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TMI Blog2001 (9) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-contracted the work of Rs.39,36,075 to Zenith Engineers, Bhopal, on two per cent. profit and the remaining work was completed by Guliani Construction Company, in which the assessee is a partner. The Assessing Officer found that the total contract amount received by the assessee was more than Rs.40 lakhs, as such he should have filed a return along with the audit report under section 44AB of the Income-tax Act, 1961 (hereinafter referred to as the "Act"). Penalty proceedings were initiated under section 271B. A notice under section 271B was issued on December 20, 1991. The Income-tax Officer passed an order under section 271B of the Act to the effect that there was failure by the assessee to get his account books audited from a chartere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such person shall pay, by way of penalty, a sum equal to one-half per cent. of the total sales, turnover or gross receipts, as the case may be, in business, or of the gross receipts in profession, in such previous year or years or a sum of one hundred thousand rupees, whichever is less." A reading of the aforesaid provision makes it clear that the imposition of penalty is not mandatory. The word used is "may". A discretion is conferred on the authority to impose penalty or not to impose it. That the provision with respect to imposition of penalty is not mandatory, is further fortified by the statutory provision contained in section 273B of the Act, which is reproduced hereunder: "273B. Notwithstanding anything contained in the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appears that the assessee had disclosed the entire facts and he did not suppress any material fact with respect to the entire contract value and his share and it is also not the case of the Department that sub-contracting was impermissible. The finding which has been recorded is that the assessee was under the bona fide belief that the amount obtained by the sub-contractor was not to be accounted towards his income and has been taken to be a reasonable cause for not getting the accounts audited. It is also the finding recorded that the assessee was having no control over the account maintained by Zenith Engineers to whom the part of the main contract was sub-divided. Particularly in view of the fact that there was no suppression of the i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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