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TMI ID= 217914
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2012 (10) TMI 852 - ITAT, DELHI

M/s. Hridey Vikram, Versus Assistan Commissioner of Income-tax, Circle 22(1), New Delhi.

Penalty u/s 271B - assessee had not got its account audited u/s 44AB - Held that:- As decided in ACIT Versus Smt. Bharti Sharma [2010 (7) TMI 494 - ITAT, NEW DELHI] the assessee cannot be penalized for the act for which there is no failure on his/her part - for the purpose of sec. 44AB, turnover of all the businesses has to be considered but the provisions of sec. 271B will be pressed in operation in respect of the failure only and not in respect of accounts which have been audited.

Setting aside the orders of the authorities giving directions to AO to delete the penalty levied in respect of M/s. Rex Engineering & Shares whose accounts were admittedly audited under sec. 44AB and audit report thereof was filed well within the prescribed time limit - partly in favour of assessee.

No.- I.T. A. No.2472/Del/2012

Dated.- October 19, 2012

Citations:

  1. ACIT Versus Smt. Bharti Sharma - 2010 (7) TMI 494 - ITAT, NEWDELHI

SHRI I.C. SUDHIR, AND SHRI A.N. PAHUJA, JJ.

Appellant  by: Shri S.M. Mathur, CA.

Respondent by: Shri Satpal Singh, Sr. DR.

O R D E R

PER I.C. SUDHIR, JUDICIAL MEMBER:

The assessee has impugned first appellate order dated 1st March, 2012 whereby the learned Commissioner of Income-tax (Appeals) has confirmed the penalty of Rs.1,00,000/-  levied by the Assessing Officer under section 271B of the Income-tax Act, 1961(the Act).

2. The relevant facts are that the Assessing Officer levied penalty u/s 271B of the Act on the basis that the assessee had not got its account audited under sec. 44AB and had not filed audit report in the case of M/s. Rex Overseas Corporation.  The contention of the assessee remained that he did not get the account audited under sec. 44AB in the case of M/s. Rex Overseas Corporation since their sales were `Nil’.  He however got the account of  M/s. Rex Engineering and Sales audited under sec. 44AB of the Act and audit report was filed in respect thereto since their total turnover was Rs.23,69,49,229/-.  The AO did not agree with this explanation of the assessee on the basis that both are the proprietary concerns of the assessee and for the purposes of sec. 44AB, turnover of all the businesses has to be considered.  The learned CIT(A) has upheld this action of the Assessing Officer.

3. The contention of the learned AR before the Tribunal remained that the decision of Delhi Bench of the Tribunal in the case of ACIT vs. Smt. Bharti Sharma (2010) 6 ITR (Trib.) 48 (Delhi) fully covers issue raised in the present appeal.  He submitted that this decision was also cited before the authorities below but they have failed to appreciate the same.  The learned AR further submitted that the assessee was under bona fide belief that since M/s. Rex Overseas Corp. was having sales at `Nil’, there was no need to get its accounts audited under sec. 44AB of the Act.  The learned DR on the other hand, tried to justify the orders of the authorities below.

4. Having gone through the decision of Delhi Bench of the Tribunal in the case of ACIT vs. Smt. Bharti Sharma (supra) we find that under almost similar facts the Tribunal has held that the assessee cannot be penalized for the act for which there is no failure on his/her part.  It was held that it is also true that for the purpose of sec. 44AB, turnover of all the businesses has to be considered but the provisions of sec. 271B will be pressed in operation in respect of the failure only and not in respect of accounts which have been audited.  In other words, penalty cannot be imposed in respect of the business whose books of accounts have been audited and filed on or before due date specified in the Act. In that case before the Tribunal, the assessee was having two businesses namely exports and share trading.  Gross turnover from both exceeded Rs.40 lakhs.  The assessee got the accounts audited in respect of export business but failed in respect of share trading business.  The assessee stated that the failure was due to mistake and ignorance of the law.  The AO levied penalty @ ½% of the total turnover of both the businesses.  The learned CIT(A) held that the penalty could be imposed only with reference to the books of accounts of the business, which had not been audited and consequently  upheld the penalty in respect of share trading business whose accounts had not been audited.  The said first appellate order has been upheld by the Tribunal.  Respectfully following this decision of the Tribunal we while setting aside the orders of the authorities below, direct the Assessing Officer to delete the penalty levied under section 271B of the Act in respect of M/s. Rex Engineering & Shares whose accounts were admittedly audited under sec. 44AB of the Act and audit report thereof was filed well within the prescribed time limit.  The ground is thus partly allowed.

5. In the result, the appeal is partly allowed.

6. Order pronounced in the Open Court on 19th October, 2012.

 
 
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