Case Law Details
In reply to the show-cause notice for initiation of penalty, the assessee has replied that he is a Sr. Citizen; his accounts are looked after by Accountant. The accountant of the assessee is not qualified person. The assessee was under bona fide belief that accounts are not required to be issued under section 44AB of the Act. The assessee specifically pleaded in the reply that the Guidance note, ‘Note of Tax Audit under section 44AB’ issued by ICAI that, if the turnover of Future & Option defined as aggregate of favorable and unfavorable transaction exceed Rs. 40,00,000 than the assessee is liable to get his account audited. As per our view the assessee has sufficiently explained the circumstances, as per the provisions of section 273B of the Income Tax Act. Considering the reply of the assessee the penalty levied by assessing officer under section 271B for Rs. 40,694 is deleted.
Full Text of the ITAT Order is as follows:-
This appeal by assessee under section 253 of the Income Tax Act (‘the Act’) is directed against the order of learned. Commissioner (Appeals)-23, Mumbai dated 4-2-2013 for assessment year (AY)-2008-09. Though, the assessee has raised two alternative grounds of appeal. However, as per our considered view, the only substantial ground of appeal is if the learned. Commissioner (Appeals) erred in confirming the penalty levied under section 271B or trading in derivatives transaction and/or the assessee is not liable to get the books of accounts audited under section 44AB of the Act.
2. Brief facts of the case are that during the relevant assessment year, the assessee filed return of income on 29-3-2010 declaring total income of Rs. 32,61,150. During the assessment proceeding, the assessing officer (AO) noticed that the total turnover of the assessee was at Rs. 87,38,784 which exceed the turnover of Rs. 40,00,000 limit as prescribed under section 44AB. Thus, the assessing officer initiated the penalty under section 271B vide order-sheet dated 19-11-2010. Notice under section 274 read with section 271 dated 24-12-2010 was served upon the assessee. In response to the order-sheet dated 19-11-2010, the assessee filed his reply dated 30-11-2010 and contended that as per the “Guidance Note of Tax Audit under section 44AB of the Act” issued by Institute of Chartered Accountants (ICAI), if turnover of Future & Options defined as aggregate of favorable and unfavorable transaction exceed Rs. 40,00,000, then only the assessee is liable to get his account audited. The assessee further contended that he is a Sr. Citizen and earning income from Future & Option activities managed by his broker. His accounts are maintained by a person who is not a qualified accountant and is unaware of Income Tax Provisions. The assessee was under bonafide belief that his accounts are not required to get audited under section 44AB. The contention of assessee was not accepted by assessing officer holding that the Guidance ‘note of ICAI’ relied by assessee is not mentioned anywhere in the Income Tax Act. Though, the definition of turnover is not defined in the Act but turnover as mentioned in section 44AB implies gross receipt which included both loss and gains. The turnover of the assessee was arrived at Rs. 87,38,784. Thus, The assessing officer levied the penalty @ .5% of the total turnover. The assessing officer levied the minimum penalty as prescribed under section 271B and works out to Rs. 40,694. On appeal before the learned Commissioner (Appeals), the penalty was sustained. Aggrieved by the order of learned. Commissioner (Appeals), the assessee has filed the present appeal before us.
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