THE MARKET COMMITTEE,ROHTAK vs. ACIT, ROHTAK CIRCLE, ROHTAK

PER SAKTIJIT DEY: JUDICIAL MEMBER: Captioned appeals by the assessee arise out of two separate

orders, both dated 20.06.2018, of learned Commissioner of Income-

Tax(Appeals), Rohtak, confirming the penalty imposed under

Section 271B of the Income-Tax Act, 1961 for assessment year

2014-15.

ITA Nos.5545 & 5546/Del.2016

registered under Section 12AA of the Act. Basically, the assessee is

engaged in regulating the marketing of agricultural produce and

profit on food grains, visiting market for collection of fees from

vegetable commission agents, food grains agents and others. For

the assessment years under appeal, the assessee filed its return of

income, declaring nil income. In course of assessment proceedings,

Assessing Officer noticed that though the assessee was required to

get its accounts audited under Section 44AB of the Act and file the

audit report along with its return of income, however, the assessee

failed to do so. Thus, he issued show-cause-notice to the assessee

requiring to explain why proceedings for imposition of penalty

under Section 271B of the Act, should not be initiated. After

initiating proceedings under Section 271B of the Act, the Assessing

Officer ultimately passed orders imposing penalty of Rs.1,50,000

under Section 271B of the Act in both the cases. Though, the

assessee challenging imposition of penalty before first appellate

authority, however, it was unsuccessful.

behalf of the assessee. Therefore, we proceed to dispose of these

appeals ex parte qua the assessee after hearing the learned senior

ITA Nos.5545 & 5546/Del.2016

departmental representative and based on material available on

record.

departmental representative and perused the material on record.

Undisputedly, assessee is a market committee and has been

granted registration under Section 12AA of the Act. It is also not

disputed that assessee’s income is exempt under Section 10(26AAB)

of the Income-Tax Act, 1961. It is observed, before the departmental

authorities, while responding to the show-cause-notice issued for

imposition of penalty under Section 271B of the Act, the assessee

had submitted that since there was no income to be computed

under the head “profit of business and profession”, there was no

requirement for the assessee to get its accounts audited under

Section 44AB of the Act.

found favour with the departmental authorities. However, non-

acceptance of assessee’s explanation, ipso facto, cannot lead to

imposition of penalty under Section 271B of the Act. This is so

because, section 271B of the Act is subject to the provisions of

Section 273B of the Act. Therefore, if the assessee can satisfactorily

explain that the default committed was not due to any deliberate

ITA Nos.5545 & 5546/Del.2016

laches or defiance of statutory provisions but due to bona fide

belief, no penalty can be imposed. In the facts of the present case,

considering that entire income of the assessee is exempt under

Section 10(26AAB) of the Act and there is no income to be

computed under the head “profit of business and profession”, in our

view, assessee’s contention that the accounts were not required to

be audited under Section 44AB of the Act is a bona fide claim. In

any case of the matter, in the peculiar facts of the case, whether the

accounts required to be audited, at least, is a debatable issue. That

being the case, in our considered opinion, imposition of penalty

under Section 271B of the Act is not justified. Accordingly, we

delete the penalty imposed in both the appeals. Grounds are

allowed.

Order pronounced in the open court on 16th March, 2022

Sd/- Sd/- (DR. BRR KUMAR) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated: 16th March, 2022. Mohan Lal