TMI Blog2023 (1) TMI 650X X X X Extracts X X X X X X X X Extracts X X X X ..... ee words, Sales, Turnover, Gross receipts. So while analyzing the business of the assessee the AO has to find out whether the Sale, Gross Receipt or turnover is more than Rs. 1 crores then provisions of Section 44AB will be applicable. Therefore, if any one of Sale, Turnover or gross receipts is more than prescribed limit the provision of Section 44AB will be applicable. When Gross profit is more than Rs.4 crores, it means the Gross Receipts were definitely more than Rs.1 crores - Assessee in the case has receipts more than Rs.1 crores. Therefore, the assessee was under obligation to audit the books of account as per section 44AB of the Act. Admittedly the assessee failed to do so. There is penalty prescribed in the Section 271B of the Act for failure to comply provisions of Section 44AB. In the case under consideration, the assessee has merely stated that it was under bonafide belief. This explanation is not acceptable as the assessee is a builder, having advice of professionals like CA. Therefore, the explanation seems to be mere eye wash. The assessee has got its Balance Sheet prepared, Profit and Loss Account prepared from professionals and these are duly signed by CA. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee filed appeal before the Commissioner of Income tax (Appeal). The ld.CIT(A) confirmed the penalty. Submission of Ld.AR: 3. The Ld.AR submitted paper book. The Ld.AR submitted that during the year there was only work in progress, hence, the assessee was under bonafide belief that audit is not required and hence audit was not done. The Ld.AR submitted that there was no complete sale during the year. There were only advances from the customers. Hence, the Ld.AR submitted that penalty was not leviable. The Ld.AR relied on certain case laws. Submission of Ld.DR: 4. The Ld.DR relied on the order of the lower authorities. Ld.DR submitted that assessee is builder and follows Percentage Completion Method of Accounting. The Assessee in the Profit and Loss Account has shown Profit following Percentage Completion Method of accounting. During the year the WIP was Rs.81.46 Crores, out of that the work carried during the year was Rs.17.81 crores. The Ld.DR took us through the Assessment Order to explain that during the year 134 Sale Agreement have been executed valuing at Rs.88,37,83,270/- . The Assessee itself has accepted that 37.74% work was completed. After a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and gains of such person under section 44AD and he has claimed such income to be lower than the profits and gains so deemed to be the profits and gains of his business and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year, get his accounts of such previous year audited by an accountant before the specified date and furnish by that date the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed Failure to get accounts audited. 271B . If any person fails to get his accounts audited in respect of any previous year or years relevant to an assessment year or furnish a report of such audit as required under section 44AB, the Assessing Officer may direct that such person 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 previous year or years or a sum of one hundred fifty thousand rupees, whichever is less. 5.3 Thus, it is mandatory for an assessee whose Total Sales, Turnover, or Gross receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnover or gross receipts are not words of art used in relation to any individual transaction independently but has been used as sales , turnover or gross receipts . The expression total qualifies all the other three expressions, viz., sales , turnover, and gross receipts . Total sales indicate the aggregate price of the sales of commodities carried out by the assessee as a trading business. Obviously, it would not include such transfer of immovable or movable property by way of investment. Similarly, where the assessee is not merely selling the movable commodities, but relating to other trading activities, e.g., where assessee is a land developer and he is engaged in business of acquiring land developing it and selling houses or purchasing or is indulged in leasing business or is indulged in stock market so on and so forth, the expression turnover is made out to denote receipts from such activities. There may be third or residuary category which may not be termed properly a trading activity yet it is carrying on as business activity like job works for others, without himself being the manufacturer and selling such manufactured goods, or running a motor s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 5.6 In the case under consideration , it is an admitted fact by the assessee that assessee had earned Gross Profit of Rs.4,03,06,216/-. When Gross profit is more than Rs.4 crores, it means the Gross Receipts were definitely more than Rs.1 crores. Applying the above mentioned decision of Hon ble High Court, the assessee in the case has receipts more than Rs.1 crores. Therefore, the assessee was under obligation to audit the books of account as per section 44AB of the Act. Admittedly the assessee failed to do so. There is penalty prescribed in the Section 271B of the Act for failure to comply provisions of Section 44AB. 5.7 The Hon ble Bombay High Court, (the Hon ble jurisdictional High Court) in the case of Shri Swastik Steels (P.) Ltd. Vs ACIT 264 ITR 447 has held as under : Quote, From the minutes, it appears that Shri Gandhi Had objected to the holding of meetings on Sundays and at places outside the city limits. Secondly, the reasons given before the Commissioner of Income-tax (Appeals) show that there was an inter se fight between the Gandhi group and the Jaju group. That, the Jaju group was keen to acquire the controlling stakes in the shareholding of the Gandhi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
