Gujarat High Court Commissioner Of IncomeTax vs Tea King on 27 October, 1999 JUDGMENT B.C. Patel, J. 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. 198586 to 198990 on 10th October, 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. 198687 to 198990. The appellate authority confirmed the penalty so far as the asst. yr. 198586 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. The matter was carried in appeal by the AO as well as by the assessee. Before us, the assessee has not preferred any application against the penalty imposed on it for the asst. yr. 198586. So far as the Revenue is concerned it has preferred applications for making a reference and the same being rejected, has preferred these applications before this Court, inter alia contending that there was no plausible explanation by the assessee, not to get its account books audited for the subsequent years as well. The questions raised by the Revenue are as under : "1. Whether, the Tribunal is right in law and on facts in levying the penalty under s. 271B for asst. yr. 198687 to 198990 on the ground that the books of accounts for asst. yr. 198586 were not completed and hence, it was not possible to complete the audit for these 4 years, when the Tribunal itself, while deciding the quantum appeals for the same years held that the books of accounts for these years were complete at the time of survey action ? "2. Whether, on the facts and circumstances of the case, when the assessee itself did not carry forward the balances from books of accounts of asst. yr. 198586 to those of later years, was the Tribunal right in holding that the assessee was prevented by reasonable cause from completing the books of accounts of asst. yrs. 198687 to 198990 and getting them audited within the time permitted under s. 44AB of the IT Act ?" Mr. Naik learned counsel appearing for the Revenue submitted that in view of s. 44AB of the Act it is compulsory to get the books of account audited, if the assessee has a turnover as prescribed in this section. He submitted that in the instant case the assessee failed to get his books of account audited. He failed to submit his return in time and thus the AO was justified in invoking s. 271B of the Act. He submitted that there was no reasonable cause or explanation by the assessee for not getting the books of account audited. Therefore, not only the CIT(A) but the Tribunal both have committed errors. We have to bear in mind that these are the findings of fact. 4. 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. 5. It is required to be noted that in this section, as originally enacted, absence of reasonable cause was a necessary condition for imposing penalty. Present s. 271B reads as under : ".......... the AO may direct that such person shall pay, by way of penalty, a sum equal to onehalf per cent of the total sales, turnover of gross receipts, as the case may be in business or of the gross receipts in profession, in such previous year or years or a sum of one hundred thousand rupees, whichever is less." 6. Section 273B indicates that no penalty shall be imposed on the person or assessee as the case may be for any failure as referred to in the said section if he proves that there was reasonable cause for the said failure. Thus, reading of s. 273B of the Act, it is clear that onus is on the assessee. Looking to the provisions of s. 271B of the Act where the word "may" is used and as per the provisions contained in s. 273B w