INCOME TAX OFFICER Vs. SACHINAM TRUST

JUDGEMENT

(1.) ON 31.07.2000, when the appeal was admitted, following substantial question of law was formulated: Is the Appellate Tribunal right in law and on facts in cancelling the penalty levied under Section 271B amounting to Rs. 72,451/ - on the ground that it is not the gross amount of advances made during the year which constituted turnover but the gross interest received which constitute the basis for liability under Section 44AB.

(2.) THE Assessment Year in question is 1992 -93. The Assessee, an association of persons, is carrying on business of financing. The Gross Interest Receipts for the year under consideration were Rs. 1,85,510/ - on the total amount of advances which were to the tune of Rs. 1,44,90,381/ -. The Assessing Officer was of the view that in terms of provisions of Section 44AB of the Income Tax Act, 1961 (the Act), the Assessee was under an obligation to get its accounts audited because the total amount of advances during the year under consideration constitute the turnover of the assessee which exceeded the stipulated limit of Rs. 40 lacs. As the audit report had not been filed by the assessee, a show cause notice was issued on 05.11.1992. The assessee filed reply on 12.11.1992 contending that provisions of Section 44AB of the Act are not applicable in its case because the Gross Receipts did not exceed the sum of Rs. 40 lacs. The said contention was not accepted by the Assessing Officer and penalty of Rs. 72,451/ - was levied under the provisions of Section 271B of the Act.

(3.) THE Tribunal has confirmed the order made by Commissioner (Appeals) and dismissed the Departmental Appeal. It is this order of Tribunal, which is under challenge in the present Appeal.