2022 (11) TMI 735 - HC - Income Tax

Levy of penalty u/s 271B - default u/s 44AB - failure to get accounts get audited - appellant had not complied with the provisions of Section 44AB of the Act i.e., by submitting audited accounts - HELD THAT - Tribunal noticed that subsequent to notice issued by the assessing officer for levy of penalty u/s 271B of the Act, appellant had claimed that he was under a genuine belief that his turnover had not crossed Rs.40 lakhs and therefore he need not get his accounts audited. It may be mentioned that the entertainment tax return of the appellant showed his turnover at Rs.3,37,70,270.00. Contradictory stand of the appellant when he contended that due to seizure of books by the sales tax authorities, audit of accounts under Section 44AB of the Act got delayed. Additionally Tribunal held that appellant did not file the income tax return voluntarily but it was in response to a notice under Section 148 of the Act. Tribunal confirmed the levy of penalty. We do not find any error or infirmity in the view taken by the Tribunal. No substantial question of law.

Summary

Issues:
1. Validity of penalty under Section 271B of the Income Tax Act, 1961 for non-compliance with Section 44AB.

Analysis:
The appellant, an assessee under the Income Tax Act, challenged the order of the Income Tax Appellate Tribunal confirming the penalty of Rs.1,00,000 imposed by the assessing officer for not submitting audited accounts as required under Section 44AB. The main question before the court was whether the Tribunal was justified in upholding the penalty. The appellant, who was a Bookie at Hyderabad Race Club, claimed that he believed his turnover had not crossed Rs.40 lakhs and, therefore, he was not required to get his accounts audited. However, the Tribunal found this claim contradictory as the appellant's entertainment tax return showed a turnover of Rs.3,37,70,270. The Tribunal also noted that the appellant's filing of the income tax return was in response to a notice under Section 148, not voluntary.

The Tribunal considered the appellant's argument that the delay in auditing accounts was due to the seizure of books by sales tax authorities. However, the Tribunal dismissed this argument as contradictory to the appellant's genuine belief regarding his turnover. The Tribunal emphasized that the appellant's payment of entertainment tax on a turnover of Rs.3,37,70,270 contradicted his claim of not crossing the threshold for audit requirements. The Tribunal upheld the penalty based on these findings and the appellant's failure to provide sufficient evidence to support his claims.

The High Court, after considering the Tribunal's reasoning, found no error or legal issue in the Tribunal's decision. The Court concluded that no substantial question of law arose from the Tribunal's order and dismissed the appeal. The Court also stated that there would be no order as to costs, and any pending miscellaneous applications would stand closed.