Per A. Mohan Alankamony, AM: These four appeals are filed by the assessee aggrieved by the separate orders of the learned Commissioner of Income Tax (Appeals)-1, Coimbatore all dated 23.01.2015 in ITA Nos. 187 to 184/13-14 passed under section 271B r.w.s.250 of the Act for the assessment years 2009-10 to 2012-13 respectively.
2. The assessee has raised several grounds in its appeals, however, the crux of the common issue in all these ITA No.437 to 440/Mds/2015 appeals is that the learned Commissioner of Income Tax (Appeals) has erred by restricting the penalty to Rs.1,00,000/- as against Rs.1,42,651/- and Rs. 1,41,131/- for the assessment years 2009-10 & 2010-11 respectively and confirming the minimum penalty of Rs.1,50,000/- for the assessment years 2011-12 & 2012-13 levied by the learned Assessing Officer under section 271B of the Act. Since the issue involved is common in all these appeals, they are disposed of by this common order for the sake of convenience.
3. Brief facts are that a survey was conducted on 04.09.2013 in the premises of the assessee since the assessee had not responded to the notice sent under non- filers monitoring system. During the survey proceedings, it was noticed by the learned Assessing Officer that the assessee company is doing job work with a sales turnover ranging from Rs.2.5 cores to Rs.3.5 crores for the assessment years under consideration and has not filed its returns of income for all these assessment years under consideration. It was further noticed that the assessee had ITA No.437 to 440/Mds/2015 not audited its books of accounts and filed the A statement to that effect was recorded from the Managing Director of the assessee company Mr. M.Meyyappan. For the above reasons the learned Assessing Officer was of the view that it is a fit case to levy penalty under section 271B of the Act and accordingly levied penalty of `1,42,651/- and Rs. 1,41,131/- for the assessment years 2009-10 & 2010-11 respectively and Rs.1,50,000/- for the assessment years 2011-12 and 2012-13.
4. On appeal, the learned Commissioner of Income Tax (Appeals), taking into consideration of the provisions of section 271B the Act, that penalty can be levied @ 1 % of total sales / turnover or Rs.1.00 lakh, whichever is less, restricted the penalty from `1,42,651/- and Rs. 1,41,131/- for the assessment years 2009-10 and 2010-11 respectively to `1,00,000/-. However, the learned Commissioner of Income Tax (Appeals) sustained the penalty of Rs.1,50,000/- for the assessment years 2011-12 and 2012-13 as it was in accordance with the Act. ITA No.437 to 440/Mds/2015
5. Before us, the learned Authorized Representative submitted that the Managing Director of the assessee company met with car accident and was injured due to which he was not able to attend the business affairs of the company. Further there was labour unrest in the company which aggravated the crisis in the company. There were other several problems faced by the company due to power crisis. For the above stated reasons, there was a slight laxity on the part of the company on tax related legal compliance. Further it was argued by the learned Authorized Representative that the provisions of section 271B of the Act are not automatic and considering the reasonable cause of the failure on the part of the assessee to file tax report under section 44AB of the Act within the prescribed time levy of penalty may be deleted. The learned Authorized Representative also submitted that as on date, the audit reports for all the relevant assessment years are filed before the Revenue and the same is not in dispute. The learned Authorized Representative also placed reliance in the case of M/s Hindustan Steel Ltd. vs State of Orissa reported in 83 ITR 26(SC). ITA No.437 to 440/Mds/2015
6. The learned Departmental Representative, on the other hand, argued in support of the orders of the Revenue.
7. We have heard both the parties and carefully perused the materials available on record. The reasons adduced by the learned Authorized Representative that the Managing Director of the company was incapacitated due to car accident and facing substantial hardships due to labour unrest and power crisis are not in dispute. In these circumstances, we are of the considered view that there was reasonable cause for the failure on the part of the assessee company for not filing the audit report under section 44AB of the Act. Further, invoking section 271B of the Act is not mandatory and the Revenue has discretion for levying the penalty considering the facts and circumstances of the case.
8. In the case of M/s Hindustan Steel Ltd. vs State of Orissa reported in (1972) 83 ITR 26(SC), cited by the learned Authorized Representative, the Honble Apex Court has categorically held that an order imposing penalty for failure to carry out a statutory obligation is the result of a ITA No.437 to 440/Mds/2015 quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest or acted in conscious disregard of its obligation. Penalty will not be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of Act. Drawing strength from the above decision and considering the facts of the case with respect to the hardships faced by the Managing Director of the assessee company and the business crisis faced by the assessee company and the provisions of section 271B of the Act, we are of the considered view that penal provisions of section 271B of the Act cannot be invoked in the case of the assessee. Therefore, we hereby direct the learned Assessing Officer to delete the penalty levied under section 271B of the Act for all the relevant assessment years ITA No.437 to 440/Mds/2015 under consideration in these appeals. It is ordered accordingly.
9. In the result, all the four appeals of the assessee are allowed. Order pronounced in the open court on the 31st March, 2016 Sd/- Sd/- (. ) (. ) (G.Pavan Kumar) ( A.Mohan Alankamony ) ! # /Judicial Member # / Accountant Member !/Chennai, &/Dated 31st March, 2016 somu *+ ,+/Copy to:
1. Appellant 2. Respondent 3. - ()/CIT(A)