2013 (10) TMI 649 - AT - Income Tax

Penalty u/s 271B of the Income Tax Act Failure to comply with the requirement of tax audit u/s 44AB of the Income Tax Act - Explanation of the assessee to the show cause notice is that the assessee was a statutory body and it was also allowed registration under Section 12AA of the Act by the Commissioner of Income Tax Bathinda w.e.f 12.06.2003. The assessee was not under any legal obligation to get its accounts audited in view of the provisions of Section 44AB of the Act Held that - Assessee had shown receipts of Rs. 12, 21, 97, 171/- in the return filed by it besides the receipts of Rs. 7, 39, 80, 248/-.Thus the total receipts of the assessee during the year under considering worked out at Rs. 19, 61, 77, 419/- - As a turnover in the case exceeded Rs. 40 lacs the assessee was required to get its accounts audited as per the provisions of Section 44AB of the Act. Since the assessee failed to comply with the said provisions proceedings for imposing of penalty under Section 271B of the Act was initiated - Section 12AA of the Act did not exempt any entity from getting the accounts audited if its gross taxable receipts exceed the limit prescribed under Section 44AB of the Act Decided against the Assessee.

Summary

Issues:
Appeals against penalty under Section 271B of the Income Tax Act, 1961 for assessment years 2006-07 & 2005-06.

Analysis:
1) The assessee appealed against orders of CIT(A) for penalty under Section 271B for different assessment years. The issue in dispute in both appeals was identical, involving penalties for failure to get accounts audited under Section 44AB of the Income Tax Act, 1961.

2) The Assessing Officer noted discrepancies in the assessee's receipts, leading to the requirement for audit under Section 44AB due to taxable receipts exceeding Rs. 40 lakhs. The assessee's plea of being a "Statutory Body" and having registration under Section 12AA was deemed insufficient to avoid audit obligations.

3) The First Appellate Authority upheld the penalty, rejecting the assessee's explanation based on statutory status and registration under Section 12AA. The Tribunal concurred, emphasizing that Section 12AA did not exempt entities from audit requirements if gross taxable receipts exceeded Section 44AB limits.

4) The Tribunal referenced a previous dismissal of the assessee's appeal for registration under Section 12AA, highlighting the nature of the assessee's activities as business-oriented rather than for public utility advancement.

5) Considering the facts and legal obligations, the Tribunal affirmed the First Appellate Authority's decision, upholding the penalty for failure to audit accounts despite turnover exceeding Rs. 40 lakhs, as mandated by Section 44AB.

6) Both appeals for assessment years 2006-07 & 2005-06 were dismissed, with the Tribunal endorsing the First Appellate Authority's orders and penalties imposed under Section 271B. The Tribunal concluded the proceedings by pronouncing the judgment on 15th October 2013.