Penalty u/s 271B Not Leviable If Assessee was under Bonafide Belief that Books of Accounts Need Not be Audited: ITAT [Read Order]

The Kolkata bench of Income Tax Appellate Tribunal (ITAT) has recently held that the penalty under section 271B of Income Tax Act 1961 is not leviable if the assessee was under bonafide belief that books of accounts need not be audited.

271B of Income Tax Act 1961 provides that if a person did not audit his book of account in respect of any previous year or  relevant to assessment year  and assessing officer shall seek for auditing the account as per section 44AB of the Income Tax Act 1961  and also shall impose penalty .

Assesee Anunoy Mukherjee is an individual and is engaged in the business of mobile recharging and earns income from commission from sale of such recharge coupons of Idea Cellular. When the scrutiny assessment was carried out by the assessing officer on going through the details of bank account held by the assessee with HDFC Bank observed that Rs.1,48,19,170/- was deposited. So far as the issue under consideration regarding penalty levied under section 271B of the Income Tax Act 1961 is concerned, the Assessing Officer further noticed that the books of accounts have not been audited under section 44AB of the Income Tax Act 1961. Against this order assesee filed an appeal before the ITAT .

Vishal Kr. Agrawal, and Rohitash Gupta counsels for the assessee submits that  , “assessee was under the impression that as income is only from commission and the deposit of cash on receipt from various persons for sale of recharge coupons is not its sales but is amount collected on behalf of Telecom company. Further it is submitted that it was the first year of its business.”

P.P. Barman, counsel for the revenue, supported  the decision of the lower authorities .

After considering the contentions of the both parties the division bench of the ITAT comprising Sanjay Garg, (Judicial Member) and Dr. Manish Borad, (Accountant Member) allowed the appeal filed by the assessee  and observed that, “assessee prima facie found to be reasonable because the assessee was under bonafide belief that he was not liable to get the books of accounts audited as the commission income was below the threshold limit and this was the first year of the business venture taken up by the assessee and thus assessee’s case is covered under section  273B of the Income Tax Act, 1961”

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