SUYOJIT GARDEN,NASHIK vs. THE INCOME TAX OFFICER, WARD 2(1), NASHIK

The captioned appeal at the instance of assessee pertaining to A.Y. 2014-15 is directed against the order dated 04.03.2025 passed by National Faceless Appeal Centre (NFAC), Delhi u/s.250 of the income-tax Act, 1961 (in short ‘the Act’) arising out of Penalty Order dated 27.06.2017 passed u/s.271B of the Act.

The only issue raised in the instant appeal is that ld.CIT(A) erred in confirming levy of penalty u/s.271B of the Act at Rs.81,500/- for not getting the books of account audited.

We have heard the rival contentions and perused the record placed before us. Assessee has been alleged for not getting the books of accounts audited u/s.44AB of the Act even when the turnover for the year is of Rs.1.63 crore. Before us, Ld. Counsel for the assessee has narrated the facts stating that during F.Y. 2009-10 assessee had a total turnover of Rs.22.34 crore which included sale of flats as the assessee is a Builder and Developer. He submitted that transaction of sale of two flats sold during that year and duly shown as part of total turnover and the income earned and duly offered to tax, got cancelled for some reasons and assessee had to return the amount. Subsequently during the year under consideration those two flats were again sold but at higher amount and the assessee while computing the tax liability, reduced sale consideration offered to tax during F.Y. 2009-10 from the sale consideration received during the year and the remaining sale consideration which is less than the turnover limit provided u/s.44AB of the Act has been offered to tax u/s.44AD of the Act. Assessee in this reasonable belief did not get its books of account audited. It is also prayed that by virtue of section 273B assessee deserves immunity from levy of penalty.

Ld. Departmental Representative on the other hand stated that sale deeds of two flats which were sold during the F.Y. 2009- 10 were cancelled and fresh transaction of sale of flats was made during the year under consideration and the total turnover should include the total value of flats sold during the year. Therefore, since the assessee has not got its books of account audited, penalty has been rightly levied and sustained by ld.CIT(A).

We observe that during F.Y. 2009-10 relevant to A.Y. 2010- 11 assessee declared total turnover of Rs.22.34 crore approx. and also offered income of Rs.7,53,35,452/- in the income-tax return for A.Y.2010-11. It is not in dispute that the two flats sold during the year were initially sold during F.Y. 2009-10 and thereafter the sale deed was cancelled for some reason. It is also an admitted fact that during F.Y. 2009-10 assessee has disclosed the turnover of two flats sold during that year and also offered the income earned therefrom to tax. Now since the sale transaction of two flats carried out during F.Y. 2009-10 was cancelled, ideally the sale effected during the year are to be taken as part of total turnover but the working given by the assessee shows that based on reasonable belief that profit have been declared on the sales effected during F.Y. 2009-10 but since the value of flats have increased in last four years only, the increased value of sale consideration needs to be offered to tax. This action of the assessee is based on ‘reasonable cause’ and for such situation section 273B of the Act comes to the rescue of assessee which provided that penalty not to be imposed in certain cases if the assessee proves that there was reasonable cause for the said failure. We therefore under the given facts and circumstances are of the considered view that facts of the instant case falls under the provisions of section 273B of the Act and therefore considering the reasonable cause for the alleged failure no penalty is leviable u/s.271B of the Act. Finding of ld.CIT(A) is set-aside and the impugned penalty is deleted. Grounds of appeal raised by the assessee are allowed.

In the result, appeal of the assessee is allowed.