JUDGMENT Deepak Verma, J.— Heard Sri Arvind Kumar for the appellant and Sri Y.V. Raviraj for the respondents. 2. With consent, arguments heard and record perused. 3. This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter 3 shall be referred to as "the Act"), is at the instance of the Revenue against the order dated July 14, 2006, passed by the Income Tax Appellate Tribunal, Bangalore Bench, in I.T.A. No. 703 (Bang)/2005 for the assessment year 2001-02. The appeal before the Tribunal was at the instance of the assesses-respondent herein against the orders passed by the Assessing Officer and the Commissioner of Income Tax (Appeals), Mysore. The appeal filed by the assessee has since been allowed by the Tribunal, giving rise to this appeal having been preferred by the Revenue. 4. The following substantial question of law arises for adjudication by this court: Whether the Tribunal was correct in applying the principle laid down by the hon'ble Supreme Court in the case of Hindustan Steel Ltd. Vs. State of Orissa, AIR 1970 SC 253 to the facts of the case for the purpose of levying penalty under Section 271B of the Act? 5. The facts of the case in short are mentioned herein below: 6. The assessee is a proprietor of three concerns, namely, (1) Satish Enterprises--IOC Dealer, (2) M/s. Khyathi Motors--Workshop, (3) M/s. Khyathi Enterprises--Insurance Agency. He filed return of income on October 31, 2001, declaring the net taxable income of Rs. 5,33,640. The return filed by him was processed under Section 143(1). Subsequently, it was taken up for scrutiny and the assessment was completed on March 25, 2003, determining the income of the assessee at Rs. 5,86,620. In the said computation of income, the total income derived by him from all the three concerns was aggregated. The assessee obtained the audit report as required under Section 44AB of the Act only in respect of M/s. Sathish Enterprises (IOC Dealer). In respect of the two other businesses, according to the assessee, due to his ignorance of law and bona fide mistake, he had not obtained audit report with regard to M/s. Khyathi Motors and M/s. Khyathi Enterprises. For these two businesses he had not obtained audit reports on the ground that individually from those two businesses, he had not exceeded the total turnover of Rs. For these two businesses he had not obtained audit reports on the ground that individually from those two businesses, he had not exceeded the total turnover of Rs. 40,00,000 for the relevant assessment year, as contemplated under Section 44AB of the Act. 7. For not obtaining proper audit report in respect of other two businesses, the assessee was issued a notice under Section 271B of the Act. The assessee gave his reply. It was not found favourable by the Revenue, even though the same was considered and an order came to be passed under Section 271B of the Act levying penalty of Rs. 1 lakh on him for the aforesaid default. This order was passed by the Assessing Officer. Feeling aggrieved by the same, the assessee preferred to file an appeal before the Commissioner of Income Tax (Appeals), Mysore, who also proceeded to dismiss the appeal. Thereafter, the assessee preferred further appeal before the Income Tax Appellate Tribunal challenging those two orders passed by both the authorities below. The Tribunal, after considering the matter from all angles, came to the conclusion that no penalty could have been imposed on the assessee as there was no wilful default on his part and the appeal of the assessee was allowed. Hence, this appeal by the Revenue. 8. For ready reference, the relevant portion of Section 44AB, which deals with audit of accounts of certain persons carrying on business or profession, is reproduced herein below: 44AB. Every person,-- (a) carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds forty lakh rupees in any previous year; or.... get his accounts of such previous year audited by an accountant before the specified date and furnish by that data of report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed. 9. To clarify the position with regard to obtaining of audit report, it is necessary to read the definition of "business" as contained under Section 2(13) of the Act, which is also reproduced for ready reference: 2.(13) 'business' includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. 10. 9. To clarify the position with regard to obtaining of audit report, it is necessary to read the definition of "business" as contained under Section 2(13) of the Act, which is also reproduced for ready reference: 2.(13) 'business' includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. 10. The conjoint reading of the aforesaid provisions makes it clear that every person who is carrying on business and whose total sales or turnover exceeds Rs. 40 lakhs in any previous year would be required to get his accounts audited by the accountant. This does not show anywhere that in case an assessee is carrying on many businesses, then the aggregate of the businesses has to be arrived at and thereafter, the same is required to be audited. 11. Subsequently, it appears that some doubts were raised with regard to the correct interpretation of the aforesaid provisions of law and the matter was clarified by the Institute of chartered Accountants of India under the heading: Individual businesses--single Form No. 3CD or consolidated form? An assessee owns four proprietorship businesses. The aggregate annual turnover of all the concerns exceeds Rs. 40 lakhs but individually each business turnover is below Rs. 40 lakhs. Further, separate books of account are maintained for each business and profit and loss account and balance-sheet are prepared separately. (a) will tax audit under Section 44AB be applicable? (b).... Answer (a) The requirement of tax audit in the case of an assessee is to be determined taking into consideration on the 'sales', 'turnover' or 'gross receipts' of all the businesses carried on by him. If the aggregate annual turnover of the four proprietary concerns exceed Rs. 40 lakhs Section 44AB would be clearly applicable. (b).... 12. Therefore, from the above, it is clear that tax audit as such is conducted in respect of 'an assessee' and not in respect of particular business. 13. Apart from the above, when the assessee was served with notice issued to him under Section 271B of the Act, he had furnished explanation and further clarification to the same. It is necessary to reproduce the same, which reads as under: I am ignorant about incomplete audit report and the provision of law in this regard, omission on my part if any was not intentional. Hence, you are requested to drop penalty proceedings and oblige. 14. It is necessary to reproduce the same, which reads as under: I am ignorant about incomplete audit report and the provision of law in this regard, omission on my part if any was not intentional. Hence, you are requested to drop penalty proceedings and oblige. 14. He had proceeded to give further clarification/explanation on April 24, 2003. The relevant portion of it reads as under: This is in continuation to my submission dated April 4, 2003, submitted to you on April 6, 2003, on the above subject and in response to your notice dated April 10, 2003. For the assessment year 2001-02, I through my accountant submitted for audit the accounts of M/s. Satish Enterprises, M/s. Khyathi Motors (Workshop), Manipal and Khyathi Enterprises, Udupi. The auditors submitted the report under Section 44AB only, in respect of Satish Enterprises, the turnover in which exceeded the limit of Rs. 40 lakhs. I am ignorant of the law in this regard. Hitherto my auditor used to give the report under Section 44AB only, in respect of the audit conducted by him for Satish Enterprises as and when turnover exceeded the limit of Rs. 40 lakhs. For the assessment years 1999-2000 and 2000-01, since the turnover limit did not exceed the prescribed limit, no report was obtained in respect of any of the concerns. For the assessment year 2001-02, audit report under Section 44AB was given but name of M/s. Khyathi Motors (Workshop), Manipal, and Khyathi Enterprises were not specifically mentioned in the report. This aspect was brought to my notice only now. Since there is no intention on my part to defraud the revenue, the default if any on my part may kindly be condoned as it is not intentional and has occurred for the first time. 15. Taking the cumulative effect of the explanations offered by the assessee and from a reading of the relevant provisions of Section 44AB and Section 2(13) of the Act, we are of the considered opinion that the assessee was under a bona fide belief that he is required to obtain audit report only in respect of that business, the turnover of which crosses the limit of Rs. 40 lakhs for each assessment year. 16. 40 lakhs for each assessment year. 16. From the conduct, behaviour and attitude of the assessee, it is clear that he was not aware that aggregate of the three businesses has to be taken into consideration for compliance with the provisions contained in Section 44AB of the Act. It is also clear from the records that this was for the first time he had committed this default. It is also relevant to mention that in any case, the assessee would not have gained in any manner whatsoever, if he had included the other two businesses for working out the aggregate provided, he would have been aware of the same. 17. No doubt it is true that the assessee was being represented by his chartered accountant and he should have been little more careful and cautious in applying the legal proposition to the facts of the case. He should have added the aggregate of all the three businesses so as to have full compliance with Section 44AB of the Act. But for the mistake or default of the chartered accountant, who may have also acted bona fide, being unaware of the correct interpretation of law, the assessee cannot be held responsible, even though the said chartered accountant acted as an agent of the assessee. Since the issue involved was complicated, the clarification was issued by the Institute of Chartered Accountants of India subsequently. 18. Here, we may profitably refer to a judgment of the Supreme Court reported in Gujarat Travancore Agency, Cochin Vs. Commissioner of Income Tax, Kerala, Ernakulam, AIR 1989 SC 1671 . The Supreme Court has held that while imposing penalty, the question of means rea is not required, but the obligation cast upon the assessee has to be discharged bona fide. As mentioned hereinabove, a bare reading of the provisions of law makes it abundantly clear that the assessee was required to furnish audit report with regard to his business as Section 44AB does not show or contemplate that all businesses are required to be consolidated together for working out the aggregate of the turnover. The subsequent clarification issued by the Institute of Chartered Accountants of India cannot be pressed into service to the disadvantage of the assessee. 19. The Tribunal has also placed reliance on yet another judgment of the Supreme Court reported in Hindustan Steel Ltd. Vs. The subsequent clarification issued by the Institute of Chartered Accountants of India cannot be pressed into service to the disadvantage of the assessee. 19. The Tribunal has also placed reliance on yet another judgment of the Supreme Court reported in Hindustan Steel Ltd. Vs. State of Orissa, AIR 1970 SC 253 , where it dealt with the provisions contained in the Orissa Sales Tax Act. While considering the general principles the apex court has held that penalty can be levied on failure of the assessee to get itself registered as a dealer under the Sales Tax Act only when it is established that he had not acted bona fide, or acted deliberately in defiance of law or was guilty of conduct contumacious, or dishonest, or in conscious disregard of his obligations. If the assessee was under a bona fide belief that it was not a dealer, then levying of penalty could not be justified. In view of the foregoing discussions, it is clear to us that the assessee had acted in bona fide belief and had no dishonest intention in not obtaining audit report for all the three businesses carried on by him. 20. For all these reasons, we are of the opinion that the question of law, referred to hereinabove, has to be answered in favour of the assessee and against the Revenue. 21. The appeal, therefore, stands disposed of accordingly.