Books of Account not Liable to be Audited when Turnover of Business less than Threshold Limit u/s 44AB of Income Tax Act: ITAT deletes Penalty [Read Order]

The Surat bench of the Income Tax Appellate Tribunal (ITAT) held that the books of Account were not liable to be audited when the turnover of the business is less than the threshold limit under section 44AB of the Income Tax Act. 

Radheyshyam Bisani, the appellant assessee was an individual and earned income from salary, house property, and capital gain. 

The assessee appealed against the order passed by the Commissioner of Income Tax (Appeals) for confirming the order passed by the assessing officer on imposing the penalty under section 271B of the Income Tax Act,1961. 

Suresh K. Kabra, the counsel for the assessee contended that the turnover of the business of the assessee was not a business turnover and no penalty can be imposed under Section 271B of the Income Tax Act. 

It was also submitted that the books of account of the assessee were not liable to be audited as the turnover of the assessee was less than the threshold limit of Section 44AB of the Income Tax Act. 

Vinod Kumar, the counsel for the department contended that the share transaction of short-term capital gain cannot be treated as short-term investing activities and was ‘business activities’. 

It was also submitted that the turnover of the assessee was liable to be audited under Section 44AB of the Income Tax Act and the assessee had not obtained the audit report, thus the penalty under Section 271B of the Income Tax Act was attracted. 

A single-member bench comprising Pawan Singh (Judicial) observed that the penalty proceedings initiated under Section 271B of the Income Tax Act by taking a view that the turnover of the assessee on delivery bases share transaction and intra-day transaction was more than the threshold limit for attracting audit under Section 44AB of the Income Tax Act. 

It was also held that turnover of the assessee for capital gain, the short-term or long-term shall not form part of the turnover and was not required to get the books of account audited and the penalty imposed under section 271B of the Income Tax Act was not as per law and are liable to be deleted while allowing the appeal filed by the assessee. 

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