Bonafide Non-compliance with Audit Requirement u/s 44AB is Excusable: ITAT deletes the penalty [Read Order]

The Delhi bench of the Income Tax Appellate Tribunal (ITAT), while deleting a penalty order, has held that non-compliance with S.44AB of the Income Tax Act, 1961 can be excusable if it was committed without dishonest intention.

The total turnover of the business of the Assessee was increased to Rs.1,30,57,127/- and therefore, the Assessee was under obligation to get its accounts audited u/s. 44AB of the Act, which the assessee has failed to do, and therefore resulted in the initiation of penalty proceedings u/s. 271B of the Act by the Assessing Officer. 

 It was claimed by the assessee that the assessee, being a senior citizen of 70 years old, was under the impression that only the gain was liable to be surrendered for taxation purposes. The Assessing Officer levied the penalty of Rs. 65,286/- u/s 271B of the Act. Further stated that the case of the assessee has always fallen below the threshold limit for a tax audit, due to a bona fide mistake, the assessee could not get its accounts audited this time.

The Tribunal observed that the assessee committed default the first time for non-complying with the provisions of section 44AB because the case of the assessee crossed the threshold limits as prescribed under the provisions of section 44AB of the Act first time only.

Shri Pradip Kumar Kedia, accountant member and Shri N K Choudhry, judicial member held that the Assessee is entitled to get leniency and deleted the penalty imposed by the Assessing Officer and affirmed by the Commissioner. The appeal filed by the assessee was allowed.

The appellant was represented by Shri R.S. Ahuja and the respondent was represented by Shri B.K. Singh.

To Read the full text of the Order CLICK HERE

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