ABDUL AMZAD ALI KHAN,KHURDA vs. I, KHURDA

This is an appeal filed by the assessee against the order of CIT(A)-1,

Bhubaneswar, dated 29.10.2014, for the assessment year 2009-2010.

confirming the action of the Assessing Officer in imposing penalty under

section 271B of the I.T.Act, 1961 for Rs.27,500/-.

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authorities and materials available on record. In the instant case, the

assessee filed the return of income on 30.9.2009 showing income of

Rs.1,53,850/-. The Assessing Officer observed that the assessee was required

to get the account audited u/s.44AB and furnish the same to the department.

The return was filed without audit report for which the Assessing officer issued

a letter dated 29.4.2010 calling for furnishing of a copy of the audit report by

7.5.2010. The assessee did not file the audit report and, therefore, he

initiated the penalty proceedings u/s.271B of the Act and levied penalty of

Rs.27,500/- @ 0.5% of the gross receipts.

of income was required to be filed in ITR-4, whereas by mistake the assessee

filed the return of income in ITR-2. Since the ITR-2 does not have space to

mention regarding the audit report u/s.44AB, the Assessing Officer presumed

that no audit has been done u/s.44AB of the Act before the specified date

whereas the audit has been done on 21.9.2009 i.e. before the specified date.

It was submitted that while filing the return of income, the assessee was not

required to furnish any annexure including the audit report.

observed that the assessee should have filed the audit report by 7.5.2010

before the Assessing Officer as required by the Assessing Officer. However,

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the assessee did not comply with the request and when the penalty notice was

issued refused to receive the notice sent by RPAD. Subsequently, the

assessee sought 14 to 15 days more time to submit the audit report. This

shows that the audit was not done when the assessee sought more time to

produce the same which is much after the specified date. This clearly shows

that the audit report u/s.44AB has been back dated and not prepared by the

specified date. He further observed that the assessee was not only required

to get the accounts audited but furnish the same within the specified date.

The assessee failed to furnish the audit report even by 15.5.2010, which is

much after the specified date when the assessee asked for more time.

Therefore, he held that the Assessing Officer is justified to conclude that the

assessee has failed to get the accounts audited and furnished the same by the

specified date and in levying the penalty.

21.9.2009 and reiterated the submissions made before the Assessing Officer

as well as ld CIT(A).

by mistake filed his return of income in ITR-2 whereas it was required to file

the return of income in ITR-4. As there was no column provided in ITR-2 to

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mention regarding the audit report u/s.44AB, the same could not be

mentioned by the assessee. Ld A.R. submitted that throughout the

submission before the Assessing Officer as well as ld CIT(A) and also before

the Tribunal is that the audit report was obtained on 21.9.2009 and this fact

could not be reported in the return of income by the assessee in ITR-2 in place

of ITR-4. Before me, ld A.R. of the assessee has filed the copy of audit report

u/s.44AB of the Act of the assessee for the assessment year 2009-2010. In

view of above facts of the case and also keeping in view the fact that the

assessment of the assessee was made at the returned income of the assessee

at Rs.2,43,900/-, the default committed by the assessee was only a technical

or venial breach of law in not submitting the particulars of audit report in the

return of income filed by the assessee and, therefore, the assessee is not

exigible to penalty u/s.271B of the Act. My above view finds support from the

decision of Hon’ble Supreme Court in the case of Hindustan Steel Ltd. vs.

State of Orissa (1972) 83 ITR 26 (SC) whereby Hon'ble Apex Court has held

as under:-

"Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty when there is a technical or venial breach of the provisions of the Act or were the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute."

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and allow the ground of appeal of the assessee.

Order pronounced in the open court on 03/01/2017 in the presence of parties.

Sd/- (N.S Saini) ACCOUNTANT MEMBER

Cuttack; Dated 03/01 /2017 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : Abdul Amzad Ali Khan, Prop. Milan Financial Services, At: Kusupala, PO: Begunia, Dist: Khurda 2. The Respondent. ITO, Khurda Ward, Sriram Nagar, Khurda 3. The CIT(A)-1, Bhubaneswar 4. CIT, Bhubaneswar. 5. DR, ITAT, Cuttack 6. Guard file. //True Copy//

BY ORDER,

ASST.REGISTRAR, ITAT, Cuttack