Case Law Details
Shree Balaji Construction Vs DCIT (ITAT Indore)
The issue under consideration is whether assessee can be held liable u/s 271B of the Act for not getting the books audited during the years when the advances were received from customers under percentage completion method?
In the present case, the assessee is engaged in real estate business acquired land and started construction of commercial building in the name of Balaji Tower from Assessment Year 2005-06 onwards. The construction was completed during the Financial Year 2012-13 relevant to Assessment Year 2013-14. Assessee firm adopted ‘project completion’ method and the amount received as advance from the customers were shown as liability and expenses incurred during the period of construction was shown in the trading account as work in progress. In the return of income for Assessment Year 2010-11 to 2012-13 assessee has not disclosed any turnover. However for Assessment Year 20 13-14 during which the project was completed the assessee has shown turnover and after claiming the incidental expenses including construction cost and opening work in progress declared net profit. The revenue’s allegation is that for Assessment Year 2010-11 to 2012-13 during which assessee was receiving the amount from customers should have been accounted for as sales turnover by the assessee and as the total of such amount received during each assessment year in question exceeded the prescribed turnover limit u/s 44AB of the Act, not getting the books audited leads to levy of penalty u/s 271B of the Act.
ITAT states that, the there is a reasonable cause on the part of the assessee in not getting the books of accounts audited since it adopted the percentage completion method and that the advance received from customers is not part of turnover but in the shape of liability which can be crystallized to the sale turnover only when the project is completed and the possession is handed over along with registered sale deed to the customer. Therefore as per ITAT the assessee succeeds on two counts firstly that it was not required to get books of accounts audited and if for sake of discussion if the alleged advance received from customers is presumed to be turnover then also the assessee will succeed on account of Section 273B of the Act which provides for “penalty not to be imposed in certain cases” where the assessee proves that there was a reasonable cause for the said failure and thus covers the situation of the assessee too. ITAT, thus delete the penalty levied u/s 271B of the Act in each for Assessment Year 2010-11 to 20 12-13 and allow all three appeals raised by the assessee.
FULL TEXT OF THE ITAT JUDGEMENT
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