Case Law Details
Manoj S. Gugale Vs. ITO (ITAT Pune)
The issue is with respect to levy of penalty under section 271B of the Act. It is an undisputed fact that assessee is engaged in the business of Advertising Agency and during the year under consideration the commission earned from the Advertising Agency was not in excess of the limits prescribed under section 44AB for the purpose of getting the books audited. Before us, it is assessee’s submission that the entire receipts will not form part of turnover and therefore he had not got the books audited and for which reliance was placed on CBDT Circular and also on the decision of Bombay High Court in the case of Heros Publicity Services (supra). The aforesaid submission of the assessee prima facie appears to be bona fide belief on his part and Revenue has not brought any material on record to support that the belief of the assessee was not bona fide. Assessing officer has levied penalty under section 271B of the Act for not getting the books audited under section 44AB of the Act. A reading of section 271B makes it clear that the imposition of penalty is not mandatory as the word used is “may” meaning thereby that a discretion is conferred on the assessing officer to impose or not to impose the penalty. Further the provision with respect to imposition of penalty is not mandatory in view of the provision contained in section 273B of the Act which inter alia provides that notwithstanding the provisions of section 271B, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the failure. In the present case, the assessee was having a bona fide belief that he was not required to get his books audited under 44AB in view of the decision in Bombay High Court in the case of Heros Publicity Services (supra) and the CBDT Circular (supra). In such a situation, we are of the view that there was a reasonable cause on the part of the assessee for not getting the books audited. Further it is a settled law that when there is a technical or venial breach of the provisions of law, the ends of justice requires that discretion should not be exercised in favour of punishing a minor default and for the aforesaid proposition we get support from the decision of Hon’ble Apex Court in the case of Hindustan Steel Ltd. v. State of Orissa (1972) 83 ITR 26 (SC) wherein the 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.”
Considering the totality of the facts and relying on the aforesaid decision of Hon’ble Apex Court, we are of the view that in the present case the levy of penalty under section 271B of the Act was not justified and therefore direct its deletion. Thus the grounds of assessee are allowed.
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