TMI Blog2023 (8) TMI 713X X X X Extracts X X X X X X X X Extracts X X X X ..... is transpired by the submission of the assessee and its reliance on the case laws. The case of the assessee AOP is covered by decisions in the judgements referred, thus, under identical circumstances in the instant case, we are of the considered opinion that penalty imposed by the Ld AR and confirmed by the Ld CIT(A) is liable to be deleted and we direct to do so. Appeal of the assessee is allowed. - SHRI RAVISH SOOD, JM SHRI ARUN KHODPIA, AM For the Appellant : Shri Nilesh Jain, CA For the Respondent : Shri Choudhary N. C. Roy, Sr. DR ORDER Per Arun Khodpia, AM : This appeal is filed by the assessee against the order passed by the CIT(A), Bilaspur, dated 02.04.2018 for the assessment year 2011-2012, on the following grounds:- 1. In the facts and circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) has erred in sustaining penalty of Rs. 73,250/- imposed u/s. 271B of the Income-tax Act, 1961 by wrongly construing that the appellant failed to maintained books of accounts and get his accounts audited. 2. In the facts and circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther noticed by the AO that during the relevant assessment year 2011- 12, the Assessee has received an amount of Rs. 1,46,44,225/-, thus, the Ld AO has considered the amount of consideration received as sale for the year under consideration. As per Ld AO the amount received is more than the stipulated turnover required u/s 44AB of Act to get assessee s books Audited and for this non-compliance penalty u/s 271B for Rs. 73250/- was imposed. Aggrieved by the order of AO, the assessee preferred an appeal before the ld. CIT(A) and the ld. CIT(A) dismissed the appeal of the assessee. Assessee s submission and observations of the Ld CIT(A) extracted from the order of Ld CIT(A) were as under:- 2.2 Appellant Submission- The Action of Id. Assessing Officer is not justified. In view of brief facts narrated above and in the statement of facts the appellant was following project completion method in respect of the one and only projected starred as per agreement. Initially the agreement was to be completed with in one year but later on the terms were enlarged changing the requirement of land from 100 acres to 130 acres and contract period from one year to five years. The appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see was not liable to be audited u/s 44AB of the IT Act. 6. Ld AR of the assessee relied on the following case laws:- a. Exque Finmark Pvt. Ltd. vs. ACIT-9(1), Mumbai in ITA Appeal No. 1624/MUM/2011 dtd. 11/07/2014 4. We have heard the parties, and perused the material on record, giving our careful consideration to the matter. 4.1 We find considerable merit in the Revenue's case. This is for the reason that the Legislature has provided three parameters, viz. 'sales', 'turnover' or 'gross receipts', as the case may be, in defining the criteria for determining the legal obligation for tax audit u/s. 44AB of the Act. The word 'gross receipts' would include the amounts received by the assessee- builder toward construction from its customers. The same are only in pursuance to a contract of sale, and of revenue character. Further, the same stands excluded in reckoning the assessee's income for the year only for the reason that it adopts a particular method, i.e., the project completion method, for recognizing income, and which by itself, even as found by the tribunal in Gopal Krishan Builders (supra), would be of no consequence; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale of the provision, stands thus satisfied in the facts and circumstances of the case. The explanation that receipts from customers were only in the nature of advance/s is not technically incorrect in-as-much as it is only when the same shall stand adjusted against sale price on the completion or near completion of the project, that the same is liable to be considered as 'sales'. The notice of penalty and the basis for the A.O. in levying the penalty was that the assessee's work-in-process (WIP) had witnessed an increase during the year for an amount beyond the prescribed limit. Though, therefore, we do not regard the ld. CIT(A) to have, in confirming the penalty, based it on a different cause; the default being the same, it does amount to a different view being adopted on the ITA No.1624/Mum/2011 (A.Y. 2005-06) Esque Finmark Pvt. Ltd. vs. Asst. CIT same set of facts, confirming the view, if one was required, that the matter is liable to be considered in more ways than one. The inclusion of 'purchases', as stated by the A.O. with reference to the decision by the apex court in the case of George Oks Pvt. Ltd. under the Sales Tax Act, for the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the assessee proves that there was a reasonable cause for the said failure and thus covers the situation of the assessee too. We, thus delete the penalty levied u/s 271 B of the Act at Rs. 1,50,000/- each for Assessment Year 2010-11 to 2012-13 and allow all three appeals raised by the assessee. 7. On the other hand, ld. Sr. DR submitted that Ld CIT(A) has rightly decided the issue considering the receipt during the year, categorically defining the same as turnover within the meaning of section 44AB and thus liable to be levying of penalty u/s 271B of the Act. Ld Sr. DR vehemently supported the orders of revenue authorities. 8. We have considered the rival contentions and submissions. Have perused the case laws placed before us. 9. Admittedly, the assessee AOP has receipts from its customers in the nature of trade advance, which is discernible from the copy of balance sheet, trading and profit and loss account of the assessee for AY 2011- 12. It is also evident from the balance sheet of the subsequent year i.e AY 2015-16 the impugned advances got converted into sale / turnover of the assessee, when the project was completed. Undisputedly, accounts of the assessee were p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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