2014 (11) TMI 1285 - HC - Income Tax

Penalty u/s 271B - audit report u/s 44AB has been filed after sufficient long time - transfer of cases from Bharatpur to Jaipur - as argued jurisdiction over the case was with the IT Department Bharatpur and unilaterally it was transferred to the office of the Dy. CIT Central Circle-2 Jaipur and before passing of the order neither the assessee received any intimation nor any notice from the office of the authority so as to come to the conclusion that the jurisdiction over the case stood shifted/transferred HELD THAT - It would be appropriate to deal with the submission of the counsel that the AO at Bharatpur on account of change of jurisdiction did not accept the return of income or the audit report when presented immediately after completion of the audit of accounts as well as return of income but what was contended no tangible evidence or material either in the shape of an affidavit or otherwise of the person who claimed that he had presented the return of income along with audit report before the AO at Bharatpur was placed or refusal by the officer at Bharatpur. In our view mere justification as alleged without any supporting evidence is no explanation and the Tribunal had rightly rejected the same. Turnover as per audit report and the turnover as noticed by the AO in the penalty order is not supported with cogent material on record. This discrepancy when noticed was expressed to the counsel for the assessee on the earlier date of hearing and specifically observed in the order-sheet of 13th Feb. 2014 but even after lapse of about 8 months on the date of final hearing counsel for the assessee was unable to clarify the correct figures or the discrepancy noticed. However ultimately insofar as imposition of penalty is concerned the Act provides that it is minimum to the extent of Rs. 1 lac which ultimately has been imposed by the AO and sustained by the Tribunal. Though the assessee has tried to challenge that there was no information about transfer of cases from Bharatpur to Jaipur and S. 127 provides that notice is required to be served to the assessee but it can safely be observed that the assessee neither challenged the transfer of cases from Bharatpur to Jaipur office nor raised issue of jurisdiction at the time of transfer of cases rather the assessee submitted to the jurisdiction of the Dy. CIT Central Circle-2 Jaipur and not only filed the return of Income but the audit report also though belatedly and appeared regularly before the Dy. CIT Central Circle-2 Jaipur in the regular assessment proceedings and submitted to its jurisdiction without even uttering a word assailing the same before any authority. The Kerala High Court in the case of K. Ravindranathan Nair 2008 (3) TMI 412 - KERALA HIGH COURT has held that if there is an acceptable explanation then penalty could have been avoided whereas in the absence of any evidence adduced by the appellant at least before the Tribunal the minimum penalty imposed under S. 271B for admitted delay for filing audit report was upheld. Thus Tribunal has rightly sustained the penalty u/s 271B - Decided in favour of revenue.

Summary

Issues Involved:
1. Justification of penalty under Section 271B of the IT Act.
2. Non-communication of changed jurisdiction under Section 127 of the IT Act as a reasonable cause for not imposing penalty.

Issue-wise Detailed Analysis:

1. Justification of penalty under Section 271B of the IT Act:

The appellant-assessee was penalized under Section 271B for failing to file the audit report by the specified date despite obtaining it on time. The Tribunal affirmed the AO's decision, dismissing the appeals and restoring the penalty. The Tribunal found no tangible evidence that the assessee attempted to file the audit report on time. The AO concluded that the assessee was aware of the centralized jurisdiction in August 1997 and failed to present any credible evidence to support their claim of attempting to file the audit report at Bharatpur. The penalty of Rs. 1 lac was imposed as the minimum prescribed under law.

2. Non-communication of changed jurisdiction under Section 127 of the IT Act as a reasonable cause for not imposing penalty:

The appellant-assessee argued that they were not informed about the change of jurisdiction from Bharatpur to Jaipur, which caused the delay in filing the audit report. The Tribunal rejected this argument, noting that no evidence was provided to support the claim that the return and audit report were presented on time at Bharatpur. The Tribunal also observed that the assessee did not challenge the jurisdiction change at the time and submitted to the jurisdiction of the Dy. CIT, Central Circle-2, Jaipur, by filing the return and audit report there. The Tribunal found that the assessee's claim of not being informed was not credible and upheld the penalty.

Conclusion:

The Tribunal upheld the penalty under Section 271B, finding no reasonable cause for the delay in filing the audit report. The assessee's argument of non-communication of jurisdiction change was rejected due to lack of evidence and the assessee's subsequent submission to the new jurisdiction. The appeals were dismissed, and the penalty was sustained.