2018 (11) TMI 211 - AT - Income Tax

Levy of penalty u/s 271B - assessee failed to get the accounts audited as per Section 44AB(a) - Held that - The assessee did not declare correct income in the return of income and that the assessee had not only income from plying of the six trucks but was also doing business of hiring trucks from which the assessee also earned business commission income and that is why the gross receipts of the assessee has exceeded ₹ 1 crore. Since the gross receipts of the assessee have admittedly exceed ₹ 1 crore, therefore, provisions of Section 44AB(a) clearly apply in the case of the assessee. The other provisions contained u/s 44AB(b,c,d) would not apply in the case of the assessee. Since the assessee failed to get the accounts audited as per Section 44AB(a) of the Act, therefore, assessee is liable for penalty u/s 271B of the Act. The assessee did not make out any case of reasonable cause so as to claim immunity from the penalty. - Decided against assessee.

Summary

Issues:
Challenge to penalty u/s 271B of the Act for AY 2009-10.

Analysis:
The appeal was against the penalty imposed under section 271B of the Act for Assessment Year (AY) 2009-10. The case involved discrepancies in the income declared and the receipts shown in Form 26AS traces. The Assessing Officer (AO) reopened the case under section 147 of the Act due to undisclosed TDS and receipts. The AO calculated the net income at 4.5% of total receipts, resulting in an addition to the returned income. The penalty proceedings were initiated as the accounts were not audited under section 44AB of the Act. The assessee argued that income was declared under section 44AE as the owner of six trucks, hence no audit was required. However, the AO and CIT(A) held that since the gross receipts exceeded ?1 crore, the audit was mandatory under section 44AB(a). The CIT(A) confirmed the penalty under section 271B as the assessee failed to get the accounts audited, leading to the dismissal of the appeal.

The key point of contention was whether the assessee was liable for penalty under section 271B for failing to get the accounts audited under section 44AB of the Act. The assessee claimed that owning six trucks and declaring income under section 44AE exempted them from audit requirements. However, the authorities found that the total receipts exceeded ?1 crore, necessitating audit under section 44AB(a). The CIT(A) upheld the penalty, emphasizing that the assessee's business activities included not only owning trucks but also hiring vehicles, resulting in gross receipts surpassing ?1 crore. The failure to audit the accounts as mandated by law led to the confirmation of the penalty under section 271B.

In conclusion, the appeal challenging the penalty under section 271B for AY 2009-10 was dismissed. The authorities found that the assessee's failure to get the accounts audited under section 44AB of the Act, despite gross receipts exceeding ?1 crore, warranted the penalty. The CIT(A) affirmed the penalty, highlighting the assessee's business activities beyond owning trucks, which led to the gross receipts discrepancy. The penalty under section 271B was upheld, and the appeal was deemed meritless.