TMI Blog1995 (2) TMI 135X X X X Extracts X X X X X X X X Extracts X X X X ..... er (AO) initiated penalty proceedings for assessee's default of getting the accounts audited beyond the specified date. The assessee could not respond to the notice issued under s. 274 of the Act due to some accident. The AO, therefore, examined the auditor and came to the conclusion that the assessee had failed to get the accounts audited by the specified date without sufficient and reasonable cause. He, therefore, levied a penalty of Rs. 65,000 for assessee's default under s. 271B. The levy of penalty was confirmed in first appeal, but it was marginally reduced to Rs. 64,694. 3. Mr. Mahendra Gargieya, the learned counsel for the assessee has vehemently urged that the provisions of s. 44AB stood attracted to the case of the assessee for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cases reported in Mothoo Ram Prem Chand vs. ITO (1983) 15 TTJ (Chd) 66, Singh Furnitures vs. ITO (1984) 19 TTJ (Gau) 551, Vir Sales Corporation vs. Asstt. CIT (1994) 121 CTR (Trib)(Ahd) 46, Bangalore Steel Distributors vs. ITO (1994) 50 TTJ (Bang) 1 : (1994) 49 ITD 668 (Bang), ITO vs. Rameshchandra Co. (1993) 47 TTJ (Ind) 287, ITO vs. Jaipur Zila Dugdha Utpadak Sahkari Sangh Ltd. (1993) 46 TTJ (Jp) 84 : (1993) 45 ITD 70 : (1993) 45 ITD 262 and (1993) 45 ITD 581 as also the Jaipur Bench decision in Vimalchand Lodha (ITA Nos. 84 to 86/Jp/89; asst. yrs. 1980-81 to 1982-83) and further submitted that at the most assessee's default was a technical one for which no penalty should be levied. 5. On the contrary, the learned Departmental Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty under s. 271B. In order to appreciate the arguments of the learned counsel, it seems necessary to take note of the provisions contained in s. 271B of the Act which runs as under: "271B. If any person fails, without reasonable cause, to get this accounts audited in respect of any previous year or years relevant to an assessment year or obtain a report of such audit as required under s. 44AB, the ITO may direct that such person shall pay by way of penalty, a sum equal to one-half per cent of the total sales, turnover or gross receipts, as the case may be, in business, or of the gross receipts in profession in such previous year or years or a sum of one hundred thousand rupees, whichever is less." It may be recalled that s. 271B was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rement of getting the accounts audited by a specified date, contemplates an absolute default on the part of the assessee. Where an assessee does not at all get his account audited, his default would be punishable under the first fact situation. The second limb would come into play where, though the accounts were got audited, yet the return filed was not accompanied with the audit report. An assessee cannot be punished once for not getting the report in time and then not filing it alongwith the return. The law under s. 271B is not intended to be that harsh and oppressive. Non-preparation of an audit report would be punishable under the first limb of s. 271B when such failure is absolute. It may be that for some good reasons an assessee could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shed for unintended technical violations of the provisions of the Act. 10. In so far as assessee's non-appearance in response to summons under s. 131 is concerned, we find sufficient evidence on our record to come to the conclusion that he was not in a position to attend the office due to an accident, causing injuries to his brain. Such explanation of the assessee stood supported with the prescription slips and the condition of the patient noted in the relevant papers. Moreover, penalty under s. 271B cannot be levied for such lapses on the part of an assessee. 11. Shri Margieya is right that since the statement of Shri Khuradia, CA was recorded in absence of the assessee and such evidence was never put to the assessee before making reli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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