IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE V.K.MOHANAN TUESDAY, THE 24TH JUNE 2008 / 3RD ASHADHA 1930 ITA.No. 46 of 2003() -------------------- ITA.472/COCH/1999 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT: --------------------------- V. VISHNUDAS KINI, M/S. KINI & COMPANY, W/ISLAND, COCHIN-3. BY ADV. SRI.T.M.SREEDHARAN SRI.DEEPAK JOY.K. RESPONDENTS: ------------- 1. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-I, MATTANCHERRY. 2. THE COMMISSIONER OF INCOME TAX, C.R. BUILDING, I.S. PRESS ROAD, COCHIN-18. BY ADV. SRI.P.K.R.MENON(SR.),SR.COUNSEL FOR IT SRI.GEORGE K. GEORGE, SC FOR IT THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 24/06/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & V.K.MOHANAN, JJ. .................................................................... I.T. Appeal. No.46 of 2003 .................................................................... Dated this the 24th day of June, 2008. JUDGMENT Ramachandran Nair, J. Heard counsel for the appellant and Standing Counsel for the respondent. The question raised is whether the appellant assessee was liable to get their accounts for the year 1997-98 audited under Section 44AB of the Income Tax Act. Since assessee did not file audit report under Section 44AB, the Assessing Officer levied penalty under Section 271B of the Income Tax Act. Even though in first appeal penalty was cancelled, the Tribunal restored the penalty in a modified form against which this appeal is filed. 2. The contention of the assessee as before the Tribunal is that assessee is a commission agent and gross-receipts is around Rs.25 lakhs. However, Tribunal went into the accounts and examined the nature of activities of the appellant which is that of a customs house agent and found that though sizeable amount is received and spent on party account, the balance amount of around Rs.50 lakhs represents business receipts, though involving expenditure. We are of the view that the Tribunal is justified in 2 holding that the various items of income and expenditure of the assessee, though peculiar to the nature of business, reflect his own business activities. The Tribunal rightly found that the assessee cannot be treated as a commission agent for the purpose of exclusion of turnover from audit under Section 44AB in terms of the Board's Circular. However, since the Tribunal has modified the penalty order based on their finding that the turnover is above Rs.40 lakhs to attract audit provision, we do not find any substantial question of law arising therefrom. Consequently we dismiss the appeal. C.N.RAMACHANDRAN NAIR Judge V.K.MOHANAN Judge pms