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2022 (9) TMI 719 - Income Tax
Penalty u/s 271B - assessee failed to get the accounts audited - whether the accounts were subject to audit under the provisions of section 44AB of the Act? - whether there was a reasonable cause for failure on the part of the assessee to get his accounts audited? - HELD THAT:- Under section 271B if a person required to get the accounts audited under the provisions of section 44 AB of the Act, fails to do so, AO may impose on him a penalty for a sum of Rs. 1,50,000.00 or .5% of the turnover whichever is less. The use of the word ‘may’ in this section also indicates that it is not mandatory but discretionary. It cannot be imposed in each and every case of default but the AO shall issue a notice to the assessee for affording the opportunity of hearing.
Penalty under the provisions of section 271B of the Act is not automatic. Likewise, the provisions of section 273B of the Act provides that there shall not be any penalty if the assessee fails to get its accounts audited under the provisions of section 44 AB of the Act if he proves that there was reasonable cause for the said failure.
Admittedly, in the given case the income declared by the assessee in the return of income has been admitted by the revenue without any variation though the assessee has furnished necessary documents in support of the return filed by him. This fact can be verified from the observations of the AO contained in the assessment order.
There remains no ambiguity to the fact that all the necessary details were available before the AO during the assessment proceedings in support of the return of income filed by the assessee and no infirmity of whatsoever was pointed out by the AO during the assessment proceedings.
AO after due application of mind and carrying out the necessary verification has accepted the income declared by the assessee. As such we are of the view that there was no leakage of the revenue to the government exchequer on account of failure on the part of the assessee for not getting the accounts audited under the provisions of section 44AB of the Act. On this count, we are of the view that the assessee should not be visited with the penalty under the provisions of section 271B - Decided in favour of assessee.