S.K. Yadav, J.M.—This appeal has been filed by the assessee against the order of the CIT(A), dated 15-1-1997, wherein sustenance of penalty under section 271B has been opposed.

2. The assessee-firm derives income as share-broker and gets commission ranging from 2 per cent to 3 per cent from the persons who place orders either for purchase or sale of shares through the assessee. It deals in purchase and sale of shares on its own account also. The total commission received for the assessment year under appeal was to the tune of Rs. 7,05,866. The method of accounting followed by the assessee was that the commission received was directly credited to the commission account whereas the concerned sales and purchases were credited/debited to the respective clients account. The turnover of sale account i.e., purchase and sale of shares was not much and the turnover if included gross commission/brokerage receipts received from the customers did not exceed Rs. 50 lacs for the transitional period of 15 months. The assessee was under bona fide belief that he was not supposed to get its accounts audited and so assessee filed its return without audit report on 26-12-1989, showing total income of Rs. 3,65,748 for the year under consideration. The assessee had filed its return without accompanying the audit report. If the Department was of the view that the assessee would come within the ambit of section 44AB of the Act, it would have treated the return as defective. However, the Assessing Officer did not agree with the explanation of the assessee and imposed a penalty which was confirmed by the CIT(A).

3. It was pointed out by the assessee before us that similar issue has been decided in favour of the assessee in ITA No. 509/Ahd/1995, order dated 30-11-2000 for assessment year 1990-91 [reported as R. Wadiwala & Co. v. Asstt. CIT [2001] 72 TTJ (Ahd.) 34] by Ahmedabad Bench ‘B’ of the Tribunal wherein it has been held that there is no justification for levy of penalty under section 271B in the facts and circumstances of the case. The assessee could entertain bona fide belief that the turnover of dealing in shares made on behalf of various buyers and sellers of shares through the assessee in the capacity of sub-broker is not includible for determining the applicability of section 44AB. Such bona fide belief was fortified by the fact that in several past assessments and the assessments for subsequent years, the Assessing Officer himself has not initiated any penalty proceedings under section 271B. Such bona fide belief constitutes a reasonable cause within the meaning of section 273B which justifies the cancellation of penalty levied in the aforesaid facts and circumstances of the case. Accordingly, the Assessing Officer was directed to cancel the penalty. Most respectfully following the same, we direct the Assessing Officer to cancel the penalty under section 271B.

4. In the result, the appeal is allowed.