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TMI Blog2017 (5) TMI 1421X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty u/s. 271B, these appeals are heard together and decided by this common order. For the sake of convenience, we are discussing the facts in ITA No. 856/Hyd/2016 for AY. 2008-09. 2. Briefly stated, assessee is engaged in the business of purchase of land and conversion of land into plots (real estate business). Search & Seizure operations were conducted in the case of the M/s. Sri M. Sambasiva Rao and others, Hyderabad and its group of cases on 16-07-2008. During the course of search operations conducted in the case of Mr. S. Yellaiah, partner of the assessee-firm, M/s. Sri Sai Prasanthi Realtors, where certain information related to assessee-firm was noticed/found and seized and consequent to search proceedings, assessee filed its ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined before due date, which was shown to have furnished along with return of income furnished on 25-03-2010. AO was of the opinion that it clearly attracts the penalty proceedings u/s.271B of the Act. Accordingly, levied penalty of Rs. 64,088/-, which was equivalent to 0.5% of turnover/gross sales of Rs. 1,71,31,100/-, for the year. 4. Before the Ld.CIT(A), assessee objected the said levy of penalty. After considering the explanation of assessee, CIT(A) dismissed the appeal of assessee by stating as under: "6.0 perused of submissions of the appellant and the observations of the AO, both in the assessment order as well as the penalty order. As could be seen from the facts of the case, the appellant shown to be engaged in the business of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee fail to get his/it's accounts audited in respect of any previous year or years relevant to the assessment year, or furnish a report of such audit as required u/s.44AB. As could be seen from the language used in the said provision, the assessee is required to get accounts audited or furnish such report as stipulated u/s.44AB, which stipulate that the accounts of previous year related to assessment year are required to be audited before the due date and furnish the report in prescribed format by that date. In this case the due date for getting the accounts audited was 31-10-2008, where as the audit report is shown to be dtd.15- 09-2008. However, no such report was furnished by that date and in this case the return of income was furn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee's case, the above tax audit report could not be furnished due to misplacement of the same due to non availability of the concerned accountant and hence could not produced/submitted which may please be considered and penalty may not be levied." 6.1 Thus, as could be seen from the facts of the case, the appellant could neither prove that the accounts were audited before the due date nor establish that copy of Audit Report was obtained, with such report neither filed by due date or even afterwards. Thus on the facts of the case, it clearly attracts the penalty u/s. 271B of I.T.Act and as per the said provisions penalty of Rs. 64,088/-, being 0.5% of total sales of Rs.l,17,13,100/- for the year under reference is held to be s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per the Board Circular No. 5 of 2007 dt. 26-07-2007. He referred to para 6 of the said Circular particularly Item No. (i) which is as under: "(i) The report of audit under section 44AB is not to be attached with the return. It should not be furnished separately also before or after the due date. However, an assessee should get the report of audit from an accountant under said section before the due date of the furnishing of the return and shall fill out the relevant columns of these forms on the basis of such report. The assessee should retain the report with himself. It may be furnished in original during the assessment proceedings. No penalty under section 271B shall be initiated or levied for not furnishing the tax audit report on or b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and also further states that it should not be furnished separately also before or after due date. Non-enclosure of audit report to the return of income does not attract any penalty u/s. 271B, as specified in the Board Circular extracted above. Since AO has initiated the penalty proceedings only for nonenclosure of audit report along with the Return, we are of the opinion that the same is not attracting penalty, on the facts of the case, as assessee has complied with the Board Circular. If the audit report was not enclosed to the return of income filed by assessee subsequently in response to proceedings u/s. 153C, AO should have treated the return as defective return. No such action was taken by the AO, which indicates that the return is co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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