The Commissioner Of Income Tax, Karnal v. The Kailram Co-Op. Credit & Service Society Ltd.v&Po Kailram Distt.kaithal

IN THE HIGH COURT OF PUNJAB AND HARYANAAT CHANDIGARH The Commissioner of Income tax, Karnal Versus .....APPELLANT The Kailram Co-op. Credit & Service Society Ltd.V&PO Kailram Distt.Kaithal ....RESPONDENT The Commissioner of Income tax, Karnal Versus .....APPELLANT The Bata Co-op. Credit & Service Society Ltd.V&PO Bata Distt.Kaithal ....RESPONDENT The Commissioner of Income tax, Karnal Versus .....APPELLANT The Chaushala Co-op. Credit & Service Society Ltd.V&PO Chaushala Distt.Kaithal ....RESPONDENT The Commissioner of Income tax, Karnal Versus .....APPELLANT The Kalayat Co-op. Credit & Service Society Ltd.V&PO Kalayat Distt.Kaithal ....RESPONDENT The Commissioner of Income tax, Karnal Versus .....APPELLANT The Kurar Co-op. Credit & Service Society Ltd.V&PO Kurar Distt.Kaithal ....RESPONDENT I.T.A.No. 537 of 2007 etc. -2- CORAM:HON'BLE MR.JUSTICE SATISH KUMAR MITTALHON'BLE MR.JUSTICE RAKESH KUMAR GARG --- Present:Mr. Yogesh Putney, Advocate,for the appellants.for the appellants. .. SATISH KUMAR MITTAL, J. This order shall dispose of the aforesaid five appeals, i.e. ITANo.537 to 541 of 2007 filed by the revenue under Section 260A of theIncome Tax Act, 1961 (hereinafter referred to as `the Act') against thecommon order dated 28.02.2007 passed by the Income Tax AppellateTribunal, Chandigarh Bench (A), Chandigarh (hereinafter referred to as`the ITAT') in ITA No.472/Chandi/2006 and the other connected appealsviz. ITA Nos.473,474,475 and 476/Chandi/2006 in case of differentrespondent-assessees for the Assessment Year 2004-05 by raising thefollowing substantial questions of law:- (i)Whether on the facts and in the circumstances of thecase the Ld. ITAT was right in deleting the penaltyimposed u/s 271B of the I.T. Act without deliberatingupon, discussing and analyzing the reasons as speltout and discussed in para 3 of the penalty order andfurther ignoring the fact that there was no reasonablecause for the assessee for not furnishing the auditreport by a Chartered Accountant within the specifiedperiod in view of the facts that the assessee wasengaged in business activity and the gross turnover ofthe assessee which included the total sales and theinterest income on account of business activity of theassessee exceeded Rs.40 lacs?case the Ld. ITAT was right in deleting the penaltyimposed u/s 271B of the I.T. Act without deliberatingupon, discussing and analyzing the reasons as speltout and discussed in para 3 of the penalty order andfurther ignoring the fact that there was no reasonablecause for the assessee for not furnishing the auditreport by a Chartered Accountant within the specifiedperiod in view of the facts that the assessee wasengaged in business activity and the gross turnover ofthe assessee which included the total sales and theinterest income on account of business activity of theassessee exceeded Rs.40 lacs? (ii)Whether on the facts and in the circumstances of thecase, the Ld. ITAT was right in law in giving thebenefit of section 273B without discussing thereasonable cause for not furnishing the audit report byChartered Accountant within the specified period?case, the Ld. ITAT was right in law in giving thebenefit of section 273B without discussing thereasonable cause for not furnishing the audit report byChartered Accountant within the specified period? The brief facts giving rise to file the present appeal are thatthe respondent-assessees are Co-operative Credit and Service Societies I.T.A.No. 537 of 2007 etc. -3- deriving income from fertilizer, pesticides, seeds etc. to its members andalso from interest etc. For the Assessment Year 2004-05, the respondent-assessees filed returns declaring their income at nil after claimingexemption under Section 80P of the Act. The return was accompanied bytrading account, profit and loss account and balance sheet which were notaudited. The brief facts giving rise to file the present appeal are thatthe respondent-assessees are Co-operative Credit and Service Societies I.T.A.No. 537 of 2007 etc. -3- deriving income from fertilizer, pesticides, seeds etc. to its members andalso from interest etc. For the Assessment Year 2004-05, the respondent-assessees filed returns declaring their income at nil after claimingexemption under Section 80P of the Act. The return was accompanied bytrading account, profit and loss account and balance sheet which were notaudited. During the course of assessment proceedings, it was noticedthat the gross turnover of the assessees exceeded Rs.40.00 lacs, therefore,the assessees were required to get their accounts audited by a CharteredAccountant before the stipulated date i.e. 31.10.2004 and furnish by thatdate the report of such audit in the prescribed form duly signed andverified as required under Section 44AB of the Act. Therefore, forfailure to get the accounts audited by the Chartered Accountant within thespecified period and furnish the audit report by the stipulated date as perthe provisions of Section 44AB of the Act, penalty proceedings underSection 271B of the Act were initiated against the assessees. Before the Assessing Officer, the assessees took the plea thattheir sales turnover were much less than Rs.40.00 lacs, but after includingreceipts of interest, it exceeded Rs.40.00 lacs. Therefore, the assesseesdid not get their accounts audited as per the requirement of Section 44ABunder a bona fide belief that their sales turnover were less than Rs.40.00lacs and as such they were prevented from doing so by sufficient cause,therefore, they prayed that the penalty be not imposed on them. TheAssessing Officer did not accept the contentions of the assessees andimposed the penalty of different amounts as mentioned in its ordersAnnexure A-1. I.T.A.No. 537 of 2007 etc. -4- Feeling aggrieved against the said order, the assessees filedappeals before the Commissioner of Income Tax (Appeals) which weredismissed on 14.03.2006 while holding that the Assessing Officer wasjustified in imposing the penalty under Section 271B of the Act. Aggrieved against the aforesaid order, the assessees filedappeals before the Tribunal which were accepted and the impugnedpenalty levied by the Assessing Officer and confirmed by theCommissioner of Income Tax (Appeals) was ordered to be deleted whileholding that the assessees under a bona fide belief did not get theiraccounts audited from the Chartered Accountant or from the Inspector ofCo-operative Societies because the sales turnover of the assessees wereless than Rs.40.00 lacs excluding the receipts of interest. Similar issue was raised by the Commissioner of Income tax,Karnal in ITA No.427 of 2007 before this Court. While coming to theconclusion that the Tribunal had recorded a pure finding of fact which didnot require any interference, the appeal of the revenue was dismissed bythis Court vide order dated February 22, 2008. In these appeals also, thesame substantial questions of law have been formulated by the revenueand the facts are also exactly the same. Thus, in view of the decisiontaken by this Court in ITA No.427 of 2007, the instant appeals are liableto be dismissed. Ordered accordingly. (SATISH KUMAR MITTAL) JUDGE (RAKESH KUMAR GARG) JUDGE