PARAMJEET SINGH NARULA,DELHI vs. ITO, WARD-62(4), NEW DELHI

This appeal filed by the revenue is directed against the order dated 06.12.2017 of the CIT(A)-XX, New Delhi relating to A. Y. 2014-15.

Levy of penalty of Rs.62,204/- u/s 271B of the IT Act, 1961 by the Assessing Officer and upheld by the CIT (A) is the only issue raised by the assessee in the grounds of appeal.

Facts of the case, in brief, are that assessee is an individual and filed his return of income on 18.09.2014 declaring total income of Rs. 9,40,590/-. The Assessing Officer completed the assessment u/s 143(3) on 29.07.2016 accepting the returned income. In the said order the Assessing Officer noted that assessee has neither maintained books of account u/s 44 AA nor got the accounts audited u/s 44 AB although his turnover was more than Rs. 1 crore. Subsequently, the Assessing Officer initiated penalty proceedings u/s. 271 B of the IT Act. The explanation of the assessee that he did not maintain books of account and, therefore, question of audit did not arise was not accepted by the Assessing Officer on the ground that assessee is liable to pay penalty for violation of both the sections i.e. 44AA and 44 AB. The Assessing Officer accordingly levied penalty of Rs.62,204/- u/s 271 B being 0.5% of the turnover.

In appeal the Ld. CIT (A) up held the action of the Assessing Officer. Aggrieved with such order of the CIT (A), the assessee is in appeal before the Tribunal.

The Ld. Counsel for the assessee at the outset submitted that the Assessing Officer had already levied penalty for non maintenance of books of account as per provision 44 AA and assessee has deposited the penalty. Since the assessee did not maintain any books of account, therefore, question of getting the accounts audited does not arise. Relying on various decisions he submitted that levy of penalty u/s 271B in the instant case is not justified.

The Ld. DR on the other hand heavily relied on the order of the CIT (A). He submitted that the provisions of section 44AA and 44 AB are different and the assessee is liable for penalty separately for violation of the provisions. He submitted that the assessee cannot get away from the rigours of penalty provisions u/s 271B for not getting its account audited due to non maintenance of books of account.

I have considered the rival arguments made by both the sides and perused the orders of the authorities below. It is an admitted fact that the assessee has not maintained any books of account. Despite the same the Assessing Officer has accepted the returned income in the order passed u/s 143 (3). It is also pertinent to mention here that penalty u/s 271A has been levied for non maintenance of books of account u/s 44 AA of the IT Act. The Ld. Counsel for the assessee also produced the challan for payment of Rs.25,000/- evidencing the payment of penalty u/s 271A for non maintenance of books of account u/s. 44 AA of the IT Act. Once it is held that assessee does not maintain books of account, the question of getting the same audited u/s 44 AB does not arise. I, therefore, find merit in the argument of the Ld. Counsel for the assessee that penalty u/s 271B in instant case is not justified, since the assessee has not maintained any books of account for which he has already been penalized. I, therefore, hold that levy of penalty u/s 271B in the instant case is not justified. Accordingly, the order of the CIT(A) is set aside and the Assessing Officer is directed to cancel the penalty so levied. The grounds raised by the assessee are accordingly allowed.

In the result, the appeal filed by the assessee is allowed.