9911796707
TMI Blog2025 (1) TMI 1181X X X X Extracts X X X X X X X X Extracts X X X X ..... 61 (in short, 'Act') passed by AO was allowed by holding that the order passed was time barred. The Department filed Miscellaneous Application (MA) against the above order of ITAT which allowed and the order was recalled and appeal was fixed for hearing on 11.11.2024. The case was finally heard on 05.12.2024. 2. Grounds of appeal raised by the assessee are as under: "1. The Ld. CIT A ppeal erred in confirming the order passed by the Ld.AO which is bad in law. 2. The Ld. CIT Appeal erred in confirming the penalty impose by the Ld.AO for non-furnishing audit report under the provisions of Section 44AD of the Income Tax Act, 1961 without reasonable cause. 3. The appellant craves leave to add, amend, alter, drop any of the grounds of app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eipt of the assessee during the year under consideration exceeded the limits prescribed u/s 44AB of the Act. Hence, assessee was required to get its accounts audited as required u/s 44AB of the Act. The assessee did not filed original return of income and failed to furnish the said audit report due to which penalty u/s 271B of the Act was initiated. The assessee was issued a show cause notice on 24.12.2019 in response to which assessee filed reply dated 09.01.2020, which is reproduced at para 3 (page 2) of the penalty order. The assessee had referred to section 273B of the Act and submitted that no penalty can be imposed if there was reasonable cause for the said failure. All three partners were senior citizens and they had no knowledge of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He also observed that it was ascertained from ITBA that appellant had not uploaded audit report on the portal within prescribed time. The CIT(A) also held that there was no reasonable cause for failure of assessee to get the books of account audited. Hence, this appeal was also dismissed. 4. Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. The assessee submitted that the notification/circular cannot override the Act. For this, he relied upon the decision in cases of Ganeshdas Khanna vs. ITO and Gujarat Urban Co-op. Bank Federation (Civil Appeal No.11209 of 2002) and Jalgaon District Central Co-operative Bank vs. UoI (265 ITR 423) (Bombay). In subsequent submission dated 25.11.2024, assessee submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the first year of operation. He further submitted that the case laws relied upon by the appellant are not applicable to the facts of the present case. 6. We have heard both the parties and perused the material available on record. We have also deliberated upon the decisions relied upon by the ld. AR. There is no dispute regarding the fact that assessee did not file its return of income for the subject AY.2012-13. The return was filed only pursuant to the notice issued u/s 148 of the Act on 27.04.2019. As the assessee failed to furnish the audit report u/s 44AB of the Act, penalty u/s 271B was initiated by the AO during the assessment proceedings vide his order dated 24.12.2019. The AO issued show cause notice during the penalty proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied date and furnish by that day, the report of such audit in the prescribed form duly signed and verified by such an Accountant and setting forth such particulars as may be prescribed. Section 271B mandates levy of penalty up to maximum of Rs. 1,50,000/- but such penalty will not be imposable if the assessee proves that there was reasonable cause of such failure u/s 273B of the Act. In the present case, the reasons given by the assessee that there was substantial loss in the first year of operation, that it was busy in payment of creditors and that partners are senior citizens are not "reasonable cause" for failure to get the accounts audited u/s 44AB of the Act. It is seen from the order that assessee had turnover of Rs. 8,53,66,166/-, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here was loss return and report filed belatedly was available to the AO. In the present case, the assessee did not file any return of income and the audit report was not available before AO. Hence, these decisions are not applicable in the present case. Be that as it may, there are decisions of Hon'ble High Court where it has been held that where provisions of section 44AB are not complied, penalty u/s 271B was rightly levied. The Hon'ble Telengana High Court in case of S. Ramakumar Reddy vs. ACIT, (2023) 147 taxmann.com 401 held that where assessee bookie has not complied with provisions of section 44AB i.e., by submitting audited accounts despite having turnover exceeding prescribed limit and he did not file Income-tax return voluntarily, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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