Friday, January 24, 2014

Tax Audit applicable to Partners on Income from Partnership Firm Inbox x

The short issue in this appeal is whether or not penalty under section 44AB will also be attracted in the case in which the professional income of the assessee received from partnership firm of Chartered Accountants is taxable under the head “income from business or profession”. In the relevant previous year, the assessee, a Chartered Accountant, received Rs.32,76,000/- from M/s. Lovelock & Lewes of which she was a partner. In terms of section 28(v), the said income was taxable under the head “Profits & Gains from Business or Profession”. The Assessing Officer was of the view that the assessee ought to have obtained the audit report under section 44AB of the Income Tax Act and her failure to do so, invited penalty under section 271B of the Act. The assessee’s contention, on the other hand, was that since the assessee was not carrying out any independent profession and the taxability of the said income received under the head “profits and gains from business or profession” was only due to technical   requirement of section 28(v) of the Act the provisions of section 44AB are not attracted. The Assessing Officer rejected this plea of the assessee on the basis of a decision of this Tribunal in the case of Amal Ganguly (ITA No. 2135/Kol./2008, Assessment Year 2003-04) vide order dated 20.02.2009. The Assessing Officer was of the view that since the plea raised by the assessee is not acceptable to the jurisdictional Tribunal, the same cannot be accepted by him. Respectfully following the view of the Tribunal and thus holding that the assessee ought to have got her accounts audited under section 44AB of the Act, the Assessing Officer imposed penalty of Rs.16,380/- under section 271B of the Act. Aggrieved, the assessee carried the matter in appeal before ld. CIT(Appeals) but without any success. Ld. CIT(Appeals) also took note of the decision of the Coordinate Bench of this Tribunal, which covered the issue against the assessee. The assessee is not satisfied and is in further appeal before us.
INCOME TAX APPELLATE TRIBUNAL, KOLKATA
Before Shri Pramod Kumar (Accountant Member),
and Shri George Mathan (Judicial Member)
I.T.A. No.: 703/ Kol. / 2012 – Assessment year : 2006-07
Usha A. Narayanan Vs. Deputy Commissioner of Income Tax
Date of pronouncing the order : March 25, 2013
ORDER
Per Pramod Kumar:
1. By way of this appeal, the assessee-appellant has challenged correctness of learned Commissioner of Income Tax (Appeals)’s order dated 16th March, 2012, in the matter of penalty under section 271B of the Income Tax Act, 1961, for the assessment year 2006-07, on the following grounds:-
(1) The ld. CIT(A) erred in confirming the penalty u/s. 271B imposed on appellant without considering the fact and circumstance of the case.
(2) The ld. CIT(A) erred in not distinguishing the income from profession by an individual professional and the income from profession by a partner of a professional firm (which consists partners salary, commission, share of profit as per Partnership Deed) in the light of provision of income Tax Act, 1961 vis-à-vis Indian Partnership Act, 1932.
2. When this appeal was called out for hearing, none appeared for the assessee nor there was any adjournment petition. Even on earlier occasions, the assessee was unrepresented. In this view of the matter and as pointed out by ld. Departmental Representative that the issue is a covered matter, we are proceeding the case ex-parte qua the assessee and disposing the matter on the basis of arguments of ld. D.R., material on record and binding judicial precedence on the issue.
3. The short issue in this appeal is whether or not penalty under section 44AB will also be attracted in the case in which the professional income of the assessee received from partnership firm of Chartered Accountants is taxable under the head “income from business or profession”. In the relevant previous year, the assessee, a Chartered Accountant, received Rs.32,76,000/- from M/s. Lovelock & Lewes of which she was a partner. In terms of section 28(v), the said income was taxable under the head “Profits & Gains from Business or Profession”. The Assessing Officer was of the view that the assessee ought to have obtained the audit report under section 44AB of the Income Tax Act and her failure to do so, invited penalty under section 271B of the Act. The assessee’s contention, on the other hand, was that since the assessee was not carrying out any independent profession and the taxability of the said income received under the head “profits and gains from business or profession” was only due to technical   requirement of section 28(v) of the Act the provisions of section 44AB are not attracted. The Assessing Officer rejected this plea of the assessee on the basis of a decision of this Tribunal in the case of Amal Ganguly (ITA No. 2135/Kol./2008, Assessment Year 2003-04) vide order dated 20.02.2009. The Assessing Officer was of the view that since the plea raised by the assessee is not acceptable to the jurisdictional Tribunal, the same cannot be accepted by him. Respectfully following the view of the Tribunal and thus holding that the assessee ought to have got her accounts audited under section 44AB of the Act, the Assessing Officer imposed penalty of Rs.16,380/- under section 271B of the Act. Aggrieved, the assessee carried the matter in appeal before ld. CIT(Appeals) but without any success. Ld. CIT(Appeals) also took note of the decision of the Coordinate Bench of this Tribunal, which covered the issue against the assessee. The assessee is not satisfied and is in further appeal before us.
4. We see no reason to take any contrary view other than the view so taken by the Coordinate Bench of this Tribunal in the case of Amal Ganguly (supra). Respectfully following the said decision, we uphold the action of authorities below and decline to interfere in the matter.
5. In the result, the appeal is dismissed. Order pronounced in the open Court on 25th day of March, 2013.
 

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