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Issues:
Levy of penalty under section 271B of the Act for failure to get accounts audited as per section 44AB. Analysis: The appeal was against the penalty imposed on the assessee for not getting accounts audited as required under section 44AB of the Act due to declaring net profit below 8%. The Assessing Officer contended that since the assessee claimed profit from civil construction below 8%, accounts should have been audited, leading to the penalty. The CIT(A) upheld this decision. The authorized representative of the assessee argued that the assessee was not a civil contractor but used a mobile crane for loading and unloading iron steel material, hence section 44AB or 44AD did not apply. The departmental representative claimed that the works contract fell under the definition of 'civil construction,' exempting the need for audit. The tribunal found that the use of a mobile crane for loading and unloading iron steel did not constitute civil construction, invoking the principle of ejusdem generis. Referring to relevant case law, it clarified that section 44AD was specifically for civil construction businesses. The scope of works contract under section 44AD was limited to activities directly related to civil construction, not general works contracts like maintenance of vehicles. The tribunal held that the assessee had a reasonable cause for not auditing accounts and canceled the penalty. The decision emphasized that the legislative intent of section 44AD was to compute profits of civil construction businesses specifically. It clarified that works contract in this context referred to activities integral to civil construction, not general contract works. The tribunal found the assessee's explanation satisfactory and concluded that no penalty should be levied. In conclusion, the tribunal allowed the appeal, ruling in favor of the assessee and canceling the penalty imposed under section 271B of the Act.
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