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2023 (5) TMI 1211 - AT - Income TaxPenalty u/s 271B - failure to get his books of account audited by a qualified Chartered Accountant, thereby violating the provisions of section 44AB - as explained that the assessee is engaged in the business of supply of milk (Amul) on behalf of Gujarat Co.op Milk Marketing Federation Ltd. known as “Amul Milk” in the assigned area - HELD THAT:- During assessment proceedings as also before the Ld. CIT(A) in penalty proceedings the assessee explained, inter alia that it was his first year of business and that he was under the bonafide belief that the provisions of section 44AB as inapplicable to him as he was only a commission agent supplying milk on behalf of “Amul Milk” in the assigned area and was entitled to fixed commission only. In our opinion, the explanation offered by the assessee constitutes ‘reasonable cause’ and the assessee is eligible to the protection envisaged under section 273B. It is an admitted position that during the course of assessment proceedings, the assessee got the tax audit done and submitted the tax audit report before the Ld. AO when he was made aware that initial receipts having been deposited by him in the bank account maintained by him necessitated tax audit as per the provisions of section 44AB. This factual position has altogether been ignored by the Ld. AO/CIT(A) and the impugned penalty has been levied/confirmed. As during the course of assessment proceedings, the assessee got the tax audit done and submitted the tax audit report before the Ld. AO when he was made aware that initial receipts having been deposited by him in the bank account maintained by him necessitated tax audit as per the provisions of section 44AB. This factual position has altogether been ignored by the AO/CIT(A) and the impugned penalty has been levied/confirmed. The contention of the assessee before the AO/CIT(A) has been that the assessee is only an agent of Amul. The assessment order passed on 28.12.2019 reveals that the assessee explained in detail the modus operandi of his business which after examination has been accepted by the Ld. AO. The explanation offered by the assessee has been discarded by the Ld. CIT(A) without any valid and cogent reasons. As following the decision in Mohd. Javed’s case [2023 (3) TMI 1364 - ITAT DELHI] we hold that the impugned penalty is not sustainable which we hereby vacate. Decided in favour of assessee.
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