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2016 (10) TMI 220 - ITAT PUNE

2016 (10) TMI 220 - ITAT PUNE - TM - Levy of penalty u/s. 271B - Delay in getting the accounts audited and obtaining tax audit report u/s. 44AB - Held that:- As per the provisions of section 44AB of the Act the, the assessee was required to get accounts audited for the assessment year under appeal on or before 30-09-2008. However, the assessee could get the accounts audited on 20-01-2009. Thus, there was delay of 3 months and 20 days in getting the accounts audited and obtaining tax audit report .....

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of income of assessee is service charges received from M/s. Maxpro Associates, a sister concern of assessee. The income from M/s. Maxpro Associates is accounted on the basis of credit notes issued. Since, M/s. Maxpro Associates could not finalize its books of account in time, M/s. Maxpro Associates issued credit notes to the assessee for the last quarter of the financial year ended on 31-03-2008 in December, 2008. The assessee finalized its books after receiving credit notes from M/s. Maxpro Ass .....

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to get the same audited within the time specified under the provisions of the Act. Mere delay in filing of tax audit report as envisaged u/s. 44AB would ipso facto not attract the penalty where the delay in filing of audit report has been reasonably explained. - The Co-ordinate Bench of the Tribunal in the case of Prachin Land Infra Pvt. Ltd. Vs. ITO (2013 (11) TMI 1668 - ITAT PUNE) in similar circumstances where the Assessing Officer levied penalty u/s. 271B for obtaining the Audit Report .....

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irming the levy of penalty u/s. 271B of the Income Tax Act, 1961 (hereinafter referred to as the Act ) for violating the provisions of section u/s. 44AB of the Act. 2. The brief facts of the case as emanating from records are: The assessee is engaged in the business of dealing in properties and services relating to land and properties. The assessee filed his return of income for the impugned assessment year on 30-03-2009 declaring total income of ₹ 29,51,840/-. Along with the return of inc .....

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filing of Audit Report as envisaged u/s. 44AB of the Act. The Assessing Officer vide order dated 28-06-2011 levied penalty of ₹ 1 lakh u/s. 271B for delayed filing of audit report. The assessee filed appeal against the order levying penalty u/s. 271B of the Act. The Commissioner of Income Tax (Appeals) discarded the explanation furnished by the assessee for delay in getting the accounts audited and furnishing the same along with the return of income filed within the extended period for fi .....

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s computation of income in view of disallowances under section 40(a)(ia) of the Act and declared income of ₹ 30,25,544/-. The same has been accepted by the learned assessing officer and made assessment u/s. 143(3) by assessing the income at ₹ 30,25,540/-. The assessing officer has levied the penalty of ₹ 1,00,000/- u/s 271B of the Act on account of getting books of accounts audited u/s. 44AB of the Act on 20TH JANUARY, 2009 whereas the same should have been done before the spec .....

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has been obtained on 20/01/2009. 2. In view of this the delay was for only 3 months and 20 days. 3. The said appellant was prevented by reasonable cause not getting books of accounts audited u/s. 44AB before the specified date. 2. LEVY OF PENALTY OF ₹ 1,00,000/- U/s. 271B OF THE INCOME TAX ACT: 1. Your honour, it is humbly submitted that the delay in obtaining the tax audit u/s. 44AB of the Act for A.Y. 2008-09 due to major two reasonable causes: a. The accountant has left the job during t .....

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for your kind perusal and ready reference. The appellant has further submitted during the course of penalty proceedings that his major source of income is service charges received from M/s. Maxpro Associates which is his sister concern. The said income is earned on the purchases and sale transactions of land effected through appellant by M/s. Maxpro Associates. The said income is accounted for on the basis of credit notes issued by M/s. Maxpro Associates. M/s. Maxpro Associates could not finalis .....

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uld finalized his books of accounts only after appointing a new accountant and obtaining credit notes from M/s. Maxpro Associates. The auditor of the appellant firm completed his audits after making necessary verification and handed over tax audit report to the appellant firm on 20/01/2009. In view of above reasonable causes the penalty u/s. 271 B should have not been levied. b. Your honour it has been held in various decisions that mere failure to file Audit report in time will not justify levy .....

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s audited before the statutory due date and therefore this is not a fit case for levy of penalty u/s. 271 B of the I.T. Act. We have also relied upon the decision of Hon'ble Income Tax Appellate Tribunal Pune, Bench "A" in the matter of: Prachin Land Infra Pvt. Ltd. Vs. I TO, Ward -2, Panvel (ITA No. 917/PN/2013 of Asstt. Year: 2007-08). c. Your honour, obtaining Tax Audit Report u/s. 44AB of the Act by the appellant, is not a malafide intention of the appellant to defraud the reve .....

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ts notice u/s. 274 read with Section 271 B of the Act. The copies of letters are enclosed here with for your ready reference and kind perusal. e. Your honour, the appellant was prevented by reasonable cause as mentioned herein above. There is no mens rea of the appellant in the impugned matter. We relied upon the following case laws: The appellant citing the case law of Spectrum Marketing v. ITO humbly submits that there was no deliberate or intentional inaction on the part of the assessee to co .....

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Panvel [ITA No. 917/PN/2013 of AY 2007-08 of ITAT Pune A Bench ] Therefore, we request your honour that under these circumstances, the appellant could not get his accounts audited u/s. 44AB of the Act on or before 30/09/2008 since he has been prevented by reasonable cause as narrated hereinabove. Your honour, in view of the submission made hereinabove and in view of the facts and circumstances of the case, there is reasonable cause and we request your honour to kindly delete the penalty of S .....

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the audit of the accounts has been rightly rejected by the authorities below as the same were not supported by any cogent evidence. 5. We have heard the submissions made by the ld. DR and have perused the written submissions furnished on behalf of the assessee and the orders of the authorities below. As per the provisions of section 44AB of the Act the, the assessee was required to get accounts audited for the assessment year under appeal on or before 30-09-2008. However, the assessee could get .....

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time to pick up the threads of the work left in between by the outgoing incumbent. Further, it has been submitted that the major source of income of assessee is service charges received from M/s. Maxpro Associates, a sister concern of assessee. The income from M/s. Maxpro Associates is accounted on the basis of credit notes issued. Since, M/s. Maxpro Associates could not finalize its books of account in time, M/s. Maxpro Associates issued credit notes to the assessee for the last quarter of the .....

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alization of accounts was beyond the control of assessee. In the absence of finalization of accounts it was not possible for the assessee to get the same audited within the time specified under the provisions of the Act. Mere delay in filing of tax audit report as envisaged u/s. 44AB would ipso facto not attract the penalty where the delay in filing of audit report has been reasonably explained. 6. The Co-ordinate Bench of the Tribunal in the case of Prachin Land Infra Pvt. Ltd. Vs. ITO (supra) .....

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