TMI Blog2016 (12) TMI 1404X X X X Extracts X X X X X X X X Extracts X X X X ..... same are set aside. The addition made by the Assessing Officer is deleted.- Decided in favour of assessee Penalty levied under Section 271B - delay in filing audit report - Held that:- The object of filing audit report is only to assist the Assessing Officer to determine the correct taxable income. Since the assessee has filed return of income along with the audit report, the purpose of statutory requirement is complied with. The delay in filing the audit report did not hamper the assessment proceeding in any way. Therefore, this Tribunal is of the considered opinion that there is no justification in levying penalty under Section 271B of the Act. Therefore, this Tribunal is unable to uphold the orders of the lower authorities, accordingly, the same are set aside and the penalty levied under Section 271B of the Act is deleted. - Decided in favour of assessee - ITA Nos. 1222 & 1223/Mds/2016 - - - Dated:- 23-11-2016 - Shri N.R.S. Ganesan, Judicial Member And Shri D.S. Sunder Singh, Accountant Member Appellant by : Shri T. Vasudevan, Advocate Respondent by : Shri Supriyo Pal, JCIT ORDER Per N. R. S. Ganesan, Judicial Member Both the appeals of the assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Bakia Trading Agency are very much in existence. The assessee has also produced copies of sales tax registration and bill for transportation of granites before the officer who examined him under Section 131 of the Act. The Assessing Officer, according to the Ld. counsel, ignored the material filed by the assessee and simply proceeded to disallow the claim of the assessee on the ground that M/s Rajham Impex and M/s Shri Bakia Trading Agency are not in existence. 4. Referring to the order of the assessment, more particularly para 13, the Ld.counsel submitted that the Assessing Officer accepted that the assessee has exported granites. Unless and until the assessee purchased granites, either from M/s Rajham Impex or M/s Shri Bakia Trading Agency or from somebody else, the assessee could not have exported 1996 cu.m. of granite blocks. Therefore, according to the Ld. counsel, when the Assessing Officer himself accepted the export of granites, he has no reason to doubt the purchases. The Assessing Officer simply disbelieving the case of the assessee on the ground that bills were outstanding for longer time and the supplier has raised a single bill. According to the Ld. counsel, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that when the vendors M/s Rajham Impex and M/s Shri Bakia Trading Agency insisted for cash payment, the same was withdrawn from bank and paid to them directly. Referring to Rule 6DD of Income- tax Rules, 1962, the Ld.counsel submitted that when the vendors insisted for payment of cash, admittedly the provisions of Section 14A is not applicable at all. In fact, the assessee has issued self cheque, which was used for withdrawing the money for cash payment. According to the Ld. counsel, these facts were not considered by the Assessing Officer or the CIT(Appeals) during the course of assessment proceeding and appellate proceeding even though the same were available with them. The Ld.counsel placed his reliance on the judgment of Gujarat High Court in CIT v. Nangalia Fabrics Pvt. Ltd. 2013 (8) TMI 80, copy of which is filed by the assessee. 7. On the contrary, Shri Supriyo Pal, the Ld. Departmental Representative, submitted that it is not in dispute that the assessee exported 1996 cu.m. of granite blocks. The Assessing Officer, as rightly submitted by the Ld.counsel for the assessee, admitted in the assessment order that the assessee has exported. The dispute is with regard to purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able on record. The assessee is admittedly engaged in the business of export of granites. The export of granites to the extent of 1996 cu.m. is not in dispute. The Assessing Officer is disputing the purchase of granites from two business entities, namely, M/s Rajham Impex and M/s Shri Bakia Trading Agency. On the basis of the enquiries conducted at Madurai and Trichy, the Revenue authorities examined the assessee under Section 131 of the Act. The copies of the statement recorded from the assessee under Section 131 of the Act forms part of assessment order as Annexure-J. In response to question No.14, the assessee explained that M/s Rajham Impex and M/s Shri Bakia Trading Agency were very much existing at the time of purchase of granites. To prove the existence, the assessee has filed copies of registration of sales tax and bills issued by them including the confirmation letters. For the purpose of convenience, we are reproducing the question asked to the assessee as question No.14 under Section 131 of the Act and the answer given by the assessee, as under:- Q.14 In respect of your claim of having purchased granite from M/s Rajham Impex and M/s Shri Bakia Trading Agency, as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aware that we had incurred transportation charges for exporting the granites received from M/s Rajham Impex and M/s Shri Bakia Trading Agency. Hence, in response to the specific query raised vide sl.no.3 in 142(1) notice dated 13.01.2014 regarding the transport charges, my auditor in his reply dated 28.01.2014 mistakenly has stated that the transport charges are not applicable since it is included in purchase cost. Now I would like to submit the copies of two bills as proof for the transportation charges paid to M/s Sekhar Transport, Ongole amounting to ₹ 6,45,417/-. Further I am also submitting a bill copy received from M/s Triar Logistics, Bangalore for the shipping charges incurred to the tune of ₹ 8,30,516/- towards uploading the consignment. With regard to the credit facility, it is the common business practice in this trade. Since we buy the old stocks under specific conditions the credit facility is extended. Hence, there is huge outstanding. This was the only purchase made by us on old stock (stock material). Payments to the above mentioned suppliers were made by cash since they insisted only cash. So, I have drawn the cash by issuing self cheques and for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on report said to be filed by the Inspector of Income Tax. This Tribunal is of the considered opinion that the material available on record clearly establishes the existence of Shri Bakia Trading Agency and the bills produced by the assessee discloses the TIN number and CST number. It does not lack any details which are required to be disclosed. Therefore, merely because one single bill was raised and the amount was outstanding for longer time that cannot be a reason to doubt the transaction. There may be various reasons for the businessman to keep the outstanding amount for a longer period. It is the matter between two businessmen to settle the outstanding amount in a manner known to law or according to their personal understanding. Such an event cannot be a reason to doubt the transaction at all. 12. Now coming to M/s Rajham Impex, the assessee has filed the copies of sales tax registration before the Revenue authorities during examination under Section 131 of the Act. The assessee has filed the copies of the same at page 20 of the paper-book. This contains the TIN number, CST number and permanent address of the proprietor of Rajham Impex. The bill raised by M/s Rajham Impex a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee from quarry owners. Since the vendors insisted for cash payment, the assessee has to necessarily make cash payment to M/s Rajham Impex and M/s Shri Bakia Trading Agency so as to enable them to make payment in cash to the quarry owners. These facts were not in dispute. Therefore, in view of Rule 6DD(k) of Income-tax Rules, 1962, there cannot be any disallowance under Section 40A(3) of the Act. In view of the above discussion, this Tribunal is unable to uphold the orders of the lower authorities, accordingly the same are set aside. The addition made by the Assessing Officer is deleted. 15. Now coming to I.T.A. No.1222/Mds/2016, the Assessing Officer levied penalty under Section 271B of the Act. Admittedly, there was a delay in getting the audit report. However, the assessee filed the audit report along with the return of income on 13.07.2012. From the order of the Assessing Officer it appears that the assessee explained before the Assessing Officer that his father was not well and he ultimately died in October, 2010. Thereafter his mother was bedridden and passed away in September, 2011. Due to demise of his father and mother, there was family dispute among the family mem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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