1996 (8) TMI 102 - HC - Income Tax

Levy of penalty u/s 271B - assessee did not maintain any books of account - HELD THAT - Maintenance of accounts is envisaged under section 44AA and on failure to do so the assessee shall be guilty and liable to be penalised under section 271A. Even after maintenance of books of account the obligation of the assessee does not come to an end. He is required to do something more, i.e., by getting the books of account audited by an accountant. But when a person commits an offence by not maintaining the books of account as contemplated by section 44AA the offence is complete. After that there can be no possibility of any offence as contemplated by section 44AB and, therefore, in our opinion, the imposition of penalty under section 271B is erroneous. Tribunal has overlooked this aspect of the matter. Of course, it is apparent from the records that the assessee failed to maintain the books of account as required under section 44AA and for that penalty is prescribed under section 271A. It is for the Tribunal to take action in accordance with law. Decided in favour of assessee.

Summary

The High Court held that the penalty imposed on the assessee under section 271B of the Income-tax Act was erroneous. The Tribunal overlooked that the offense of not maintaining books of account under section 44AA was complete, and therefore, penalty under section 271B was unwarranted. The Court ruled in favor of the assessee.