2020 (5) TMI 350 - AT - Income Tax

Penalty u/s 271B - Failure to get account Audited - Determination of turnover of the Business and Profession - AO invoked the provisions of section 44AB - assessee s accounts are not audited despite the eligible turnover of professional receipts AND no audit report is submitted - if the assessee is a medical professional or a business woman? - HELD THAT - It is an undisputed fact that the assessee is a qualified doctor, a Gynecologist and Anesthetist. She runs a nursing home. It is also admitted fact that the assessee attends to the patients and treats them in OPD and others. Therefore, mere running a nursing home/hospital does not convert a medical doctor into a business woman. Running a nursing home by her alone is a part of the medical profession. It is a different way of conducting her medical profession. Further, we find it is not the case of the assessee that she received salary from a hospital and there is no service agreement to support such an arrangement. Therefore, on this limited issue, we are of the considered opinion that the assessee is covered by provisions of section 44AA of the Act. Appellant is a Gynecologist and also runs proprietary concern named as Indira Maternity Home. There is no difference between the professional receipt of an individual and professional receipt of her proprietary concern as basically she is a professional. Therefore, it cannot be said that receipt of the appellant was in the nature of business receipt. Appellant is a professional who is running a proprietary concern and therefore receipt of the proprietary concern is also a professional receipt. Accordingly no merit in the submission of the appellant and penalty levied under Section 271B is upheld. It is self-explanatory and the order of the CIT(A) is fair and reasonable on this issue and it does not call for any interference. Accordingly, the ground raised by the assessee is dismissed.

Summary

Issues:
Penalty under section 271B of the Income Tax Act, 1961 for failure to maintain audited accounts.

Analysis:
The appeal was filed against the order of the CIT(A) confirming the penalty of ?16,376/- imposed by the Assessing Officer under section 271B of the Income Tax Act, 1961. The Assessing Officer initiated penalty proceedings due to the non-audit of the assessee's accounts despite eligible turnover of professional receipts. The Assessing Officer invoked section 44AB and imposed the penalty, which was upheld by the CIT(A). The main contention was whether the assessee, a medical practitioner running a maternity home, should be considered a professional or a businesswoman for the purpose of audit requirements.

The assessee argued that since the turnover was below the threshold limits prescribed for business, the audit requirement did not apply. It was contended that the assessee conducts a business, not a profession, and therefore, the provisions of section 44AA/44AB did not apply. On the other hand, the Revenue argued that the assessee, being a medical professional, should maintain books of accounts as required for professionals. The Revenue contended that the turnover of ?32,75,261/- attracted the provisions of section 44AB r.w.s. 271B of the Act.

The Tribunal analyzed the facts and concluded that the assessee, a qualified doctor running a nursing home, was engaged in the medical profession, not business. The Tribunal noted that running a nursing home was part of the medical profession and did not convert the doctor into a businesswoman. It was observed that the assessee treated patients directly without a service agreement with a hospital. Relying on precedents and the facts of the case, the Tribunal upheld the CIT(A)'s decision and dismissed the appeal, stating that the assessee was covered by the provisions of section 44AA of the Act.

The Tribunal found the order of the CIT(A) fair and reasonable, and upheld the penalty under section 271B. The appeal of the assessee was dismissed, and the order was pronounced on February 13, 2020.