NEETA DINESHKUMAR SALECHA,AHMEDABAD vs. THE ITO, WARD-5(3)(4), AHMEDABAD

Sole grievance of the assessee is that the ld.CIT(A) has erred in confirming the penalty of Rs.1,50,000/- imposed by the AO under section 271B of the Income Tax Act, 1961.

Brief facts of the case are that the assessee has filed her return of income on 29.11.2014 declaring total income at Rs.5,00,180/-. The facts emerging out from the record indicate that at the relevant time, the assessee was running two proprietorship concerns viz. M/s.Shree Sharada Feb Tex

2 and M/s.Ganesh Trading Company. She has filed tax audit report under section 44AB with regard to the account of M/s.Shree Sharada Feb Tex. However, during the course of assessment proceedings, it came to the notice of the AO that the assessee is proprietor of M/s.Ganesh Trading Company also, which was having bank account with Progressive Mercantile Cooperative Bank Ltd. Qua this firm, the assessee has not got account audited. The AO passed assessment order on 30.12.2016 under section 143(2) of the Act. He initiated penalty proceedings for not getting the accounts audited with regard to M/s.Ganesh Trading Company. Ultimately, after hearing the assessee he imposed a minimum penalty of Rs.1,50,000/-. Appeal to the CIT(A) did not bring any relief to the assessee.

Before us, the ld.counsel for the assessee contended that no doubt the assessee has maintained account for M/s.Shree Sharada Feb Tex. Audit report submitted along with return. The AO has not disputed this fact, and the ld.counsel for the assessee took us through first page of the assessment for buttressing his contention. With regard to M/s.Ganesh Trading Company he submitted that by mistake the bank account maintained by this concerned remained to be included in the audit accounts, and its accounts were not audited because books were not maintained. According to the ld.counsel for the assessee, if the books are not being maintained, then it is impossible for an assessee to get them audited. Therefore, there should not be any penalty under section 271B upon the assessee. He relied upon the following decisions:

On the other hand, the ld.DR contended that for exonerating one penalty, the assessee cannot take plea of another default. On the one hand, she has not disclosed the accounts to the department, and on the other hand she is trying to absolve herself from levy of penalty under the argument that the accounts were not maintained.

We have duly considered rival submissions and gone through the record carefully. For not maintaining accounts, penalty is required to be imposed under section 271A. The ld.AO ought to have initiated penalty under this section. But once the assessee has been submitting that she is not maintaining any accounts for any concern, then she cannot be expected to get them audited. It is a plausible argument. Judgments relied upon by the ld.counsel for the assessee are to this effect. We allow the appeal of the assessee and delete penalty.

In the result, appeal of the assessee is allowed.