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2019 (3) TMI 1464 - AT - Income TaxPenalty u/s 271B - failure to get accounts audited u/s 44AB - statutory obligation to maintain books of accounts not adhered to - HELD THAT - AO himself recorded that no books were maintained by the assessee and penalty u/s 271B of the Act is to be imposed when any person fails to get his accounts audited. Admittedly there is no dispute that no books were maintained by the assessee and as rightly argued by the Ld.AR getting the same audited does not arise at all. Therefore, we find force in the arguments of AR and taking the support from the decision of Hon ble High Court of Allahabad in the case of CIT vs Bisauli Tractors 2007 (5) TMI 181 - ALLAHABAD HIGH COURT When there are no books of account, the question of their audit does notarise. If there is any fault in the matter, the said fault can be examined with reference to non-maintenance of Books of Account. There are certainly no defaults for not obtaining the said Audit Reports for years under consideration. The requirement of audit is in relation to the books maintained. When there are no books, there is nothing to audit. - We cancel the penalty imposed by the AO u/s 271B - Decided in favour of assessee.
Issues:
Whether CIT(A) was justified in confirming the penalty imposed by AO u/s 271B of the Income Tax Act. Analysis: The appeal was filed against the order passed by CIT(A)-14, Kolkata for AY 2013-14. The only issue to be decided was the justification of confirming the penalty imposed under section 271B of the Act. The assessee, engaged in the trading of Iron and Steel, declared a total income of ?3,86,050. The AO determined the income at ?8,06,820 under section 143(3) of the Act. The penalty proceedings were initiated by the AO as the assessee admitted to not maintaining any books of accounts. The total sales shown by the assessee were ?10,75,76,516, exceeding the limit requiring audit under section 44AB of the Act. The argument put forth by the Ld.AR was that since no books were maintained, there was no requirement for audit, and thus, no penalty should be imposed under section 271B. The Ld.AR relied on the decision of the Hon’ble High Court of Allahabad in CIT vs Bisauli Tractors [2008] 299 ITR 219 (All.). On the other hand, the Ld. DR contended that maintaining books of accounts is a statutory obligation, and hence, the penalty under section 271B was justified. The Tribunal observed that the AO confirmed that no books were maintained by the assessee, making it necessary to impose a penalty under section 271B for failing to get accounts audited. The Tribunal agreed with the arguments presented by the Ld.AR and referred to the decision of the Hon’ble High Court of Allahabad in the case of CIT vs Bisauli Tractors. The Tribunal concluded that when no books were maintained, there was no requirement for audit, and hence, the penalty under section 271B was not maintainable. Therefore, the order of CIT(A) confirming the penalty was set aside, and the penalty imposed by the AO under section 271B was canceled. Consequently, the appeal of the assessee was allowed.
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