DR. SUNDERLAL SURANA v. INCOME TAX OFFICER
[Citation -2006-LL-0825-5]

Citation 2006-LL-0825-5
Appellant Name DR. SUNDERLAL SURANA
Respondent Name INCOME TAX OFFICER
Court ITAT
Relevant Act Income-tax
Date of Order 25/08/2006
Assessment Year 2003-04
Judgment View Judgment
Keyword Tags audit report • ayurvedic
Bot Summary: The assessee did not get his accounts audited under s. 44AB of the Act. The AO took total receipts to be from assessee s profession only. The total receipts, obviously exceeded Rs.10,00,000 and the assessee did not get his accounts audited as required under s. 44AB of the Act. In the alternative, it has been submitted that the advocate, who was dealing with the assessee s case, Shri Pratap Surana, had advised the assessee that his professional receipts being below Rs. 10,00,000 and business receipts being below Rs. 40,00,000, there was no legal necessity for obtaining audit report as provided under s. 44AB of the Act. As per written submission filed on behalf of the assessee, he is an ayurvedic doctor and has no knowledge of allopathy, leave aside pathological analysis, and he has three types of receipts from treatment of patient, from pathological laboratory and from the sales of medicines. Since, we are dealing with the penalty proceedings and the facts available before us, in relation to the above- mentioned three types of receipts are not available in detail, yet it seems plausible that these are three different types of receipts and cannot be attributed to only profession of the assessee. We are of the considered opinion that a reasonable cause is available with the assessee for not obtaining the requisite audit report.


This appeal of assessee is directed against order of learned CIT(A) dt. 17th March, 2005. This appeal arises out of penalty order passed under s. 271B of Act on 14th Sept., 2004. facts of this issue are that assessee is medical practitioner and is also proprietor of Surana Clinic and Diagnostic Centre. He showed receipts of Rs. 70,492 from patients treated by him by way of fees; Rs. 4,88,221 from pathological laboratory; and Rs. 8,60,832 from sales of medicines, totalling to Rs. 14,19,596. assessee did not get his accounts audited under s. 44AB of Act. reasons for not getting his accounts audited are stated to be that his gross receipts from profession are below Rs. 10,00,000 and from his business receipts are below Rs. 40,00,000. As per s. 44AB, accounts are to be got audited if professional receipts are at Rs. 10,00,000 or above and if business receipts are at Rs. 40,00,000 or above. AO took total receipts to be from assessee s profession only. total receipts, obviously exceeded Rs.10,00,000 and assessee did not get his accounts audited as required under s. 44AB of Act. Therefore, he levied penalty under s. 271B of Act. learned CIT(A) also confirmed this penalty of Rs. 7,098. We have heard rival submissions and perused evidence available on record. It has been submitted before us that assessee has been maintaining separate records for professional receipts, pathological receipts and sale of medicines. According to learned Authorised Representative, if these receipts are taken under profession and from business separately, provisions of s. 44AB are not attracted. In alternative, it has been submitted that advocate, who was dealing with assessee s case, Shri Pratap Surana, had advised assessee that his professional receipts being below Rs. 10,00,000 and business receipts being below Rs. 40,00,000, there was no legal necessity for obtaining audit report as provided under s. 44AB of Act. Thus, it has been pleaded that this is reasonable cause, which is sufficient enough to exonerate assessee from levy of penalty, for not obtaining audit report under s. 44AB. On other hand, learned Departmental Representative has heavily relied on orders of authorities below. He has refuted both above submissions of learned Authorised Representative. We have carefully considered rival submissions, in light of available facts. It is true that assessee is medical practitioner. As per written submission filed on behalf of assessee, he is ayurvedic doctor and has no knowledge of allopathy, leave aside pathological analysis, and he has three types of receipts (1) from treatment of patient, (2) from pathological laboratory and (3) from sales of medicines. Since, we are dealing with penalty proceedings and facts available before us, in relation to above- mentioned three types of receipts are not available in detail, yet it seems plausible that these are three different types of receipts and cannot be attributed to only profession of assessee. But we are of considered opinion that reasonable cause is available with assessee for not obtaining requisite audit report. legal adviser gave wrong advice that no such audit report is required because both types of incomes are below required ceiling limit. concerned advocate has filed his affidavit, which is duly attested and contains similar averments with conviction that he is still of same opinion that no such audit report is required. Be that as it may, we hold that wrong legal advice given by counsel is reason for impugned default and assessee was prevented by this advice, which constituted reasonable cause in eyes of law and in favour of assessee. We are convinced that assessee was acting as per advice of advocate in good faith and issue involved in this case with regard to nature of receipts is debatable one. advice given by counsel constitutes reasonable cause. advocate has confirmed plea taken by assessee by filing his duly attested affidavit. Therefore, in totality of facts and circumstances of this case, we are of considered opinion that no penalty can be levied upon assessee under s. 271B of Act. penalty is hereby cancelled. In result, appeal stands allowed. *** DR. SUNDERLAL SURANA v. INCOME TAX OFFICER
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