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

IN THE HIGH COURT OF PUNJAB AND HARYANAAT CHANDIGARH I.T.A.No. 427 of 2007 DATE OF DECISION: FEBRUARY 22, 2008 The Commissioner of Income tax, Karnal .....APPELLANT Versus The Sajuma Co-op. Credit & Service Society Ltd.&PO Sajuma Distt.Kaithal ....RESPONDENT CORAM:HON'BLE MR.JUSTICE SATISH KUMAR MITTALHON'BLE MR.JUSTICE RAKESH KUMAR GARG--- Present:Mr. Yogesh Putney, Advocate,for the appellant. .. SATISH KUMAR MITTAL, J. The instant appeal filed by the revenue under Section 260Aof the Income Tax Act, 1961 (hereinafter referred to as `the Act') isdirected against the order dated 12.03.2007 passed by the Income TaxAppellate Tribunal, Chandigarh Bench (A), Chandigarh (hereinafterreferred to as `the ITAT') in ITA No.471/Chandi/2006 in case of therespondent-assessee 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 wascase 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 was I.T.A.No. 427 of 2007 -2- engaged 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 that the respondent-assessee is a Co-operative Credit and Service Societyderiving income from fertilizer, pesticides, seeds etc. to its members andalso from interest etc. For the Assessment Year 2004-05, the respondent-assessee filed return declaring its income at nil after claiming exemptionunder Section 80P of the Act. The return was accompanied by tradingaccount, profit and loss account and balance sheet which were notaudited. During the course of assessment proceedings, it was noticed that the gross turnover of the assessee exceeded Rs.40.00 lacs, therefore,the assessee was required to get its 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 assessee. Before the Assessing Officer, the assessee took the plea thatthe sales turnover of the assessee were much less than Rs.40.00 lacs, but I.T.A.No. 427 of 2007 -3- that the gross turnover of the assessee exceeded Rs.40.00 lacs, therefore,the assessee was required to get its 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 assessee. Before the Assessing Officer, the assessee took the plea thatthe sales turnover of the assessee were much less than Rs.40.00 lacs, but I.T.A.No. 427 of 2007 -3- after including receipts of interest, it exceeded Rs.40.00 lacs. Therefore,assessee did not get its accounts audited as per the requirement of Section44AB under a bona fide belief that its sales turnover were less thanRs.40.00 lacs and as such it was prevented from doing so by sufficientcause, therefore, it prayed that the penalty be not imposed on it. TheAssessing Officer did not accept the contention of the assessee andimposed the penalty of Rs.21,756/-. Feeling aggrieved against the said order, the assessee filedan appeal before the Commissioner of Income Tax (Appeals) which wasdismissed 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 assessee filed anappeal before the Tribunal which was accepted and the impugned penaltylevied by the Assessing Officer and confirmed by the Commissioner ofIncome Tax (Appeals) was ordered to be deleted while holding that theassessee under a bona fide belief did not get its accounts audited from theChartered Accountant or from the Inspector of Co-operative Societiesbecause the sales turnover of the assessee were less than Rs.40.00 lacsexcluding the receipts of interest. There is no material on the record onthe basis of which it can be held that the said finding is illegal or perverse.In our view, the Tribunal has recorded a finding of fact to the effect thatin the facts and circumstances of the case, the assessee under a bona fidebelief did not get its accounts audited from the Chartered Accountant orfrom the Inspector of Co-operative Societies because the sales turnover ofthe assessee were less than Rs.40.00 lacs. Since a pure finding of fact hasbeen recorded, which does not require any interference, therefore, in our I.T.A.No. 427 of 2007 -4- opinion, no substantial question of law is arising from the impugned orderpassed by the Tribunal. Dismissed. (SATISH KUMAR MITTAL) JUDGE February 22, 2008vkg (RAKESH KUMAR GARG) JUDGE