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2016 (10) TMI 365 - ITAT PUNE

2016 (10) TMI 365 - ITAT PUNE - TMI - Penalty levied by the AO u/s.271B - not getting the accounts audited before the specified date - Held that:- We find some force in the submission of the assessee that when the accounts of the A.Y. 2007-08 was audited on 11-02-2009, it was not possible to obtain the tax audit report u/s.44AB for A.Y. 2008-09 before 30-09-2008. Although the assessee could not substantiate with evidence the sudden leaving of the old Accountant and that the new Accountant took s .....

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07-08 the audit of the accounts for A.Y. 2008-09 could not have been done. Further, the AO has completed the assessment on a total income of ₹ 533,87,720/- in the order passed u/s.143(3) on 14-12-2010 which is the income declared by the assessee in the revised computation of income. - Thus we are of the considered opinion that this is not a fit case for levy of penalty u/s.271B of the I.T. Act. We therefore set aside the order of the CIT(A) and direct the AO to cancel the penalty - Dec .....

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al. 3. Facts of the case, in brief, are that the assessee filed his return of income on 31-03-2010 declaring total income of ₹ 4,88,33,300/-. During the course of assessment proceedings the assessee firm submitted a revised computation of income after auditing the books of account u/s.44AB. In the said revised computation, total income was declared at ₹ 5,33,87,722/-. The income was revised on account of disallowance of donation and disallowance of service charges u/s.40(a)(ia). For .....

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mises on 10-01-2008. During the course of survey certain loose papers, documents etc were impounded. The AO noted that the assessee has got its books of account audited as per the provisions of section 44AB only on 24-03-2010. According to the AO, as per the provisions of section 44AB, the assessee should have got his accounts audited and furnished such audit report before the specified due date which in the instant case is 30-09-2008. Since the assessee has got its accounts audited u/s.44AB onl .....

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date and the explanation of the assessee was not supported by any evidence, the AO, relying on the decision of Hon ble Karnataka High Court in the case of Saraswati Electronics Vs. ITO reported in 292 ITR 411 rejected such explanation of the assessee and levied penalty of ₹ 1 lakh u/s.271B of the I.T. Act. 5. Before CIT(A) the assessee reiterated the same submissions as made before the AO. It was submitted that the accounts for the A.Y. 2007-08, i.e. preceding assessment year was obtained .....

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s.271B should be deleted. 6. However, the CIT(A) was also not satisfied with the explanation given by the assessee. He noted that though the assessee has made the submission that the Accountant had left the job and the books could be completed only after the new Accountant joined, however the same was not based on any evidence. The assessee has not given the name of the old Accountant and when he left the job and when the new Accountant had joined etc. Distinguishing the various decisions cited .....

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t getting its books of account audited u/s.44AB before the specified date. The assessee has also filed a copy of the order of the Tribunal in assessee s own case for A.Yrs. 2006-07 and 2007-08 vide ITA Nos.918 and 919/PN/2013 order dated 27-11-2013 wherein the Tribunal has deleted the penalty levied u/s.271B by the AO which was sustained by the CIT(A). Referring to the decision of the Pune Bench of the Tribunal in the case of Hemant Ramchandra Dake vide ITA No.920/PN/2013 order dated 26-11-2013 .....

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ts of the impugned assessment year. The assessee has not filed any evidence to substantiate his claim that the Accountant has left the job for which the books of account could not be audited before the specified ate. He submitted that various decisions relied on by the Ld. Counsel for the assessee are not applicable to the facts of the present case. He submitted that since the assessee has violated the provisions of section 44AB by not getting the accounts audited before the specified date and f .....

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has got its accounts audited only on 24-03-2010 as against the specified date of 30-09-2008. The submission of the assessee that the Accountant has left the job and the assessee could get its accounts audited only after joining of the new Accountant and therefore there was reasonable case for such default was rejected by the AO. According to the AO, it is not understood as to how the assessee was running his business where the transactions are in crores without any Accountant. We find the Ld.CIT .....

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s a reasonable cause in not getting the accounts audited before the specified date. 10. We find some force in the above submission of the assessee. It is an admitted fact that penalty was levied u/s.271B in A.Yrs. 2006-07 and 2007-08 for not getting the accounts audited before the specified date. However, the Tribunal vide order dated 27-11- 2013 has deleted such penalty levied u/s.271B for A.Yrs. 2006-07 and 2007-08. Therefore, we find some force in the submission of the assessee that when the .....

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the financial year 2007-08 cannot be verified. No auditor will audit the accounts of a subsequent year without having the audited accounts of the preceding assessment year. Therefore, there is some force in the argument of the assessee that without the audit of the accounts for A.Y. 2007-08 the audit of the accounts for A.Y. 2008-09 could not have been done. Further, the AO has completed the assessment on a total income of ₹ 533,87,720/- in the order passed u/s.143(3) on 14-12-2010 which i .....

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2007. There is no absolute default by the assessee. The explanation of the assessee that the Accountant has left the job in the middle of the F.Y. 2006-07 has not been controverted by the Revenue. We, therefore, find some force in the submission of the assessee before the Assessing Officer and the CIT(A) that there was a reasonable cause on his part for not getting the accounts audited before the statutory due date. It has been held in various judicial decisions that mere failure to file audit r .....

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e, we are of the opinion that this is not a fit case for levy of penalty u/s.271B of the I.T. Act, 1961. We, therefore, set-aside the order of the CIT(A) and direct the Assessing Officer to cancel the penalty. 12. Further, the Pune Bench of the Tribunal in the case of Prachin Land Infra Pvt. Ltd. while deleting the penalty levied u/s.271B has observed as under : 6. We have heard the arguments advanced by the Ld. Departmental Representative and perused the record. We find the Assessing Officer in .....

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ainst the income declared at ₹ 55,62,383/- by making addition of ₹ 5,75,033/- which consists of disallowance of Donation of ₹ 5 lakhs and Preliminary expenses of ₹ 75,003/-. In other words, the various other expenses and income declared by the assessee has been accepted and the assessee has not preferred any appeal against the same addition. The assessee has got its books of accounts audited on 11-02- 2009 and filed the return of income on 30-03-2009, which is not in disp .....

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