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TMI Blog2015 (10) TMI 923X X X X Extracts X X X X X X X X Extracts X X X X ..... under a bona fide belief that the commission income for the year under consideration was less than ₹ 40 lacs; hence under that impression he has not obtained the audited accounts. On the question of bona fide of tax payers, viz-a-viz, the provision of Section 271B of IT Act a decision of Hon’ble Gujarat High Court has been cited in the case of ITO Vs. Sachinam Trust(2009 (3) TMI 186 - HIGH COURT OF GUJARAT ). Respectfully following this decision, we hereby hold that in view of the provisions of Section 273B of IT Act the assessee was prevented by a reasonable cause; hence the penalty levied u/s. 271B deserves to be deleted. - Decided in favour of assessee. Penalty u/s. 271(1)(c) - Non deduction of TDS on commission - Held that:- W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order passed u/s.271B dated 25.03.2010 were that the assessee-firm is engaged in dalali/commission/brokerage business in textile cloth. While levying the penalty u/s.271B of IT Act, the AO has given the reason as follows: 2. In this case, during the course of assessment proceedings, it was noticed that assessee has shown total commission income of ₹ 24,06,124/- during the year under consideration. However, out of the total commission of ₹ 24,06,124/- an amount of ₹ 4,56,895/- pertained on the previous year i.e. A.Y. 2003-04. Since the assessee is following Mercantile System of accounting, it should have accounted for the said commission income of ₹ 4,56,895/- in the A.Y. 2003-04 itself. Therefore, the commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtaining to the present year. Hence, it is seen that once it is held that this income is taxable in the present year, as a consequence, the assessee becomes eligible for reduction of such income in assessment year 2005-06. Income cannot be taxed twice, once in the present year by applying the mercantile system of accounting and then again in the next year on the basis of assessee's books of account as per cash system of accounting in respect of its commission income. Hence, the assessee deserves relief in the next year as a consequence to upholding of addition made by the A.O. in the present year. Admittedly, the next year i.e. assessment year 2005-06 is not open before us but since the relief claimed by the assessee as per this alterna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year under consideration was less than ₹ 40 lacs; hence under that impression he has not obtained the audited accounts. On the question of bona fide of tax payers, viz-a-viz, the provision of Section 271B of IT Act a decision of Hon ble Gujarat High Court has been cited in the case of ITO Vs. Sachinam Trust, 223 CTR 152 (Guj.). Respectfully following this decision, we hereby hold that in view of the provisions of Section 273B of IT Act the assessee was prevented by a reasonable cause; hence the penalty levied u/s. 271B deserves to be deleted. B. Penalty u/s. 271(1)(c) 4. Facts in brief as emerged from the penalty order passed u/s.271(1)(c) dated 25.03.2010 were that the penalty was levied as per the following observations: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... done on their cloth in process houses of Ahmedabad city. Alternatively, we help exporters of textiles cloths in procuring grey cloth, finished cloth and /or supervise the cloth while the same is processed in various process houses in the city. For this purpose, we make payments to brokers/ agents/ parties who help us in procuring grey cloth and / or processing the cloth. Method of accounting consistently followed by the firm in general is Mercantile. However, the commission income is taken into account on cash for doing so is that from most of the process houses (giver of commission on cloth supervision work) and exporters (giver of commission on grey cloth purchases) are crediting our account in their books with the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X
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