2023 (4) TMI 361 - AT - Income Tax

Penalty u/s 271B - Assessee failed to file correct audited books of account, alongwith original return of income but with revised return - HELD THAT - In the instant case, the Assessee filed its return of income on 30.09.2011 and the books of account of the Assessee have also been audited only on 30.09.2011, however it seems that somehow due to inadvertent or otherwise mistake in the name of Auditor, the Assessee failed to file correct audited books of account, alongwith original return of income, but it is a fact that audited books of account which are not in dispute, have duly been filed along with the revised return of income. The facts and figures of the original return and the revised return are exactly same and there is nothing contrary. Even it is not the case of the Revenue-Department that the Assessee has failed to get his accounts audited for the year under consideration and/or failed to furnish report of such audit as required u/s 44AB of the Act before the finalization of the assessment order, as mandated u/s 271B of the Act - Appeal filed by the Assessee stands allowed.

Summary

Issues:
Assessment of total taxable income, disallowance of expenses, penalty under section 271B for not getting accounts audited within prescribed period, ex parte decision due to non-appearance of Assessee, revision of return with audit report, imposition of penalty u/s 271B.

Assessment of Total Taxable Income:
The Assessee declared a total taxable income of Rs. 6,50,860/- initially, which was later revised admitting the same income. The case was processed under section 143(1) of the Income-tax Act, 1961. The Assessee was observed to have declared sales of Rs. 3,57,70,786/- and purchases of Rs. 3,45,81,398/- during the year under consideration.

Disallowance of Expenses:
The Assessing Officer (AO) disallowed Rs. 34,58,139/- @ 10% of purchases, Rs. 1,000/- debited as donation, and Rs. 3,04,197/- @ 50% of expenses claimed in the P&L A/c by the Assessee. The Assessee failed to produce books of account, leading to the conclusion that there were no supporting vouchers for the expenses and purchases.

Penalty under Section 271B:
The AO initiated penalty proceedings under section 271B as the Assessee got the accounts audited after the stipulated period. The penalty of Rs. 1,50,000/- was imposed, which was affirmed by the Commissioner. The Assessee appealed against this penalty imposition.

Ex Parte Decision:
The appeal was decided ex parte as the notice of hearing sent to the Assessee was returned undelivered. The Tribunal proceeded to decide the appeal in the absence of the Assessee.

Revision of Return with Audit Report:
The original return was filed on 30.09.2011, revised on 14.09.2012, and audited on 30.09.2011 by Shri V.K. Gupta of M/s M.K. Goswami & Co. The revised return was filed after the due date, leading to penalty proceedings under section 271B. However, the audited books of account were filed along with the revised return, and the facts and figures of the original and revised returns were the same.

Decision on Penalty under Section 271B:
The Tribunal considered the circumstances and relevant provisions of law. It noted that the audited books were filed along with the revised return, and there was no failure to get accounts audited or furnish the required report before finalizing the assessment. Consequently, the penalty under section 271B was deleted, and the appeal by the Assessee was allowed.

This detailed analysis covers the issues of assessment, disallowance of expenses, penalty imposition under section 271B, ex parte decision, revision of return with audit report, and the Tribunal's decision on the penalty.