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Facts
The assessee did not maintain books of accounts for the Assessment Year 2017-18 due to an accident involving their accountant. A penalty was imposed under section 271A of the Income Tax Act for this non-maintenance.
Held
The Tribunal held that once a penalty has been imposed under section 271A for non-maintenance of books of accounts, a penalty under section 271B for non-furnishing of an audit report cannot be levied. This decision was based on High Court pronouncements.
Key Issues
Whether penalty under Section 271B can be imposed for non-furnishing of audit report when penalty under Section 271A has already been levied for non-maintenance of books of accounts.
Sections Cited
271A, 271B, 44AB, 44AA, 250
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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI GEORGE GEORGE KAND MS PADMAVATHY S
M/s. Rcube Amalgamations, The Deputy Commissioner 204, Karur Main Road, Vs. of Income Tax, Lakkapuram Village, Circle 1, Kollukadu Medu, Erode Tamil Nadu - 638002. PAN: AAOFR 6611E (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/Appellant by : Shri S. Saravanan, CA (Through Virtual Mode) ��यथ� क� ओर से/Respondent by : Ms. R. Kavitha, Addl.CIT सुनवाई क� तारीख/Date of Hearing : 20.01.2026 घोषणा क� तारीख/Date of Pronouncement : 22.01.2026 आदेश/ O R D E R
PER GEORGE GEORGE K, VICE PRESIDENT:
This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 07.10.2025 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The order of the CIT(A)-NFAC arises out of the order of the AO
The Ld.AR submitted that in the instant case the assessee had not maintained the books of accounts since during the relevant assessment year, the assessee’s accountant met with an accident and was seriously injured. It was further submitted by the Ld.AR that for non-maintenance of books of accounts, the assessee was imposed penalty u/s.271A of the Act. It was submitted that if penalty has been imposed u/s.271A of the Act for non-maintenance of books of accounts, no penalty u/s.271B of the Act can be imposed for non-furnishing of audit report u/s.44AB of the Act. In this context, the Ld.AR relied on the Chennai Bench order of the Tribunal in the case of Shri Shanthilal D Jain vs. DCIT in to 2402/CHNY/2019 (order dated 20.05.2022).
The Ld.DR supported the order of the AO and the First Appellate Authority. relevant assessment year had not maintained the books of accounts. For non-maintenance of books of accounts, penalty u/s.271A of the Act was imposed. The Chennai Bench of the Tribunal in the case of Shri Shanthilal D Jain, (supra) after considering the judicial pronouncements on the subject had held that once penalty has been imposed u/s.271A of the Act for non- maintenance of books of accounts, again penalty u/s.271B of the Act cannot be imposed for non-furnishing of audit report u/s.44AB of the Act. The relevant finding of the Chennai Bench of the Tribunal in the case of Shri Shanthilal D Jain, (supra)reads as follows:- “28.1 Coming to penalties levied u/s.271B of the Act, in the above 17 appeals in regard to not filing audit report u/s.44AB of the Act. The AO levied penalty u/s.271B of the Act for not producing audit report or not filing audit report u/s.44AB of the Act. The AO levied penalty u/s.271B of the Act and the CIT(A) confirmed the same. Aggrieved, now assessees are in appeal before the Tribunal.
28.2 Before us, ld.counsel for the assessee made only one statement that the Hon’ble Allahabad High Court in the case of CIT vs. S.K. Gupta & Co., (2010) 322 ITR 86, Hon’ble Madhya Pradesh High Court in the case of Bharat Construction Co. vs. ITO, (1999) 153 CTR 414 and Hon’ble Gauhati High Court in the case of Surajmal Parsuram Todi vs. CIT, (1996) 222 ITR 691 has categorically held that once books of account are not maintained and consequently penalty u/s.271A of the Act is levied and confirmed, no penalty u/s.271B of the Act for failure to get the accounts audited u/s.44AB of the Act be levied. The Hon’ble Gauhati High Court in the case of Surajmal Parsuram Todi, supra, held as under:- We have gone through the provisions of ss. 44AA, 44AB, 271A and 271B of the Act. Maintenance of accounts is envisaged under s.
44AA and on failure to do so the assessee shall be guilty and liable to be penalised under s. 271A. Even after maintenance of books of account the obligation of the assessee does not come to an end. He is required to do something more, i.e., by getting the books of account audited by an accountant. But when a person commits an offence by not maintaining the books of account as contemplated by s. 44AA the offence is complete. After that there can be no possibility of any offence as contemplated by s. 44AB and, therefore, in our opinion, the imposition of penalty under s. 271B is erroneous. The Tribunal has overlooked this aspect of the matter. Of course, it is apparent from the records that the assessee failed to maintain the books of account as required under s. 44AA and for that penalty is prescribed under s. 271A. It is for the Tribunal to take action in accordance with law.
Similarly, the Hon’ble Allahabad High Court in the case of S.K. Gupta & Co, supra, held as under:- “The submission of Sri Mahajan is misconceived for the reason that the requirement of getting the books of account audited could arise only where the books of accounts are maintained. If for some reason the assessee has not maintained the books of account the appropriate provision under which penalty proceedings can be initiated is under section 271A of the Act which recourse has also been taken by the assessee as would appear from the order of the Tribunal. The Tribunal was, therefore, justified in upholding the order of the Commissioner of Income-tax (Appeals) cancelling the penalty imposed under section 271B of the Act.”
28.3 As the issue is squarely covered in favour of assessee and no contrary decision pointed out by Revenue, respectfully following the decision of these High Courts, we delete the penalty and reverse the orders of lower authorities. Similar are the facts in all these 16 appeals, hence taking a consistent view, all these 17 appeals relating to levy of penalty u/s.271B of the Act are allowed in favour of the assessee.”
In light of the Co-ordinate Bench order of the Tribunal, which has considered the judicial pronouncements on the issue,
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 22nd January, 2026 at Chennai.