STERLING AND WILSON CO-GEN SOLUTIONS PRIVATE LIMITED,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 16(2), MUMBAI, AAYAKAR BHAWAN,MUMBAI

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ITA 821/MUM/2026Status: DisposedITAT Mumbai15 June 2026AY 2022-235 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the penalty, stating that the assessee's claim of turnover being below the threshold was a bald assertion. The repeated failure to produce books of account prevented verification of the conditions for exemption from tax audit.

What were the facts?

The assessee's turnover was Rs. 9,22,63,726/-, which was below the Rs. 10 crore threshold for mandatory tax audit. However, the Assessing Officer initiated penalty proceedings under Section 271B for failure to get books of accounts audited, as the assessee did not produce them for verification.

What were the issues?

Whether penalty under Section 271B is leviable when the assessee fails to produce books of account to substantiate claims for exemption from mandatory tax audit under Section 44AB.

Which sections of the Income-tax Act were involved?

Section 271B,Section 44AB

AI-generated summary — verify with the full judgment below

Before: SMT. BEENA PILLAI & SHRI PRABHASH SHANKAR

For Appellant: Shri Dipesh Ruparelia, AR
For Respondent: Shri Swapnil Choudhari, (Sr. AR.)
Hearing: 16.04.2026Pronounced: 15.06.2026

आदेश / O R D E R PER PRABHASH SHANKAR [A.M.]:- The present appeal emanating from the appellate order dated 30.11.2025 is preferred by the assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to the penalty order passed u/s. 271B of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 29.03.2024 for the Assessment Year [A.Y.] 2022-23.

ITA No. 821/Mum/2026; Sterling & Wilson Co-Gen Solutions Pvt. Ltd. 2. The assessee has filed as many as twelve grounds on the single issue of penalty imposed u/s 271B of the Act, inter alia claiming that the ld.CIT(A). erred in confirming the penalty without appreciating that the assessee’s turnover was below the prescribed threshold of Rs 10 cr., ignoring the audited financial statements and in holding that the assessee had failed to produce the books of accounts for verification without appreciating the fact that the books of accounts and all contents therein were duly verified and accepted during the course of original assessment proceedings itself and also in not appreciating the fact that the cash book and all the bank statements furnished by the assessee were sufficient to prove that more than 95% of the gross receipts had been received by it through normal banking channels and 95% of the expenses had been paid by the assessee through normal banking channels. 3. Brief facts of the case are that the assessee filed its return of income declaring losses of Rs. 9,18,16,846/-.As per the audited financials of the total turnover of the assessee had been disclosed as Rs.9,22,63,726/-. Thereafter, assessment order was passed under section 143(3) of the by assessing loss at Rs.8,50,53,059/- and the AO initiated penalty proceedings under section 271B of the Act for not getting the books of accounts audited as per the provisions of section 44AB of the Act. The reply of the assessee was not found satisfactory. During penalty proceedings, the assessee was requested to produce books of accounts like cash book, bank book, Sales Register and general ledger for verification to ascertain the claim of the assessee which was not complied and books of accounts were not produced despite subsequent notices as well. The AO therefore, concluded that the assessee failed to produce the books of 2

ITA No. 821/Mum/2026; Sterling & Wilson Co-Gen Solutions Pvt. Ltd. accounts for verification as called for. As per the provisions of section 44AB, of the Act, the books of accounts need not be audited, if the gross receipts from business or profession are less than Rs. 10 cr. and 95% of the same were received through banking channels and 95% of the expenses were paid through banking channels. He further observed that in the absence of bank book, sales register and ledger, the details of sales or turnover could not be verified or ascertained as to whether 95% of the same were received through banking channels or not. Further, the details of expenses could not be verified as to whether 95% of the same were paid through banking channels during the relevant assessment year or subsequent to the assessment year. The bank statements of the assessee for the relevant assessment year did not contain these details and their transactions could not be deciphered in the absence of ledger accounts. In the absence of any details regarding the sales or turnover, it could not be ascertained whether 95% of the gross business receipts were received through banking channels. Also, it could not be ascertained whether 95% of the expenses were paidthrough banking channels or not. In the absence of any details and evidences, the explanation of the assesseewas rejected and the penalty u/s 271B of the Act amounting to Rs. 1,50,000/- was levied.

4.

Aggieved, the assessee filed appeal before the ld.CIT(A) reiterating the same contention as made before the AO. He however, rejected the contention with the observations that the assessee had not produced the core primary books of account i.e. the ledger, sales register and bank books, despite

ITA No. 821/Mum/2026; Sterling & Wilson Co-Gen Solutions Pvt. Ltd. specific and repeated requisitions made by the Assessing Officer who categorically recorded that: “in the absence of bank book, sales register and ledger, the details of sales or turnover could not be verified or ascertained as to whether 95% of the same were received through banking channels or not… the bank statements do not contain these details and transactions could not be deciphered in the absence of ledger accounts.” Thus, the assessee had failed to discharge the onus of establishing the factual preconditions of the provision these circumstances. He therefore, upheld the penalty.

5.

Before us, the ld.AR has reiterated the same contentions claiming that the total turnover of the assessee had not exceeded Rs. 10 cr. and was Rs. 9,22,63,726/- and 95% thereof were received through banking channels. Further, no part of the turnover of the assessee had been earned in cash as total turnover has been realized through the bank account of the assessee. It is carrying on business and its profits are not taxed under ay presumptive sections, clause(a) of section 44AB shall apply to the assessee. As per proviso to clause (a) of section 44AB, from AY 2021-22 onwards, an assessee was covered by tax audit only if its turnover exceededRs.10 cr. As the turnover of the assessee was less than the threshold amount, the provisions of tax audit were not applicable and penalty was not justified. 6. On careful consideration of the relevant facts of the case,it is quite apparent that the contentions of the assessee that its turnover was less than Rs 10 cr. was merely a bald assertion which could be examined by the lower authorities on account of assesses repeated failure to produce the relevant

ITA No. 821/Mum/2026; Sterling & Wilson Co-Gen Solutions Pvt. Ltd. books of account before them. The assessee has been non committal on the reasons for such non production before the AO who required to examine whether the receipts received by way of cash or cheque and made no effort to produce even before the appellate authorities. In such a situation, the authorities below have rightly concluded that the assessee was liable to get the accounts audited which it failed to demonstrate. We do not find any infirmity in the appellate order and uphold the same, dismissing the grounds of appeal filed. 7. Consequently, the appeal filed by the assessee is dismissed. Order pronounced in the open court on 15/06/2026.

Sd/- Sd/- BEENA PILLAI PRABHASH SHANKAR (न्याययक सदस्य /JUDICIAL MEMBER) (लेखाकार सदस्य/ACCOUNTANT MEMBER)

Place: म ुंबई/Mumbai ददनाुंक /Date 15.06.2026 Soumili Das / PS आदेश की प्रयियलयि अग्रेयिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER,

उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीलीअयधकरण 5

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