FAIRDEAL MEDICAL AND GENERAL STORES ,MUMBAI vs. INCOME OFFICER 24(1)(1), MUMBAI

1. Since the assessee did not file its return of income, a notice u/s 142(1) of the Act dated 10/12/2017 was issued and served upon the assessee calling the assessee to prepare true and correct return of income. However, the assessee did not file any return of income in response to the notice and the AO proceeded to assess u/s 144 of the Act and completed the assessment at Rs. 16,14,550/-. The basis for the assessed income was estimation of profit @ 18% of the estimated turnover of Rs. 1,58,26,454/-. The business profit was estimated at Rs. 28,48,762/- and after allowing reasonable expenses of Rs. 12,34,212/-, the income was assessed at Rs. 16,14,550/-. 4. Since the turnover of the assessee exceeded the prescribed amount for getting the books of accounts audited u/s 44AB of the Act, the AO initiated penalty proceedings and levied penalty u/s 271B of the Act at Rs.79,132/-. The assessee carried the matter before the ld. CIT(A) and pleaded that the quarrel in respect of quantum addition has been settled under the Vivaad Se Vishwaas Scheme and, therefore, no penalty should be levied. In alternative, it was strongly contended that since the assessee did not maintain any books of accounts, there was no question of getting the same audited. 5. After considering the facts and submissions, the ld. CIT(A) observed that immunity from penalty when the dispute has been settled under theVivaad Se Vishwaas Scheme, does not cover penalties that are not limited to quantum assessment like penalty u/s 271B, 271BA, and 271DA of the Act.

Before us, the ld. Counsel for the assessee reiterated what has been stated before the lower authorities. The ld. D/R strongly supported the findings of the AO/ld. CIT(A). 7. We have carefully considered the orders of the authorities below. It is an undisputed fact that the assessee did not maintain any regular books of accounts. We are of the considered view that separate penalty has been provided for non-maintenance of account i.e., u/s 271A of the Act. In our considered opinion, if the assessee does not maintain books of accounts, then it is not possible to get the books of accounts audited u/s 44AB of the Act. Our view is fortified by the decision of the Co- ordinate Bench in the case of Jaydev Bavalal Thummar vs. ITO [2024] 159 taxmann.com 1594 (Rajkot-Trib.) and Rajnikant Hargovinddas Sanadia vs. Income Tax Officer ITA No. 267/Rjt/2022. 8. The Hon’ble Allahabad High Court in the case of CIT vs. Bisauli Tractors [2008] 299 ITR 219 (All.), has held that “Separate penalty has been provided for non-maintenance of accounts, i.e., under section 271A of the Act and for not getting the accounts audited and not furnishing the audit report i.e., under section 271B of the Act. In the present case, the Assessing Officer did not impose penalty under section 271A of the Act and instead proceeded to impose penalty under section 271B of the Act. If a person has not maintained the accounts book or any accounts the question of its audit does not arise. In such an event the imposition of penalty under the provision contained in section 271A of the Act for the alleged non-compliance of section 44AA of the Act may arise but the provisions of section 44AB of the Act does not get violated in case where the accounts have not been maintained at all and, therefore, penal provisions of section 271B of the Act would not apply."

Finding parity of facts that the decisions of the Co-ordinate Benches (supra), and the decision of the Hon’ble Allahabad High Court (supra), we direct the AO to delete the impugned penalty. 10. In the result, appeal of the assessee is allowed. Order pronounced in the Court on 15th October, 2025 at Mumbai. (SAKTIJIT DEY) ACCOUNTANT MEMBER

अपीलाथ / The Appellant 2.  थ / The Respondent 3. संबंिधत आयकर आयु" / Concerned Pr. CIT 4. आयकर आयु")अपील (/ The CIT(A)- 5. िवभागीय ितिनिध ,आयकर अपीलीय अिधकरण, मुंबई /DR,ITAT, Mumbai, 6. गाड& फाई/ Guard file.