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Can penalty u/s 271b imposed for nonaudit of partial tos

Indudhar (Tax Advocate) (427 Points)

15 December 2011

Friends,

My client is subjected to IT scrutiny.. He has audited his accounts for 1 business and filed the same..

But during the course of scrutiny, the ITO detected another business for which the assesse concealed.

Now the ITO is proposing penalty u/s 271B for the 2 business TO for non audit of accounts..

Is it right?

How can I safegaurd him from this penalty..

Please guide me guys,

Thanks in anticipation..

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2 Replies

praveen (Chartered Accountant) (6971 Points)
Replied 15 December 2011

For getting the books of accounts audited under section44AB the turnover of both the businesses shall be considered. Hence there can be one audit only for one PAN . The Income Tax Officer has all the powers to levy penalty in this case. However, you can also plead before him and ask him to levy penalty only the business for which the books of accounts are not audited.

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CA Shraddha (Mcom, CS Exe.) (Service) (224 Points)
Replied 15 December 2011

The intention of the revenue to file the tax audit report within prescribed time limit is to enable the AO to complete the assessment of the assessee within prescribed time limit and non compliance of which will lead to penalty u/s. 271B.

Now in your case it seems that there is malafide intention of the assessee to avoid tax liability. In addition to that, the AO can complete the assessment only if complete details in respect of income of the assessee is furnished to him. You can also refer the case of Udupi v. Dr. K. satish Shetty (2010) 188 Taxmann 0032 (KAR) in which the penalty u/s. 271B was deleted as it was established that there is no malafide intention of the assessee. Hence, if one can establish the bonafide belief of the assessee then only there are chances of deletion of penalty.

Further, as per the provisions of sec. 44AB the turnover of various bsinesses carried on by the assessee are required to be clubbed for determining the applicability of this section. Hence, AO is correct.

But wait for others reply one may find exceptional citation.

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