TMI Blog2009 (2) TMI 207X X X X Extracts X X X X X X X X Extracts X X X X ..... ow or contemplate that all business are required to be consolidated together for working out the aggregate of the turnover. - The subsequent clarification issued by the Chartered Accountants of India cannot be pressed into service to the disadvantage of the Assessee - it is clear to us that assessee had acted in bonafide belief and had no dishonest intention in not obtaining audit report for all the three businesses carried on by him – penalty not imposable - 22/2007 - - - Dated:- 22-2-2008 - THE HON'BLE MR. JUST ICE DEEPAK VERMA AND THE HON 'BLE MR. JUSTICE ANAND BYRAREDY Petitioner represented : By Sri Arvind Kumar, Advocate Respondent represented : By Sri. Y.V. Raviraj, Advocate for Sri. S. Parthasarathy, Advocate This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d down by the Hon'ble Supreme Court in the case of HINDUSTAN STEEL LIMITED VS. STATE OF ORISSA reported in 83 ITR 26 to the facts of the case for the purpose of levying penalty under Section 271 (B) of the Act?" 5. The facts of the case in short are mentioned herein below:- The assessee is proprietor of three concerns namely, (1) Satish Enterprises - IOC Dealer (2) M/s. Khyathi Motors - Workshop (3) M/s. Kyathi Enterprises - Insurance Agency. He filed return of income on 31.10.2001 declaring the net taxable income of Rs.5,33,640/-. The return filed by him was processed under Section 143(1). Subsequently, it was taken up for scrutiny and the assessment was completed on 25.3.2003 determining the income of the assessee at Rs. 5,86,620/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from all angles, came to the consclusion that no penalty could have been imposed on the assessee as there was no willful default on his part and the appeal of the assessee was allowed. Hence, this appeal by the Revenue. 7. For ready reference, the relevant portion of Sec.44AB, which deals with audit of accounts of certain persons carrying on business or profession is reproduced herein below:- "Sec.44AB:- Every person,- (a) carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds forty lakh rupees in any previous year; or (b) XXX XXXX XXX (c) XXX XXXX XXX get his accounts of such previous year audited by an accountant before the specified date and furnish by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h business and profit and loss account and balance sheet are prepared separately. (a) Will tax audit under Section 44AB be applicable? (b) ---------. Answer (a):- The requirement of tax audit in the case of an assessee is to be determined taking into consideration the 'sales', 'turnover' or 'gross receipts' of all the business carried on by him. If the aggregate annual turnover of the four proprietary concerns exceeds Rs. 40 Lakhs, Section 44AB would be carefully applicable. (b) .. Therefore, from the above, it is clear that tax audit as such is conducted in respect of "an assessee" and not in respect of particular business." 9. Apart from the above, when the assessee was served with notice issued to him under Section 271B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect was brought to my notice only now. Since there is no intention on my part to defraud the revenue, the default if any on my part may kindly be condoned as it is not intentional and has occurred for the first time." 10. Taking the cumulative effect of the effect of the explanations offered by the assessee and from a reading of the relevant provisions of Section 44AB and Section 2(13) of the Act, we are of the considered opinion that the assessee was under a bonafide belief that he is required to obtain audit report only in respect of that business, the turnover of which crosses the limit of Rs. 40 Lakhs for each assessment year. 11. From the conduct, behavior and attitude of the assessee, it is clear that he was not aware that agg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee has to be discharged bonafide. As mentioned herein above, a bare reading of the provisions of law makes it abundantly clear that the Assessee was required to furnish audit with regard to his business as Section 44AB does not show or contemplate that all business are required to be consolidated together for working out the aggregate of the turnover. The subsequent clarification issued by the Chartered Accountants of India cannot be pressed into service to the disadvantage of the Assessee. 14. Tribunal has also placed reliance on yet another judgment of the Supreme Court reported in (1972) ITR 83 page 27 (HINDUSTAN STEEL LIMITED .VS. STATE OF ORISSA), where it dealt with the provisions contained in Orissa Sales Tax Act. While cons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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