- (1.) THE appellant is a distributor of Indian Oil Cooking Gas and is also engaged in the sale of gas stove and spare parts. For the assessment year 1999 -00, the appellant showed a sale of Rs.2,80,578/ -. A turnover was shown relating to sale of miscellaneous items other than sale of gas cylinders. The appellant had also shown a receipt of commission of Rs.4,80,686.91 from Indian Oil Corporation, which was credited to the profit and loss account. On the basis of the return filed and information gathered by the Assessing Officer, notice under Section 271B of the Act was issued by the Assessing Officer to show cause why a penalty should not be imposed on the ground that the assessee had failed to get his account audited under Section 44AB of the Act as he had failed to disclose the turnover on sale of cylinders amnounting to Rs.4,73,45,398/ - and since the turnover exceeded Rs.40 lacs, the assessee was under a legal obligation to get his books of account audited under Section 44AB of the Act. The appellant filed his reply contending that since no order has been passed no penalty proceedings could be initiated. The appellant further submitted that the appellant had not made any purchases from the bottling plant nor had sold any gas and that whatever goods were sent by the corporation, the ownership of those goods remained with the corporation and that the appellant was only allowed to take commission and, consequently, the provision of Section 44AB of the Act was not applicable.
(2.) THE Assessing Officer did not agree with the submission of the appellant and passed an order under Section 271B of the Act imposing a penalty of Rs.86,880/ - being half percent of the total turnover, which he assessed at Rs.1,73,75,938/ -. The appellant, being aggrieved, filed an appeal, which was dismissed by the Commissioner of Income Tax (Appeals). The appellant, being aggrieved, filed a second appeal before the Tribunal, which was also rejected. The appellant has thereafter, filed the present appeal under Section 260A of the Income Tax Act, which was admitted on various questions of law.
(3.) WE have heard Sri Suyash Agarwal, the learned counsel for the appellant and upon hearing we find that the questions of law is required to be reformulated as under: 1. Whether the sale of gas cylinders by the appellant was liable to be included in the turnover and was required to be audited under Section 44AB of the Act? 2. Whether in the facts and circumstances of the present case the assessee was justified in imposing penalty under Section 271B of the Act? The assessee contends that as per the agreement he was only a distributor and was not carrying on the business of purchase and sale of gas cylinders and that he was only getting a commission. It was urged that since the commission given to the appellant by the Indian Oil Corporation was less than Rs.40 lacs, the appellant was under no obligation to get the accounts audited under Section 44AB of the Act.;