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2015 (10) TMI 1507 - AT - Income TaxPenalty u/s. 271B - failure to get accounts audited - Held that - AO had to take permission from the Joint Commissioner before levying the penalty as the amount of penalty exceeded ₹ 10,000/-. There is nothing in the order of the penalty which could show that the ITO has taken prior permission from the Joint Commissioner. When a statute required a thing to be done in a certain manner, it shall be done in that manner alone. When a particular authority has been designated to record his satisfaction on any particular issue, then it is that authority alone who should apply his independent mind to record his satisfaction and satisfaction so recorded should be independent and not borrowed or dictated satisfaction. Considering the facts of the case, in the light of the provisions of Sec. 274 of the Act, we have no hesitation to hold that the AO has levied penalty incontravention to the provisions of Sec. 274 of the Act and, therefore, the order of the First Appellate authority is liable to be set aside. We direct the AO to delete the penalty so levied. - Decided in favour of assessee.
Issues:
Penalty u/s. 271B of the Income Tax Act - Confirmation by Ld. CIT(A) - Compliance with Sec. 274 - Permission from Joint Commissioner for penalty exceeding Rs. 10,000. Analysis: Issue 1: Confirmation of Penalty u/s. 271B by Ld. CIT(A) The appeal pertains to the confirmation of penalty u/s. 271B of the Income Tax Act by the Ld. CIT(A). The assessee, a garment trader, failed to get its accounts audited despite the turnover exceeding the prescribed limit under Sec. 44AB of the Act. The penalty proceedings were initiated, and the AO levied a penalty of Rs. 77,927. The Ld. CIT(A) upheld the penalty, leading to the appeal. Issue 2: Compliance with Sec. 274 for Penalty Imposition The appellant contended that since the quantum additions had been set aside, no penalty should be levied. However, the Tribunal disagreed, stating that the imposition of penalty under Sec. 271B is independent of the quantum additions. The AO had levied the penalty without obtaining prior permission from the Joint Commissioner, as required by Sec. 274 for penalties exceeding Rs. 10,000. The Tribunal found this to be a violation of the statutory provisions. Judicial Interpretation and Decision The Tribunal analyzed the provisions of Sec. 274, emphasizing the requirement for the AO to seek prior approval from the Joint Commissioner for penalties exceeding Rs. 10,000. The absence of such permission rendered the penalty imposition invalid. The Tribunal held that when a statute mandates a specific procedure, it must be strictly followed. As the AO failed to obtain the necessary permission, the penalty imposed was deemed contrary to the law. Consequently, the Tribunal set aside the order of the Ld. CIT(A) and directed the AO to delete the penalty levied under Sec. 271B. In conclusion, the appeal filed by the assessee was allowed, highlighting the importance of adherence to procedural requirements, such as obtaining prior approval for penalties exceeding specified limits as per Sec. 274 of the Income Tax Act.
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