TaxTMI 
TaxTMI 
2017 (9) TMI 369
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....ase are that the assessee has filed its return of income for the assessment year 2007-08 on 31-10-2007 declaring total income at Rs. 97,787/-. The assessment was completed u/s 143(3) on 24-12-2009 determining total income at Rs. 9,37,666 by estimating net profit at 7% of the total turnover declared by the assessee. While completing the assessment the AO initiated penalty proceedings u/s 271B for failure to get accounts audited u/s 44AB of the Income-tax Ac, 1961 though its turnover for the relevant financial year exceeded the prescribed limit provided for audit of accounts. Accordingly, a notice u/s 274 r.w.s. 271B dated 24-12-2009 was issued to the assessee and asked to explain as to why penalty should not be levied for failure to get acco....
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....t is not the case of the assessee that it has maintained books of account and those books of account were washed away, but the assessee has not at all maintained books of account and hence, there is no reasonable cause for the assessee to get its books of account audited u/s 44AB and hence levied penalty of Rs. 1 lakh u/s 271B of the Income-tax Act, 1961. Aggrieved by the penalty order, assessee preferred appeal before CIT(A). 3. Before CIT(A), assessee reiterated its submissions taken before AO. The CIT(A), for the detailed discussion in his order, confirmed penalty levied by the AO u/s 271B by holding that the assessee has failed to explain as to why the books of account which were damaged in the alleged flood was finally reconstructed....
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....en in the quantum appellate proceedings before C IT(A) as being prepared in accordance with Accounting Standard-4 issued by Institute of Chartered Accountants of India (ICAI, hereinafter). There is a reasonable cause as provided in section 273B for failure to get accounts audited u/s 44AB and hence, the AO was completely erred in levying penalty u/s 271B. 5. On the other hand, the Ld.DR strongly supported the order of CIT(A). 6. We have heard both the parties, perused the material available on record and gone through the orders of authorities below. The AO levied penalty u/s 271B for failure to get accounts audited u/s 44AB of the Income-tax Act, 1961. According to the AO, the assessee failed to explain reasonable and sufficient cause....
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....e Act. We find that the assessee claims to have maintained books of account, however those books of account were destroyed in flood because of which the assessee could not produce the books of account to the auditor to get its books of account audited u/s 44AB of the Act. Therefore, one has to examine whether there is a reasonable cause as provided in section 273B, which impliedly exonerates assessee from complying with provisions of concerned sections. 7. Provisions of section 273B provides that no penalty shall be imposable on the person or the assessee, as the case may be, referred to in the said provisions, if he proves that there is a reasonable cause for the said failure. Since the provisions of section 273B covers the provisions o....