TaxTMI 
TaxTMI 
TaxTMI 
2020 (2) TMI 77
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....ase, confirmation of Penalty Order passed u/s. 271B of the Income-Tax Act, 1961, by the learned CIT(A), imposing penalty at Rs. 1 ,50,000/- is quite arbitrary, erroneous, unjustified, unwarranted, excessive and bad-in-law. 2.That, the learned CIT(A) grossly erred, both on facts and in law, in confirming the penalty under s. 271B of the Income-Tax Act, 1961, for alleged failure to get its books of account audited under s. 44AB of the Act without considering the material fact that for the relevant assessment year, the turnover of the business had not exceeded the prescribed limit under s. 44AB of the Act and therefore, the appellant was not required to get its books of account audited under s. 44AB of the Act. 3.That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the penalty imposed u/s. 271B of the Act by the AO without considering the material fact that for the assessment year under consideration, the appellant was neither required to, nor it maintained, any books of account as prescribed under s.44AA of the Act and therefore, there could not have been any occasion for the appellant to get any books of account audited.....
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....improper, arbitrary, excessive, unjustified, unwarranted and bad-inlaw. Ld AR of the assessee vide written submission has stated that ground is general in nature, hence no specific submissions have been considered necessary. In view of this, ground being general in nature is treated as dismissed. Ground # 2 whereby appellant has contested the appeal on the ground that turnover during the relevant' years was not exceeding the prescribed limit provided u/s 44AB of the Act, so appellant was not exceeding the prescribed limit provided u/s 44AB of the Act, hence, the appellant was not required to get its accounts audited u/s 44AB of the Act. This has been contended that during the relevant period, the assessee firm constructed one 3-storyed building titled as 'Balaji Tower' and construction work was under progress during this period. As per Id AR, since the appellant had adopted 'project competition method' for revenue recognition no income had accrued to the appellant. By this way, the assessee has filed consolidated accounts for AY 2010-11 to AY 2013-14. As observed by Id AO in para 7.5 of. assessment order that one of the partners of the assessee firm, namely Sh....
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....ot required to get its accounts audited for earlier years as it followed 'project completion method' is nothing but an alibi to save its skin from imposition of penalty u/s 271 B of the act and other provisions. In the present case, I have no hesitation to say, the assessee has knowingly and deliberately did not get its accounts audited, therefore, case of the assessee does not fall in the category of "reasonable cause". Ld AR has placed reliance on the decision of Esque Finmark (P) Ltd v/s ACIT (supra) where penalty was deleted by Hon'ble ITAT because assessee was following 'project completion method' for recognizing revenue and returning income, the adjustment of income by the A.O. resulted into increase in turnover which made assessee liable for audit u/s 44A-B of the Act. On perusal of relevant decision (para 4.1), it is seen that Hon' ble ITA T expressed its agreement with the views expressed by Lucknow ITAT in the case of DClT v/s Gopal Krlshan Builders (2004) 91 ITD 124 (Luck) that word 'gross receipts' would include the amounts received from by the assessee-builder towards construction from its customers. Finally rejected the contention of th....
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....1 B of the Act is hereby sustained. Ground :# 2 of all the appeals is dismissed. 5. Aggrieved assessee is now in appeal before the Tribunal. 6. At the outset Ld. Counsel for the assessee reiterated the submissions made before the Ld. CIT(A) and pleaded that the issue stands squarely covered by the decision of Co-ordinate Bench of Bombay in the case of Esque Finmark (P) Ltd Vs. ACIT (2014) 40 CCH 810. Reliance was also placed on following decisions:- 1. Hon'ble High Court of Punjab & Haryana in the case of CIT Vs. Market Committee (2012) 80 DTR 213 (PH HC) 2. Hon'ble ITAT Jodhpur in the case of ITO vs. Narendra Kumar (2004) 23 CCH 247 (Jodh Trib) 3 Hon'ble ITAT Delhi in the case of Anoop Kumar Beri vs. ACIT (2004) 23 CCH 395 (DeI Trib) 4. Hon'ble Allahabad High Court in the case of CIT vs. Bisauli Tractors (2008) 299ITR 219 (All) 5. Hon'ble Gauhati High Court in the case of Surajmal Parsuram Todi vs. CIT (1997) 222 ITR . 691 (Gau.) 6. Hon'ble Jurisdictional High Court , of Madhya Pradesh in the case of ITO vs. Nanak Singh Guliani (2002) 257 ITR 677 (MP) 7. Hon'ble High Court of Gujarat in the case of ITO vs. Sachinam Trust (2010) 320ITR 445 (G....
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.... customers should have been accounted for as sales turnover by the assessee and as the total of such amount received during each assessment year in question exceeded the prescribed turnover limit u/s 44AB of the Act, not getting the books audited leads to levy of penalty u/s 271B of the Act. 11. In these given facts "where the assessee has adopted the percentage completion method and has disclosed the turnover in the year of completion of project to offer income for tax can the assessee be held liable u/s 271B of the Act for not getting the books audited during the years when the advances were received from customers". 12. We observe that similar issue came for adjudication before the Co-ordinate Bench of Bombay in the case of Esque Finmark (P) Ltd Vs. ACIT (supra) wherein also the company was engaged in the business as builder and developers and followed project completion method for recognizing the sale and failed to get the accounts audited during the years when the assessee received amount from the customers in the nature of advance and the Income Tax Officers levied the penalty u/s 271B of the Act, Tribunal decided in favour of assessee observing as follows:- "4. We have h....
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.... statement for the relevant year. The assessee, it may be noted, is a company. It is, therefore, in compliance of s. 44AB of the Act, required to get its accounts audited and, further, obtain and furnish an audit report both under the Companies Act, 1956 as well as under the Act, Le., in terms of the said provision. The audit report u/s,.224 of the Companies Act, which stands duly furnished" is thus itself toward and in' compliance of section 44AB, albeit partly. Non obtaining another audit report from its Auditors, i.e., in Form 3CA, under the circumstances, is, therefore, only on account of a bona fide belief that its turnover not exceeding- the qualifying monetary limit, stands to be excluded. Further, the purpose of verification of accounts, including purchases, cited by the A.O. as the underlying reason for the legal obligation of audit while explaining the ratlonale of the provision, stands thus satisfied in the facts and circumstances of the case. The explanation that receipts from customers were only in the nature of advance/s is not technically incorrect in-as-much as it is only when the same shall stand adjusted against sale price on the completion or near complet....