Law:

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Section 271B of the Income-tax Act, 1961 - For failure to get Accounts audited Where in view of Tax Audit Manual published by Bombay Chartered Accountants' Society, which contained legal opinion of eminent counsel that in case of a person carrying on banking business, appropriate expression to be considered for deciding applicability of provisions of section 44AB would be term 'gross receipts', assessee, carrying on business of financing, bona fidely believed that gross receipts of interest and not gross amount of advance, would constitute basis for ascertaining limit of Rs. 40 lakhs so as to attract section 44AB, penalty on assessee was not leviable [Assessment year 1992-93] [In favour of assessee] ITO v. Sachinam Trust [2009] 223 CTR (Guj.) 152 Under the provisions of section 273B, the Legislature has provided that notwithstanding anything contained in the provisions of section 271B, no penalty shall be imposable on a person or an assessee for any failure referred to in the said provisions if it is proved that there was reasonable cause for the said failure. Where in view of Tax Audit Manual published by the Bombay Chartered Accountants' Society, which contained legal opinion of eminent counsel that in case of a person carrying on banking business, the appropriate expression to be considered for deciding the applicability of the provisions of section 44AB would be the term 'gross receipts', the assessee, carrying on the business of financing, bona fidely believed that gross receipts of interest, and not gross amount of advances, would constitute the basis for ascertaining the limit of Rs. 40 lakhs so as to attract section 44AB, the assessee could be said to have a reasonable cause for not getting its accounts audited under section 44AB, and as such no penalty could be imposed on the assessee. Manish R. Bhatt and Ms. Mauna M. Bhatt for the Appellant. Mrs. Swati Soparkar for the Respondent JUDGMENT D.A. Mehta, J. - On 31st July, 2000, when the appeal was admitted, following substantial question of law was formulated : "Is the Tribunal right in law and on facts in cancelling the penalty levied under s. 27IB amounting to Rs. 72,451 on the ground that it is not…

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