TaxTMI 
TaxTMI 
2013 (1) TMI 107
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....account, were not audited under section 44AB of the Act, and no report there-under was furnished along with the return of income (which was filed in time - on 07/09/2006), even as the assessee's turnover exceeded the threshold limit of Rs. 40 lakhs, as prescribed under the said section. There was, thus, a contravention of section 44AB, so that the assessee was liable to penalty u/s. 271B of the Act, and was accordingly show caused in the matter vide notice dated 13/06/2007. After seeking several adjournments; the assessee not attending on each date, the assessee finally submitted its reply on 12/03/2008, stating that there was no provision in its regulations for audit of its accounts by a private firm of Chartered Accountants, so that the same were audited only by its statutory auditors, namely, the District Audit Officer. The same was found not acceptable by the Assessing Officer and penalty u/s. 271B levied at Rs. 33,438/-vide order dated 28/03/2008. The facts for the following year, i.e., assessment year 2007-2008, are much the same, and the penalty stood levied at Rs. 44,458/- vide order dated 28/05/2008. 2.2 In appeal, the assessee raised several contentions. Firstly, that ....
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....o so.' The view taken by the tribunal was thus inconsistent with the express language of section 44AB read with section 271B of the Act, so that no plea to that effect could be sustained in law. 4. We have heard the parties, and perused the material on record. 4.1 Our first observation in the matter is that the several pleas raised by the assessee before the authorities below toward non-audit u/s. 44AB, and the consequent levy of penalty u/s. 271B, both qua facts or on law, viz. non-finalization of accounts for the immediately preceding year; statutory audit by the District Audit Officer [DAO] in terms of section 64 of the U.P Co-operative Societies Act; the earlier initiation of penalty proceedings, et. al., are without basis and/or of no moment, and rightly rejected by them. Each of the said contentions, which though were not raised before us, stand suitably addressed and met by the authorities below; the ld. CIT(A) in particular. The statutory audit for the first year (A.Y. 2006-07) stood completed well before the due date of the filing of the return for that year. Where, then, does the question of non-finalization of accounts for the preceding year (f.y. 2004-05) arise....
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....us 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: Provided that this section shall not apply to the person, who derives income of the nature referred to in section 44B or section 44BBA, on and from the 1st day of April, 1985 or, as the case may be, the date on which the relevant section came into force, whichever is later: Provided further that in a case where such person is required by or under any other law to get his accounts audited, it shall be sufficient compliance with the provisions of this section if such person gets the accounts of such business or profession audited under such law before the specified date and furnishes by that date the report of the audit as required under such other law and a further report by an accountant in the form prescribed under this section. Explanation.-For the purposes of this section,- (i) "accountant" shall have the same meaning as in the Explanation below sub-section (2) of section 288; (ii) "specified date", in relation to the accou....
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....lopment Union Ltd. (supra) was squarely applicable, and there was no occasion to levy penalty u/s. 271B of the Act. 4.4 A combined reading of the decisions in the case of Iqbalpur Co-operative Cane Development Union Ltd. (supra) and by the tribunal in the case of U.P. Co-operative Cane Development Union Ltd. (supra) would show that an exemption of income from tax has been considered a valid cause for holding a bona fide belief that the assessee was not liable to get its accounts audited u/s. 44AB of the Act, i.e., for the purpose of filing its return of income, which the assessee, irrespective of the exemption of its income, is obliged to and indeed does. Holding or otherwise of a belief, and a bona fide one at that, is a matter of fact, and which would depend upon a number of factors, including circumstantial, viz. the past conduct; the degree of general and legal awareness; the knowledge of the concerned person/s as also those in the assessee's ambit, et. al. It is thus difficult to state of the afore-going, by way of a general proposition or as a ratio or a matter of rule. In a given case, an assessee may well be aware of the legal requirement (as apparent from its own pas....
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.... valid. In fact, neither the tribunal nor the hon'ble Uttrakhand high court have or could say so. Rather, if and where so, there would be no contravention of law in the first place, so that the question of levy of penalty would not arise at the threshold. It is trite law that there is no maxim in law that everyone knows the law. As such, where circumstances are shown to exist that the tribunal comes to a finding of fact that the assessee did indeed held a bona fide belief that its accounts were not required to be audited, i.e., held in good faith, penalty for violation of the provision ought not to be levied. It is and was, we may clarify, well within the powers of the AO to require the assessee, during the course of assessment proceedings, to get its accounts audited u/s. 44AB of the Act and furnish a report there-under to him within a reasonable time. The assessee cannot take a stand that it shall not, for that would be a contravention of law, and a deliberate one at that, making it liable to penalty u/s. 271B of the Act. That, however, is not the same thing, or equivalent to stating that where audit u/s. 44AB has not been caused and audit report consequently not obtained, penalt....