1993 (3) TMI 196 - AT - Income Tax

Summary

Issues Involved: Appeal against cancellation of penalty u/s 271B for failure to audit accounts u/s 44AB.

Summary:
1. The revenue appealed against the cancellation of penalty u/s 271B by CIT (Appeals) for failure to audit accounts as required by section 44AB of the Income-tax Act, 1961.
2. The turnover of the assessee exceeded the limit specified u/s 44AB(a), necessitating audit, but the assessee failed to comply.
3. The Assessing Officer imposed a penalty, which was cancelled by CIT (Appeals) based on the assessee's reasonable belief and lack of deliberate defiance of law.
4. The CIT (Appeals) excluded interest and adat receipts from turnover, categorizing the assessee as a kachha arahatia, and held that penalty proceedings should have been initiated during assessment.
5. The assessee's submissions, including references to relevant legal provisions and circulars, supported the contention that only gross commission should be considered for section 44AB.
6. The Tribunal upheld the CIT (Appeals)'s decision, considering the nature of transactions and the assessee's reasonable cause for not auditing accounts, and dismissed the appeal.

Key Points:
- The Assessing Officer imposed a penalty for failure to audit accounts as required by section 44AB.
- CIT (Appeals) cancelled the penalty based on the assessee's reasonable belief and lack of deliberate defiance of law.
- The Tribunal upheld the decision, considering the nature of transactions and the assessee's reasonable cause for non-compliance with audit requirements.