M/S J.V.KULKARNI & FRIENDS ASSOCIATES,MALKAPUR vs. A,C.I.T CENT CIR. 1(4), NAGPUR

These two appeals filed by the assessee against the separate order dated 13-06-2016 and 21-06-2016 passed by the Commissioner of Income Tax (Appeals)-3, Nagpur [‘CIT(A)’] for assessment year 2009-10.

First, we shall take up appeal in for A.Y. 2009-10.

The assessee raised two grounds of appeal amongst which the only issue emanates for our consideration is as to whether the CIT(A) justified in confirming the penalty imposed by the AO u/s. 271B of the Act.

The ld. AR, Shri Rachit Thakar submits that there was no malafide intention of the assessee for not getting the audit of books of account, but however, for want of letter from the Buldhana Urban Credit Co-op. Society, Buldhana, the audit of books were delayed. The said fact was brought to the notice of AO as well as the CIT(A) in the concerned proceedings, but however, they did not accept the submissions of the assessee. The ld. AR drew our attention to the case laws in the case of Hindustan Steel Ltd. reported in 83 ITR 26 (SC) of the Hon’ble Supreme Court and placed reliance the said decision which was followed by the Hon’ble Madras High Court in the case of P. Senthil Kumar reported in 416 ITR 336 (Mad.). The ld. DR relied on the order of CIT(A).

After hearing both the parties, we note that the provisions u/s. 44AB of the Act mandates every person carrying on business requires audit of books, if turnover or gross receipts exceeds Rs.45 lacs. As discussed above, the assessee has shown gross receipt as Rs.36.33 crores, the provisions u/s. 44AB are applicable to the facts of the case. The Hon’ble Supreme Court in the case of Hindustan Steel Ltd. (supra) held the liability to pay penalty does not arise merely upon proof of default and that penalty cannot be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. In the present case, the assessee offered its explanation in the penalty proceedings stating the delay for getting the books audited for want of letter from Buldhana Urban Credit Co-op. Society, Buldhana and the books were audited immediately after the letter received from the said society. Further, books were audited on 01-02-2010 and were available for examination during the assessment proceedings which was completed on 20-12-2011 u/s. 143(3) of the Act. Therefore, it was a mere technical breach as the books were not audited before specified time as provided by the statute, in our opinion that the delay as explained by the assessee flows from bonafide belief and no penalty could be imposed for a mere technical or venial breach of the provisions of the Act. Thus, penalty imposed by the AO and confirmed by the CIT(A) u/s. 271B of the Act is not justified and it is set aside. Thus, the grounds raised by the assessee are allowed.

In the result, the appeal of assessee is allowed.

Now, we shall take up appeal in A.Y. 2009-10.

The assessee raised two grounds of appeal amongst which the only issue emanates for our consideration is as to whether the CIT(A) justified in restricting the disallowance to an extent of Rs.4,55,470/-.

In the result, the appeal of assessee is dismissed.

To sum up, the appeal of assessee in is allowed and appeal in is dismissed.