TMI Blog2019 (5) TMI 1110X X X X Extracts X X X X X X X X Extracts X X X X ..... r audit Report furnished. The assessee has taken the stand of criminal proceedings and illness of one of the directors in order to avoid the penal consequences of Section 271B of the Act which we have already held no nexus with non-compliance of legal obligation. It is thus clear the assessee has not been able to give any sufficient and reasonable cause for not getting the accounts whatsoever maintained by it audited u/s 44AB and therefore failed to discharge the onus. In the overall consideration and analyzation and keeping in view the spirit of stringent provisions, we are of the considered view that the authorities below rightly invoked the provisions of section of 271-B of the act and imposed the penalty - Decided against assessee. - ITA Nos.59 And 60(Asr)/2018 - - - Dated:- 22-3-2019 - SH. N.S.SAINI, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER For The Appellant : Sh. P.N. Arora (Ld. Adv.) For The Respondent : Sh. Yashender Garg (Ld. DR) ORDER PER N.K.CHOUDHRY, JM: The aforesaid appeals have been preferred by the Assessee/Appellant against the composite order im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t get impress and ultimately imposed the penalty of ₹ 1,50,000/- being 0.50% of gross receipts by holding that it clearly indicates that the books of account have actually not been got audited by the stipulated date and with a view to get immunity from the penal consequences in respect of committed default of failure to get its books of accounts audited, the assessee has misconceived the facts which deserves no cognizance. For brevity and ready reference, the concluding part of penalty order is reproduced herein below:- i.) The perusal of the copy of FIR reveals that FIR was lodged against the company on 11-01-2012 for criminal breach of trust and embezzlement of certain quantity of rice which the assessee company failed to supply to Food Corporation of Indian as per directions of the Punjab State Civil Supplies Corporation Ltd. and not by the SBI Ferozepur for non-payment of interest on the term loan as alleged by the assessee. ii.) Furthermore there in no mention in the FIR that premises of the said concern was locked. The assessee has also failed to establish that the factory premises were locked and the relevant documents/books of acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30/09/2013 (2012 emphasis ours) 20/03/2014 17 months 20 days ₹ 5,35,30,801 2013-14 30/09/2014 (2013 emphasis ours) 20/03/2014 5 months 20 days ₹ 3,33,08,219 The arguments of the appellant are not acceptable for the following reasons: a) The statutory audit was got completed in the month of March 2014 when the entire financial year 2013-14 had passed. In this period, for the entire financial year the appellant was able to muster turnover of ₹ 3,33,08,219/-. If the business could be run normally, there is no reason that the accounts were not available for the purposes of audit. b) The criminal proceedings were mounted in January 2012 and the bail was granted in May 2012. Even if the medical reasons of one of the director is accepted, it cannot be accepted that the other director was free enough to run business but was not capacity to get the accounts au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on i.e. 2012-13 and 2013-14 and therefore the aforesaid reasons constitute a reasonable delay. 8. On the contrary, the Ld. DR relied upon the orders passed by the authorities below and submitted that the order under challenge does not suffer from any perversity or illegality or impropriety. 9. Having heard the parties and perused the material avialble on record. Let us to peruse the relevant provisions of law applicable to the instant case. 44AB . Every person,- ( a) carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds [one crore rupees] in any previous year [***]; or ( b) carrying on profession shall, if his gross receipts in profession exceed [twenty-five lakh rupees] in any [previous year; or ( c) carrying on the business shall, if the profits and gains from the business are deemed to be the profits and gains of such person under [section 44AE] [or section 44BB or section 44BBB], as the case may be, and he has claimed his income to be lower t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r then such person is required to get his accounts of such previous year audited by an accountant before the specified date which in the instant case was 30th Sep., 2012 and further required to submit such report in the prescribed form duly signed and verified by such Accountant and setting forth such particulars as may be prescribed. According to provision of section 44AB, the assessee was under legal obligation to get its accounts audited before 30th September, 2012. Further Sec.271B provides the penal consequences for non-compliance of the provisions of Sec.44AB. For the sake of completeness and ready reference the relevant provisions of section 271B and 273B of the Act as applicable in the instant case, are reproduced herein below. 271B. If any person fails ('without reasonable cause' stands omitted by the Taxation Laws (Amendment Miscellaneous Provisions) Act,1986 w.e.f. 10-09-1986) to get his accounts audited in respect of any previous year or years relevant to an assessment year or obtain a report of such audit as required under section 44AB, the Income-tax Officer may direct that such person shall pay, by way of penalty, a sum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase may be, for any failure referred to in the concerned provisions if he proves that there was a reasonable cause for the said failure . It is thus to be seen that as to whether the assessee has been able to prove that there was a reasonable cause for the assessee for not getting its accounts audited under section 44AB of the Act and then to furnish the report by the specified date. In order to get exonerate from penal consequences, the onus is upon the assessee to establish reasonable cause for non-compliance of legal obligations. 9.3 While coming to the instant case we realized that the Assessing Officer has imposed the minimum penalty i.e. 1,50,000/- as prescribed under the provisions applicable hereto. The assessee case is based upon the criminal proceedings which resulted into non-getting audit of the books of account. It is an admitted fact that the FIR was lodged on 11.01.2012 against the assessee company for criminal breach of trust, embezzlement of certain quantity of rice which the assessee company failed to supply to Food Corporation of Indian (FCI) as per directions of Punjab State Civil Supplies Corporation Ltd . and not by the SBI Ferozpur f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d but was released on bail in May, 2012 itself whereas the assessee was under obligation to get its accounts audited upto 30th Sep., 2012 for the F.Y.2011-12 and upto 30th Sep., 2013 for the F.Y. 2012-13 but the same gets audited only on 20-04-2014 and therefore there is huge time gap of 17 months 20 days and which in our considered view, does not seems to be reasonable nexus with the criminal proceedings because it is not the case of the Assessee that the staff of account department and/or the persons who were dealing with the financial transactions of the assessee company were also arrested and/or subjected to the criminal proceedings. The other ground i.e. illness of one of the director is also does not seems to be a reasonable cause for non-compliance of legal obligation because it is not the case of the Asseeee that the company is being run by one man only and it is also not the case of the assessee that it does not have staff of accounts department for compliance of legal obligations, hence in our considered view, as accounts department's officials along with one of the directors were freely available to handle the accounts and administration and to carry the business act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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