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2016 (9) TMI 11 - ITAT INDORE

2016 (9) TMI 11 - ITAT INDORE - TMI - Penalty u/s 271B - Failure to get the books of accounts audited u/s 44AB - illness of the assessee - Held that:- We are of the considered opinion that due to the illness of the assessee, he could not maintain proper books of accounts for the financial year 2009-10 relevant to assessment year 2010-11, which are essential for audit u/s 44AB of the Act. Therefore, the question that the books of accounts could be audited during the period in which the assessee a .....

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ein it was held that the illness of Chartered Accountant constituted a reasonable cause and hence penalty u/s 271B could not be levied, whereas in the instant case, the assessee was himself ill due to which he could not maintain essential books, hence same constitutes a reasonable cause. Penalty deleted - Decided in favour of assessee. - I.T.A. No. 84/Ind/2016 - Dated:- 26-7-2016 - SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER For The Appellants : Shri Atik Bansal, CA .....

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is regarding imposition of penalty u/s 271B of ₹ 1 lakh, which is upheld by the ld. CIT(A). I.T.A. No. 84/Ind/2016 Assessment Year: 2010-11 3. Briefly stated, the facts of the case are that the assessee has filed his return of income on 15.11.2010 declaring total income at ₹ 4,98,491/-. The same was assessed vide order u/s 143(3) dated 30.01.2013 and total income was determined at ₹ 7,45,690/-. During the course of assessment proceedings, the AO noticed that the assessee is not .....

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271B asking the assessee as to why the penalty u/s 271B should not be levied. In response to this, it was submitted by the assessee that the non-compliance of Section 44AB of the Act, was not intentional, but due to the reason that health condition of the assessee got critical during the year and he had to get urgently admitted in the hospital for medical treatment. However, the AO did not satisfy with the explanation and observed that the medical report for the treatment in the CHL Apollo Hosp .....

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ssessee filed appeal before the ld. CIT(A), but could not get any relief. 5. The ld. CIT(A) held that the assessee has not been able to show a reasonable cause for failure to get the books of accounts audited u/s 44AB, whereas the AO has clearly brought out that the assessee personally appeared in the income tax office in the period during which the books of accounts had to be audited for assessment year 2010-11. Accordingly, penalty levied by the AO was confirmed by observing that the case laws .....

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e work properly and could not maintain the books of accounts as essential for the purpose of audit. The ld. Authorized Representative of the assessee contended that the assessee has got his books of accounts duly audited in the previous year, which proves that he was not negligent and was conscious to abide by the rules. The AO and ld. CIT(A) has misunderstood the facts. The contention of the AO that the assessee has personally attended the assessment proceedings for assessment year 2007-08 on 1 .....

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page nos. 22 to 37. The ld. Authorized Representative of the assessee further submitted that the assessee was not in a condition to maintain proper books of accounts and, therefore, the AO applied net profit rate after rejecting the books of accounts. Therefore, the assessee once has already been penalized due to addition to the book result for non-maintenance of books, hence consequential failure for not getting the books of accounts audited, if penalized, would tantamount to penalize twice for .....

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d Member), (1997) 63 ITD 0237. (v) CIT vs. Ashoka Dairy, (2006) 200 CTR 0211 ( P&H ) (vi) CIT vs. Anand Kumar & Co., (2005) 196 CTR 0225, (2006) ITR 0111. (All) (vii) Surajmal Parsuram Todi vs. CIT, (1996) 222 ITR 0691 (Gau) (viii) CIT vs. E.C.C.Project Pvt.Ltd., (2015 374 ITR 0044 (All). 7. The ld. Authorized Representative of the assessee contended that in the decision of ITO vs. Gayatri Coal Supply Company (supra), it was held that even illness of Chartered Accountant constitutes a re .....

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s in the instant case, the assessee was ill, hence, revision is not applicable. Therefore, the same cannot constitute reasonable cause. Further, the ld. Departmental Representative submitted that the assessee has appeared before the AO and, therefore, the reliance on medical report is not relevant. 9. We have heard both the parties and perused the relevant reports available with us. We are of the considered opinion that the AO and ld. CIT(A) have not dis-approved the version of the assessee, whi .....

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ages 19 & 20 that this fact of the illness of the assessee was also communicated in a letter dated 04.04.2009 addressed to Chief Commissioner of Income Tax citing reasons of his illness regarding getting the refund processed speedily. Similar communication was also made to ITO Ward 2(1), Indore (which is placed at paper book page 21) for giving the effect of the appellate order in which the assessee has cited that he was suffering from chronic disease (C- 2) and facing financial hardships an .....

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ounts required for audit could not be maintained due to illness of the assessee, hence there was no books of accounts, which could be produced before Chartered Accountants for getting them audited. Therefore, the contention of the AO is misplaced. Further, the ld. Authorized Representative of the assessee has relied in the case of ITO vs. Gayatri Coal Supply Company (supra), wherein it was held that the illness of Chartered Accountant constituted a reasonable cause and hence penalty u/s 271B cou .....

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