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2017 (2) TMI 505 - ITAT BANGALORE

2017 (2) TMI 505 - ITAT BANGALORE - TMI - Penalty under section 271B - not getting accounts audited under section 44AB - Held that:- The penalty under section 271B is imposable under the Act if the assessee fails to prove that there was a reasonable cause for failure on the part of the assessee for not complying the mandatory provision of section 44AB in terms of 273B of the Act. - In our view, the assessee was required to get its accounts audited at the time of filing of the return of inco .....

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fide belief for not getting its accounts audited, is not sustainable as the application of section 44AB is independent and is not depended upon the method of accounts adopted by the assessee under section 145 of the Act whether it is project completion method or percentage completion method. The requirement under section 44AB is based on the total sales, turnover or gross receipt as the case may be of the assessee and . If it exceeds the threshold limit as provided under the Act, then the assess .....

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Per Laliet Kumar, Judicial Member These are the three appeals arising out of the common order passed by the CIT dated 28.11.2013 confirming the imposition of the penalty for violation of Section 44AB under section 271B of the Income Tax Act. 2. Brief facts of the case in ITA Nos.270/Bang/2014 and Assessment year : 2006-07 A search was conducted under section 132 of the Income Tax Act on 16.09.2008 and the AO found that the gross receipts on sale of site of G. L. Residency Projects was ₹ 6 .....

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letion method and the receipts were below the limits prescribed under section. However, with a view to mitigate the litigation, the assessee had declared the income before the AO and the revised profit and loss account and balance sheet was filed before the AO. It was submitted on behalf of assessee that he was under genuine belief that the accounts are not required to be audited and it is only required to be audited at the end of the project as the assessee was consistently following the projec .....

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thus subjected for the penalty under section 271B of the Act were rightly levied on him and Ld Dr relied upon following 2 judgments. 1 DCIT Vs. Gopal Krishan Builders (2004) 91 ITD 124 Luck 2 CIT Vs. S. C Naregal (2010 )329 ITR 615 5. We have heard the rival contentions of the parties and perused the record. . The search has taken place under section 132 of the IT Act on 16.09.2008 and the notice under section 153A was issued for the AY 2006-07 on 02.02.2010 and thereafter the assessee in respo .....

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edings of the AO. We have gone through the assessment order dated 31.12.2010 assed under section 153A wherein there is no whisper of the filing of audited report dated 30.09.2009 before the AO. The AO in the assessment order has categorically mentioned for initiation of penalty under section 271(1)(c) and 271B separately. The imposition of penalty under section 271B provides as under: If any person fails 5[* * *] to get his accounts audited in respect of any previous year or years relevant to an .....

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ee fails to prove that there was a reasonable cause for failure on the part of the assessee for not complying the mandatory provision of section 44AB in terms of 273B of the Act. In our view, the assessee was required to get its accounts audited at the time of filing of the return of income at the first instance i.e., on 30.07.2007 and in any case the assessee was having an opportunity to file the audited reports after receipt of the notice under section 153A of the Act when the assessee was cal .....

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145 of the Act whether it is project completion method or percentage completion method. In our view, the requirement under section 44AB is based on the total sales, turnover or gross receipt as the case may be of the assessee and . If it exceeds the threshold limit as provided under the Act, then the assessee is required to compulsorily get its accounts audited before the specific date. Since, the assessee has failed to do so, therefore, we have no other option but to confirm the order passed by .....

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ircular 387 dated 6.7.1984 and reproduced by ld. CIT(A). There is no dispute about the very object of bringing provisions of Section 44AB and the same had further been laid down in the case of Rajkot Engineering Association and Ors. v. Union of India (supra) to the effect that object of Section 44AB of the Act read with Rule 6G of Income Tax Rules is to safeguard against tax evasion and tax avoidance which will ensure that the economic system does not result in concentration of wealth to the com .....

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is returned on completion of the project and in case project goes on for more than 5 years and assessee gets its books of account audited for last year in which project is completed, then from where A.O. will be able to verify the figures of expenses and receipts etc. of earlier years. So, it is against the very principle of Section 44AB that in project completion assessee would get the books of account audited in the last year and not in earlier years when he is debiting the expenses and showin .....

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