DIAMONDSTAR EXPORTS LTD, MUMBAI v. DCIT CIR 8(1), MUMBAI

ITA 7494/MUM/2010 | 2005-2006
Pronouncement Date: 27-07-2012 | Result: Allowed

Appeal Details

RSA Number 749419914 RSA 2010
Assessee PAN AAACV1830A
Bench Mumbai
Appeal Number ITA 7494/MUM/2010
Duration Of Justice 1 year(s) 8 month(s) 24 day(s)
Appellant DIAMONDSTAR EXPORTS LTD, MUMBAI
Respondent DCIT CIR 8(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 27-07-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 27-07-2012
Assessment Year 2005-2006
Appeal Filed On 02-11-2010
Judgment Text
ITA NO.7494 OF 2010 DIAMONDSTAR EXPORTS LTD MUMBAI D BENCH PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH MUMBAI BEFORE SHRI SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA JUDICIAL MEMBER ITA NO.7494/MUM/2010 (ASSESSMENT YEAR: 2005-06) DIAMONDSTAR EXPORTS LTD 16 MHADA COMMERCIAL COMPLEX OSHIWARA NEW LINK ROAD JOGESHWARI (W) MUMBAI 400 012 PAN NO.AAACV 1830 A (APPELLANT) VS. DCIT CIRCLE 8(1) AAYAKAR BHAVAN M.K. MARG MUMBAI 400020 (RESPONDENT) ASSESSEE BY: SHRI K.K.VED & SHRI H.P SUTAR DEPARTMENT BY: SHRI PRADEEP KUMAR SINGH DR DATE OF HEARING: 16/07/2012 DATE OF PRONOUNCEMENT: 27/07/2012 O R D E R PER B. RAMAKOTAIAH A.M. THE PRESENT APPEAL IS DIRECTED AGAINST THE ORDER OF THE CIT (A)- 16 MUMBAI DATED 06/09/2010 CONFIRMING THE IMPOSITI ON OF PENALTY OF ` 1.00 LAKH UNDER SECTION 271B OF THE ACT FOR NOT FI LING THE TAX AUDIT REPORT UNDER SECTION 44AB WITHIN THE SPECIFIE D DUE DATE. 2. DURING THE ASSESSMENT PROCEEDINGS AO NOTICED THAT ASSESSEE HAD FILED RETURN ON 29.11.2005 ALONG WITH TAX AUDIT REPORT UNDER SECTION 44AB DATED 28.10.2005. AO INITIATED THE PRO CEEDINGS UNDER SECTION 271B. ASSESSEE EXPLAINED THAT THERE WAS DEL AY IN FILING THE RETURN AND EVEN THOUGH THE AUDIT REPORT WAS OBTAINE D AS EARLY AS 28.10.2005 DUE TO THE PRE-OCCUPATION WITH THE SPEC IAL LEAVE PETITION BEFORE THE HON'BLE SUPREME COURT THERE WA S DELAY OF 29 DAYS IN FILING THE TAX AUDIT REPORT. AO DID NOT ACC EPT THE EXPLANATION AND AS THERE WAS A DELAY IN FILING THE TAX AUDIT RE PORT WHICH WAS ITA NO.7494 OF 2010 DIAMONDSTAR EXPORTS LTD MUMBAI D BENCH PAGE 2 OF 5 DUE ON 31.10.2005 HE LEVIED MAXIMUM AMOUNT OF PENA LTY UNDER THE PROVISION AT ` 1.00 LAKH. THE SAME SUBMISSIONS WERE MADE BEFORE THE CIT (A). THE CIT (A) DID NOT ACCEPT THAT THERE WAS SUFFICIENT CAUSE WHICH PREVENTED ASSESSEE TO FILE T AX AUDIT REPORT. HE NOTICED THAT ASSESSEE EXPLANATION THAT THERE ARE INADEQUATE STAFF CANNOT BE ACCEPTED AS ASSESSEE IS HAVING AN ARRANGE MENT WITH THE SISTER CONCERN DIAMONDSTAR INDIA LTD FOR ADMINISTRA TIVE AND MANAGERIAL WORK AND THEREFORE THE RETURN COULD HAV E BEEN FILED BY THE OTHER COMPANY AS IT WAS THEIR DUTY TO ADMINIST ER THE ASSESSEE COMPANY. HE ALSO NOTICED THAT THE RETURN IN THE CAS E OF DIAMOND STAR INDIA LTD WAS FILED IN TIME. THEREFORE THE RE ASON THAT ASSESSEE WAS BUSY IN DEFENDING THE SLP WAS NOT CORRECT. HE W AS ALSO OF THE OPINION THAT ASSESSEE HAS WILLFULLY DISREGARDED TO SUBMIT THE AUDIT REPORT BEFORE THE SPECIFIED DATE. ACCORDINGLY HE CO NFIRMED THE PENALTY. 3. THE LEARNED COUNSEL SUBMITTED REFERRING TO THE WRI TTEN SUBMISSIONS MADE BEFORE THE CIT (A) THAT ASSESSEE WAS DEFENDING THE SEARCH AND SEIZURE ACTION UNDERTAKEN BY THE AUT HORITIES IN 2001. IN DECEMBER 2004 THE APPEAL OF ASSESSEE WAS ALLOWED BY THE HON'BLE BOMBAY HIGH COURT WHEREIN IT WAS HELD THAT THE PROCEEDINGS WERE CONSIDERED INVALID AND ILLEGAL. TH E TAX AUTHORITIES AGGRIEVED BY THE AFORESAID ORDER WITH RESPECT TO PA YMENT OF INTEREST AT ` 84.68 LAKHS FILED IN SLP BEFORE THE HON'BLE SUPREM E COURT IN THE YEAR 2005. THE FIRST HEARING TOOK PLACE ON 19.9 .2005 AND FURTHER HEARING TOOK PLACE IN THE MONTH OF DECEMBER 2005 AND ULTIMATELY THE APPEAL WAS DISPOSED OFF ON 20.03.200 6 BY DIRECTING THE AUTHORITIES TO PAY ` 75 000/- AS FULL AND FINAL SETTLEMENT. IN VIEW OF THE ABOVE IT WAS SUBMITTED THAT THE ACCOUNTS DE PARTMENT LOST SIGHT OF FILING THE RETURN OF INCOME ITSELF EVEN TH OUGH THE AUDIT WAS COMPLETED. ITA NO.7494 OF 2010 DIAMONDSTAR EXPORTS LTD MUMBAI D BENCH PAGE 3 OF 5 4. ON A QUERY IT WAS INFORMED THAT ASSESSEE HAS SUFFER ED LOSSES AND THE LOSS CLAIMED WAS DEPRECIATION LOSS AND THER E WAS NO ADDITION TO THE INCOME RETURNED IN THE SCRUTINY ASS ESSMENT UNDER SECTION 143(3). THE LEARNED COUNSEL SUBMITTED THAT ASSESSEES MINIMAL STAFF WERE ENGAGED IN DEFENDING THE CASE BE FORE THE HON'BLE SUPREME COURT AND THEREFORE THEY LOST SIGHT OF FIL ING AUDIT REPORT BEFORE AO EVEN THOUGH THE AUDIT WAS COMPLETED. IT WAS FURTHER SUBMITTED THAT THERE WAS NO DISPUTE WITH REFERENCE TO THE DATE OF AUDIT AND THE ONLY REASON FOR LEVYING PENALTY WAS W ITH REFERENCE TO THE DELAY IN FILING THE REPORT WHICH WAS FILED ALON G WITH THE RETURN OF INCOME. HE RELIED ON THE DECISION IN THE CASE OF TH E INCOME TAX OFFICER VS. BINDRA BAN BANSI LAL (2001) 78 ITD 228 (ASR.) TO SUBMIT THAT WHEN THERE IS NO DIFFERENCE BETWEEN THE RETURN OF INCOME AND FINALLY ASSESSED INCOME THERE WAS NO LOSS OF REVENU E AND IN SUCH CASE OF TECHNICAL OR VENIAL BREACH OF PROVISIONS OF LAW DISCRETION SHOULD BE EXERCISED IN FAVOUR OF ASSESSEE. HE FURTH ER RELIED ON THE DECISION OF THE HON'BLE ITAT H BENCH IN THE CASE OF SEA GREEN HOTEL IN ITA NO.4352/MUM/2003 FOR ASSESSMENT YEAR 1 998-99 ON THE REASONABLE CAUSE. 5. THE DR HOWEVER VEHEMENTLY DEFENDED THE ORDER OF TH E AUTHORITIES TO SUBMIT THAT THE REASON GIVEN BY ASSE SSEE IS NOT SATISFACTORY AND THEREFORE FOR NOT COMPLYING WITH T HE PROVISIONS OF SECTION 44AB IN FILING THE RETURN ON OR BEFORE THE SPECIFIED DATE PENALTY UNDER SECTION 271B IS WARRANTED. HE RELIED ON THE FINDINGS OF THE AUTHORITIES. 6. WE HAVE CONSIDERED THE ISSUE. THERE IS NO DISPUTE W ITH REFERENCE TO THE FACT THAT THE AUDIT WAS COMPLETED WITHIN THE DUE DATE. THERE IS ALSO NO DISPUTE THAT ASSESSEE FILED RETURN OF INCOME ON 29.11.2005 DECLARING A LOSS OF ` 24 63 432/- WHICH WAS SUBSEQUENTLY REVISED. IT IS ALSO A FACT THAT AUDIT WAS COMPLETED IN OCTOBER BEFORE THE DUE DATE. IT WAS ONLY A DELAY IN FILING THE AUDIT ITA NO.7494 OF 2010 DIAMONDSTAR EXPORTS LTD MUMBAI D BENCH PAGE 4 OF 5 REPORT AS PER THE STATUTORY PRESCRIPTIONS. ASSESSEE HAS IN OUR VIEW A REASONABLE CAUSE IN NOT FILING THE AUDIT REPORT A S THE RETURN ITSELF WAS DELAYED FOR THE REASONS STATED BY IT. AS SEEN F ROM THE SUBMISSIONS AND THE FACTS PLACED ON RECORD IT CANN OT BE DENIED THAT ASSESSEE WAS PREOCCUPIED WITH THE PROCEEDINGS BEFORE THE HON'BLE SUPREME COURT IN THE SEARCH & SEIZURE MATTE R. THEREFORE IN OUR VIEW THERE REASONABLE CAUSE FOR NOT FILING T HE AUDIT REPORT WITHIN THE DUE DATE. 7. IN THE CASE OF SEA GREEN HOTEL VS. ACIT (ITA NO.4352/MUM/2003) DATED 12.08.2005 THE ITAT CONSID ERED THAT FILING OF AUDIT REPORT BEFORE FILING OF RETURN MAY NOT SERVE ANY USEFUL PURPOSE BECAUSE ASSESSMENT PROCEEDINGS CAN ONLY BE INITIATED AFTER THE RECEIPT OF RETURN. THUS IF THE AUDIT REPORT IS READY AND IS FURNISHED ALONG WITH THE RETURN OF INCOME IT SHOUL D BE SUFFICIENT AND SUBSTANTIAL COMPLIANCE OF SECTION 44AB. IN THE ABOVE CASE SIMILAR TO THE PRESENT FACTS ASSESSEE OBTAINED AUD IT REPORT BEFORE THE DUE DATE BUT WAS FILED LATER. THE REPORT WAS D UE ON OR BEFORE 31.10.1998 BUT THE RETURN WAS FILED ON 12.12.1998. THERE THE DELAY WAS LESS THAN THREE MONTHS WHEREAS IN ASSESSEES C ASE THE RETURN WAS FILED WITH THE DELAY OF 28 DAYS ONLY. 8. FURTHER IN THE CASE OF INCOME TAX OFFICER VS. BINDR A BAN BANSI LAL (2001) 78 ITD 228 (AMRITSAR BENCH) IT WA S HELD THAT THERE IS NO DIFFERENCE BETWEEN THE RETURNED INCOME AND THE FINALLY ASSESSED INCOME AND WHERE THERE WAS NO LOSS OF RETU RN DISCRETION SHOULD BE EXERCISED IN A CASE OF TECHNICAL OR VENIA L BREACH AND ASSESSEE SHOULD NOT BE PUNISHED FOR MINOR DEFAULTS. IN THIS CASE ALSO THE RETURNED INCOME AND THE ASSESSED INCOME WE RE SAME AND THE DELAY OF FILING THE AUDIT REPORT WAS LESS THAN A MONTH. SINCE ASSESSEE WAS PREOCCUPIED WITH THE PROCEEDINGS BEFOR E THE HON'BLE SUPREME COURT OF INDIA THE COPY OF THE ORDERS PLAC ED ON RECORD WE ARE OF THE OPINION THAT ASSESSEE HAS REASONABLE CAU SE AND THEREFORE ITA NO.7494 OF 2010 DIAMONDSTAR EXPORTS LTD MUMBAI D BENCH PAGE 5 OF 5 LEVY OF PENALTY UNDER SECTION 271B WAS NOT WARRANTE D. THEREFORE WE CANCEL THE PENALTY AND ALLOW THE GROUNDS IN THE APPEAL. 9. IN THE RESULT THE APPEAL FILED BY ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JULY 2012. SD/- SD/- (AMIT SHUKLA) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED 27 TH JULY 2012. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR D BENCH ITAT MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES MUMBAI