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2017 (11) TMI 1493 - AT - Income TaxPenalty u/s 271B - reasonable cause for not getting its accounts audited u/s 44AB - purchase and sale of the security exceeded to 40 Lacs rupees - bonafide belief on the basis of Accounting standards issues by ICAI - Held that:- the said method was followed by the assessee as per the relevant guidelines laid down by the ICAI and we find merit in the contention of the learned counsel for the assessee that the belief of the assessee about the non applicability of provisions of section 44AB based on such method of disclosure as adopted by it following guidelines of ICAI was a bona fide belief. In the case of Sachinam Trust [2009 (3) TMI 186 - HIGH COURT OF GUJARAT] cited by the learned counsel for the assessee, The assessee carrying on the business of financing had believed that gross receipts of interest and not gross amount of advances would constitute the basis for ascertaining the limit of ₹ 40,00,000/- so as to attract u/s 44AB and since the said belief was based on the legal opinion of eminent counsel contained in tax audit manual published by the Bombay Chartered Accountant Society, the assessee was held to have a bona fide belief which constituted the reasonable cause for not getting its accounts audited u/s 44AB. Hon’ble Gujarat High Curt accordingly held that no penalty u/s 271B could be imposed on the assessee. In our opinion, the ratio of the said decision is squarely applicable to the facts involved in the present case and respectfully following the same, we cancelled the penalty imposed by the AO u/s 271B - Appeal of the assessee is allowed.
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