The Income Tax Appellate Tribunal (ITAT), Delhi bench has held that since the income tax is collected through the “Vivad Se Viswas Scheme” ended the litigation, penalty under section 271B of the Income Tax Act, 1961 will not sustain.
The assessee, Mr. Yuvraj Singh has challenged the imposition of penalty of Rs.77,462/- under Section 271B of the Act for alleged violation of Section 44AB of the Act.
The assessee contended that being a small businessman, he was not obliged to keep the accounts. It was contended that the action of the Assessing Officer in imposing penalty under Section 271B of the Act assuming the cash deposits in the nature turnover for the purposes of Section 44AB of the Act is wholly unjustified.
A division bench of Shri Kul Bharat, Judicial Member & Shri Pradip Kumar Kedia, Accountant Member has observed that reasonable cause exists for failure of the assessee to get his account audited in respect of previous year relevant to Assessment Year 2011-12 in question. The assessee has claimed turnover in business to the tune of Rs.58,42,500/- which is below the threshold of Rs.60 lac applicable at the relevant time. The assessee has filed a return taking shelter of Section 44AD of the Act and declared 8% on the turnover on estimated basis as provided under the presumptive taxation scheme of Section 44AD of the Act.
Quashing the penalty order, the bench held that “The Assessing Officer in the course of assessment has displaced the turnover declared by the assessee by including the cash deposits reflected as liability by the assessee in the relevant assessment year. Thus, when seen with the fact that the quantum litigation has come to an end under‘Vivad se Vishwas Scheme, 2020’ (VSV) and there is no final judicial finding available regarding the correctness of turnover declared by the assessee, the benefit of doubt must go to the assessee. The income has been assessed and the tax has been collected without protracted litigation. Hence, the stale cause in the form of penalty under Section 271B should be shunned in the peculiar circumstances. We thus set aside the order of the CIT(A) and reverse the action of the Assessing Officer.”
Shri Amit Kumar, CA appeared for the appellant-assessee.
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