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Once Penalty Levied for Non-Maintenance of Book of Accounts, no further default for not getting Audited u/s 44AB: ITAT Jaipur deletes Penalty u/s 271B
Category: INCOME TAX, Posted on: 17/04/2023
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The Jaipur Bench of Income Tax Appellate Tribunal (ITAT) has deleted penalty under Section under Section 271 of the Income Tax Act 1961 holding that once penalty is levied for non-maintenance of books of accounts no further default could be made for not getting the same audited under Section 44AB of the Act.

The assessee, Bhawani Shankar Gupta was engaged in the business of trading bangles and other artificial accessories and showed gross receipt and declared net profit under Section 44AD of the Income Tax Act for an amount. During the year, it was found that the assessee had also made transactions of shares and not disclosed the same in his return of income. After examination of details filed it was found that assessee had made transactions in various segments and made total sales. Therefore, the assessee had made two business trades of bangles and shares. In view of provision of section 44AB the assessee was required to get audited its accounts before the specified date and furnish by that date the report of such audit in the prescribed form duly signed and verified by such accounts and setting fourth such particulars as may be prescribed. As per explanation (ii) of section 44AB specified date in relation to the accounts of the assessee of the previous year relevant to an assessment year, means the due date for furnishing the return of income under sub-section (1) of section 139. The assessee has failed to get his accounts audited under Section 44AB of the Income Tax Act. Therefore, it was clear that the assessee had violated the provision of section 44AB of the Income Tax Act, 1961, hence, penalty under Section 271B was levied.

Vishal Gupta, on behalf of the assessee submitted that, the department had already levied and confirmed the penalty under Section 271A, being the penalty for failure to maintain or retain books of accounts if so then the levy of penalty under Section 271B was incorrect.

Monisha Choudhary on behalf of the revenue submitted that the assessee had even though liable to get his books of account failed to do so and the levy of penalty was correct and the same be upheld. 

The Division Bench of S. Seethalakshmi, (Judicial Member) and Rathod Kamlesh Jayant bhai, (Accountant Member) allowed the appeal and deleted the penalty observing 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 u/s 44AB of the Act and therefore, the penalty levied u/s 271B is not justified.”

Bhawani Shankar Gupta vs ITO CITATION:   2023 TAXSCAN (ITAT) 745


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