ANKIT CHAUHAN,DELHI vs. THE INCOME TAX OFFICER, WARD 36(1), DELHI, DELHI

This appeal by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] vide order dated 09-12-2024 pertaining to A.Y. 2014-15 arising out the penalty order date 29-06-2021 under section 271B of the Income Tax Act,1961, (in short ‘the Act’).

The assessee has raised the following grounds in appeal:

The brief fact of the case are that the assessee filed his return of income for the A.Y. 2017-18 on 28-07-2017 declaring total income of Rs. 2,49,466/-claiming the deduction u/s 80 TTA of the Act. The case of the assessee was selected for scrutiny under CASS with reason ‘large cash deposits during the year’. Notice u/s 143(2) of the Act was issued. The assessee filed his reply stating that he was an authorized dealer of Amul Milk and he started his business from 01-10-2016. The Ld. Assessing officer completed the assessment vide order dated 18-12-2029 under section 143(3) of the act after making the addition of 1,47,738/- and initiating penalty proceedings u/s 271B of the Act for his failure to get his books of account audited by a qualified chartered Accountant, thereby violating the provisions of section 44AB of the Act.

During the penalty proceedings, show cause notices were issued and reply filed by the assessee. After considering the reply submitted by assessee the penalty of Rs, 137285/- was imposed vide order dated 29-06-2021 under section 271B of the Act, against which the assessee filed the appeal before the NFAC, Delhi. Who dismissed the appeal.

During the assessment it was submitted that the daily proceeds received by the assessee were firstly deposited by him in the bank account maintained by him from where he transferred such deposits to Principal, i.e. Gujarat Co-operative Milk Marketing Federation Ltd. On the same day. The assessee also submitted that it was the first year of business of the assessee who was absolutely not aware that section 44AB is applicable to him. There was no willful default and mensrea for not getting the tax Audit done. He further submitted that no penalty shall be imposable on the person if he proves that there was reasonable cause for the failure as provided under section 273B of the Act.

The Ld. AR of the assessee reiterated the same arguments which were advanced before the Ld. CIT(A). He further submitted that the matter is covered in favour of the assessee by the order dated 22-05-2023 of the Co-ordinate Bench in the case of Mohammad Daud vs. ITO Ward -58 (1) in 2022for A.Y.2017-18. In this case the Co-ordinate bench in para 10 held as under;

The Ld. AR has also relied upon the followings, judgments:-

The Ld. DR however relied on the order of the Ld. CIT(A).

We have heard the parties and gone through the material available on record. In this case the assessee contended before the lower authorities, that the assessee is only an authorized dealer of Amul Milk and this fact was also confirmed by the GCMMF by mail. The assessment order reveals that the assessee explained in details the modus operandi of his business. The assessee sold the federation Milk and their milk products in the assigned area implying thereby that the assessee was providing the services and acted only on behalf of his principal for earing the fixed commission. This fact has not been appreciated in right perspective. The explanation offered by the assessee has been discarded by the Ld. CIT(A) without any valid and cogent reasons. We also find that the Co-ordinate Bench in the case of Mohammad Daud vs. ITO Ward -58(1) (supra) wherein under similar circumstances, have deleted the penalty. In view of the facts and circumstances and legal position of the case, penalty levied u/s 271B upheld by the Ld. CIT(A) /NFAC is quashed and we direct the Assessing officer to delete the penalty levied against the assessee.

In the result, the appeal filed by the assessee is allowed.