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TMI Blog2023 (5) TMI 1211X X X X Extracts X X X X X X X X Extracts X X X X ..... alf of Amul Milk in the assigned area and was entitled to fixed commission only. In our opinion, the explanation offered by the assessee constitutes reasonable cause and the assessee is eligible to the protection envisaged under section 273B. It is an admitted position that during the course of assessment proceedings, the assessee got the tax audit done and submitted the tax audit report before the Ld. AO when he was made aware that initial receipts having been deposited by him in the bank account maintained by him necessitated tax audit as per the provisions of section 44AB. This factual position has altogether been ignored by the Ld. AO/CIT(A) and the impugned penalty has been levied/confirmed. As during the course of assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 271B of the Income Tax Act, 1961 (the Act ) for the Assessment Year ( AY ) 2017-18. 2. The grounds raised by the assessee are as under:- 1. In the circumstances and facts of the case that the learned A.O s order as well as CIT(Appeal) s order are not justified in the eyes of law. 2. The humble appellant was not liable to have Tax Audit in view of Circular No. F.No.201/3/85-IT(A-II) dated 17/03/1986. 3. That the documents filed before the A.O during the course of proceedings evidently proves that the appellant provided the services only as courier and thus is not liable u/s 44AB of Income Tax Act, 1961. 4. That the certification filed by the appellant for the services rendered on behalf of the principal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the penalty proceedings under section 271B of the Act for his failure to get his books of account audited by a qualified Chartered Accountant, thereby violating the provisions of section 44AB of the Act. 4. During penalty proceedings, show cause notices remain uncomplied with. Hence, the penalty of Rs. 1,50,000/- was imposed vide order dated 21.12.2021 under section 271B of the Act against which the assessee filed appeal before the NFAC, Delhi. 5. During the course of appellate proceedings, it was explained that the assessee is engaged in the business of supply of milk (Amul) on behalf of Gujarat Co.op Milk Marketing Federation Ltd. known as Amul Milk in the assigned area and its daily proceeds were given to them via bank mode. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en by Gujarat Milk Marketing Federation (AMUL) did not specify that assessee was only an agent for marketing of their product. The assessee did not give any evidence showing that he was acting as commission agent only. In view of this, the assessee s stance that its accounts are not liable to audit u/s 44AB is not acceptable. 4.3.1 Second line of argument is that the previous year was the assessee s first year of business and since he was ignorant about the provision of law and that there was no wilful default. This argument is also not acceptable. The provision of section 44AB is very clear. If turnover exceeds certain prescribed limit, books of accounts are to be maintained and the same have to be audited by a Chartered Accountant. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is less. However, no penalty shall be imposable on the person if he proves that there was reasonable cause for the failure as provided under section 273B of the Act. 10. During assessment proceedings as also before the Ld. CIT(A) in penalty proceedings the assessee explained, inter alia that it was his first year of business and that he was under the bonafide belief that the provisions of section 44AB of the Act was inapplicable to him as he was only a commission agent supplying milk on behalf of Amul Milk in the assigned area and was entitled to fixed commission only. In our opinion, the explanation offered by the assessee constitutes reasonable cause and the assessee is eligible to the protection envisaged under section 273B of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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