TARAK NATH SAHA MONDAL,KOLKATA vs. ITO, WD-50(4), KOLKATA, KOLKATA

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ITA 1155/KOL/2016Status: DisposedITAT Kolkata12 January 2018AY 2011-20124 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee was not required to get accounts audited under Section 44AB(d) because their income did not exceed the maximum amount not chargeable to income tax, which was a necessary condition for the audit requirement in this specific scenario.

What were the facts?

The assessee declared a net profit of 6.83% on gross receipts, which was below the 8% threshold. The Assessing Officer initiated penalty proceedings under Section 271B for failure to get accounts audited as per Section 44AB read with Section 44AD.

What were the issues?

Whether the assessee was liable for penalty under Section 271B for not obtaining an audit report when their income did not exceed the basic exemption limit, despite declaring profits below the presumptive rate under Section 44AD.

Which sections of the Income-tax Act were involved?

Section 44AB,Section 44AD,Section 271B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA BENCH ‘D’, KOLKATA

Before: Shri P.M. Jagtap, AM & Shri S.S. Viswanethra Ravi, JM]

order : January 12, 2018 ORDER This appeal filed by the assessee is directed against the order of Ld. CIT (Appeals) – 15, Kolkata dated 01.02.2016 whereby he confirmed the penalty of Rs. 10,845/- imposed by the A.O. under section 271B of the Income Tax Act, 1961.

2.

The assessee in the present case is an individual who filed his return of income for the year under consideration on 30.03.2012 declaring a total income of Rs. 1,26,160/-. In the said return, net profit of Rs. 1,48,317/- was declared by the assessee on the gross receipts of Rs. 21,68,920/- from his eligible business. Since the net profit so declared at 6.83% was below 8%, the Assessing Officer was of the view that the assessee was required to get his accounts audited as per section 44AB read with section 44AD of the Act. Since this 2 Assessment Year: 2011-12 Tarak Nath Saha Mondal requirement was not complied with by the assessee, penalty proceedings under section 271B were initiated by the A.O. During the course of the said proceedings, no explanation was offered by the assessee in response to the show cause notice issued by the A.O. The A.O., therefore, presumed that the assessee had no explanation to offer for the default committed by him under section 44AB and he proceeded to impose a penalty of Rs. 10,845/- under section 271B of the Act.

3.

The penalty imposed by the A.O. under section 271B was challenged by the assessee in the appeal filed before the Ld. CIT(A) and since the assessee could not offer any satisfactory explanation for his default committed under section 44AB, the Ld. CIT(A) confirmed the penalty imposed by the A.O. under section 271B. Aggrieved by the order of the Ld. CIT(A), the assessee has preferred this appeal before the Tribunal.

4.

We have heard the arguments of both the sides and also perused the relevant material available on record. As rightly pointed out by the learned counsel for the assessee from Clause (d) of Section 44AB as applicable to the year under consideration, every person carrying on the business was required to get his accounts audited if profits and gains from the business were deemed to be the profits and gains of such person under section 44AD and he had claimed such income to the lower than the profits and gains so deemed to be the profits and gains of the business and his income exceeded the maximum amount which was not chargeable to income tax in the

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