TMI Blog2019 (7) TMI 1368X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Assessee : Shri Miraj D Shah, AR For the Respondent : Shri Shankar Halder, JCIT, Sr. DR ORDER PER DR. A. L. SAINI: The captioned appeal filed by the Assessee, pertaining to assessment year 2009-10, is directed against the order passed by the Commissioner of Income Tax (Appeal)-14, Kolkata, which in turn arises out of apenalty order passed by the Assessing Officer u/s 271B of the Income Tax Act, 1961 (in short the Act ) dated 22/06/2017. 2. Grounds of appeal raised by the assessee are as follows: 1. For that the ld. Commissioner of Income Tax (A)-14, Kolkata has erred in law as well as on facts of the case by not paying heed to the assessee s grounds of appeal raised before his honour on the point of imposition of penalty u/s 271B of the I.T. Act, 1961 of ₹ 73,070/- and dismissed the appeal on the grounds which are not correct as the assesseebonafidely was not in the idea of getting his books of accounts audited if his sales, turnover or gross receipts exceeds ₹ 40 lakh in the previous year relating to assessment year 2009-10 and the same was required to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 211/-. The assessment u/s. 143(3)/147 of the I.T. Act, 1961 was completed on 28.12.2016 and the total income of the assessee for the AY. 2009-10 was assessed at ₹ 12,98,200/- @ 8% of the gross turnover at Rs.l,46,14,105/-.As earlier mentioned, the total business turnover of the assessee during the F.Y.2008- 09 was at ₹ 1,46,11,105/-. Therefore, as per provisions of section 44AB of the I.T.Act,1961, the assessee should have got his books of accounts of proprietorship business audited within the specified time and furnished before the time framed as per section 139(1) of the I.T. Act, 1961. For A.Y. 2009-10, the stipulated time was 30.09.2009 within which the assesse had failed to get his books of accounts audited. No tax Audit Report was submitted within the period as well.During the course of assessment proceedings, a show cause notice was issued to the assessee on 08.12.2016 asking him why penalty proceeding u/s. 271B of the I.T. Act, 1961 should not be initiated for violation of the provision of section 44AB of the I.T. Act, 1961. 5. In compliance to the show cause notice, the assessee filed a written submission dated 15.12.2016, which are reproduced be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment year 2009-10, therefore as per the requirement of section 44AB of the Act, the assessee should get his accounts audited u/s 44AB of the Act. Since the assessee has failed to get his accounts audited therefore, penalty imposed by the Assessing Officer u/s 271B of the Act, the tune of ₹ 73,070/- should be upheld. 9. We have heard both the parties and perused the material available on record. We note that the assessee has started his business during the relevant previous year 2008-09 and is not professionally literature. We note that the assessee was maintaining requisite books of accounts and there was no willful attempt not to get books of accounts audited. The ld Counsel for the assessee submitted before us that assessee used to depend on his accountant, who suggestedthe assessee that accounts of the concerned financial year were not required to be audited. Only in the course of hearing, the assessee came to know that the accounts are required to be auditedif turnover / gross receipts exceeds ₹ 40 lakhs. Therefore, this omission was not deliberate and intentional. Therefore, ld Counsel submitted that under these circumstances the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 271B of the Act, observing the followings: 3.2 Coming to the discharge of the burden of proof, the assessee has furnished an affidavit dated 09.03.2016 by Shri Sanjeev Kumar, Advocate (at PB page 8). The same states that as the assessee s, whose returns he has been filing since AY 2008-09, turnover up to (the year relevant to) AY 2012-13 did not exceed the limit prescribed under section 44AB, he could not advise the assessee to get his accounts audited for AY 2014-15. On enquiry about the intervening year, i.e., the previous year relevant to AY 2013-14, the counsel, Shri P.N. Arora, would clarify that the returns for both the years, i.e., AYs. 2013-14 and 2014-15, were filed on 31.03.2015, and audit reports for both the years (dated 31.03.2015), uploaded on the same day, placing a copy of the said returns on record. This is clearly surprising. This is as a counsel, if not alert, and advising his client in anticipation, i.e., on his turnover approaching the prescribed limit, would normally advise his client only when the latter approaches him for filing the return accompanied by his unaudited accounts - in case of business income, i.e., on o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the non-rendering of the advice as to the requirement for audit on the accounts for AYs. 2008-09 to 2012-13. How, one may wonder, is that relevant? This is as no such requirement arose for those years. We, in fact, have alreadyproceeded on the basis that the assessee was not aware of the obligation for tax audit a matter of common knowledge among businessmen, so that nothing in fact turns thereon. The occasion for rendering advice would arise only when the assessee is preparing to file the return for AY 2013-14 and, in any case, for AY 2014-15. In fact, approaching the counsel in time for either year would make him aware of the requirement of law and, consequently, the penal consequence attending non-compliance. If anything, it shows that the assessee is aware or stands made aware on seeking professional advice, of the last date for filing the return/s belatedly, and chooses to, for reasons best known to him, avail of the said time period. It is the assessee s own lackadaisical conduct that has been thus responsible for the admitted contravention of section 44AB, with that under reference being the second such default in succession. No reasonable cause, und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 012, is in fact not for months, but for years, as we have clarified that approaching his counsel in time for either year (AY 2013-14 or 2014-15) would prevent the default. The explanation advanced, supported by an affidavit, when examined in the context of the facts of the case, does not exhibit the counsels mistake at all which, in substance, is the assessee s explanation. Rather, the assessee s conduct exhibits his awareness of his legal obligations and the concomitant implications. The cited case law would thus be of little assistance to the assessee. In fact, as a reading thereof shows, no substantial question of law arises in either of the decisions. 3.5 So, however, the fact of the matter is that the assessee has filed his returns for AYs 2013-14 and 2014-15 together on 31.03.2015, implying that the returns for these years, as well as the books of account for the same, were prepared and, as the case may be, audited (u/s. 44AB) ostensibly for the first time, simultaneously. There is nothing on record to suggest that the books of account for these years were not complete or not maintained in the regular course of business. The only reason ..... 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