ANAHAITA NALIN SHAH, MUMBAI V. DCIT 4(1), MUMBAI

ITA 7972/MUM/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75461 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-12-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 18-11-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K SINGH
• Assessee Lawyers: PRAMOD KUMAR PARIDA
• Keywords: Business income; Principle of natural justice; Reasonable cause; Capital receipt
• Section: 139; 273B; 143(3)

Judgement Text

, , ,, , INCOME TAX APPELLATE TRIBUNAL,MUMBAI - A BENCH. . .. . . .. . , ,, , / !'# !'# !'# !'# , ' ' ' ' BEFORE S/SH. B.R. MITTAL, JUDICIAL MEMBER & RAJENDR A, ACCOUNTANT MEMBER /. ITA NO.7972/MUM/2010, $ $ $ $ % % % % / ASSESSMENT YEAR-2004-05 ANAHAITA NALIN SHAH, 1 & 1A, BIRLA MANSION , 3 RD FLOOR, 134, NAGINDAS MASTER ROAD, MUMBAI-400023 VS DCIT 4(1) MUMBAI. PAN: AANPS0303H ( &' / APPELLANT) ( ()&' / RESPONDENT) $*+ $*+ $*+ $*+ , , , , ' '' ' / APPELLANT BY : SHRI PRAMOD KUMAR PARIDA ! - , ' / REVENUE BY : SHRI K. SINGH $ $ $ $ - -- - +. +. +. +. / DATE OF HEARING : 10-01-2014 /0% - +. / DATE OF PRONOUNCEMENT : 29-01-2014 $ $ $ $ , 1961 - -- - 254 )1( ' '' ' +1+ +1+ +1+ +1+ '2 '2 '2 '2 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM: CHALLENGING THE ORDER DATED 11.10.2010 OF CIT(A)-8, MUMBAI,ASSESSEE HAS FILED FOLLOWING GROUNDS OF APPEAL: 1.THE LEARNED ASSESSING OFFICER HAS ERRED IN LEVYIN G PENALTY OF RS. 1,00,000/- U/S. 271B OF THE INCOME-TAX ACT, 1961. 2.THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE AB OVE PENALTY LEVIED BY THE A.O. VIDE HIS APPEAL NO. IT/CIT(A) 8/CIR.4/54/08-09. 3.THE ORDER APPEALED AGAINST IS BAD IN LAW AND IS A GAINST THE PRINCIPLE OF NATURAL JUSTICE. 4. THE ORDER APPEALED AGAINST IS BASED ON SURMISES AND CONJECTURES. 5.YOUR PETITIONER RESERVES THE RIGHT TO ADD, TO DEL ETE AND/OR AMEND ANY OF THE FOREGOING GROUNDS. 2 .ASSESSEE,AN INDIVIDUAL,FILED HER RETURN OF INCOME ON 01.11.2004 DECLARING TOTAL INCOME OF RS. 77.43 LACS.ASSESSING OFFICER(AO) FINALISED THE ASS ESSMENT U/S. 143(3) OF THE ACT ON 04.12.2006 DETERMINING THE TOTAL INCOME OF THE ASSE SSEE AT RS. 1,00,76,850/-.DURING THE COURSE OF ASSESSMENT PROCEEDINGS,AO FOUND THAT ASSESSEE HA D SHOWN PROFIT FOR SPECULATIVE BUSINESS AT RS. 17.14 LACS, THAT THE AMOUNT SHOWN WAS THE NET P ROFIT AMOUNT,THAT THE GROSS AMOUNT OF TURNOVER RAN INTO CRORES OF RUPEES, THAT EVEN TOTAL OF PROFIT/LOSS PUT TOGETHER EXCEEDED RS. 40 LACS, THAT ASSESSEE HAD NOT SUBMITTED ANY TAX AUDIT REPORT AS REQUIRED U/S. 44AB OF THE ACT.AO INITIATED PENALTY PROCEEDINGS U/S.271B OF TH E ACT AND A NOTICE WAS ISSUED TO THE ASSESSEE ON 04.12.2006, AFTER CONSIDERING THE SUBMI SSIONS OF THE ASSESSEE,AO HELD THAT TURNOVER OF THE ASSESSEE EXCEEDED THE LIMIT PRESCRI BED BY THE ACT FOR GETTING THE BOOKS OF ACCOUNTS AUDITED, THAT IF THE TURNOVER OF ONLY SPEC ULATION PROFIT WAS CONSIDERED SAME WAS MORE THAN 40 LACS, THAT ASSESSEE WAS REQUIRED TO GET HER ACCOUNTS AUDITED, THAT INSPITE OF SUFFICIENT 2 ITA NO. 7972/MUM/2010 ANAHAITA NALIN SHAH OPPORTUNITY GIVEN TO HER SHE HAD NOT SUBMITTED ANY EXPLANATION.FINALLY,AO LEVIED PENALTY OF RS. 1 LAC U/S. 271B OF THE ACT. 3. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY (FAA), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE PENALTY ORD ER, HE HELD THAT EVEN IF THE ASSESSEES CONTENTION THAT SPECULATION PROFIT ON NON-DELIVERY AND F & O TRADING HAD TO BE CONSIDERED AS ASSESSEES TURN-OVER THAT AMOUNTED TO RS.17.47 LACS ; THE ASSESSEE COULD NOT OFFERED ANY EXPLANATION AS TO WHY THE TURNOVER PERTAINING TO BU SINESS INCOME,AMOUNTING TO RS. 23.55 LACS AND SHOWN BY HER AS SHORT TERM CAPITAL GAIN(STCG)SH OULD NOT BE TREATED AS HER TURNOVER FOR THE PURPOSE OF SECTION 44AB OF THE ACT, THAT INCOME AMOUNTING TO RS. 23.55 LACS WAS DECLARED BY THE ASSESSEE AS STCG BUT SAME WAS HELD TO BE INC OME FROM BUSINESS BY THE AO AND THE FAA. HE FURTHER HELD THAT IT WAS NOT THE CASE OF TH E APPELLANT THAT THE TURNOVER ON TRANSACTION FROM BUSINESS PROFIT OF RS.23.55 LACS WAS LESS THAN RS. 40 LACS, THAT AO WERE JUSTIFIED TO HOLD THAT THE ASSESSEE WAS REQUIRED TO GET HER ACCOUNTS AUDITED AS PER THE PROVISIONS OF THE SECTION 44AB OF THE ACT. FINALLY, HE UPHELD THE ORDER OF TH E FAA. 4. BEFORE US,AUTHORISED REPRESENTATIVE (AR) SUBMITTED THAT ASSESSEE WAS GETTING INCOME FROM VARIOUS SOURCES, THAT THE AO HAD TREATED INCOME FRO M STCG AS BUSINESS INCOME, THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE HAD SHOWN THE TUR NOVER OF RS.17 LACS ONLY, THAT PROVISIONS OF SECTION 44AB WERE NOT APPLICABLE IN THE CASE UNDER CONSIDERATION, HE RELIED UPON THE ORDER OF GROMORE EXPORTSLTD.(78ITD95).DEPARTMENTAL REPRESENT ATIVE(DR)SUPPORTED THE ORDER OF THE FAA.DURING THE COURSE OF HEARING ON 10.04.2014 A SP ECIFIC QUESTION WAS PUT TO THE AR WITH REGARD TO BUSINESS ACTIVITIES OF THE ASSESSEE AND HE STATED THAT THE ASSESSEE WAS IN BUSINESS OF PURCHASE AND SALE OF SHARES AND THE SHARES SOLD BY HER WERE NOT OUT OF THE INVESTMENTS. 5. WE ARE OF THE OPINION THAT BEFORE PROCEEDINGS FURTHER,IT WOULD BE USEFUL TO DI SCUSS THE IMPORTANCE OF AUDIT OF THE ACCOUNTS,LEGISLATIVE HIS TORY AND BACKGROUND OF SECTION 44AB AND 271B OF THE ACT AS BOTH THE SECTIONS ARE INTER-RELA TED.IT IS SAID THAT TAX-AUDIT CONTRIBUTES TO EXPEDITIOUS AND ACCELERATED ASSESSMENTS AND IT ENSU RES PROPER MAINTENANCE OF ACCOUNTS IN ADDITION TO HELPING IN DETECTION OF FRAUDULENT PRAC TICES. 5.A. KEEPING IN MIND THE IMPORTANCE AND NECESSITY OF AUD IT OF THE BOOKS OF ACCOUNTS,SECTION 271B OF THE ACT WAS INTRODUCED INTO THE STATUTE BOO K ALONG WITH SECTION 44AB BY THE FINANCE ACT 21OF 1984,WITH EFFECT FROM 01.04.985.IT WAS HEL D AS A MEASURE TO DRIVE UNEARTH BLACK MONEY. BY THE TAXATION LAWS(AMENDMENT AND MISCELLAN EOUS PROVISIONS)ACT, 1986,THE PHRASE WITHOUT REASON -ABLE CAUSE WAS OMITTED W.E.F.10.09. 1986.BY THE SAID ACT SECTION 273B WAS INTRODUCED IN THE ACT. THE OBLIGATION CREATED BY SE CTION 44AB OF THE ACT AS IT STOOD PRIOR TO 01.07.1995WAS MERELY TO GET THE ACCOUNTS AUDITED BE FORE THE SPECIFIED DATE.THERE WAS NO OBLIGATION TO FURNISH THAT AUDIT REPORT BEFORE THE AO BEFORE THE SPECIFIED DATE.THIS OBLIGATION WAS CREATED BY SUBSTITUTING THE WORDS FURNISH BY FOR THE WORDS OBTAIN BEFORE BY THE FINANCE ACT,1995.THUS, PRIOR TO THE AMENDMENT THE OBLIGATIO N OF AN ASSESSEE,TO WHOM SECTION 44AB APPLIED,WAS MERELY TO GET THE ACCOUNTS AUDITED AND OBTAIN AN AUDIT REPORT BEFORE THE SPECIFIED DATE.RULE 6G ALONG WITH FORMS NOS.3CB, 3CC,3CD AND 3CE OF THE INCOME-TAX RULES, 1962,(RULES) ARE THE PART OF THE SECTIONS 271B AND 44AB OF THE ACT.IT WAS EXPECTED THAT SUCH AUDIT WOULD HELP IN FACILITATING THE ADMINISTRATION OF TAX-LAWS BY A PROPER PRESENTATION OF THE ACCOUNTS BEFORE THE TAX AUTHORITIES.IT WAS ALSO EXP ECTED THAT THE TIME OF THE AOS COULD BE SAVED AND COULD BE UTILISED FOR ATTENDING TO MORE IMPORTA NT INVESTIGATIONAL ASPECTS OF THE CASE.IN OTHER WORDS SECTION WAS INTRODUCED IN THE ACT TO HA VE A DETAILED SCAN OF ACCOUNTS OF THE ASSESSEES IN HIGHER BRACKETS SO THAT THE DETECTION OF EVASION IF ANY,MAY YIELD ATTRACTIVE DIVIDENDS REGARDING EXIGIBILITY TO TAX. BESIDES,THE COMPULSORY AUDIT FACILITATES THE ASSESSING AUTHORITY TO GET AT A NEAT EPITOME OF TRANSACTIONS WITHOUT THE NECESSITY OF DEVOTING CONSIDERABLE TIME TO SCRUTINY OF ACCOUNTS AND TRANSACTIONS. 3 ITA NO. 7972/MUM/2010 ANAHAITA NALIN SHAH 5.B. SECTION PROVIDES FOR COMPULSORY AUDIT IN THE CASE O F TRADING COMMUNITY WHO DERIVE THEIR INCOME FROM PROFITS AND GAINS FROM THE BUSINESS AS WELL AS IN THE CASE OF PROFESSIONALS WHO DERIVE THEIR INCOME BY WAY OF PROFESSIONAL RECEIPTS THOUGH THEY DO NOT DEAL IN COMMODITIES OR THE PERSONS ENGAGED IN SUPPLY OF SERVICES THOUGH TH E SERVICE IS ESSENTIAL PART OF THE PROFESSION RENDERED BY THEM TO THEIR CONSTITUENTS.THAT WAS THE REASON BEHIND USING DIFFERENT TERMINOLOGY AND FIXING DIFFERENT AMOUNTS FOR CLASSIFYING THE PE RSONS WHO WOULD FALL WITHIN THE SCOPE OF COMPULSORY AUDIT.INCOME FROM BUSINESS OF PARTICULAR NATURE REFERS TO THREE DIFFERENT ASPECTS OF THE RECEIPTS BY THE BUSINESSMAN,NAMELY,RECEIPT FROM THE SALES,AGGREGATE OF TURNOVER/THE GROSS RECEIPTS FROM A SOURCE WHERE THE ASSESSEE IS NOT IN VOLVED IN THE TRADING COMMODITIES.FOR THE LAST CATEGORY OF PERSONS,CRITERIA LAID IS OF THE GR OSS RECEIPTS.THE REASON BEHIND PRESCRIBING LIMITS OF TURNOVER/GROSS RECEIPTS IS OBVIOUS.IF ANY OTHER BASIS LIKE THAT OF INCOME OR TAXABLE INCOME HAD BEEN ADOPTED AS THE BASIS FOR COMPULSORY AUDIT,SUCH A PROVISION WOULD HAVE BEEN SELF-DEFEATING. UNDER THE PROVISIONS OF SECTION WHI LE MAKING ASSESSMENT,AO HAS TO DETERMINE THE TAX LIABILITY WITH THE AID OF THE AUDIT REPORT BUT NOT MERELY ON THAT BASIS.IN OTHER WORDS THERE IS NO DELEGATION TO THE ACCOUNTANT OR ABDICATION OF THE ASSESSING AUTHORITY'S FUNCTION. 5.C. SECTION 271B OF THE ACT BEGINS WITH THE PHRASE IF ANY PERSON FAILS WITHOUT REASONABLE CAUSE,TO GET HIS ACCOUNTS AUDITED WITHIN THE TIME STIPULATED,THEN THE CONCERNED INCOME-TAX AUTHORITY MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY,THE SUM MENTIONED THEREIN.IT IS CLEAR THAT PROVISIONS OF THE SECTION CONSIST OF TWO LIMBS.THE FIRST LIMB SPEAKS OF THE FAILURE OF AN ASSESSEE TO GET HIS ACCOUNTS AUDITED WHEREAS THE SECOND LIMB SPEAKS OF THE FAILURE ON HIS PART TO FURNISH A REPORT OF SUCH AUDIT.IN OTHER WOR DS THE EXPRESSION AS REQUIRED UNDER SECTION 44AB APPEARING IN SECTION 271B GOVERNS BOTH LIMBS. 5.1. HERE WE WOULD LIKE TO REFER THE JUDGMENT DELIVERED BY THE HONBLE HIGH COURT OF RAJASTHAN IN THE MATTER OF BAJARANG OIL MILLS (295I TR314),WHICH READS AS UNDER: IT MAY BE NOTICED THAT THE SALES,TURNOVER OR GROSS RECEIPTS ARE NOT WORDS OF ART USED IN RELATION TO ANY INDIVIDUAL TRANSACTION INDEPENDE NTLY BUT HAVE BEEN USED AS SALES, TURNOVER OR GROSS RECEIPTS. THE EXPRESSION TOT AL QUALIFY ALL THE OTHER THREE EXPRESSIONS, VIZ., SALES, TURNOVERAND GROSS RECEIPTS.TOTAL SALES INDICATE THE AGGREGATE PRICE OF THE SALE OF COMMODITIES CARRIED OUT BY THE ASSESSEE AS A TRADING BUSINESS. OBVIOUSLY,IT WOULD NOT INCLUDE SUCH TRANSFER OF IMMOVABLE OR MOVABLE PROPE RTY BY WAY OF INVESTMENT.SIMILARLY,WHERE THE ASSESSEE IS NOT MERELY SELLING THE MOVABLE COMM ODITIES,BUT RELATING TO OTHER TRADING ACTIVITIES, E.G.,WHERE THE ASSESSEE IS A LAND DEVEL OPER AND HE IS ENGAGED IN THE BUSINESS OF ACQUIRING LAND DEVELOPING IT AND SELLING HOUSES OR PURCHASING OR IS INDULGING IN LEASING BUSINESS OR IS INDULGING IN STOCK MARKET AND SO ON AND SO FORTH, THE EXPRESSION TURNOVER IS MADE OUT TO DENOTE RECEIPTS FROM SUCH ACTIVITIES.TH ERE MAY BE A THIRD OR RESIDUARY CATEGORY WHICH MAY NOT BE TERMED PROPERLY A TRADING ACTIVITY YET IT IS CARRYING ON BUSINESS ACTIVITY LIKE JOB WORKS FOR OTHERS, WITHOUT HIMSELF BEING THE MAN UFACTURING AND SELLING SUCH MANUFACTURED GOODS, OR RUNNING A MOTOR SERVICE GARAGE, FOR THE R ECEIPTS OF SUCH BUSINESS CAN APTLY BE TERMED AS RECEIPTS OF THE FIRM. HOWEVER, INTEGRAL RELATION OF RECEIPTS BY A PERSON FROM BUSINESS,DOES INDICATE THAT IT REFERS TO REVENUE RECEIPTS ONLY AN D DOES NOT INCLUDE CAPITAL RECEIPTS AND CERTAINLY NOT THE RECEIPTS WHICH ARE NOT RELATABLE TO BUSINESS AND MAY FALL UNDER THE EXPRESSION INCOME TO BE SUBJECTED TO TAX AS INCOME FROM SOURCE S OTHER THAN PROFITS OR GAINS FROM BUSINESS, PROFESSION OR VOCATION. 6. FROM THE ABOVE DISCUSSION IT CAN BE CONCLUDED THAT THE PROVISION OF SECTION 271B OF THE ACT IS AN ENABLING PROVISION EMPOWERING THE AO TO DIREC T PAYMENT OF PENALTY FOR NON-COMPLIANCE WITH THE PROVISIONS OF SECTION 44AB.SECTION 271B HA S TO BE READ WITH PROVISIONS OF SECTION 44AB OF THE ACT.SECTION 44AB REQUIRES ASSESSEES TO GET THEIR ACCOUNTS AUDITED BY AN ACCOUNTANT BEFORE THE SPECIFIED DATE AND FURNISH BY THE DATE,THE REPORT OF SUCH AUDIT IN THE 4 ITA NO. 7972/MUM/2010 ANAHAITA NALIN SHAH PRESCRIBED FORM DULY SIGNED AND VERIFIED BY SUCH AC COUNTANT.SECTION 271B OF THE ACT STIPULATES IMPOSITION OF PENALTY IF AN ASSESSEE FAILS TO FURNI SH SUCH REPORT.A HARMONIOUS CONSIDERATION OF BOTH THE PROVISIONS REQUIRES THE ASSESSEE TO ASSIGN REASONABLE CAUSE HIS FALIURE.REASONABLE CAUSE OF FAILURE DEPENDS ON THE FACTS AND CIRCUMSTA NCES OF THE CASE CONCERNED.THE EXERCISE OF POWER UNDER SECTION 271B IS DISCRETIONARY,NOT MANDA TORY.WORD USED IN THE SECTION IS MAY AND NOT SHALL.COURTS EXPECT AOS TO EXERCISE THE D ISCRETION JUDICIALLY AND TAKE A DECISION,ABOUT IMPOSING PENALTY,AFTER CONSIDE -RING ALL THE RELEVANT CIRCUMSTANCES.THE QUESTION OF PENALTY FOR NON-COMPLIANCE CANNOT BE INQUIRED IN TO WITHOUT READING THE PROVISIONS OF SECTIONS 271B AND 273B TOGETHER AS BOTH ARE INTEGRA LLY CONNECTED.AS THE PROOF RELATING TO REASONABLE CAUSE IS A MATTER OF FACTUAL DETAILS,SO BURDEN HAS BEEN CAST UPON THE ASSESSEE TO PRODUCE EVIDENCE IN THIS REGARD.IN THE CASE OF KHUD A WOOD PRODUCTS P. LTD.,(297ITR383)HONBLE GAUHATI HIGH COURT HAD HELD THAT THERE WAS NO EVID -ENCE ON RECORD TO SHOW THAT ANY EFFORT WAS MADE BY THE ASSESSEE TO GET THE ACCOUNTS DULY AUDITED WITHIN THE SCHEDULED TIME AND THEREFORE IMPOSITION OF PENALTY U/S.271B OF THE ACT WAS JUSTIFIED. 6.1. NOW WE WOULD LIKE TO HIGH LIGHT SOME OF THE PRINCIP LES RELEVANT FOR IMPOSING PENALTY UNDER THE SECTION: I). THE QUANTUM OF PENALTY UNDER SECTION 271B DOES NOT DEPEND ON THE LENGTH OF THE DELAY BEYOND THESPECIFIED DATE IN GETTING THE ACCOUNTS AUDITED AND FURNISHING A REPORT OF SUCH AUDIT. THE BASE FOR COMPUTATION OF PENALTY IS THE TURNOVER OF SALES OR GROSS RECEIPTS, AS THE CASE MAY BE. IT IS TRUE THAT THERE IS NO SPECIFIC REFERENCE TO SPECIFIED DATE MADE IN THE SECTION,HOWEVER, SECTION CLEARLY MENTIONS THAT THE VIOLATION OF THE PROVISIONS OF SECTION IS PUNISHABLE UNDER THE ACT.THE TIME-FRAME IS INHERENT IN THE WORDS AS REQ UIRED UNDER SECTION 44AB APPEARING IN THE SECTION. ACT OF GETTING ACCOUNTS AUDITED AND FURNSH ING A REPORT OF SUCH AUDIT SUBSEQUENT TO THE SPECIFIED DATE; THOUGH BEFORE THE FILING OF THE R ETURN,BY THE ASSESSEE;DOES NOT AUTOMATICALLY ABSOLVE HIM OF HIS LIABILITY FOR PENALTY UNDER SECT ION 271B OF THE ACT. II). ACT DOES NOT GIVE ANY DISCRETION TO THE AO TO EXTEN D THE TIME-LIMIT, VIZ., THE SPECIFIED DATE FOR GETTING THE ACCOUNTS AUDITED UNDER SECTION 44AB . NON-COMPLIANCE WITH THE PROVISIONS OF SECTION 44AB RENDERS AN ASSESSEE LIABLE FOR PENALTY UNDER SECTION 271B OF THE ACT. III). IF AN ASSESSEE,HAVING TWO BUSINESSES WHOSE COMBINED TURNOVER EXCEEDING RS. 40 LAKHS AND IT GETS ACCOUNTS OF ONE BUSINESS ALONE AUDITED,PENA LTY CAN BE LEVIED ONLY IN RELATION TO BUSINESS WHOSE ACCOUNTS ARE NOT AUDITED. IV). IN A CASE WHERE THE MAIN OBJECT OF AN ASSESSEE IS P ROMOTE AND DEVELOP THE GAMES AND IT IS FOUND THAT IT IS NOT INVOLVED IN ANY KIND OF BUSINE SS ACTIVITY TO EARN PROFITS OR GAINS AND THE MAJOR SOURCE OF ITS INCOME IS GRANT FROM THE GOVERN MENT OF INDIA, THE PROVISIONS OF SECTION 271B ARE NOT APPLICABLE. V). IF A CERTIFIED COPY OF TAX AUDIT REPORT HAD BEEN FI LED PENALTY SHOULD NOT BE IMPOSED U/S.271B. VI). THERE IS NOTHING IN SECTION 271B TO SHOW THAT SUCH A PROCEEDING SHOULD BE SIMULTANEOUS WITH THE ASSESSMENT PROCEEDING UNDER SECTION 139. VII). IN THE CASE OF A COMMISSION AGENT,IF THE COMMISSION AGENT DOES NOT SELL THE GOODS OF HIS PRINCIPAL AS HIS OWN AND ONLY CHARGES COMMISSION FO R BRINGING TOGETHER TWO PERSONS FOR THE PURPOSE OF EFFECTING A SALE,HE WILL NOT COME WITHIN THE AMBIT OF SECTION 44AB IF HIS PROFESSIONAL RECEIPTS DO NOT EXCEED RS.10 LAKHS. HO WEVER, IF THERE IS EVIDENCE TO SHOW THAT THE GOODS HAVE REMAINED WITH HIM AND IT IS HE WHO HAS S OLD THE GOODS TO PROSPECTIVE BUYERS, THEN IT WOULD AMOUNT TO SALE OR TURNOVER AND IF IT EXCEE DS THE LIMITS PRESCRIBED IN SECTION 44AB, I.E., RS. 40 LAKHS, THE PROVISION WILL APPLY.NO HARD AND FAST RULE CAN BE LAID DOWN.THE 5 ITA NO. 7972/MUM/2010 ANAHAITA NALIN SHAH DETERMINATION OF THE QUESTION WHETHER THE COMMISSIO N AGENT HAS SOLD GOODS FOR BROKERAGE OR AS SELLER DEPENDS ON THE FACTS OF EACH CASE. VIII) .IN A CASE WHERE THE REPORT OF THE CHARTERED ACCOUN TANT STATES THAT PARTICULARS GIVEN BY HIM ARE BASED ON UNAUDITED ACCOUNT AND THE INFORMATION PRODUCED BEFORE HIS IS SUBJECT TO CHANGE AND MODIFICATION,PENALTY U/S.271B CAN BE LEVIED.IN SUCH CASES IT BECOMES CLEAR THAT COMPULSORY AUDIT OF THE BOOKS OF ACCOUNTS OF THE AS SESSEE WAS NOT OVER TILL DUE DATE OF FINALSING THE AUDIT REPORT,. IX). EVEN AFTER AMENDMENTS,SECTION 44AB DOES NOT REQUIRE FILING OF SUCH RETURN ALONG WITH THE AUDIT REPORT WITHIN THE TIME SPECIFIED UNDER SUB-SE CTION (1) OF SECTION 139 AND CONSEQUENTLY NO PENALTY FOR SUCH A DEFAULT HAS BEEN PROVIDED IN SEC TION 271B.IN OTHER WORDS IF NO NOTICE IS ISSUED UNDER SECTION142(1) ASKING THE ASSESSEE TO F ILE THE RETURN OF INCOME AND ASSESSEE FURNISHES THE AUDIT REPORT ALONG WITH THE RETURN U/ S.139(4) HE IS NOT LIABLE TO PENALTY. X). IN THE CASE OF SHRI SWASTIK STEELS PRIVATE LTD.,DIS PUTE BETWEEN DIRECTORS OF ASSESSEE- COMPANY WAS NOT CONSIDERED A REASONABLE CAUSE FOR D EFAULT IN FURNISHING THE AUDIT REPORT BY THE HONBLE BOMBAY HIGH COURT. XI). IMPOSITION OF PENALTY IS JUSTIFIED IN A CASE WHERE PHOTO COPIES OF THE IMPOUNDED BOOKS OF ACCOUNT OF EARLIER YEARS ARE SUPPLIED BY THE INCOME TAX AUTHORITIES TO ASSESSEE AND EVEN THEN IT FAILS TO FILE AUDIT REPORT FOR SUBSEQUENT ASSESSMEN T YEARS. XII). NOT RECEIVING AUDIT REPORTS FROM BRANCH OFFICES LOC ATED OUTSIDE INDIA CAN BE CONSIDERED A REASONABLE CAUSE FOR DELAY AND PENALTY IS SUCH CASE S SHOULD NOT TO BE IMPOSED. XIII). IGNORANCE OF ACT IS NOT A GROUND FOR NOT WRITING UP BOOKS OF ACCOUNT AND SAME CANNOT BE TAKEN AS A REASONABLE CAUSE FOR NOT LEVYING PENALTY FOR NOT GETTING THE BOOKS AUDITED. XIV). IF THE FACT IS PROVED THAT FURNISHING THE AUDIT REP ORT BELATEDLY WAS DUE TO ILLNESS OF AUDITOR, PENALTY UNDER THE SECTION 271B SHOULD NOT BE LEVIED . XV). SEPARATE PENALTY HAS BEEN PROVIDED FOR NON-MAINTENA NCE OF ACCOUNTS, I.E., UNDER SECTION 271A OF THE ACT AND FOR NOT GETTING THE ACCOUNTS AU DITED AND NOT FURNISHING THE AUDIT REPORT, I.E., UNDER SECTION 271B. IF A PERSON HAS NOT MAINT AINED ACCOUNT BOOKS OR ANY ACCOUNTS THE QUESTION OF AUDIT DOES NOT ARISE.IN SUCH AN EVENT T HE IMPOSITION OF PENALTY UNDER THE PROVISION CONTAINED IN SECTION 271A FOR ALLEGED NON-COMPLIANC E WITH SECTION 44AA MAY ARISE BUT THE PROVISIONS OF SECTION 44AB DO NOT GET VIOLATED IN A CASE WHERE ACCOUNTS HAVE NOT BEEN MAINTAINED AT ALL AND THEREFORE THE PENAL PROVISION S OF SECTION 271B OF THE ACT WOULD NOT APPLY. 7. UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSEE HAD ENTERED IN TO SPECULATIVE BUSINESS OF THE SHARES, THAT THE TRANSACTIONS ENTERED IN TO BY HER WERE MORE THAN THE PRESCRIBED MONETARY LIMIT AS ENVISAGED BY THE PROVISIONS OF SECTION 44AB OF T HE ACT,THAT NO BONAFIDE REASONS WAS FURNISHED BY THE ASSESSEE,FOR NOT GETTING THE BOOKS OF ACCOUNTS AUDITED,BEFORE THE AO OR THE FAA.WE ARE OF THE OPINION THAT WORDS TOTAL TURNOVE R INDICATE THE AGGREGATE PRICE OF THE COMMODITIES RECEIVED BY AN ASSESSEE DURING THE COUR SE OF HIS TRADING OR BUSINESS ACTIVITIES.IT DOES NOT DIFFERENTIATE BETWEEN COMMODITIES SOLD UND ER THE HEAD SPECULATIVE BUSINESS/NORMAL BUSINESS.TRANSFER OF IMMOVABLE OR MOVABLE PROPERTY BY WAY OF INVESTMENT IS NOT INCLUDED BY THE PROVISIONS OF THE SECTION 44AB OF THE ACT.PROVI SIONS OF THE ACT ARE CLEAR THAT ALL REVENUE RECEIPTS ARE COVERED BY THE WORDS TURNOVER,WHEREVER CAPITAL RECEIPTS ARE NOT TO BE CONSIDERED A PART OF THE TURNOVER FOR THE PURPOSES OF THE SAID S ECTION.IN OTHER WORDS,RECEIPTS WHICH ARE NOT RELATABLE TO BUSINESS AND MAY FALL UNDER THE EXPRES SION INCOME TO BE SUBJECTED TO TAX AS INCOME FROM SOURCESDO NOT FORM PART OF TOTAL TURNO VER.CONSIDERING THE PRINCIPLES GOVERNING 6 ITA NO. 7972/MUM/2010 ANAHAITA NALIN SHAH THE IMPOSITION OF PENALTY U/S.271 B AND THE FACTS O F THE CASE WE ARE OF THE OPINION THAT AO WAS JUSTIFIED IN LEVYING PENALTY FOR NOT HER BOOKS OF A CCOUNTS AUDITED.WE FIND THAT THE CASES RELIED UPON BY THE AR ARE NOT RELEVANT TO DECIDE THE ISSUE AS THE FACTS OF THE CASE ARE TOTALLY DIFFERENT.SECONDLY,WHILE DECIDING THE CASE AT THAT POINT OF TIME TRIBUNAL DID NOT HAVE THE BENEFIT OF THE DECISION OF THE HONBLE HIGH COURT O F RAJASTHAN DELIVERED IN THE CASE OF BAJARANG OIL MILLS(SUPRA).SO,CONFIRMING THE ORDER OF THE FAA , WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE ASSESSEE. AS A RESULT,APPEAL FILED B Y THE ASSESSEE STANDS DISMISSED. * +3 $*+ 4 5 - 1 $ !6 - !+ 78 . ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JANUARY,2014 . '2 - /0% ' 9 :$ 29 TUOJH TUOJH TUOJH TUOJH , 201 4 0 - 1 ; SD/- SD/- ( . < < < < . . B.R.MITTAL) ( !'# !'# !'# !'# / RAJENDRA) / JUDICIAL MEMBER ' ' ' ' /ACCOUNTANT MEMBER / MUMBAI, :$ /DATE: 29 TH JANUARY,2014. SK '2 '2 '2 '2 - -- - (+= (+= (+= (+= >'=%+ >'=%+ >'=%+ >'=%+ / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / &' 2. RESPONDENT / ()&' 3. THE CONCERNED CIT (A) / ? @ , 4. THE CONCERNED CIT / ? @ 5. DR A BENCH, ITAT, MUMBAI / =A1 (+$ , ,, , , . . . 6. GUARD FILE/ 1 B )=+ )=+ )=+ )=+ (+ (+(+ (+ //TRUE COPY// '2$ / BY ORDER, C / 7 ! DY./ASST. REGISTRAR , /ITAT, MUMBAI