The Pune bench of the Income Tax Appellate Tribunal ( ITAT ) has held that the commission agent is not obliged to get the account audited and the penalty under section 271 B of the Income Tax Act,1961 is not leviable.
Bablu Kumar Harinarayan Gupta, the assessee challenged the separate orders of Commissioner of Income Tax (Appeals)- National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 01.09.2021 for the assessment years 2010-11 and 2012-13 respectively.
The appellant is an individual. The return of income for the assessment year 2010-11 was filed on 29.06.2010 declaring a total income of Rs.1,73,260/-. During the course of assessment proceedings, the Assessing Officer found that the appellant had deposited cash in the bank account amounting to Rs.1,48,43,428/-.
The Assessing Officer viewed that the said cash deposit represents the business receipts of the appellant which was not disclosed in the Return of Income. The Assessing Officer opinioned that the cash deposits amounting to Rs.1,48,43,428/- had escaped to the tax and issued notice under section 148 of the Income Tax Act, 1961 (‘the Act’) on 29.03.2017 after recording the reasons.
The assessment was completed by the Assessing Officer u/s 143(3) r.w.s. 147 of the Income Tax Act dated 28.12.2018 at total income @ 8% of the cash deposits made by the appellant. The AO levied a penalty u/s 271B under the Income Tax Act for the failure of the assessee to get accounts audited as stipulated under the provisions of section 44AB of the Act.
It was contended that the appellant is only a commission agent for one Mr Dinanath Gupta and he was only purchasing fruits for the said Mr Dinanath Gupta and selling them to traders as per instruction of said person to compute the turnover, annual commission alone has to be reckoned as the gross receipts. The CIT(A)confirmed the levy of a penalty.
A Coram consisting of Shri Inturi Rama Rao, Accountant Member and Shri S S Viswanethra Ravi, Judicial Member observed that the levy of penalty under section 271Bof the Income Tax Act can’t invoke merely because the appellant was unable to substantiate the submission.
Further observed that the appellant is only commission agent and there is no obligation on the part of the assessee to get the accounts audited as he was under the bonafide belief that it is only commission receipt, which can be considered as turnover for section 44AB of the Act.
While allowing the appeal, the Tribunal directed the Assessing Officer to delete the penalty under section 271B of the Income Tax Act. Shri Pramod S. Shingte appeared for the appellant and Shri Ramnath P Murkunde appeared for the revenue.
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