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TMI Blog2023 (8) TMI 960X X X X Extracts X X X X X X X X Extracts X X X X ..... contractor was not to be accounted towards his income, was a reasonable cause for not getting accounts audited under section 44AB. In the case of Staywell Hotels (P.) Ltd. [ 2005 (3) TMI 47 - MADHYA PRADESH HIGH COURT] held that where delay in filing audit report in Form No. 3CD, was not due to any deliberate intention on part of assessee, nor could its conduct be regarded as contumacious or with a view to evade payment of tax, no case for penalty u/s 271B was made out. Thus we are of the considered view that this is a fit case when penalty under Section 271B of the Act is liable to set-aside. Decided in favour of assessee. - Shri Waseem Ahmed, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member For the Appellant : Shri Sagar Shah, A.R. For the Respondent : Shri Abhimanyu Singh, Sr. DR ORDER PER SIDDHARTHA NAUTIYAL, JM: This appeal has been filed by the assessee against the order passed by the Ld. Commissioner of Income Tax(Appeals), (in short Ld. CIT(A) ), National Faceless Appeal Centre, (in short NFAC ), Delhi in Order No. ITBA/NFAC/S/250/2022-23/1051685070(1) vide order dated 30.03.2023 passed for Assessment Year 2017-18. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pliance to the any provision of income tax act as on aware about the provision of Income Tax Act appellant is regularly filling return of income and getting books of accounts audited from A.Y. 2019-20 till date. 6. On the basis of the facts and circumstances of the case the order passed by the Ld. Commissioner of Income Tax (Appeals) has erred in passing order u/s 250 of the Act, dated 30.03.2023 since Ld. CIT (A) has upheld the decision of AO and failed to consider that penalty provision of section 271B does not empower the AO to mandatorily levy the penalty as there is discretion to 40 to waive the penalty looking into the facts of the case and the same is ignored by the Ld. CIT (A). 7. On the basis of the facts and circumstances of the case the order passed by the Ld. Commissioner of Income Tax (Appeals) has erred in passing order u/s 250 of the Act, dated 30.03.2023 since during the course of assessment proceedings when appellant aware about the provision he duly certified his books of accounts by independent chartered accountant which was accepted at assessment stage and no discrepancies were found, there is only inadvertent mistake of the appellant that he has faile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ximum amount not chargeable to tax levy of penalty at Rs. 1,28,529/- is unreasonable, illegal and against the set of facts available on record. 13. On the basis of the facts and circumstances of the case the order passed by the Ld. Commissioner of Income Tax (Appeals) has erred in passing order u/s 250 of the Act, dated 30.03.2023 is required to be quashed as intention of mandating the compliance of Provision of Section 44AB was to ensure that the books of account and other records are properly maintained and faithfully reflect the true income of the taxpayer. Though this object was achieved and the books of accounts of the appellant was duly accepted by AO when the returned income is considered as assessed income. Though books of accounts were not audited, the object of the law was achieved, which was disregarded by AO. Hence, penalty levied u/s. 271B is bad in law as well as on facts and required to be deleted. The appellant craves leave, to add, amend, alter or delete any of the grounds of anneal at the time of personal hearing in the interest of natural justice. 3. The brief facts of the case are that the Assessing Officer observed that during scrutiny assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 271B. . 7.4 In this case, the turnover of the assessee during the FY 2016-17 as per P L Accounts submitted during the appellate proceedings is Rs. 3.41,66,600/- and it exceeds the limit of one crore rupees specified in section 44AB. In view of the above facts and respectfully following the of Hon'ble Karnataka High Court in the e judgment of Hon case of S.C. Naregal (supra), I agree with the view of the AO that the assessee was not prevented by any reasonable cause to gets his accounts audited u/s. 44AB and therefore, levy of penalty u/s. 271B is upheld. These grounds of appeal are accordingly dismissed. . 10.1 It is observed from the P L A/c. of the assessee for the FY 2016- 17 that the assessee has reported sales of dairy products amounting to Rs. 3,41,66,600/- and has debited expenses on account of purchases amounting to Rs. 3,36,68,889/-. It proves that the appellant is acting as a trader and not as commission agent. Further, he has not substantiated his claim that he is acting as a commission agent. Therefore, the contention that he earns commission only is false and baseless. As the turnover of the assessee exceeds Rs. 1 crore, the assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affairs of the business. Further, this was the first year when the turnover of the assessee s business exceeded the statutory limit under Section 44AB of the Act. It is further observed that in the scrutiny assessment, the accounts of the assessee have not been rejected and also that during the course of assessment proceedings, no additions have been made to the returned income filed by the assessee. Therefore, evidently there is no mala fide intention in not getting the books of accounts audited during the impugned year under consideration. 8. In the case of Koramangala Club 81 taxmann.com 270 (Karnataka) , the Hon'ble High Court held that where assessee was under bona fide belief that provisions of section 44AB were not applicable to a club, while supplying beverages, liquor, etc., to its members as it was not engaged in any business, but only a mutuality, it constituted reasonable cause to absolve it from levy of penalty. In the case of Dr. K. Satish Shetty 188 Taxman 32 (Karnataka) , assessee was proprietor of three concerns and his assessment was completed on total income of all three concerns. The assessee obtained an audit report required under section 44AB only in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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