DINESH KISHOR GOGIYA,ULHASNAGAR vs. ITO WARD 2(1) KALYAN, KALYAN

ITA 4250/MUM/2025Status: DisposedITAT Mumbai29 December 2025AY 2015-1610 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty under section 271B was not sustainable. The core issue was the interpretation of 'turnover' or 'gross receipts' for section 44AB, given the assessee's role as a commission agent. The Tribunal noted that for commission agents (kachha arhatiyas), only the commission earned constitutes turnover for section 44AB, as clarified by CBDT Circular No. 452. The assessee's explanation that bank deposits represented funds collected for principals, not his own turnover, was accepted. The Tribunal found no material on record to suggest the assessee was a pucca arhatiya or that the deposits were his sales. The burden shifted to the Revenue to disprove the assessee's explanation, which it failed to do. Since the assessee's actual turnover (commission income) did not exceed the threshold under section 44AB, the obligation to get accounts audited did not arise. Consequently, the penalty under section 271B, which is contingent on a failure to comply with section 44AB, could not be sustained. The penalty of Rs. 1,50,000/- was deleted.

What were the facts?

The assessee, Dinesh Kishor Gogiya, is appealing an order dated April 30, 2025, passed by the National Faceless Appeal Centre, Delhi, which confirmed a penalty of Rs. 1,50,000/- levied under section 271B of the Income-tax Act, 1961, for the assessment year 2015-16. The penalty was imposed for alleged failure to get accounts audited as required under section 44AB. The assessee, engaged in commission agency (kachha arhatiya), filed his return declaring Rs. 3,04,200/-. The Assessing Officer completed assessment under section 147 read with sections 144 and 144B, noting deposits of Rs. 3,13,25,504/-. The AO treated these as gross receipts, estimated income, and initiated penalty proceedings under section 271B. The CIT(A) confirmed the penalty, stating the deposits exceeded the threshold under section 44AB.

What were the issues?

1. Whether the penalty of Rs. 1,50,000/- levied under section 271B of the Income-tax Act, 1961, for the assessment year 2015-16 is sustainable, considering the assessee's business as a commission agent and the nature of bank deposits, turning on the interpretation of 'turnover' or 'gross receipts' for the purpose of section 44AB. Assessee's contentions: - The assessee acted solely as a commission agent (kachha arhatiya), collecting sale proceeds on behalf of principals and retaining a commission. - Bank deposits did not represent the assessee's turnover but were collections made for principals. - Section 44AB was not applicable as the commission earned did not exceed the prescribed threshold. - Similar penalties for earlier years were dropped, and quantum proceedings were set aside. - Relied on CBDT Circular No. 452 dated March 17, 1986. Revenue's contentions: - Relied on the orders of the authorities below (AO and CIT(A)).

Which sections of the Income-tax Act were involved?

Section 271B,Section 44AB,Section 147,Section 144,Section 144B,Section 44AA,Section 44AD

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘D’ BENCH MUMBAI

Before: SHRI AMIT SHUKLA & SHRI ARUN KHODPIA

PER AMIT SHUKLA (J.M): This appeal has been preferred by the assessee against the order dated 30 April 2025 passed by the National Faceless Appeal Centre, Delhi, whereby penalty of Rs.1,50,000/- levied under section 271B of the Income-tax Act, 1961, for the assessment year 2015–16, has been confirmed.

2.

The assessee is aggrieved solely by the levy and confirmation of penalty on the allegation that he failed to get his accounts audited as required under section 44AB of the Act.

3.

Briefly stated, the assessee filed his return of income for the relevant assessment year declaring total income of Rs. 3,04,200/-. The assessee claimed to be engaged primarily in the business of commission agency, oper

The order continues below.

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