF THE ACT AND FOR THIS THE ASSESSEE HAS RAISE D THE GROUND AS UNDER :- (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A)-III HAS ERRED IN IMPOSING PENALTY OF RS.1 0 0 000/- U/S 271B OF THE INCOME-TAX ACT DUE TO FAILURE 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE DID NOT FILE HIS RETURN OF INCOME AND THE AUDIT REPORT WITHIN THE MEANING OF S ECTION 44AB OF THE ACT ON THE DUE DATE AS PRESCRIBED UNDER THE ACT. THE REASO N FOR SUCH NON-FILING WAS STATED TO BE A PREVENTIVE CHECK (SEARCH) CARRIED OU T BY THE CENTRAL EXCISE AUTHORITIES AND DUE TO THAT BOOKS OF ACCOUNTS AND D OCUMENTS WERE SEIZED BY THEM. THE AO OBTAINED COPIES OF EXTRACTS OF SUCH SE IZED BOOKS AND FOUND THAT AS PER EXPORTS REGISTER THE TOTAL EXPORT TURN OVER OF THE ASSESSEE FOR THE ITA NO.2279/AHD/2006 ASST. YEAR :2000-01 2 SIX MONTHS PERIOD WAS MORE THAN RS.4 CRORES AND THE REFORE IT SHOULD HAVE GOT ITS BOOKS AUDITED AS PER THE PROVISIONS OF SECT ION 44AB OF THE IT ACT. FOR THIS DEFAULT THE AO IMPOSED A PENALTY OF RS. 1 LAK H U/S 271B OF THE I.T.ACT. 4. BEFORE CIT(A) THE ASSESSEE REITERATED THE SAME S UBMISSIONS AS MADE BEFORE THE ASSESSING OFFICER THAT NO RETURN OF INC OME COULD BE FILED IN THIS CASE FOR THE REASON THAT THE CENTRAL EXCISE DEPARTM ENT HAD SEIZED ALL THE STATUTORY RECORDS AND DESPITE REPEATED REQUESTS FOR XEROX COPIES OF THE SEIZED RECORDS THE SAME WERE NOT GIVEN TO THE ASSE SSEE. AS NO RECORDS OR EXTRACTS THEREOF WERE AVAILABLE WITH THE ASSESSEE THERE WAS NO OCCASION TO GET THE ACCOUNTS AUDITED. IN SUPPORT OF ITS CLAIM T HE ASSESSEE FURNISHED COPIES OF LETTERS ADDRESSED TO THE CENTRAL EXCISE D EPARTMENT ALONG WITH COPY OF PANCHNAMA ETC. THE CIT(A) CONSIDERED THE SUBMISS IONS AND WENT THROUGH THE VARIOUS DOCUMENTS FURNISHED BEFORE HIM. THE CIT (A) OBSERVED THAT THOUGH THE RECORDS WERE SEIZED BY THE EXCISE AUTHOR ITIES THERE IS A LETTER ADDRESSED TO THE COMPANY BY THE ASSTT. DIRECTOR CE NTRAL EXCISE MUMBAI DATED 31.12.1998 WHEREIN THE ASSTT. DIRECTOR HAD AC CEDED TO THE REQUEST OF THE ASSESSEE TO TAKE PHOTOCOPIES OF RAW-MATERIAL RE GISTER DAILY STOCK REGISTER AND EXPORT REGISTER WHICH PROVES THE FACT THAT THE ASSESSEE COULD HAVE TAKEN COPIES OF THE RECORDS AND COULD HAVE GOT THE ACCOUN TS AUDITED. SINCE THE ASSESSEE COULD HAVE GOT HIS ACCOUNTS AUDITED BY TAK ING PHOTOCOPY OF THE SEIZED MATERIAL THERE IS NO REASONABLE CAUSE FOR N OT FILING THE AUDIT REPORT AS PER PROVISIONS OF SECTION 44AB OF THE ACT. THUS THE CIT(A) CONFIRMED THE PENALTY OF RS.1 LAC IMPOSED BY THE AO. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE THE TRI BUNAL. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PER USED THE MATERIAL ON RECORD. WE FIND THAT A CENTRAL EXCISE SEARCH WAS CA RRIED ON THE FACTORY PREMISES OF THE ASSESSEE UNIT NO.2 PLOT NO.92-93 GOVIND INDUSTRIAL ESTATE VED ROAD SURAT ON 15.10.1999. DURING THE COURSE OF SEARCH THE EXCISE DEPARTMENT SEIZED BOOKS OF ACCOUNTS AND DOCUMENTS. WE FIND THAT THE ASSESSEE REQUESTED THE ADDITIONAL DIRECTOR D.G.A.E . MUMBAI DATED 14.1.2000 6.3.2000 & 9.3.2000 FOR THE COPIES OF TH E DOCUMENTS/BOOKS. THE RELEVANT LETTER DT.6.3.2000 READS AS UNDER :- 3 DATE 06.03.2000 TO THE ADDITIONAL DIRECTOR D.G.A.E. MUMBAI. FOR KIND ATTENTION MR. ARUN KUMARJI. SUB: AUTHORIZATION FOR COLLECTION OF XEROX COPIES O F OUR SEIZED RECORDS. DEAR SIR WE REFER TO OUR LETTER DATED 14/01/2000 AND OUR PER SONAL TELEPHONIC TALK TODAY IN THE ABOVE SUBJECT. WE AUTHORISED MR. SHABBIR MIT HANI AS OUR REPRESENTATIVE FOR COLLECTING ALL XEROX COPIES OF SEIZED RECORDS O F UNIT 1 & 2. WE ARE REQUIRED ALL THESE RECORD FOR INCOME TAX AND SALES TAX PURPO SE. WE THEREFORE REQUESTED YOU KINDLY GIVE US THE COPIE S OF THE RECORDS TO OUR REPRESENTATIVE. THANKING YOU YOURS FAITHFULLY FOR RAJWANI SYNTHETICS (P) LTD. SD/- (DIRECTOR) RCD.7 MAR 2000 STAMPED DIRECTOR GENERAL OF ANTI-EVASION (C.EX) MU MBAI) AND LETTER DATED 9.3.2000 GIVING DESCRIPTION OF TH E BOOKS OF ACCOUNTS REQUIRED READS AS UNDER :- DATED 09.03.2000 TO THE ADDITIONAL DIRECTOR D.G.A.E. MUMBAI. FOR KIND ATTENTION MR. ARUN KUMARJI. SUB: XEROX COPIES OF STATUTORY RECORDS. DEAR SIR WE REFER TO OUR LETTER DATED 14/01/2000 AND 06.03.2 000 ON THE ABOVE SUBJECT WE REQUIRED XEROX COPIES OF FOLLOWING DOCUMENTS FRO M OUR SEIZED RECORDS. THESE DOCUMENTS ARE URGENTLY REQUIRED FOR INCOME TA X SALES TAX RETURN FILING PURPOSE. 1. INBOND REGISTER 2. EXPORT REGISTER 3. REJECT REGISTER 4. PRODUCTION REGISTER 5. WASTAGE REGISTER WE THEREFORE REQUEST YOU KINDLY GIVE US THE ALL ABO VE MENTIONED REGISTERS AS SOON AS POSSIBLE. THANKING YOU 4 YOURS FAITHFULLY FOR RAJWANI SYNTHETICS (P) LTD. SD/- (DIRECTOR) THE LD. COUNSEL FOR THE ASSESSEE BEFORE US CONTENDE D THAT EVEN THE ASSESSING OFFICER COULD GET THESE RECORDS ONLY ON 2 7.7.2005 AND THE ASSESSEE TILL DATE IS UNABLE TO GET THE SEIZED MAT ERIAL FROM THE EXCIDE DEPARTMENT. IT IS A FACT THAT THE ASSESSEE COULD NO T GET THE SEIZED BOOKS OF ACCOUNTS FROM THE EXCISE DEPARTMENT TILL THE DUE DA TE OF FILING OF RETURN AND FILING OF AUDIT REPORT I.E. 31.12.2000. THIS FACT I S COMING OUT OF THE PENALTY ORDER WHICH READS AS: THE ASSESSEE COULD HAVE GATHERED THE EXTRACTS OF DOCUMENTS AND FILES FROM EXCISE DEPARTMENT FOR FILI NG RETURN OF INCOME AND GET ITS ACCOUNTS AUDITED AS PER THE PROVISIONS OF S ECTION 44AB OF THE I.T. ACT. 6. WE FIND THAT THE ASSESSING OFFICER IS NOT SURE WHETHER THE ASSESSEE HAS OBTAINED THE SEIZED BOOKS OF ACCOUNTS FROM THE CENTRAL EXCISE AUTHORITIES BEFORE THE DUE DATE OF FILING OF AUDIT REPORT. ACCO RDINGLY THERE IS A REASONABLE CAUSE FOR NOT FILING THE AUDIT REPORT AS DUE TO SEA RCH THE BOOKS OF ACCOUNT WERE SEIZED AND THE COPIES WERE NOT MADE AVAILABLE DESPITE REQUESTS MADE BY THE ASSESSEE. THERE IS NO EVIDENCE THAT THE COPI ES OF SEIZED BOOKS OF ACCOUNT WERE MADE AVAILABLE TO THE ASSESSEE AND IN THE ABSENCE OF THE SAME THE PENALTY CANNOT BE SUSTAINED. ACCORDINGLY THE PENALTY IS DELETED AND THE ORDERS OF THE LOWER AUTHORITIES ARE REVERSE D. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. SD/- SD/- (A. N. PAHUJA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD DATED : 19.05.2010 MAHATA/- ORDER PRONOUNCED IN OPEN COURT ON 19.5.2010 5 COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD