TMI Blog1996 (3) TMI 155X X X X Extracts X X X X X X X X Extracts X X X X ..... 31,441-90 26,22,312-96 2. 1989-90 24,71,151-54 31,26,965-95 ---------------------------------------------------------- 48,02,593-44 57,49,278-91 ---------------------------------------------------------- Separate profit and loss accounts and balance-sheet were drawn by the assessee for their head office and the branch office. 3. It has been the assessee's case that they ran an honest and bona fide belief that since in the head office and the branch office their sales remained below the statutory limit of Rs. 40 lakhs they were not required to get their account books audited. This belief in the submission of the assessee validly constituted " reasonable cause ". Apart from this, there was no wilful and deliberate default on the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the penalty. According to him, the requirement of the initiation of the penalty during the assessment proceedings did not apply to penalty under section 271B, which unlike the provisions pertaining to certain other penalties such as 271(1)(c) or 271(1)(a)---penalties for concealment or late filing of return respectively did not enjoin upon the Assessing Officer to impose penalty in the course of any proceedings under the IT Act. Regarding the applicability of section 275 of the Act, it was submitted that the limitation provided for by it related to the completion of the proceedings after initiation rather than any limit set for the initiation of a penalty. About the ratio in the case of Rajinder Kumar Somani, the learned D.R. submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of section 275 of the IT Act, 1961 runs as under : --- " Bar of limitation for imposing penalties 275(1) No order imposing a penalty under this Chapter shall be passed --- (a) ......................... (b) ......................... (c) in any other case, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later." 9. Since admittedly the present case does not fall with clauses (a) (b) of sub-section (1) of section 275(1) they have been omitted by me. 10. As is evident, the Legislature gave a mandat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legal requirement about the initiation of penalty in the course of any proceedings under the IT Act did not exist was not under consideration before the Court. Incidentally, it was also not possible. I say so because the judgment in Rajinder Kumar Somani's case was rendered on 30th of April, 1980, while the substantive provision of section 44AB requiring audit of accounts of certain persons carrying on business or profession, the penalty provisions contained in section 271B imposing penalty for non-compliance of the mandate of section 44AB came on the statute book only w.e.f. 1st of April, 1985. These circumstances make it more than obvious that the ratio of Rajinder Kumar Somani's case does not at all help the assessee in any manner---dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in each of the two years. If taken together, as has been done, they will far exceed Rs. 40 lacs in both the years. Assessee is a partnership firm and they submitted one return for their whole of the business. In the circumstances, the submission that the turnover of each of the branches was to be considered separately does not appear to hold any water, separate profit and loss account and balance-sheets prepared for the two notwithstanding. The preparation of separate profit and loss account and drawing of separate balance-sheets is naturally done with a view to know about the state of health of the two business---so that the assessee knows the sales, profit and other necessary business requirements. A belief could be bona fide only if it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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