Pristine Jewellery Vs ITO (ITAT Surat)
ITAT Surat Upholds Rs. 1.5 Lakh Penalty on Jewellery Firm for Tax Audit Non-Compliance
The Income Tax Appellate Tribunal (ITAT) Surat Bench has affirmed a penalty of Rs. 1,50,000/- imposed on Pristine Jewellery for its failure to comply with the mandatory tax audit requirements under Section 44AB of the Income-tax Act, 1961, for Assessment Year (AY) 2012-13. The Tribunal rejected the assessee’s arguments of “reasonable cause” and highlighted its consistent failure to furnish the audit report.
The case originated from an assessment order passed on December 24, 2019, where it was noted that Pristine Jewellery had not filed its original return of income for AY 2012-13. A return was subsequently filed on April 27, 2019, in response to a notice issued under Section 148 on March 31, 2019. The Assessing Officer (AO) determined that the firm’s total receipts for the year, amounting to Rs. 8,53,66,166/-, exceeded the limits prescribed under Section 44AB, making a tax audit mandatory.
Chronology of Penalty Proceedings
Due to the failure to get accounts audited and furnish the required report, the AO initiated penalty proceedings under Section 271B of the Act. A show cause notice (SCN) was issued on December 24, 2019. In response, the assessee, on January 9, 2020, invoked Section 273B, arguing that no penalty should be imposed due to “reasonable cause.” Their stated reasons included that all three partners were senior citizens and lacked knowledge of compliance.
