BLUE SKY BRANDCOMM ASIA PRIVATE LIMITED ,MUMBAI vs. DCIT CIRCLE 6(1)(2), MUMBAI

On the facts and circumstances of the case and in law, the Hon'ble Commissioner of Income-tax (Appeals), Income-tax Department (hereinafter referred to as "the CIT(A)" for brevity) has erred in upholding the order of the Assessing Officer imposing penalty under section 271B of the Act. 2. On the facts and circumstances of the case and in law, the CIT(A) ought to have appreciated that the Appellant was prevented from getting its books of account audited and consequently, it could not comply with provisions of section 44AB of the Act. 3. On the facts and circumstances of the case and in law, the CIT(A) erred in holding that sufficient cause was not established despite the Appellant submitting the details of the numerous cases which are pending inter se the directors.”

The assessee is a company and did not file the return of income for AY 2015-16. The AO reopened the assessment by issuing notice under section 148 of the Act and the assessee filed the return of income declaring income of Rs. 8,53,199/-. The assessment under section 147 of the Act was completed accepting the income retuned by the assessee. The AO subsequently issued a notice under section 271B of the Act to show-cause why penalty could not be levied since the assessee failed to comply with the requirement to get the account audited under section 44AB in spite of having business receipts of Rs. 4,74,52,920/-. In response the assessee submitted that the accounts could not be audited for the following reasons:

In 2015, a dispute arose between two of them regarding various the handling/ affairs of various companies/entities. There are cases pending inter- se between them in various forums viz:- the Hon'ble Bombay High Court as well as before the Arbitral Tribunal etc.