TMI Blog2017 (2) TMI 505X X X X Extracts X X X X X X X X Extracts X X X X ..... tice under section 153A of the Act when the assessee was called upon to file the return of income. However, despite receipt of notice issued under section 153A, the assessee had failed to file the audited accounts report. The claim of the assessee that the assessee was following the project completion method, therefore the assessee had bonafide 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the notice filed reply to the show cause notice and in the reply it was submitted by the assessee that the assessee was following project completion 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 project completion method. The assessee relied upon the following judgments for the purpose of proving the case: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 assessment year or 6[furnish a report of such audit as required under section 44AB], the 7[Assessing] Officer may direct that such personal shall pay, by way of penalty, a sum equal to one-half per cent of the total sales, turnover or gross receipts, as the case may be, in business, or of the gross receipts in profession, in such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompulsorily 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 the CIT in imposing the penalty. Even otherwise, the case of the revenue (confirming the imposition of penalty) is also covered by the judgment of the Lucknow Tribunal in the matter of DCIT Vs. Gopal Krishan Builders (2004) 91 ITD 124 Luck wherein the Tribunal has noted as under: 8. The other plea of the ld. counsel for the assessee was in respect of the very object, for which Section 44AB of this Act was brought on statute. The philosophy behind the compulsory audit is stated in para 17.2 of circular 387 dated 6.7.1984 and reproduced by ld. CIT(A). There is no dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis of above, I am of the view that assessee at the outset had not been able to bring before me the audit guideline and even if such guideline is there, the same is against the very provisions of Section 44AB. 7. Moreover, the judgment of the jurisdictional High Court in the matter of CIT Vs. S. C Naregal (2010 )329 ITR 615is squarely applicable to the case in hand . In the said judgment the jurisdictional High Court held as under: This substantial question of law does not arise for consideration in this appeal as it is clear from the provisions of section 44AB of the Act that whenever the turnover exceeds rupees forty lakhs, the accounts are required to be audited and the question as to whether the assessee was receiving commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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