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TMI Blog2015 (11) TMI 735X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - ITA No: 2766/AHD/2013, ITA No: 2767 & 2768/AHD/2013 - - - Dated:- 30-9-2015 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER For The Appellant : Shri U.S. Bhati, AR For The Respondent : Shri Somogyan Pal, Sr. D.R. PER ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. These 3 appeals filed by the Assessee are against the order of CIT(A)-XX, Ahmedabad dated 30.09.2013 for A.Y. 2008-09 2010-2011. 2. Before us, at the outset the ld. A.R. submitted that though t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as transport contractor for various parties and provided the transport facilities for which all the payments were received by the appellant from those parties and in turn the freight payment were made to various truck owners or transporters whose vehicles were used. As per accounting system all the receipt of freight and the payments made out of them ought to have been shown in the profit loss account, like in the normal business sales and purchases are shown. But to avoid the requirements of provisions of Section 44AB those freight receipts and payments were shown in the separate freight account bypassing the profit loss account and the net result of the freight account was transferred to profit loss account. So when all the payments were received by the appellant on which TDS has been made by the parties U/S.194C of the Act and all the receipts and payments have been routed through the books of accounts and bank account of the appellant then absolutely those were the turnover of the assessee or could be the gross receipts of the appellant. The credit of the TDS has also been claimed by the appellant. 4.7. It is needless to mention that, in view of the provisions of Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been noticed that the Hon'ble ITAT Vizag Bench in the case of Ashok Transport, Guntur Vs. DIT in ITA No.322 344/Viz/2011 dtd. 3.5.2013 has clearly held that the provisions of Section 44AB of the I.T. Act are clearly applicable and penalty u/s.271B is attracted if audit is not made to the accounts of the appellant. Relevant portion is reproduced as under:- 6. We have heard the Ld. D.R. in this regard. The revenue placed reliance on the decision of Chandigarh Bench of ITAT in the case of Sardari Lal Oberai Vs. ITO (2007) 106 TTJ (Chd) 1033, wherein the Tribunal has taken the view that the transport charges received by a transport contractor shall constitute turnover and hence penalty u/s.27IB is leviable. The Id. D.R. further pointed out that the very fact that the customers of the assessee had deducted tax at source u/s.1940 of the Act clearly show that the assessee has undertaken transport contracts from its customers and hence, the transport charges received by the assesseee from them shall constitute his turnover. The Learned D.R. further submitted that the Learned CIT(A) has misdirected himself in accepting the contention of the assessee that he has paid the trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le for the reason that it was not a technical breach rather it was a well thought planning. In this way the revenue is losing at both the ends because of the practice being followed. On the one side appellant is claiming the credit of the TDS of which no corresponding income has been offered by him in his return of income and ultimately getting refund of such TDS. On the other side, many of the truck owners might not have filed their returns of income as not warranted due to claim of credit by appellant and they remained out of reach of the Department. In this way the income which was liable to be taxed in their hands remained untaxed in their hands. As against the IDS they got the reimbursement of money equivalent to the TDS from the appellant. In other words those truck owners have not lost any money so far as TDS amount is concerned and at the same time they have not offered the income by filing their returns of income. 4.11. Further, the appellant's claim that they were not responsible for other truck or goods being carried in truck is not relevant to decide the obligation of getting the audit done of his books of accounts. Although, it may be relevant to decide the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceipt as turnover of the appellant. The submission is also not fc relevant for the reason that either the assessee has to show his net income in his profit loss account or he has to show gross freight receipt in credit side of the profit loss account and freight payments in debit side but either way the quantum of total income would not get changed. Hence assessment made on total income remains same whether there happens to be default u/s.44AB or not. 4.16. As claimed the freight payments to the truck owners cannot be taken as such the reimbursement of the expenditures. In fact in the gross receipts of the appellant and freight payments out of them are two different aspects and the amount involved in support of transactions are also different, so it cannot be said that those were the reimbursements. The decisions of the Hon'ble ITAT, Chandigarh bench in the case of Sardarilal Oberoi Vs. ITO and Hon'ble ITAT Vizag Bench in the case of Ashok Transport Vs. DIT have crucially dealt the issue involved in the appellant's case and decides the preposition and accordingly the appellant was under obligation to get his accounts audited u/s.44AB of the Act and consequentl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (supra). 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 (1972) 83 ITR 26 (SC) whereby Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X
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