POOVADAI JANARTHANAM DINESH,CHENNAI vs. ITO NON CORPORATE WARD 11(3)(I/C), CHENNAI

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ITA 2655/CHNY/2017Status: DisposedITAT Chennai10 August 2018AY 2013-143 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that while turnover includes gross receipts, the assessee had a bona fide belief that their commission did not exceed the audit limit. Therefore, there was a reasonable cause for not getting the books audited.

What were the facts?

The assessee, a clearing and forwarding agent, received commission charges of Rs. 9,54,599/-. The Assessing Officer levied penalty under Section 271B for not auditing the accounts, considering gross receipts as turnover.

What were the issues?

Whether penalty under Section 271B is leviable when the assessee had a bona fide belief that their commission income did not necessitate a mandatory audit.

Which sections of the Income-tax Act were involved?

Section 271B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A ’ BENCH : CHENNAI

Before: SHRI N.R.S. GANESAN & SHRI S.JAYARAMAN

PER N.R.S. GANESAN, JUDICIAL MEMBER :

1.

This appeal of the Assessee is directed against the order of the Ld.CIT(A)-13, Chennai dated 22.08.2017 and pertains to assessment year

2013-14 confirming the penalty levied by the ld. Assessing Officer u/s.271B of the Act.

2.

Ms.Hemalatha, the ld. Counsel for the assessee, submitted that the assessee engaged himself in the business of clearing and forwarding of import and export goods of the customer. In other words, the assessee was acting as clearing and forwarding agent. The assessee has received commission charges only to the extent of `9,54,599/-. However, the ld. Assessing Officer by taking the gross receipt found that the assessee’s account needs to be audited. According to ld.A.R, the assessee was under the bona fide impression that the company of assessee received only `9,54,599/-, hence the accounts are not compulsorily auditable. The ld. Counsel for the assessee placed reliance on the order of the Mumbai Tribunal in the case of M/s.Helios Logistics, Mumbai Vs. INCOME TAX OFFICER in vide order dated 29th July, 2016 and also relied on the other decision of different Benches of the Tribunal.

3.

On the other contrary, ld.D.R submitted that the gross receipts are the turnover, which include the entire receipts including the commission.

Therefore, the assessee is liable to get the accounts audited. Since admittedly the books of accounts were not audited, therefore, the ld. Assessing Officer has rightly levied the penalty u/s.271 B of the Act.

4.

We have considered the rival submissions on either side and perused the relevant material available on record. The assessee claims that the commission received was only `9,54,599/-, hence the accounts need not to be audited. This Tribunal is of the considered opinion that the turnover means the gross receipts, which include the commission also. However, the assessee was under the bona fide belief that the commission is only `9,54,599/-, hence, the account need not to be audited, when the commission does not exceed the prescribed limit and the assessee was under the bona fide impression that books need not to be audited, this Tribunal is of the considered opinion that there was a reasonable cause for not getting the books audited. Therefore, the levy of penalty u/s.271B of the Act in the facts of the case is not warranted. Accordingly, the orders of both the authorities below are set aside and the penalty levied by the ld. Assessing Officer as confirmed by the Ld.CIT(A) is deleted.

5.

In the result, the appeal of assessee is allowed.

Order pronounced on 10th August, 2018, at Chennai.

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