This appeal by assessee is directed against order of CIT(A)-II, Surat, for asst. yr. 2001-02. only ground raised in this appeal by assessee is against levy of penalty of Rs. 52,505 under s. 271B of IT Act, 1961. At time of hearing before us, it is submitted by learned counsel that assessee is contractor who is disclosing its income as per s. 44AD of IT Act,1961. For year under consideration assessee got its accounts audited on 8th June, 2001. income as per audited accounts was Rs. 8,11,036. However, assessee by applying s. 44AD, disclosed income at 8 per cent of total receipt, i.e., Rs. 8,40,090. Since income was disclosed as per s. 44AD and not as per audited accounts, counsel of assessee omitted to furnish audited balance sheet and P&L a/c though account of assessee was duly audited by that time. That AO accepted income disclosed by assessee on basis of s. 44AD. When AO initiated penalty proceedings under s. 271B, assessee furnished audited statement before him. He submitted that there was reasonable cause for assessee s failure to furnish audited accounts before AO because counsel of assessee omitted to furnish audited accounts because income was returned on basis of s. 44AD. He, therefore, stated that since there was reasonable cause for assessee s failure to furnish audited statements, penalty levied under s. 271B may be deleted. learned Departmental Representative, on other hand, relied upon orders of authorities below. He stated that as per s. 44AD assessee was required not only to get its accounts audited but was also duty-bound to furnish same before due date. Since assessee failed to furnish audited statements before due date, penalty was rightly levied and same should be sustained. We have considered rival submissions and perused material placed before us. It is not in dispute that assessee got its accounts audited within time, however failed to furnish same before due date. Therefore, only default by assessee is with regard to furnishing of audit report before due date. It is not in dispute that assessee has disclosed income as per s. 44AD, which is more than income as shown in audited P&L a/c. AO has also accepted income on basis of s. 44AD and has not worked out same on basis of audited accounts. In above circumstances, assessee s counsel remained under bona fide impression that since income is being disclosed under s. 44AD, audited account is not required to be furnished. In our opinion, assessee cannot be penalized under s. 271B. above bona fide impression of assessee s counsel would constitute reasonable cause. bona fides of assessee are also proved from fact that income disclosed by assessee as per s. 44AD was more than income as determined in audited P&L a/c. Apart from there being reasonable cause for assessee s failure, default committed by assessee is only technical/venial breach because audited statement has not been relied upon either by assessee or by Revenue for determining income of assessee. In above circumstances, in our opinion, for such technical or venial default, it would not be justified to levy penalty under s. 271B. We, therefore, cancel penalty sustained by CIT(A). In result, assessee s appeal is allowed. *** PARJANYA ASSOCIATES v. ASSISTANT COMMISSIONER OF INCOME TAX