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| The Tax Publishers2020 TaxPub(DT) 0852 (Ind-Trib) INCOME TAX ACT, 1961
Section 271B
There was a reasonable cause on part of assessee in not getting books of accounts audited since it adopted percentage completion method and advance received from customers was not part of turnover but in the shape of liability which could be crystallized to the sale turnover only when project was completed and possession was handed over along with registered sale deed to customer. Therefore, assessee was not required to get books of account audited and no penalty could be levied under section 271B.
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Penalty under section 271B - Leviability - Failure to get books of account audited - Reasonable cause
Assessee, a partnership firm engaged in civil construction was subjected to search and seizure operation. During the course of assessment proceedings carried out under section 143(3) read with section 153C, AO noticed that turnover of assessee for assessment years 2010-11 to 2012-13 was above the prescribed limit for audit as per section 44AB but assessee had not get the books of account audited. Thus, AO held the assessee liable to pay penalty of Rs. 1,50,000 under section 271B. Assessee contended that the assessee firm followed project completed method and alleged turnover was actually the amount of advance received from customers which was adjusted in subsequent years when the project was completed and immoveable properties were transferred to the customers. Also, in case of failure on part of the assessee to complete the project, advance was liable to the refunded. Held: There was a reasonable cause on part of assessee in not getting books of account audited since it adopted percentage completion method and advance received from customers was not part of turnover but in the shape of liability which could be crystallized to sale turnover only when project was completed and possession was handed over along with registered sale deed to the customer. Therefore, assessee was not required to get books of account audited and if for sake of discussion alleged advance received from customers was presumed to be turnover then also assessee would succeed on account of section 273B which provides for 'penalty not to be imposed in certain cases' where assessee proves that there was a reasonable cause for such failure. Therefore, penalty could not be sustained.
Supported:Esque Finmark (P) Ltd. v. ACIT (2014) 40 CCH 810 (Mum) : 2014 TaxPub(DT) 4574 (Mum-Trib) Esque Finmark (P) Ltd. v. ACIT (2014) 40 CCH 810 (Mum) : 2014 TaxPub(DT) 4574 (Mum-Trib)
REFERRED :
FAVOUR : in assessee's favour
A.Y. :
IN THE ITAT, INDORE BENCH
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