2024 (6) TMI 973 - AT - Income Tax

Levy of penalty u/s 271B - non-production of books of accounts and not getting the books of accounts audited u/s 44AB - HELD THAT - The assessee did not maintain books of account. As he did not maintain books of account, no question for producing the books of account before the Tax Authority will arise. The assessee violated section 44AA of the Act and for this action, penalty is levied u/s. 271A of the Act. However, the Tax authorities levied penalty u/s 271B of the Act due to non-submission of books of account. As no books of accounts were maintained by the assessee he could not produce books of account before the Tax authority and therefore, no question will arise for production of books of account. Thus penalty imposed by Ld. A.O u/s 271B of the Act is erroneous. Accordingly, we direct ld. AO to delete the impugned penalty. Assessee appeal allowed.

Summary

Issues involved:
The judgment involves the levy of penalty under section 271B of the Income-Tax Act, 1961 for Assessment Years 2013-14 and 2014-15.

Adjudication of the Appeal in ITA No.1199/Chny/2023:
The case pertains to a Real Estate business assessed to income tax, where a penalty was imposed under section 271B for failure to get accounts audited u/s 44AB. The appellant contended that the penalty was unjustified, citing non-maintenance of proper books of accounts. The Commissioner (Appeals) upheld the penalty, leading to the appeal before the Tribunal.

Key Details:
- A survey operation revealed cash deposits and investments by the assessee.
- The assessee estimated income at 4% of gross receipts due to lack of proper books of accounts.
- The Assessing Officer (AO) estimated income at 8% of gross receipts, resulting in additional income.
- Penalty proceedings u/s 271B initiated and a penalty of Rs. 1,50,000/- imposed.
- The appeal before the CIT(A) was dismissed, prompting the present appeal before the Tribunal.

Tribunal's Observations:
- The Tribunal considered the distinction between non-maintenance and improper maintenance of books of accounts.
- The appellant did not maintain books of accounts for the relevant assessment years.
- The obligation to maintain proper books of accounts under section 44AA is crucial for correct income assessment.
- The Tribunal referenced a Chennai Tribunal decision and a Guwahati High Court case supporting the assessee's position.
- As the assessee did not maintain books of accounts, the penalty under section 271B was deemed erroneous.
- The Tribunal directed the AO to delete the imposed penalty in both appeals.

Conclusion:
The Tribunal allowed both appeals, emphasizing that the penalty under section 271B was unwarranted due to the non-maintenance of books of accounts, as per the provisions of the Income-Tax Act.

This summary encapsulates the legal judgment involving the levy of penalty under section 271B of the Income-Tax Act, 1961, highlighting the key issues, details, adjudication process, tribunal's observations, and the ultimate conclusion reached in favor of the appellant.