TaxTMI 
TaxTMI 
2019 (5) TMI 1110
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....Ward-III(5), has passed orders of penalty on 31.3.2015 to the tune of Rs. 150000/- for not getting books audited under section 44AB of the I.T. Act, 1961 under Section 271(B) of the I.T. Act, 1961 on conjectures and surmises. The same may kindly be deleted. 2. That the learned Assessing Officer-cum-Income Tax Officer, ward-III(5), Ferozepur has levied the penalty to the tune of Rs. 150000/- under section 271(B) of the I.T. Act, 1961 which is wrong, illegal and baseless because this the assessee has reasonable cause for not getting the books audited under section 44AB of the I.T. Act, 1961 in time due the reasons beyond his control. Since the assessee had reasonable cause for not getting the books of accounts audited hence penalty levied may kindly be deleted." 4. The brief facts of the case are that the Assessing Officer from the assessee's audit report dated 20.03.2014 received in its office on 31.02.2014 for the F.Y.2011-12 relevant to the assessment year i.e. 2012- 13, came to know that the assessee was under legal obligation to get its account audited before the specified date i.e. up to 30.09.2012 as per the provisions of section 44AB of the Act because during the year un....
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....st and embezzlement which resulted in failure to get its books of accounts audited by the stipulated date. v) In its reply the assessee has submitted that FIR was lodged by the Vigilance Department on 11-01-2012 with the result Sheller was locked. The perusal of the record of the assessee reveals that assessee has shown turnover of Rs. 5,35,30,801/- in the A.Y. 2012-13 and Rs. 3,33,08,219/- in the A.Y. 2013-14, but the assessee has failed to give any plausible explanation as to how the said huge turnover was made during the period under consideration when the premises of the assessee was locked. vi) Further more, till date the assessee has failed to file its return of income for the year under consideration i.e. for the financial year 2011- 12 relevant to the assessment year 2012-13." 5. The assessee challenged the imposition of penalty before the Ld. CIT(A), who while considering the penalty order and submissions of the assessee affirmed the penalty by holding as under: "6. I have given careful consideration to the facts of the case and it is for consideration that the delay for both the AY is as under: Assessment Year Due Date Actual Date Period of Delay Total ....
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....coming patient of depression and after initiation of criminal proceedings on 11.1.2012 both the Directors avoided their arrest however, Sh. Ramesh Chander was got arrested on 07.02.2012 but got bail on 23rd May, 2012. It was further submitted by the learned counsel for the assessee that another Director Sh. Ashish Garg was able to avoid arrest. The FIR was lodged by the Vigilance Department and the State Bank of India, Ferozpur in which the assessee was having CC Limit and secured turn over loan. Business of the company also considerably gone down from the sales of Rs. 5,35,30,801/- for the A.Y.2012-13 to Rs. 3,33,08,219/- for the A.Y.2013-14. Therefore, the circumstances stated above were beyond the control of the assessee which resulted into delay in getting audit the books of account for both the years under consideration i.e. 2012-13 and 2013-14 and therefore the aforesaid reasons constitute a reasonable delay. 8. On the contrary, the Ld. DR relied upon the orders passed by the authorities below and submitted that the order under challenge does not suffer from any perversity or illegality or impropriety. 9. Having heard the parties and perused the material avialble on recor....
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....ecified date", in relation to the accounts of the assessee of the previous year relevant to an assessment year, means [the due date for furnishing the return of income under subsection (1) of section 139].]" 9.1 From sub-clause(a) of Section 44AB, it reflects that every person who is carrying business, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds 1 crore rupees (earlier it was 60 lacs) in any previous year then such person is required to get his accounts of such previous year audited by an accountant before the specified date which in the instant case was 30th Sep., 2012 and further required to submit such report in the prescribed form duly signed and verified by such Accountant and setting forth such particulars as may be prescribed. According to provision of section 44AB, the assessee was under legal obligation to get its accounts audited before 30th September, 2012. Further Sec.271B provides the penal consequences for non-compliance of the provisions of Sec.44AB. For the sake of completeness and ready reference the relevant provisions of section 271B and 273B of the Act as applicable in the instant case, are reproduced he....
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.....f. 10-09-1986), the phrase 'without reasonable cause' has been omitted in order to make provisions more stringent. However section 273-B of the Act puts rider on imposition of penalty and provides that notwithstanding anything contained in the provisions of Section 271-B, amongst other sections, no penalty shall be impossible on the person or the assessee, as the case may be, for any failure referred to in the concerned provisions if he proves that there was a reasonable cause for the said failure. It is thus to be seen that as to whether the assessee has been able to prove that there was a reasonable cause for the assessee for not getting its accounts audited under section 44AB of the Act and then to furnish the report by the specified date. In order to get exonerate from penal consequences, the onus is upon the assessee to establish reasonable cause for non-compliance of legal obligations. 9.3 While coming to the instant case we realized that the Assessing Officer has imposed the minimum penalty i.e. 1,50,000/- as prescribed under the provisions applicable hereto. The assessee case is based upon the criminal proceedings which resulted into non-getting audit of the book....
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....R was lodged on 11.01.2012 by the Vigilance Department for criminal breach of trust and embezzlement of certain quantity of rice which the assessee company failed to supply to Food Corporation of India as per directions of Punjab State Civil Supplies Corporation Ltd, and in pursuance thereof one of the director was arrested but was released on bail in May, 2012 itself whereas the assessee was under obligation to get its accounts audited upto 30th Sep., 2012 for the F.Y.2011-12 and upto 30th Sep., 2013 for the F.Y. 2012-13 but the same gets audited only on 20-04-2014 and therefore there is huge time gap of 17 months 20 days and which in our considered view, does not seems to be reasonable nexus with the criminal proceedings because it is not the case of the Assessee that the staff of account department and/or the persons who were dealing with the financial transactions of the assessee company were also arrested and/or subjected to the criminal proceedings. The other ground i.e. illness of one of the director is also does not seems to be a reasonable cause for non-compliance of legal obligation because it is not the case of the Asseeee that the company is being run by one man only an....