SENAPATI SATIJA,NEW DELHI vs. ACIT CIRCLE-45(1), NEW DELHI

This appeal has been preferred by the assessee against the order dated 29.04.2019, impugned herein, passed by the learned Commissioner of Income-tax (Appeals)-15, Delhi (in short “Ld. Commissioner”), whereby the ld. Commissioner affirmed the levy of penalty imposed by the Assessing Officer u/s.271B of the Income- tax Act, 1961 (in short ‘the Act’) for the assessment year 2015-16.

[2] 2.1 During the penalty proceedings, it was claimed by the assessee that the assessee, being a senior citizen of 70 years old, was under the impression that only the gain is liable to be surrendered for taxation purposes. The case of the assessee has always fallen below the threshold limit for tax audit, however first time falls within the ambit of section 44AB of the Act, therefore, due to bona fide mistake, the assessee could not get its accounts audited and hence the Assessee may be given pardon from the rigors of penalty provisions. The assessee also relied upon various judgments as it appears from the assessment order.

2.2 The Assessing Officer, though considered the claim of the assessee and the judgments referred by the assessee, however, by distinguishing the judgments referred, did not find reasons stated by the Assesseeas reasonable cause and consequently levied the penalty of Rs. 65,286/- u/s 271B of the Act.

[3]

The contention of the Appellant has been considered and the order of AO has also been perused. It is seen that the assessee has achieved the following turnover of his business S. No. Description Amount 1. Turnover from the Business 71,52,520 2. Turnover from F&O (Future & Option) 59,04,607 Total 1,30,57,127 Turnover It has been held in the case of CIT Vs S.C. Naregal (Kar) 329 ITR615 that Ignorance of law is no excuse and accordingly the Levy of penalty u/s 271B was upheld. Therefore, considering the facts and circumstances of the case, I am of the considered opinion that the whole of the turnover is to be taken for the purpose of calculating the Gross turnover of the business. Therefore, the action of the A.O. in levying the penalty of Rs. 65,286/- u/s 271B is justified and the action of the A.O. is confirmed accordingly.

5. Heard the parties and perused the material available on record. At the outset we observe that the Assessee’s case falls under the threshold limit as prescribed u/s. 44AB of the Act and the assessee has claimed before the authorities below and us as well that the assessee was not aware that the aggregate of the Assessee’s business ‘heads’ was required to be taken into consideration for compliance of the provisions contained in section 44AB of the Act. The assessee also claimed that the Assessee had acted under bona fide belief without dishonest intention in not obtaining audit report for all the three businesses carried on by him in respect of clearing and forwarding agent.

[4] 5.1 We have given our thoughtful consideration to the peculiar facts and circumstances of the case. In Section 271B of the Act, the discretion has been given to the Assessing Officer to direct the assessee to pay by way of penalty a sum equal to one-half percent of the total sales etc. etc. The provisions empower the Assessing Officer to levy the penalty as per its discretion. In our considered view, the discretion can be exercised by a person who has been entrusted with such discretion, judiciously, reasonably and cautiously and considering the peculiar facts and circumstances of the case.

5.3 In the instant case, the assessee committed default first time for non-complying with the provisions of section 44AB because the case of the assessee crossed the threshold limits as prescribed under the provisions of section 44AB of the Act first time only and it is not the case of the Revenue that the assessee though crossed the threshold limit of section 44AB of the Act in subsequent years as well but still committed default in not getting its accounts audited. Even it is not the case of the Revenue Department that the Assessee has acted deliberately in defiance of law or was guilty of conduct contemptuous or dishonest or acted in conscious disregard of its obligation, therefore not liable for imposition of penalty as per dictum of the Hon’ble Apex Court in the case of Hindustan Steel limited vs. State of Orissa (83 ITR-26)(SC).

5.4 Considering the peculiar facts in totality and the analyzations made above, the Assessee is entitled to get leniency and consequently, the penalty imposed by the Assessing Officer and affirmed by the ld. Commissioner is liable to be deleted, hence, ordered accordingly.

[5]

Order pronounced in the open court on 30/06/2022