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TMI Blog2025 (1) TMI 277X X X X Extracts X X X X X X X X Extracts X X X X ..... ontained in section 273B of the Act. We are also of the opinion that an honest belief founded upon reasonable grounds, of the existence of a state of circumstances, which assuming them to be true, would reasonably lead any ordinary prudent and cautious man, placed in the position of the person concerned, to come to the conclusion that the same was the right thing to do. Our above view finds support from the various decisions cited by the assessee. From the conduct, behavior and attitude of the assessee, it is clear that as soon as notice u/s 142(1) was served on the assessee, the assessee sought opinion from a professional who advised them to get their accounts audited and file return of income at the earliest. Immediately on advice, they appointed a CA firm to carry out the tax audit and file their return of income which was ultimately filed on 13/03/2018. As the assessee society s total income after deduction u/s 80P of the Act was NIL and hence, they on an honest and bonafide belief and under the impression that they are not required to file return of Income u/s 139 of the Act along with the tax audit report cannot be said to be without a reasonable cause within the meaning of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, in the above case, the assessee has furnished the audit report but failed to do so within the due date. The due date for furnishing audit report for the AY 2017-18 was 31/10/2017. However, the assessee has filed the same on 13/03/2018, which is after the due date. In the opinion of AO, the above non-compliance attracts penalty u/s. 271B of IT Act which is per cent of gross receipts or Rs. 1,50,000/-, whichever is less. Accordingly, as the gross receipts of the assessee exceeds Rs. 1,00,00,000/- for the AY 2017-18, the assessee was required to furnish audit report within due date. As the same has not been furnished within due date, penalty proceedings u/s 271B of the IT Act has been initiated and penalty notice has been issued to the assessee. In response to the said notice, the assessee has vide his detailed submission dated 18/01/2020 explained that assessee being a primary agricultural credit society had filed its return of Income along with the Tax Audit Report for the AY 17 18 in response to notice u/s. 142(1) of the Act. The assessee society s total income after deduction u/s 80P of the Act was NIL and hence, they on an honest and bonafide belief were under the impre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the due date due to an honest and bonafide belief and under the impression that the assessee society are not required to file return of Income U/s 139 of the Act along with the tax audit report. The Assessee also submitted that even the internal auditors from the co-operative department also not appraised the management about the matter. It is only after getting the notice u/s 142(1) of the Act, the assessee sought opinion from a professional who advised them to get their accounts audited and file return of income at the earliest. Acting upon immediately, they appointed a CA firm to carry out the tax audit and file their return of income which were ultimately filed on 13/03/2018. Further, it is also contended that as the AO completed the assessment based on the audited statement of accounts as well as audit report, there was no loss to the revenue on account of delay in filing the audit report. Accordingly, there was a reasonable cause within the meaning of section 273B of the Act in not getting the audit report within the prescribed time. Therefore, as per provisions contained in section 273B of the Act, the penalty may not be levied as there exist a reasonable cause for failure. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rupees in any previous year [***]: [Provided that in the case of a person whose (a) aggregate of all amounts received including amount received for sales, turnover or gross receipts during the previous year, in cash, does not exceed five per cent of the said amount; and (b) aggregate of all payments made including amount incurred for expenditure, in cash, during the previous year does not exceed five per cent of the said payment, this clause shall have effect as if for the words one crore rupees , the words [ten] crore rupees had been substituted:] [Provided further that for the purposes of this clause, the payment or receipt, as the case may be, by a cheque drawn on a bank or by a bank draft, which is not account payee, shall be deemed to be the payment or receipt, as the case may be, in cash; or] (b) carrying on profession shall, if his gross receipts in profession exceed fifty lakh rupees in any previous year; or (c) carrying on the business shall, if the profits and gains from the business are deemed to be the profits and gains of such person under section 44AE or section 44BB or section 44BBB, as the case may be, and he has claimed his income to be lower than the profits or ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-section (1) of section 139. 271B. [ Failure to get accounts audited. [Inserted by Act 21 of 1984, Section 30 (w.e.f. 1.4.1985).] - If any person fails ][* * *] [ Omitted by Act 46 of 1986, Section 21 (w.e.f. 10.9.1986).] to get his accounts audited in respect of any previous year or years relevant to an assessment year or [furnish a report of such audit as required under section 44-AB] [ Substituted by Act 22 of 1995, Section 48, for certain words (w.e.f. 1.7.1995).], the [Assessing Officer] [ Substituted by Act 4 of 1988, Section 2, for Income-tax Officer (w.e.f. 1.4.1988).] may direct that 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. 273B. [ Penalty not to be imposed in certain cases. - Notwithstanding anything contained in the provisions of [clause (b) of sub-section (1) of] [section 271, section 271-A] [Substituted by Act 4 of 1988, Section 114, for section 270, clause (a) or Clause (b) of sub-Section (1) of section 271, section 271-A, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. 9.3 Section 273B starts with the non obstante clause and provides that notwithstanding anything contained in several provisions enumerated therein including section 271B, no penalty shall be imposable on the person or the assessee, as the case may be, for failure referred to in the said provisions, if he proves that there was reasonable cause for the said failure. A clause beginning with notwithstanding anything is sometimes appended to a section in the beginning with a view to give the enacting part of the section in case of conflict, an overriding effect over the provision or Act mentioned in the non obstante clause. A non obstante clause may be used as a legislative device to modify the ambit of the provision or law mentioned in the non obstante clause, or to override it in specified circumstances. The true effect of the non obstante clause is that in spite of the provision or the Act mentioned in the non obstante clause, the enactment following it will have its full operation or that the provisions embr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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