COMMISSIONER OF INCOME TAX Vs. TEA KING

JUDGEMENT

(1.) THESE applications are preferred by the CIT, Rajkot, under S. 256(2) of the IT Act, 1961 (hereinafter referred to as the Act), as the applications preferred under S. 256(1) of the Act before the Tribunal, Rajkot, requesting for reference were rejected.

(2.) THE assessee is a registered partnership firm and was carrying on business in tea. Only after the survey operation carried out by the authorities on 1st/2nd March, 1990, under S. 133A of the Act in the business premises of the assessee, the assessee filed returns of income for asst. yr. 1985-86 to 1989-90 on 10th Oct., 1990. Since the books of accounts were not audited, the AO levied penalty under S. 271B of the Act for all the years i.e. 1986-87 to 1989-90. The appellate authority confirmed the penalty so far as the asst. yr. 1985-86 is concerned on the ground that the assessee failed to get the account books audited within the stipulated period. However, in the subsequent years, the order passed by the AO levying penalty was set aside on the ground that since the books of account for the preceding assessment years were not ready and were not upto date and, therefore, it was not possible for the assessee to get the account books audited for the subsequent years though the same were written.

(3.) NO doubt S. 44AB of the Act lays down that every person carrying on business shall, if his total sales, turnover or gross receipts as the case may be, in business exceed forty lakh rupees in any previous year or carrying on profession, shall if his gross receipts in profession exceed ten lakh rupees shall get the accounts of such previous year audited by an accountant before the specified date and obtain before the date the report of such audit in the prescribed form.