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2013 (1) TMI 107 - AT - Income TaxPenalty u/s. 271B - Failure to get accounts audited u/s 44AB - assessee contented that its entire income being tax exempt u/s.80P accordingly there being no loss to the Revenue - A.Y. 2006-07 - Held that:- No reason to doubt the assessee when it states that it was under a bona fide belief that it was not required to get its accounts audited u/s. 44AB in view of its entire income being exempt u/s. 80P. Its' statutory audit was completed well in time, so that it was definitely in a position to obtain an additional report u/s. 44AB from a firm of Chartered Accountants, i.e., were it to be in its knowledge or been so advised. In fact, had its statutory auditors qualified to be Accountants under the Act, they would have themselves guided the assessee properly in this regard. The same, nevertheless, shows the assessee's bonafides in the matter, it getting its accounts audited as well as filing the return of income in time. Therefore, of the view that in the facts and circumstances of the case, there was sufficient cause for the AO not to levy penalty u/s. 271B for the first year (i.e., A.Y. 2006-07) in spite of the default in complying with the provision of s. 44AB, which the said (former) section seeks to penalize, and accordingly direct its deletion. A.Y. 2006-07 - The return for the second year (i.e., A.Y. 2007-08) was filed on 24-09-2007, even as, the show-cause notice for the levy of penalty u/s. 271B for the first year (A.Y. 2006-07) stood issued to it on 13-06-2007. As such, ignorance of law, i.e., of it being required to get its accounts audited u/s. 44AB irrespective of the quantum and nature of its income, including the tax status, tax-exempt or otherwise, thereof, which forms the edifice of the assessee's case, completely breaks down for the second year, i.e., A.Y. 2007-08. Having been served with a legal notice for the levy of penalty u/s. 271B, it was incumbent on the assessee to cause to comply with the provision, at least for the second year and, in any case, seek legal opinion in its respect. Rather, it could have, on its own, requested the AO not levy the penalty for that year (i.e., A.Y. 2006-07), explaining that the non-audit of its accounts u/s. 44AB stood caused only due to its ignorance of law, acting though in good faith, and for allowing it reasonable time to furnish the report there-under before the completion of assessment. Not only does it do nothing of the sort, it goes ahead to file the return of income for the following year, after over three months, again in the same manner, i.e., without getting its accounts audited and obtaining a report u/s. 44AB, which it was mandatorily required to furnish. That is, the assessee deliberately adopts a legal stand, which is without basis, so that it cannot claim to have acted in good faith or under a bona fide belief. The plea of 'reasonable cause' would thus not obtain for the second year, and the levy of penalty u/s. 271B for the assessment year 2007-08 is accordingly upheld.
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