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

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ITA 5546/DEL/2018Status: DisposedITAT Delhi07 March 2022AY 2014-155 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the assessee's entire income was exempt under Section 10(26AAB) and there was no business income, its belief that an audit was not required was bona fide. Therefore, the penalty under Section 271B was not justified.

What were the facts?

The assessee, a market committee registered under Section 12AA, failed to get its accounts audited under Section 44AB and file the audit report. The Assessing Officer imposed a penalty under Section 271B for this failure.

What were the issues?

Whether penalty under Section 271B is leviable when the assessee has a bona fide belief that audit under Section 44AB was not required due to exempt income.

Which sections of the Income-tax Act were involved?

Section 44AB,Section 271B,Section 273B,Section 10(26AAB)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘G’, NEW DELHI

Before: SHRI SAKTIJIT DEY & DR. BRR KUMARR

For Respondent: Shri Umesh Takyar, Sr. DR
Hearing: 07.03.2022Pronounced: 16.03.2022

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

2.

Briefly the facts are, assessee is a local authority and is 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.

3.

When the appeals were called for hearing, none appeared on 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.

4.

We have considered the submissions of the learned departmental representative and perused the material on record.

1.

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.

5.

Apparently, the aforesaid contention of the assessee has not 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.

6.

In the result, both the appeals are allowed.

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