No Audit can be Made u/s 44AB of Income Tax Act When Assessee Has Not Maintain Books of Account: ITAT [Read Order]

The Bangalore bench of the Income Tax Appellate Tribunal ( ITAT) held that no audit can be made under section 44AB of the Income Tax Act,1961 when the assessee has not been maintained the books of account.

Bandenawaz Mulla, the appellant assessee appealed against the order passed by the Commissioner of Income Tax (Appeals) for confirming the levy of penalty under section 271A of the Income Tax Act by the assessing officer. 

Pratibha, the counsel for the assessee contended that during the assessment proceedings, the assessee submitted all the copies of the return of income along with a statement of receipt and payment and statement of affairs before the assessing officer. 

It was also submitted that the assessee had not been maintaining the books of accounts and thus there was no question of auditing the books of account under section 44AB of the Income Tax Act. 

Priyadarshini Baseganni, the counsel for the revenue relied on the decisions made by the lower authorities. It was further contended that the assessee failed to get the books of account audited without any reasonable cause, thus the assessing officer invoked the provision of section 271A of the Income Tax Act and levied the penalty. 

It was further submitted that the penalty imposed under section 271A of the Income Tax Act by the assessing officer was as per the law and is not liable to be deleted. 

The bench observed that the assessee had not been maintaining the books of accounts. As such, there is no question of auditing the same under section 44AB of the Income Tax Act. Consequently, there cannot be any question of levying penalty under section 271B of the Income Tax Act. 

The two-member bench comprising Chandra Poojari (Accountant) and Beena Pillai (Judicial) held that if the assessee has not maintained the books of accounts, the penalty proceedings cannot be initiated under section 271A of the Income Tax Act. 

Additionally, the bench held that the penalty imposed by the assessing officer was not as per the law and is liable to be deleted while allowing the appeal filed by the assessee. 

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates