The Jaipur bench of Income Tax Appellate Tribunal (ITAT) has recently held that penalty under section 271 B of Income Tax Act 1961 would not applicable once the penalty levied for non- maintenance of books of accounts.
Section 271 B of Income Tax Act 1961 states that if a person failed to furnish audit report, he/she shall be liable to pay penalty.
Assessee Rakesh Kumar Agarwal, had not filed Income Tax Return (ITR) declaring total income for Assessment Year 2012-13 and the filing of ITR is not found verifiable from the AST-ITBA system.
As per the information given in ITS-CIB data, the assessee had held share and commodity transactions for Rs.1,46, 79, 32,400/-. They found that assessee entered into share transactions and commodity transactions through the brokers. This has not been found verifiable from the ITR.
After verifying assessing officer has reasons to believe that the income to the extent of Rs. 1467932400/- has escaped assessment within the meaning of Section 147 of the Income Tax Act 1961 and issue show cause notice to the assesee, but assessee did not reply and filed ITR for the Assessment Year 2012-13. Thereafter, in 2019 assesee filed ITR income of Rs.1,50,000/- for AY 2012-13. Accordingly, show cause notice was issued to assesee.
During the assessment proceedings assessing officer noted that the assessee has neither kept nor maintained books of account and evidence of maintenance of books of account has not been furnished for verification of the claims. Thus, the assessing officer has initiated penalty proceeding under section 271A as the assessee has failed to keep and maintain books of account under section 44AA and penalty 271B were initiated to get audited the books of account under Section 44AB.
Aggrieved assesse filed appeal before the CIT (A) but CIT (A) upheld the decision of the assessing officer. Against the order of the CIT(A), the assesee filed second appeal before the tribunal.
Vishal Gupta counsel for the assesee department has already levied and confirmed the penalty u/s 271A, being the penalty for failure to keep /maintain or retain books of accounts, documents etc. If so then the levy of penalty u/s 271B is incorrect, as per his submissions
Monisha Choudhary, counsel for the revenue supported the orders of the lower authority and submitted that the assessee has even though liable maintain his books of account, has failed to do so and the levy of penalty is correct and that the same should be upheld.
The Tribunal consisting Dr. S. Seethalakshmi, (Judicial Member) and Rathod Kamlesh Jayantbhai, (Accountant Member) allowed the appeal filed by the assesee.
Further the bench observed that “once the penalty is levied for non-maintenance of book of accounts, there cannot be further default for not getting the same audited as required under section 44AB of the Income Tax Act and therefore, the penalty levied under section 271B of the Income Tax Act 1961 is not justified and thus vacated.”
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