The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench consisting of Waseem Ahmed, Accountant Member, and Madhumita Roy, Judicial Member granted relief to Developer as non-maintenance of Books of Account would not attract Penalty u/s 271B.
The assessee, M/s Gurukrupa Developers is a partnership firm engaged in the business of construction of residential as well as a commercial complexes. There was the search under section 132and the assessee was also part of the search. During the search at the premises of Dhanjimama Group documents belonging to the assessee were found hence a notice under section 153C of the Act was issued to the assessee. The assessee in response to such shown cause notice furnished the return of income declaring an additional income of ₹ 40,18,357/- which was accepted by the AO in the order framed under section 143(3) read with sections 153C and 153A of the Act.
However, the AO found that the assessee in the year under consideration has achieved a turnover of ₹ 1,03,11,896/- and therefore it was liable for getting the accounts audited under section 44 AB of the Act. But the assessee failed to do so. Accordingly, the AO initiated the penalty proceedings under section 271B of the Act, proposing to levy the penalty by issuing a show-cause notice to the assessee. In response to such show cause notice assessee submitted that its books of account and other supporting materials were impounded by the search team hence it was practically impossible to prepare the books of accounts and get them audited.
As such, the return of income was filed on a provisional basis. However, the AO disregarded the submission made by the assessee and levied the penalty under section 271B of the Act for ₹ 51,559/- being ½% of the turnover by holding that it was the duty of the assessee to get its books of account audited under section 44AB which has not been complied with. Aggrieved the assessee filed an appeal before the CIT wherein CIT confirmed the order of AO.
The Tribunal observed that” In view of the above, we are of the opinion that the assessee cannot be penalized for not getting the accounts audited as the assessee did not maintain any books of accounts and the assessee in the given fact and circumstances cannot be held guilty for the procedural maps as there was sufficient cause for non-compliance as provided under the provisions of section 273B of the Act.”
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