TaxTMI 
TaxTMI 
2023 (1) TMI 573
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.... penalty of Rs. 1,00,000/- u/s. 271B of the Act for AY 2010-11 and Rs.1,50,000/- for each of the remaining six years involved, respectively. 3. Brief facts of the case are that a survey u/s. 133A was carried out on 28.04.2015 at the office of Rich Udyog Network Ltd. and other concerns belonging to Rich Udyog Network Ltd. group of Kanpur. The survey u/s. 133A of the Act was converted into search u/s. 132 of the Act. In the course of search, various incriminating documents/information relating to the assessee were also found and seized as noted by the Ld. AO in the order. In the course of assessment, Ld. AO found that the accounts of the assessee were voluminous and complex and, therefore, referred the case of the assessee to Pr. CIT(C), Kanpur for seeking the approval for conduct of special audit. Based on the approval of Ld. Pr. CIT(C), Kanpur, assessee was required to get its books of accounts audited by the Special Auditor and submit a report thereon within ninety days. 3.1. In the penalty order, Ld. AO noted that since no books of account and other documents of the assessee were found during the course of survey and search at his premises and the same were not produced in the ....
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....t, Ld. AO found that accounts of the assessee were voluminous and complex and, therefore, referred the case of the assessee to Pr. CIT(C), Kanpur for seeking approval for conduct of special audit u/s. 142(2A) of the Act. Based on the approval of Ld. Pr. CIT(C), Kanpur, assessee was required to get its books of accounts audited by the Special Auditor and submit a report thereon within ninety days. Ld. AO issued notices u/s. 142(1) of the Act which were complied in part only. It is claimed that on 15.12.2017, Ld. A.R. of the assessee attended the hearing and produced books of account before the Ld. AO. Assessee further claimed that the said books of account were impounded by the Ld. AO without assigning any reason inasmuch as the said books were impounded in the course of assessment proceedings without any authority to do so u/s. 142(1) of the Act. Subsequently, Special Auditors also repeatedly stated before the Income Tax Department about the non-compliance by the assessee in the special audit proceedings for getting the accounts audited. 3.1. Owing to non-compliance by the assessee, Ld. AO issued show cause notice u/s. 144 of the Act dated 31.07.2018 against which assessee filed ....
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....s not qua assessment and is not dependent upon the outcome of the assessment. He is of the view that the conduct of assessee shows that he is non-cooperative to the authorities and thus, dismissed the appeal of the assessee. Aggrieved, the assessee is in appeal before the Tribunal. 5. Before us Shri Rakesh Garg, Advocate represented the assessee and Shri Amit Nigam, CIT, DR represented the revenue. 6. Ld. Counsel for the assessee, at the outset, placed on record, copies of order sheet of the assessment proceeding to demonstrate the existence of reasonable cause which prevented the assessee in complying with the statutory requirements as required by the Ld. AO in the assessment proceedings vis-à-vis section 142(2A) of the Act. From the order sheet entry dated 15.12.2017, Ld. Counsel pointed out that Shri Rahul Kumar Mittal, Advocate/Ld. AR of the assessee, attended the hearing on that date and all the relevant ledgers for AYs. 2010-11 to 2016-17 were produced which were impounded by the Ld. AO in his presence. He thus, submitted that once the books of account produced before the Ld. AO were impounded by the Ld. AO in the course of assessment proceeding, assessee was preve....
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....le on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure.]" 9. From the perusal of the above provisions of the Act, we note that where a reasonable cause exists with the assessee for the failure on his part to comply with the statutory requirement, penalty need not to be imposed. Before us, Ld. Counsel for the assessee, through the order sheet entries of the assessment proceedings, evidently demonstrated that relevant ledgers for all the years under consideration were impounded by the Ld. AO in the course of assessment itself which has prevented the assessee in making compliance to the requirements of the special auditors for getting the special audit u/s. 142A of the Act completed. We also note that the Ld. CIT(A) himself while noting down various principles relating to penalty imposition has stated in one of the points that onus was on the assessee to answer the charge of having failed to comply with the direction (extracted supra). 9.1. Ld. CI(A) also observed in para 9.2 that wordings of section 273B are explicit that a person who has failed to comply with the n....