2023 (1) TMI 650

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....rned AO erred in levying & learned CIT(A) erred in confirming, penalty u/s 271B of ITA, 1961, without appreciating that appellant had reasonable cause (for not complying with provisions of section 44AB of ITA, 1961), as so envisaged u/s 273B of ITA, 1961. 4. The appellant craves leave to add / amend / alter / delete any of the above grounds of appeal." 2. Brief facts of the case as per the assessment order, are that the assessee had filed return of income electronically for A.Y.2015-16 declaring total income of Rs.33,80,870/-. Assessee was in the business of Builder and developer. During the scrutiny assessment the Assessing Officer (AO) asked the assessee to file copy of Audit report, along with certain other documents. The Assessee replied that No Tax Audit done for the year as there was only Work in Progress (WIP) and no sale. The AO initiated penalty proceedings u/s 271B and then levied the penalty. Aggrieved by the same, the assessee filed appeal before the Commissioner of Income tax (Appeal). The ld.CIT(A) confirmed the penalty. Submission of Ld.AR: 3. The Ld.AR submitted paper book. The Ld.AR submitted that during the year there was only work in progress, hence, the ....

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....levant provisions of the Act as applicable for AY 2015-16 are reproduced as under : 44AB. Every person,- (a) carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds one crore rupees in any previous year; or (b) carrying on profession shall, if his gross receipts in profession exceed twenty-five lakh rupees in any previous year; or (c) carrying on the business shall, if the profits and gains from the business are deemed to be the profits and gains of such person under section 44AE or section 44BB or section 44BBB, as the case may be, and he has claimed his income to be lower than the profits or gains so deemed to be the profits and gains of his business, as the case may be, in any previous year; or (d) carrying on the business shall, if the profits and gains from the business are deemed to be the profits and gains of such person under section 44AD and he has claimed such income to be lower than the profits and gains so deemed to be the profits and gains of his business and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year, get his accounts of such previo....

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....me of the business to which it relates and which is/are carried on by the assessee and in making assessment of profits and gains from the business whether such volume is a part of the business concerns trading in commodities or otherwise the business activities where the assessee has to indulge in incurring cost before receiving the amount in relation to that business or he is carrying on other business activities in which the cost factor is excluded by the assessee and what he is receiving as charges for the work done by him, like job work, where the raw material is provided by the other manufacturer, the assessee is merely to relate his receipts to labour charges or procuring cost incurred by him along with part of his profit. It is in that sense that business which is carried on by the assessee has to be taken into totality. It may be noticed that the "sales", "turnover" or "gross receipts" are not words of art used in relation to any individual transaction independently but has been used as "sales", "turnover" or "gross receipts". The expression 'total' qualifies all the other three expressions, viz., 'sales', 'turnover, and 'gross receipts'. Total sales indicate the aggregate ....

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....er for the purposes of the said section. In other words, receipts which are not relatable to business and may fall under the expression 'income to be subjected to tax as income from sources' do not form part of total turnover. Considering the principles governing the imposition of penalty u/s.271 B and the facts of the case we are of the opinion that AO was justified in levying penalty for not her books of accounts audited. We find that the cases relied upon by the AR are not relevant to decide the issue as the facts of the case are totally different. Secondly, while deciding the case at that point of time Tribunal did not have the benefit of the decision of the Hon'ble High court of Rajasthan delivered in the case of Bajarang Oil Mills(supra). So, confirming the order of the FAA, we decide the effective ground of appeal against the assessee." Unquote. 5.6 In the case under consideration , it is an admitted fact by the assessee that assessee had earned Gross Profit of Rs.4,03,06,216/-. When Gross profit is more than Rs.4 crores, it means the Gross Receipts were definitely more than Rs.1 crores. Applying the above mentioned decision of Hon'ble High Court, the assessee in the case h....