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TMI Blog2022 (4) TMI 1270X X X X Extracts X X X X X X X X Extracts X X X X ..... 961 is therefore ab initio void, ultra vires and ex-facie null in law. 2. FOR THAT on a true and proper interpretation of the scope of the provisions of s. 27IB of the Income Tax Act, 1961, the Ld. Commissioner of Income Tax (Appeals)-13, Kolkata was absolutely in error in upholding the impugned order imposing penalty in the sum of Rs. 1,50,000/- passed by the Ld. Income Tax Officer, Ward 43(1), Kolkata and his purported finding de hors any violation thereof is wholly arbitrary, unreasonable and perverse. 3. FOR THAT the Ld. Commissioner of Income Tax (Appeals)-13. Kolkata erred in sustaining the impugned order imposing penalty u/s. 27 IB of the Act passed without considering explanation tendered by the appellant in light of the provision of s. 273B of the Income Tax Act, 1961 by the Ld. Income Tax Officer, Ward 43(1), Kolkata and failing to controvert her bonafides in the facts of the instant case and the impugned findings considering extraneous parameters not germane to the issue is therefore, unfounded, unjustified and untenable hi law. 4. For THAT the specious approach of the Ld. Commissioner of Income Tax (Appeals)-13, Kolkata of considering improper facts, failing to co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nting to Rs. 1,50,000/- upon the assessee on 08.06.2018. 4. Being aggrieved by the order dated 08.06.2018, the assessee preferred an appeal before the CIT(A) -3, Kolkata which was by the Ld. CIT(A) observing as under: 5.2 I have carefully perused the penalty order, the observations of the Assessing Officer and the contentions and arguments of the appellant. Reasonable cause, as applied to human action is that which would constrain a person of average intelligence and ordinary prudence. The word "reasonable" can be described as rational according to the dictates of the reason and is not excessive or immoderate. 5.3 It is observed that the appellant has been engaged in the trading in derivative contracts in large volumes. The appellant has transacted in derivatives amounting to Rs. 965.35 crores. Thus, the appellant cannot be by any stretch of imagination be termed as an ordinary layperson which was ignorant of law. It has to be appreciated that dealing in derivatives is a specialized professional activity and thus, the appellant cannot be termed as an ordinary person who is ignorant of law. Thus, the plea of the appellant of being ignorant of law is bereft of merit and is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee and, therefore, failure on the part of assessee to get the account audited would not lead to levy of penalty u/s 271B of the Act. Moreover, the assessee was under bonafide impression that trading in commodities being speculative activity would not constitute turnover for the purpose of section 44AB of the Income Tax Act. Besides that department could not bring on record any evidence to point out that the income returned by the assessee was not accepted in the assessment nor any suggestion that the books of account maintained by the assessee were in any way fabricated or deficient and the default committed by the assessee is of a technical nature. Further, the AO was not handicapped for want of tax audit report while making the assessment for the assessment year under appeal. Hence the penalty proceeding u/s 271B could not be levied. The Ld. AR relied upon the following decisions in defence of these arguments: "i. ITA 1594 to 1598/Kol/2004, The Kalna Town Credit Co-operative Bank Ltd. ii. ITA 3215/Chny/2019, Shri Dwaraknath Krishnaram iii. ITA 441/Mum/2011 iv. Banwari Sitaram Pasari HUF vs ACIT (2013) 140 ITD 320 (PN)" 7. On the other hand, Ld. DR appearing on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the incomes returned by the assessee were not accepted in the assessments. In this connection, we may refer to the order of the Kolkata Bench "B" of the Tribunal in I.T.O., Ward-37(3), Kolkata vs. M/s. Star Hide Co. [I.T.A.No. 1626 (Kol)/2002, dated 11.2.2004] to hold that where the. income returned by the assessee has been accepted by the department and there is no suggestion that the books of account maintained by the assessee were in any way fabricated or suffered from certain defects or deficiency and taking into consideration the fact that the entire income of the assessee-bank is non-taxable meaning thereby that the assessee had no intention to defraud the revenue, the default committed by the assessee is of a technical or venial nature. Further, the A.O. was not handicapped for want of the Tax Audit Report while making the assessments for each of the assessment years under appeal. He was not prevented from verifying or making enquiries into the accounts of the assessee as the basis of the Tax Audit Report. Thus the ratio of the decision of the Tribunal in M/s. Star Hide Co. (supra) is very much applicable in the case of the present assessee and we are of the considered ..... X X X X Extracts X X X X X X X X Extracts X X X X
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