9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (11) TMI 735 - AT - Income TaxPenalty u/s. 271B - failure to furnish the audit accounts u/s. 44AB - it is assessee s submission that he was under bona fide belief that he was not required to get the accounts audited in view of CBDT Instruction No. 452 dated 17th March, 1986 and the various decisions relied upon by him - Held that - No material has been placed on record by Revenue to demonstrate that the belief of the Assessee was not a bonafide belief. A reading of Section 271B makes it clear that the imposition of penalty is not mandatory as the word used is may meaning thereby that a discretion is conferred on the A.O to impose or not to impose the penalty. Further the provision with respect to imposition of penalty is not mandatory in view of the provision contained in Section 273B of the Act which interalia provides that notwithstanding the provisions of Section 271B, no penalty shall be imposable 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 failure. In the present case, the Assessee was having a bona fide belief that he was not required to get his books audited under 44AB in view of the CBDT Circular. In such a situation, we are of the view that there was a reasonable cause on the part of the Assessee for not getting the books audited. Further it is a settled law that when there is a technical or venial breach of the provisions of law, the ends of justice requires that discretion should not be exercised in favour of punishing a minor default and for which we get support from the decision of Hon ble Apex Court in the case of Hindustan Steel Ltd. vs. State of Orissa ( 1969 (8) TMI 31 - SUPREME Court ) - Decided in favour of assessee.
Issues Involved:
1. Whether the Assessee was required to get his accounts audited under Section 44AB of the Income Tax Act. 2. Whether the Assessee's failure to get accounts audited attracts penalty under Section 271B of the Income Tax Act. 3. Whether the Assessee's belief that he was not required to get his accounts audited constituted a "reasonable cause" under Section 273B of the Income Tax Act. Issue-wise Detailed Analysis: 1. Requirement of Audit under Section 44AB: The Assessee, engaged in the business of goods transport agency, filed his return of income for A.Y. 2010-11 declaring a total income of Rs. 4,78,250. The gross receipts were Rs. 1,82,04,414, which necessitated an audit under Section 44AB of the Income Tax Act since the turnover exceeded Rs. 40 lakhs. The Assessee failed to furnish audited accounts, leading the Assessing Officer (A.O.) to levy a penalty under Section 271B. 2. Penalty under Section 271B: The A.O. levied a penalty of Rs. 91,022, being 0.5% of the gross receipts, due to non-compliance with Section 44AB. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the penalty, stating that the Assessee's contention of being a commission agent was incorrect. The CIT(A) emphasized that the Assessee acted as a transport contractor, receiving payments and making freight payments, which should have been reflected in the profit & loss account. The CIT(A) also noted that the Assessee's argument of working as a "Kacha Adatia" was not applicable in the service sector. 3. Reasonable Cause under Section 273B: The Assessee argued that he was under a bona fide belief that he was not required to get his accounts audited, based on CBDT Circular No. 452 dated 17th March 1986. The Tribunal acknowledged this belief as bona fide, noting that no material was presented by the Revenue to demonstrate otherwise. The Tribunal highlighted that the imposition of penalty is discretionary, as indicated by the use of the word "may" in Section 271B. Moreover, Section 273B provides that no penalty shall be imposed if there is a reasonable cause for the failure. The Tribunal referred to the Supreme Court's decision in Hindustan Steel Ltd. vs. State of Orissa, which held that even if a minimum penalty is prescribed, it should not be imposed for a technical or venial breach or when the breach flows from a bona fide belief. The Tribunal concluded that the Assessee's belief constituted a reasonable cause, and therefore, the penalty under Section 271B was not justified. Conclusion: The Tribunal allowed the Assessee's appeal, directing the deletion of the penalty. It ruled that the Assessee had a reasonable cause for not getting the accounts audited, and the imposition of penalty was not warranted. The same reasoning was applied to the Assessee's appeals for A.Y. 2008-09 and 2010-11, resulting in all appeals being allowed. Order Pronouncement: The order was pronounced in open court on 30-09-2015.
|
