M/s. Gemorium v. The ITO, Ward- 5(1), Jaipur
[Citation -2016-LL-0914-52]

Citation 2016-LL-0914-52
Appellant Name M/s. Gemorium
Respondent Name The ITO, Ward- 5(1), Jaipur
Court ITAT-Jaipur
Relevant Act Income-tax
Date of Order 14/09/2016
Assessment Year 2008-09
Judgment View Judgment
Keyword Tags statutory auditor • reason for delay • delay in audit • audit report • audit fee • imposition of penalty
Bot Summary: On examination, AO reached the conclusion that the delay in audit was caused by late submission of accounts by the assessee to the auditor. AR of the assessee submitted that the delay was on account of dispute with the auditor regarding audit 3 ITA No. 514/JP/2014 M/s. Gemorium vs. ITO, Ward- 5, Jaipur. AR of the assessee submitted that there was no delay in filing of the return for the last about 18 years, the delay was made only during assessment year under consideration i.e. 2008-09, the assessee changed the auditor from the assessment year 2009-10, there was no delay in filing the return of income for the assessment year 2009-10, the penalty was levied solely relying on the statements recorded from the auditor Shri R.A. Sharma and no opportunity was provided to the assessee to cross examine the statements made by auditor Shri R.A.Sharma. The assessment u/s 143(3) of the Act was completed on 27-12-2010 and penalty proceedings u/s 271B of the Act were initiated as the assessee firm could not get the accounts audited within time limit prescribed u/s 44AB of the Act. The assessee firm got the accounts audited on 1-05-2009 and filed the return of income on 23-05-2009 which resulted delay of almost 08 months. The assessee submitted that the bone of contention of the issue was on account of audit fees of the auditor which resulted delay in completion of the audit and the same was completed by 01-05-2009 and thereafter the assessee filed the return on 26-05-2009. CIT(A) is not justified in imposing the penalty u/s 271B. Hence, the solitary ground of appeal of the assessee is allowed.


IN INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR BEFORE:SHRI BHAGCHAND, AM & SHRI LALIET KUMAR, JM ITA No. 514/JP/2014 Assessment Year : 2008-09 M/s. Gemorium ITO 1969, Dhabaji Ka Khurra Vs. Ward- 5(1) Ramganj Bazar, Jaipur Jaipur PAN/GIR No.: AACFG 7515 N Appellant Respondent Assessee by : Shri Rohan Sogani and Shri Rajiv Sogani, CA Revenue by: Shri R.A. Verma, Addl.CIT -DR Date of Hearing : 24/08/2016 Date of Pronouncement : 14 /09/2016 ORDER PER LALIET KUMAR, JM assessee has filed appeal against order of ld. CIT(A)- 2, Jaipur dated 13-05-2014 for assessment year 2008-09 raising therein solitary ground as under. In facts and circumstances of case and in law ld. CIT(A) has erred in confirming action of AO in imposing penalty u/s 271B of Act amounting to Rs. 2 ITA No. 514/JP/2014 M/s. Gemorium vs. ITO, Ward- 5 (1), Jaipur . 1.00 lac. action of ld. CIT(A) is illegal, unjustified, arbitrary and against facts of case. Relief may please be granted by quashing penalty of Rs. 1.00 lac imposed u/s 271B of Act. 2.1 Brief facts as conclusively emerges out from order of ld. CIT(A) is reproduced as under:- 2.3 I have considered facts of case; penalty order and appellant s written submission. Assessing Officer levied penalty u/s 271B for not getting accounts audited and submitting audit report in time. It is not in dispute that appellant got accounts audited after due date of filing return of income and therefore, it was liable for penalty unless there were justifiable reasons for delay. Appellant submitted that delay was caused by auditor with whom it had dispute over audit fees. Appellant also submitted that it is for first time such delay happened and after this year auditor was also changed. However, Assessing Officer examined auditor to verify appellant s explanation. On examination, AO reached conclusion that delay in audit was caused by late submission of accounts by assessee to auditor. Auditor confirmed that there was no dispute over fees and therefore, it was not reason for delay in audit. Delay was caused by appellant only by submitting accounts on 30-09-2009 resulting in delay in audit. Considering order and appellant s submission, it is clear that appellant did not get accounts audited for year without any justifiable reason and therefore, penalty is leviable u/s 271B. Accordingly, penalty levied by AO is confirmed. 2.2 During course of hearing, ld. AR of assessee submitted that delay was on account of dispute with auditor regarding audit 3 ITA No. 514/JP/2014 M/s. Gemorium vs. ITO, Ward- 5 (1), Jaipur . fees and explanation of assessee was not accepted by AO and thus he imposed penalty u/s 271B of Act. ld. AR of assessee submitted that there was no delay in filing of return for last about 18 years, delay was made only during assessment year under consideration i.e. 2008-09, assessee changed auditor from assessment year 2009-10, there was no delay in filing return of income for assessment year 2009-10, penalty was levied solely relying on statements recorded from auditor Shri R.A. Sharma and no opportunity was provided to assessee to cross examine statements made by auditor Shri R.A.Sharma. ld. AR of assessee relied on following case laws:- (i) Azadi Bachao Andolan vs. Union of India (2001) 252 ITR 471 (Del.) (ii) Indian Handloom Textiles vs. ITO (1999) 68 ITD 560 (Kol. Tribunal) (iii) Aleli & Co. (P) Ltd. vs. DCIT, 7 SOT 639 (Mum) (iv) Kripa Industries (I) Ltd. (2002) 76 TTJ 502 (Pune) (v) Ashoka Dairy (2005) 149 Taxman 732 (P&H) (vi) A.K. Kraipak vs. Union of India AIR 1970 SC-150 4 ITA No. 514/JP/2014 M/s. Gemorium vs. ITO, Ward- 5 (1), Jaipur . (vii) Shree Ram Durga Prasad and Fateh Chand vs. Settlement Commissioner 1989-SC-1038 (viii) Andaman Timber Industries (Civil Apeal No. 4228 of 2006) ld. AR of assessee prayed for quashing penalty imposed by lower authorities. 2.3 ld. DR relied on orders of lower authorities. 2.4 We have heard rival contentions and perused materials available on record. It is noted from records that assessee firm filed return of income for assessment year 2008-09 on 23-05-2009 through e-filing and copy of ITR-V was filed on 26-05-2009. assessment u/s 143(3) of Act was completed on 27-12-2010 and penalty proceedings u/s 271B of Act were initiated as assessee firm could not get accounts audited within time limit prescribed u/s 44AB of Act. It is noted that due date of filing of return of income for assessment year 2008-09 was 30-09-2008. However, assessee firm got accounts audited on 1-05-2009 and filed return of income on 23-05-2009 which resulted delay of almost 08 months. It is noted from submissions of assessee that it is first instance of delay in 5 ITA No. 514/JP/2014 M/s. Gemorium vs. ITO, Ward- 5 (1), Jaipur . getting accounts audited pertaining to assessment year 2008-09. assessee submitted that bone of contention of issue was on account of audit fees of auditor which resulted delay in completion of audit and same was completed by 01-05-2009 and thereafter assessee filed return on 26-05-2009. It is noted from records that assessee was not provided opportunity by lower authorities to cross examine statements given by Shri R.A. Sharma, Auditor of firm and assessee was deprived of countering Shri R.A. Sharma, Auditor. It appears from discussions held hereinabove that delay made by assessee firm in filing return of income is for first time i.e. in A.Y. 2008-09 which was on account of dispute of audit fee between assessee and auditor. Hence, it appears that dispute with statutory auditor is reasonable cause within meaning of Section 273B as held in case of Kripa Industries (I) Ltd. vs. JCIT by ITAT Pune Bench(supra) that there is no mala fide reason for not obtaining accounts audited in time and penalty u/s 271B should not be imposed. Taking into consideration decision of ITAT Pune Bench in case of Kripa Industries (I) Ltd. vs. JCIT (supra) and other case 6 ITA No. 514/JP/2014 M/s. Gemorium vs. ITO, Ward- 5 (1), Jaipur . laws relied hereinabove, we feel that ld. CIT(A) is not justified in imposing penalty u/s 271B. Hence, solitary ground of appeal of assessee is allowed. 3.0 In result, appeal of assessee is allowed. Order pronounced in open court on 14/09/2016. Sd/- Sd/- (Bhagchand) (Laliet Kumar) Accountant Member Judicial Member Jaipur Dated:- 14/09/ 2016 Copy of order forwarded to: s 1. Appellant- M/s. Gemorium, Jaipur 2. Respondent- ITO, Ward- 5(1), Jaipur 3. CIT(A). 4. CIT, 5. DR, ITAT, Jaipur 6. Guard File (ITA No. 514/JP/2014) By order, Assistant. Registrar M/s. Gemorium v. ITO, Ward- 5(1), Jaipur
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