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Facts
The assessee, an AOP, failed to file an income return for AY 2018-19. Based on information about cash deposits and expenditures, reassessment proceedings were initiated, leading to a substantial addition under Section 69C, which was upheld by the CIT(A). The assessee also faced penalties under Section 271B for not auditing accounts and under Section 271AAC(1) consequential to the quantum addition.
Held
For the quantum addition (ITA 405), the issue was remanded to the Assessing Officer to provide the assessee, an association of illiterate persons, a proper opportunity to represent its case. The penalty under Section 271B (ITA 406) was deleted as the actual brokerage receipts, which constituted turnover, were below the threshold for mandatory audit under Section 44AB. The consequential penalty under Section 271AAC(1) (ITA 407) was also remanded as it depended on the outcome of the reassessment proceedings.
Key Issues
1. Whether the quantum addition under Section 69C was justified given the assessee's claim of illiteracy and partial compliance. 2. Whether the penalty under Section 271B for non-audit was valid when actual brokerage turnover was below the Section 44AB threshold. 3. Whether the consequential penalty under Section 271AAC(1) could stand independently after the main assessment was remanded.
Sections Cited
147, 148, 143(2), 142(1), 69C, 115BBE, 271B, 44AB, 271AAC(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: Shri Inturi Rama Rao & Shri Sonjoy Sarma
O R D E R Per Sonjoy Sarma: All the captioned appeals have been preferred by the assessee against separate orders by the National Faceless Appeal Centre [hereinafter referred to as ‘CIT(A)’] dated 06.03.25 and 07.03.25 arising out of assessment and penalty proceedings relating to assessment year 2018-19. Since, the issue involved in the appeals are interlinked and are arising from the same set of facts, therefore, these appeals were heard together and are being disposed of by this common order. For the sake of convenience, is taken as lead case.
to 407/Coch/2025 Lorry Transport Agencies Union 2. - Brief facts of the case are that the assessee is a AOP and has not filed return of income for the assessment year 2018-29. Based on information available, it was found that there was a cash deposit of Rs.6,89,810/- and cash expenditure of Rs.1,02,63,000/-. Consequently, proceedings u/s 147 were initiated and notice u/s 148 was issued and in response, the assessee filed a return of income declaring income of Rs.5,854/-. Subsequently, statutory notices u/s 143(2) and 142(1) were issued and after getting partial response from the assessee, the Assessing Officer treated the said cash expenditure of Rs.1,02,63,000/- as unexplained u/s 69C r.w.s 115BBE of the Act by assessing total income of the assessee at Rs.1,09,58,664/-.
Aggrieved by the above order, the assessee preferred an appeal before the ld. CIT(A), however, the appeal of the assessee was dismissed by the ld. CIT(A)
Dissatisfied with the above order, the assessee is in appeal before this Tribunal raising various ground. However, the primary contention of the assessee is that the assessee association is based on illiterate persons not familiar with online compliance, therefore, the assessee could partially make compliance with the notices and due to this lacking of awareness, the Assessing Officer made the impugned addition and confirmed by the ld. CIT(A). The ld. AR prayed one more opportunity may be given to the assessee to properly represent its case.
On the other hand, the ld. DR supported the orders of the authorities below.
We, after hearing the submission of the ld. DR and perusing the materials available on record, find that the assessee to 407/Coch/2025 Lorry Transport Agencies Union association is based on illiterate persons not familiar with online compliance, therefore, the assessee could partially make compliance with the notices before the Assessing Officer and also ld. CIT(A) and due to this lacking of awareness itself, the Assessing Officer made the impugned addition. Therefore, in the interests of justice and fair play, we deem it necessary to remand back the whole issue to the file of the Assessing Officer with a direction to re-examine the issue afresh in accordance with law after giving proper and due opportunities of hearing to the assessee.
In terms of the above, is allowed for statistical purposes. this appeal, the Assessing Officer levied penalty u/s 271B of the Act for allegedly failure to get its accounts audited u/s 44AB of the Act. Since, the assessee is a AOP lorry brokers receiving brokerage payments from its transporters and the Assessing Officer was in belief that the entire payments were the turnover of the assessee and therefore, he levied the impugned penalty. The contention of the ld. AR is that the total credit amount in the bank account includes receipts of transporters and the same were not actually turnover of the assessee, therefore, the penalty u/s 271B of the Act is not sustainable. ld. DR supported the orders of the authorities below. We find that the actually receipts by way of commission/brokerage which were received by the assessee were below the limit prescribed u/s 44AB. Since the brokerage received by the assessee was below the prescribed limited, therefore, there is no requirement to get the accounts audited and hence the penalty u/s 271B is not sustainable and is hereby deleted.
In this appeal, a penalty proceedings were initiated u/s 271AAC(1) of the Act which is consequential to the quantum addition made in ITA No.405/Coch/2025. Since, we already set aside the to the file of the Assessing Officer, therefore, the impugned penalty u/s 271AAC(1) cannot be survive at this stage. Accordingly, the instant appeal is remanded back to re- consider the penalty as it is depending on the outcome of the re- assessment proceedings in ITA No.405/Coch/2025.
Order pronounced on 10.06.2025.