2017 (2) TMI 505

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.... Assessment year : 2006-07 A search was conducted under section 132 of the Income Tax Act on 16.09.2008 and the AO found that the gross receipts on sale of site of G. L. Residency Projects was Rs. 65,06,118/- and for Air City Projects is Rs. 1,49,22,440/- for the financial year ending 31.03.2007. The AO also noted that the assessee was required to get the assessee's account audited under section 44AB of the Act and however assessee had failed to do so. Therefore, the notice was issued on 31.12.2010 and 28.01.2011. 3. The assessee, in response to the notice filed reply to the show cause notice and in the reply it was submitted by the assessee that the assessee was following project completion method and the receipts were below the limits ....

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....under section 153A on 29.07.2010. The original return of income was filed on 31.07.2007. In the revised return filed pursuant to section 153A, the assessee had declared an additional income of Rs. 32,43,094/-. The assessee has shown to us the audited report at page 93 dated 30.09.2009 and during the course of argument, it was submitted that the audited reports were filed by the assessee during the assessment proceedings or in the penalty proceedings of the AO. We have gone through the assessment order dated 31.12.2010 assed under section 153A wherein there is no whisper of the filing of audited report dated 30.09.2009 before the AO. The AO in the assessment order has categorically mentioned for initiation of penalty under section 271(1)(c) ....

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.... belief for not getting its accounts audited, is not sustainable as the application of section 44AB is independent and is not depended upon the method of accounts adopted by the assessee under section 145 of the Act whether it is project completion method or percentage completion method. In our view, the requirement under section 44AB is based on the total sales, turnover or gross receipt as the case may be of the assessee and . If it exceeds the threshold limit as provided under the Act, then the assessee is required to compulsorily get its accounts audited before the specific date. Since, the assessee has failed to do so, therefore, we have no other option but to confirm the order passed by the CIT in imposing the penalty. Even otherwise,....

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.... case project goes on for more than 5 years and assessee gets its books of account audited for last year in which project is completed, then from where A.O. will be able to verify the figures of expenses and receipts etc. of earlier years. So, it is against the very principle of Section 44AB that in project completion assessee would get the books of account audited in the last year and not in earlier years when he is debiting the expenses and showing sundry debits and different types of receipts are also there. On the basis of above, I am of the view that assessee at the outset had not been able to bring before me the audit guideline and even if such guideline is there, the same is against the very provisions of Section 44AB." 7. Moreover....