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2015 (11) TMI 735 - ITAT AHMEDABAD

2015 (11) TMI 735 - ITAT AHMEDABAD - TMI - Penalty u/s. 271B - failure to furnish the audit accounts u/s. 44AB - it is assessee’s submission that he was under bona fide belief that he was not required to get the accounts audited in view of CBDT Instruction No. 452 dated 17th March, 1986 and the various decisions relied upon by him - Held that:- No material has been placed on record by Revenue to demonstrate that the belief of the Assessee was not a bonafide belief. A reading of Section 271B make .....

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erred to in the said provisions if he proves that there was reasonable cause for the failure. In the present case, the Assessee was having a bona fide belief that he was not required to get his books audited under 44AB in view of the CBDT Circular. In such a situation, we are of the view that there was a reasonable cause on the part of the Assessee for not getting the books audited. Further it is a settled law that when there is a technical or venial breach of the provisions of law, the ends of .....

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ent : Shri Somogyan Pal, Sr. D.R. PER ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. These 3 appeals filed by the Assessee are against the order of CIT(A)-XX, Ahmedabad dated 30.09.2013 for A.Y. 2008-09 & 2010-2011. 2. Before us, at the outset the ld. A.R. submitted that though the appeals of two different Assessee relates to 2 different assessment years but the facts and circumstances of all the cases are similar except for the assessment years and amounts and the submissions are also common for all .....

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-11 on 04.01.2011 declaring total income of ₹ 4,78,250/-. The case was selected for scrutiny and thereafter the assessment was framed under section 143(3) vide order dated 31.12.2012 and the total income was assessed at ₹ 4,78,250/-. A.O noted that the gross receipts of the assessee was ₹ 1,82,04,414/- and therefore the Assessee was required to get his accounts audited u/s. 44AB of the Act since the Assessee had failed to furnish the audit accounts, he was of the view that Asse .....

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eason that the books of accounts of the appellant has not been got audited u/s.44AB of the Act although the turnover/gross receipt during the year under consideration was at ₹ 1,82,04,414/- i.e. above ₹ 40 lakhs. It is very much apparent that as per Form No.26AS statement which shows the gross receipts and TDS, the gross receipt were at ₹ 1,82,04,414/- while it has shown the net receipts of Rs.l1,34,194/- in the profit & loss account. The appellant has contended that he has .....

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s made out of them ought to have been shown in the profit & loss account, like in the normal business sales and purchases are shown. But to avoid the requirements of provisions of Section 44AB those freight receipts and payments were shown in the separate freight account bypassing the profit & loss account and the net result of the freight account was transferred to profit & loss account. So when all the payments were received by the appellant on which TDS has been made by the partie .....

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s audited. Even if the assessee's freight payments are not treated as turnover then also those can be termed as gross receipts on which provisions of Section 44AB of the I.T. Act were applicable. -Appellant's main contention is that he has worked as commission agent on behalf of the various parties is found not correct for the reason that the customers/parties have made the payment to the appellant by deducting the TDS U/S.194C of the Act treating the same as contract between the two or .....

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g as a commission agent. In the Circular No.715 dtd.8.8.1995 of the CBDT (Q.No.6 & 9) it has been held that Lorry Receipt (L.R) was to be treated as a contract between the appellant and the customers and the TDS was to be made as per provisions of Section 194C of the Act. Hence every receipt from the customers was a contract receipt and the same is definitely forming part of the turnover. 4.8. Assessee's contention that it had worked as a Kacha Adatia is also not on the parity for the re .....

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the assessee was having a bonafide belief that such receipts were not to be included for the purpose of determining the obligation of audit u/s.44AB and same constituted a reasonable cause for not getting the account audited. 4.9. However, at the same time it has been noticed that the Hon'ble ITAT Vizag Bench in the case of Ashok Transport, Guntur Vs. DIT in ITA No.322 & 344/Viz/2011 dtd. 3.5.2013 has clearly held that the provisions of Section 44AB of the I.T. Act are clearly applicable .....

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D.R. further pointed out that the very fact that the customers of the assessee had deducted tax at source u/s.1940 of the Act clearly show that the assessee has undertaken transport contracts from its customers and hence, the transport charges received by the assesseee from them shall constitute his turnover. The Learned D.R. further submitted that the Learned CIT(A) has misdirected himself in accepting the contention of the assessee that he has paid the transport charges to the concerned lorry .....

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the transport charges to the concerned owners of the vehicle. However, the contentions raised by Learned D.R. show that in view taken by the ld. CIT(A) is against the facts available on record. We also notice that the assessee has failed to show that there was reasonable cause in not getting his accounts audited. Accordingly, we are unable to sustain the orders passed by Learned CIT(A). Accordingly, we reverse the orders of the Ld.CIT(A) in both the years and restore the penalty levied by the as .....

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d upon the judgment of Hon'ble Punjab & Haryana High Court in the case of CIT Vs. Ashoka Dairy which was in support of the reasonable cause but facts of that case are totally different from the facts of the present case. In the cited case there was delay in filing of the audit report while in our case no audit report as such has been filed at all. Moreover, the delay in that case was on account of leaving service by the accountant, partners not well educated and one of the partners ill e .....

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ends because of the practice being followed. On the one side appellant is claiming the credit of the TDS of which no corresponding income has been offered by him in his return of income and ultimately getting refund of such TDS. On the other side, many of the truck owners might not have filed their returns of income as not warranted due to claim of credit by appellant and they remained out of reach of the Department. In this way the income which was liable to be taxed in their hands remained unt .....

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f accounts. Although, it may be relevant to decide the transport charges from the parties but it not significant for the penalty proceedings under consideration. 4.12. The A.R. of the appellant has taken the comparison of the share brokers cases claiming the appellant's case on parity is also not acceptable for the reason that share brokers are officially governed by rules of stock exchange and other related laws thereby their brokerage is also fixed and in no case they can deviate from such .....

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se of debatable issue but the same is not convincing as there cannot be any debate over the gross receipts which has came to the coffers of the appellant and deposited in his bank account and subsequently the payments to various transporters were made therefrom. There is no reasonable cause in view of the provisions of Section 273B which prevented the assessee not to get his books of accounts audited. There can be reasonable cause for a particular year but it cannot be so constantly for all the .....

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B there was any ambiguity in the languages of the Sections or in interpretation of the sections. Hence the judgment of the Hon'ble Supreme Court is not application over the facts. 4.15. The Id.A.R's submission that the A.O. has accepted the brokerage income shown by the appellant in his return of income in assessment order. Now he cannot be allowed to deviate from the stand and impose penalty by treating whole freight receipt as turnover of the appellant. The submission is also not fc re .....

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of the expenditures. In fact in the gross receipts of the appellant and freight payments out of them are two different aspects and the amount involved in support of transactions are also different, so it cannot be said that those were the reimbursements. The decisions of the Hon'ble ITAT, Chandigarh bench in the case of Sardarilal Oberoi Vs. ITO and Hon'ble ITAT Vizag Bench in the case of Ashok Transport Vs. DIT have crucially dealt the issue involved in the appellant's case and deci .....

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Aggrieved by the aforesaid order of ld. CIT(A), Assessee is now in appeal before us and has raised the following effective ground:- 1. The ld. CIT(A) erred in law and on facts in confirming the penalty amounting to ₹ 91,022/- u/s. 271B of the Income Tax Act, 1961. 5. Before us, ld. A.R. reiterated the submissions made before A.O and ld. CIT(A) and further submitted that Assessee is engaged in the business of transport on commission basis and does not own any trucks and acts merely as a bo .....

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ted before ld. CIT(A) and also the decisions of Co-ordinate Bench of Tribunal in the case of Saiyad Saukatli Saiyadmiya vs. ITO ITA No. 3168/A/2011 order dated 9th May, 2014 which is reported in (2014) 40 CCH 214 Ahd Trib. He also placed on record the copy of the aforesaid order. The ld. D.R. on the other hand supported the order of A.O and ld. CIT(A). 6. We have heard the rival submissions and perused the material on record. The issue in the present case is about levy of penalty u/s. 271B on ac .....

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datory as the word used is may meaning thereby that a discretion is conferred on the A.O to impose or not to impose the penalty. Further the provision with respect to imposition of penalty is not mandatory in view of the provision contained in Section 273B of the Act which interalia provides that notwithstanding the provisions of Section 271B, no penalty shall be imposable on the person or the Assessee, as the case may be, for any failure referred to in the said provisions if he proves that ther .....

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