Penalty : Ss. 44AB and 271B of I. T. Act, 1961 : A. Y. 1992 – 93 : Provisions of s. 44AB not complied with on the basis of legal opinion contained in Tax Audit Manual published by the Bombay Chartered Accounts’ Society : Reasonable cause for default : Pen

40. Penalty : Ss. 44AB and 271B of I. T. Act, 1961 : A. Y.
1992 – 93 : Provisions of s. 44AB not complied with on the basis of legal
opinion contained in Tax Audit Manual published by the Bombay Chartered
Accounts’ Society :  Reasonable cause for default : Penalty u/s. 271B not
justified.

[ITO vs. Sachinum Trust, 223 CTR 152 (Guj.)]

For the A. Y. 1992 – 93, the assessee trust did not get its
accounts audited under the provisions of Section 44AB of the Income-tax Act,
1961, on the basis of the legal opinion contained in the Tax Audit Manual
published by the Bombay Chartered Accountants’ Society. The Assessing Officer
was of the view that the assessee was under an obligation to get its accounts
audited u/s. 44AB of the Act. He therefore, imposed penalty u/s. 271B of the
Act. The Tribunal cancelled the penalty.

On appeal by the Revenue, the Gujarat High Court upheld the
decision of the Tribunal and held as under :

“Legal opinion contained in Tax Audit Manual published by
the Bombay Chartered Accountants’ Society constituted reasonable cause for the
bona fide belief of the assessee that its interest receipts i.e.,
gross receipts, and not loan advanced i.e., turnover, being less than
Rs. 40 laks, the provisions of s. 44AB are not applicable in its case and,
therefore, penalty u/s. 271B is not leviable.”