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Issues involved: Appeal against penalty u/s 271A of the Income-tax Act, 1961 for assessment year 2006-07.
The appellant, an individual engaged in marketing machine tools and other items, filed a return declaring commission income on a presumptive basis u/s 44AF at 5%. During scrutiny, it was found that section 44AF applied only to retail business, not to the appellant's business. The Assessing Officer determined the net income at &8377; 37,25,096/- and taxable income at &8377; 39,24,680/-, higher than the declared amounts. A penalty of &8377; 25,000/- was imposed for non-maintenance of books of account u/s 44A(2)(i), which was upheld by the Commissioner of Income-tax (Appeals). The appellant contended that there was a genuine belief that books of account were not required and cooperated in recalculating income upon realizing the error. It was argued that there was a reasonable cause for the failure to maintain regular books of account, and thus, the penalty should be deleted. After careful consideration, the Tribunal found no reason to uphold the penalty as the appellant's bona fide belief was not disputed. Referring to sections 273B and 271A of the Act, the Tribunal set aside the Commissioner's order and directed the Assessing Officer to delete the penalty of &8377; 25,000/-. In conclusion, the appellant's appeal was allowed, and the penalty was removed by the Tribunal.
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