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TMI Blog1991 (5) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessment year 1985-86 and Rs. 1,46,174 for the assessment year 1986-87. Since the assessee had not got its accounts audited under section 44AB of the Act, the Income-tax Officer passed orders of penalties under section 271B for an amount of Rs. 53,750 and Rs. 70,770 for the assessment years 1985-86 and 1986-87 respectively. The brief reason for levying such penalties was that the audit report was required to be obtained on or before 30-9-1985 for the assessment year 1985-86 and on or before 30-6-1986 for the assessment year 1986-87. Since such audit report was not filed, the assessee, according to the A.C. had committed default under section 44AB inviting penalty under section 271 B. After issuing a proper showcause notice, the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluded unloading charges and hamali charges and these activities indicated that the assessee was trading and was not engaged in the business as a commission agent. The CIT (Appeals) accepted this report, she gave a finding that the assessee was obliged to get its accounts audited by the due date for the impugned assessment years and if failed to do the same, it had to pay the penalty which was levied on it. She, therefore, confirmed the penalty orders and hence this appeal. 4. Shri S.N. Inamdar the learned counsel for the assessee argued that the assessee was a commission agent in cloth. The ITO had never given a finding in any of the assessment orders that the assessee was dealing or trading in cloth. The assessee was kutcha arhatia and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat no sales/purchases activities have been carried on by the appellants and on the credit side it is only the receipts of the commission which is shown while on the debit side expenses have been reflected. The Learned Income-tax Officer in the body of assessment order (a copy of which is enclosed herewith for your honours ready reference and records) nowhere has stated that the appellants are carrying on business either as a manufacturer or trader but has only stated " Line of assessee's business continued to remain the same as in the preceding year." He has nowhere also indicated that the appellants were liable for getting their accounts audited as per the provisions of section 44AB of the Income-tax Act, 1961. Sir, in this regard I respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as the sales/turnover of the agent for the purpose of section 44AB of the Income-tax Act, 1961." The Board, thereafter, has laid down the various principals of distinctions between kutcha arhatias and pucca arhatias which are as follows : " 3 ...... The primary necessity in each instance is to ascertain with precision what are the express terms of the particular contract under considerations. Each transaction, therefore, requires to be examined with reference to its terms and conditions and no hard and fast rule can be laid down as to whether the agent is acting only as an agent or also as a principal. 4. The Board are advised that so far as Kutcha arhatias are concerned, the turnover does not include the sales effected on behalf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limited to the commission agent's charges and certain out of pocket expenses whereas as a pucca arhatia has personal interest of his own when he enters into a transaction ; (vii) In the event of any loss, the kutcha arhatia is entitled to be indemnified by his principal as is not the case with pucca arhatia." (emphasis supplied) Shri S.N. Inamdar, therefore, argued that in the case of the assessee which was and which has been functioning as kutca arhatia, it was not necessary to get its accounts audited under section 44AB in view of the aforementioned Circular. The learned Departmental Representative, on the other hand, relied on the orders of the revenue authorities. 5. We have considered the submissions made on both the sides. In o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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