Law:

Section:

Section 271B of the Income-tax Act, 1961 - Penalty - For failure to get accounts audited - Assessment year 2001-02 - Assessee was proprietor of three concerns - His assessment was completed on total income of all three concerns - He obtained an audit report required under section 44AB only in respect of one concern - For other two businesses, he did not obtain audit reports under a bona fide belief that he was required to obtain audit report only in respect of that business, turnover of which crossed limit of Rs. 40 lakhs and for relevant assessment year turnover of other two businesses did not exceed Rs. 40 lakhs - Assessing Officer, however, levied penalty under section 271B on assessee - Whether since section 44AB as such does not show or contemplate that all businesses are to be consolidated together for working out aggregate of turnover and, on facts, it was clear that assessee had acted in a bona fide belief and had no dishonest intention in not obtaining audit report for all three businesses carried on by him, Tribunal was justified in deleting penalty imposed on assessee - Held, yes FACTS The assessee was the proprietor of three concerns. His assessment was completed on the total income derived by him from all the three concerns. He obtained the audit report required under section 44AB only in respect of one concern and for the other two businesses, he had not obtained audit reports on the ground that individually total turnover of those two businesses did not exceed the total turnover of Rs. 40 lakhs for the relevant assessment year as contemplated under section 44AB. He was issued a notice under section 271B in response to which he contended that it was abona fide mistake that had occurred due to his ignorance of law. The Assessing Officer did not accept the assessee's explanation and levied penalty under section 271B upon him. On appeal, the Commissioner (Appeals) upheld the order of the Assessing Officer. On second appeal, the Tribunal deleted the penalty holding that no penalty could be imposed on the assessee as there was no wilful default on his part. On revenue's appeal : HELD A conjoint reading of sections 44AB and 2(13 ) makes it clear that…

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