Wp(C)/29100/2005 Of M/S.river View Bar & Silver Restaurant v. Commissioner Of Income Tax (Central)

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN WEDNESDAY, THE 27TH JULY 2011 / 5TH SRAVANA 1933 WP(C).No. 29100 of 2005(L) -------------------------- PETITIONER(S): ---------------------- M/S.RIVER VIEW BAR & SILVER RESTURANT, THODUPUZHA, REP. BY ITS PARTNER, MR.NEELAKANTA RAJU. BY ADV. SRI.A.KUMAR RESPONDENT(S): ------------------------ 1. THE COMMISSIONER OF INCOME TAX(CENTRAL), KOCHI. 2. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE I, ERNAKULAM. ADV. SRI.P.K.R.MENON,SR.COUNSEL,GOI(TAXES) SRI.GEORGE K. GEORGE, SC FOR IT THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 27/07/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: dmb WP(C).No. 29100 of 2005 APPENDIX PETITIONER'S EXHIBITS:- EXT.P1:-COPY OF THE ORDER DTD 29.9.2003 PASSED BY THE 2ND RESPONDENT EXT.P2:-COPY OF THE ORDER DTD 8.2.2005 OF THE 1ST RESPONDENT IN THE REVISION PETITION FILED BY THE PETITIONER U/S 264 OF THE INCOME TAX ACT RESPONDENTS' EXHIBITS:-NIL //TRUE COPY// P.A TO JUDGE dmb S. SIRI JAGAN, J. ------------------------------------------- W.P.(C) No.29100 OF 2005 ---------------------------------------------- Dated this the 27[th] day of July, 2011 JUDGMENT The petitioner is an assessee under the Income Tax Act.For the assessment year 2000-2001, the petitioner should havefiled audit report before the assessing authority on or before31.10.2000. The petitioner filed the same only on 29.6.2001.Therefore, the 2[nd] respondent initiated proceedings under Section271B of the Income Tax Act for levying penalty for delay in filing of the auditors' report. The petitioner filed an explanation thus: “Our Auddit (sic) report for the A.Y. referred oughtto have filed on or before 31[st] October 2000. To thebest of my knowledge and belief, all the formalitiesunder the I.T. Act were completed well before thedue date, and all the closing statements withbalance tax and interest due Rs.52,731/- wasentrusted with my accountant for filing. But onlylate it came to know that the accountant misutilisedthe funds for personal purposes and Audit report aswell as returns were not filed in time. As the delaywas due to none of our default, it is humblyrequested to condone the delay in filing the reportin time.” The 2[nd] respondent considered the explanation for the delay and passed Ext.P1 order stating that the explanation is not sufficient W.P.(C)No.29100/05 for condoning the delay and imposed penalty of Rs.44,831/- onthe petitioner. The petitioner filed a revision before theCommissioner of Income Tax under Section 264 of the IncomeTax Act, 1961, which was also dismissed by Ext.P2 order. Thepetitioner challenges Exts.P1 and P2 orders. The contentionof the petitioner is that imposition of penalty is not automatic,and that the imposition of penalty being quasi criminal innature, it could have been imposed only if there was acontumacious conduct of the petitioner. According to thepetitioner, they had done all what they could do to file theauditors' report in time and it was prepared in time also. But,because of the misconduct on the part of their accountant, theaccountant did not file the same, which came to the knowledgeof the petitioner only later and therefore, they produced thesame along with their return of income on 29.6.2001. Theywould submit that, that is sufficient reason for condonation ofdelay and absolving the petitioner from penalty proceedings.The learned counsel for the petitioner relies on the followingdecisions in support of the contention of the petitioner that thereason put forwarded by the petitioner is sufficient andreasonable cause for the delay; “COMMISSIONER OF INCOME TAXV.SANKARSONSAND COMPANY(1972 (85) ITR 627), WOODWARDGOVERNOR INDIA P. LTDV.COMMISSIONER OFINCOME TAX AND OTHERS(DELHI) (2002 (255)ITR 745) and P.D. SUDHIV.INTELLIGENCEOFFICER, AGRICULTURAL INCOME TAX AND SALES “COMMISSIONER OF INCOME TAXV.SANKARSONSAND COMPANY(1972 (85) ITR 627), WOODWARDGOVERNOR INDIA P. LTDV.COMMISSIONER OFINCOME TAX AND OTHERS(DELHI) (2002 (255)ITR 745) and P.D. SUDHIV.INTELLIGENCEOFFICER, AGRICULTURAL INCOME TAX AND SALES TAX, MATTANCHERRY AND OTHERS(1992 (85) STC337)” 2.The Standing Counsel for the Income Tax Department opposes the contention of the petitioner.According to him, the initial burden of proof is on the petitionerto prove that they had sufficient and reasonable cause for notfiling the auditors' report in time. Except their averment thatit was because of the fault of the accountant, the petitionerhas not produced any proof whatsoever in support of theiraverment, without which the averment cannot be accepted onface value, is his contention. He further submits that as heldby the assessing authority and the revisional authority it wasthe responsibility of the petitioner to ensure that theiraccountant does his job correctly and in time. Even assumingthat what the petitioner says is true, he points out that, ifsuch averments are accepted on face value, then every W.P.(C)No.29100/05 assessee would come with some such excuses and thedepartment would be forced to accept the same on mereassertion in the pleadings. 3.I have considered the rival contentions in detail. Itis not disputed before me that except the assertion in the replyto the notice issued to the petitioner, the petitioner has notproduced any evidence whatsoever as proof of the averments.If pleadings are to be accepted on face value, then it will havedisastrous results, insofar as persons with imagination wouldcome up with many such explanations. Unless the same isproved through some evidence, it cannot be accepted on facevalue. Even otherwise, what the petitioner has stated is thatthe fault lies on their accountant and not on them. Thepetitioner cannot simply evade responsibility by saying so. Itwas the duty of the petitioner to ensure that the accountantdoes his job properly. The delay in this case is almost eightmonths. The petitioner should have periodically or at leastwithin a reasonable time, after the date fixed for filing theauditors' report, enquired with the accountant as to whetherthe auditors' report has been filed. The petitioner does notstate that they have done so. Therefore, the conduct of the W.P.(C)No.29100/05 petitioner is clearly contumacious and therefore, penalty isattracted. I am not satisfied that the decisions relied on by thelearned counsel for the petitioner lay down any law to thecontrary. Therefore, I am not inclined to interfere with theimpugned orders and accordingly the writ petition is dismissed. S. SIRI JAGAN, JUDGE acd