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2023 (11) TMI 1139 - AT - Income TaxPenalty u/s 271B - not getting the books of account audited u/s 44AB - as alleged cash deposits made exceeded the threshold limit as per section 44AB - CIT(A) held that since the assessee failed to get his accounts audited u/s 44AB treated the cash deposits as turnover of the assessee, though it was affected on behalf of the Principal and since the assessee was getting commission and discounts on such sales - HELD THAT - Principal i.e. Bharti Airtel Ltd. is liable to deduct tax at source. The service provider is responsible for collection of moneys from the post paid subscribers of Airtel, on behalf of Airtel in accordance with the terms of the Agreement and the Airtel shall pay the commission / incentives. The agent is liable to pay tax only on the commission / incentive received. AO levied penalty on the assessee as the cash deposit during the F.Y. 2016-17 exceeded the threshold limit u/s 44AB of the Act, treating the same as turnover of the assessee, though he is only an agent who provided services for the Principal. The only contention of the assessee is only an agent / service provider and he was under bonafide belief that he was not liable to get the books of accounts audited as the commission income was below the threshold limit and thus the assessee s case is covered u/s 273B. On similar set of facts, the decision was taken in favour of the assessee by the coordinate bench of the Tribunal in the case of Anunoy Mukherjee 2023 (2) TMI 1221 - ITAT KOLKATA as held assessee is receiving commission income and tax is deducted at source by the Telecom company treating the cash deposits as amount collected on behalf of the Telecom company from various customers and deposited in the bank account and commission on such deposits is given by the Telecom company. The reasons cited by assessee prima facie found to be reasonable because the assessee was under bonafide belief that he was not liable to get the books of accounts audited as the commission income was below the threshold limit and this was the first year of the business venture taken up by the assessee and thus assessee s case is covered u/s 273B. Thus we hold that the provisions of section 273B of the Act applies to the case of the assessee since the assessee has a reasonable cause for not getting the books of account audited and the penalty shall not be imposable on the assessee u/s 271B of the Act - Decided in favour of assessee..
Issues:
The judgment involves the issue of penalty levied under section 271B of the Income Tax Act, 1961 for not getting the books of account audited under section 44AB. Summary: The appellant, an individual operating as a service provider, appealed against the penalty imposed by the Assessing Officer (AO) under section 271B of the Act. The AO had levied a penalty of Rs. 92,181 as the cash deposits made during the year exceeded the threshold limit specified in section 44AB. The appellant contended that the cash deposits were collected on behalf of the Principal and were not part of his sales turnover. The Commissioner of Income Tax (Appeals) upheld the penalty, considering the cash deposits as the appellant's turnover. The appellant argued that he was only an agent/service provider and should not be penalized for not getting the accounts audited, as his commission income was below the threshold. The appellant cited a similar case decided in his favor by a coordinate bench of the Tribunal. The Tribunal observed the Master Service Provider Agreement between the appellant and the Principal, where the Principal was responsible for deducting tax at source. The Tribunal found merit in the appellant's argument that he had a reasonable cause for not getting the accounts audited, as the commission income was collected on behalf of the Principal. Relying on the provisions of section 273B of the Act, the Tribunal allowed the appeal, quashing the penalty imposed by the AO and directing deletion of the penalty. Decision: The Tribunal allowed the appeal of the assessee, quashing the penalty imposed under section 271B of the Income Tax Act, 1961, based on the reasonable cause for not getting the books of account audited as per section 44AB.
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