BHAGWAN DAS RAI,ITARSI vs. THE ITO WARD-, ITARSI

आदेश / O R D E R

Per B.M. Biyani, A.M.:

1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A), National Faceless Appeal Centre (NFAC) [‘The Ld. CIT(A)] has erred in confirming the levy of penalty u/s 271B of the Income-tax Act, 1961, (‘the Act’) by the Ld. AO,NFAC, Delhi (‘the Ld.AO’) for not furnishing tax audit report u/s 44AB of the Act which is wrong and contrary to the facts Shri Bhagwan Das Rai A.Y. 2015-16 of the case and thus the penalty u/s 271B of the Act is liable to be deleted.

2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating that the assessee is a commission agent for Bharti Airtel and earns commission income. Thus the assessee was under bonafide belief that only the commission receipt was to be considered in determining the turnover and consequently deciding whether the assessee was liable to get his accounts audited u/s 44AB of the Act. Thus, the levy of penalty u/s 271B of the Act is wrong and is liable to be deleted.

3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating that the assessee is voucher distributor for the telecom company Bharti Airtel and earns commission income. The assessee merely transfers the cash collected from the retailers to Bharti Airtel and charges a percentage as commission. Thus the levy of penalty u/s 271B of the Act by considering the cash collected from retailers on behalf of Bharti Airtel as turnover of the assessee is wrong and liable to be deleted.

4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating that the amount credited in the Bank account of the assessee was received by him as an agent/dealer of Bharti Airtel. The assessee had only retained his commission income. Thus, the levy of penalty u/s 271B of the Act is wrong and contrary to the facts of the case and is liable to be deleted.

5. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in confirming penalty u/s 271B of the Act which is against the principle of natural justice. Thus, the penalty u/s 271B is against the facts of the case and provisions of the Act which is liable to be deleted.”

Shri Bhagwan Das Rai A.Y. 2015-16 as sale price of coupons and transferred to telecom companies, was not assessee’s turnover. Since the commission amount did not exceed the limit of Rs. 1 crore prescribed in section 44AB for audit of accounts, the assessee did not get the audit done. Ld. AR submitted that the section 273B prescribes that no penalty u/s 271B shall be imposed if there is a reasonable cause of default. Ld. AR prayed that the assessee’s bonafide understanding of the nature of business as ‘commission business’ constitutes a reasonable cause, therefore the assessee should be given benefit of section 273B and relieved from penalty. Ld. AR also relied upon the decision of ITAT, Kolkata Bench in Anunoy Mukherjee Vs. ITO, Durgapur, ITA No. 555/Kol/2022, order dated 23.02.2023 wherein identical penalty imposed by revenue in identical set of circumstance was quashed.

Shri Bhagwan Das Rai A.Y. 2015-16 business receipts at Rs. 1,28,05,010/- on the basis of business receipts deposited in bank a/c. Therefore, when we countered Ld. AR on this aspect and enquired from him as to whether the assessee has accepted AO’s finding, Ld. AR submitted that the assessee has contested AO’s finding in quantum-appeal before CIT(A) but that appeal is pending as of now. Finding this state, we feel it more appropriate to remand this appeal also to the file of CIT(A) for a fresh adjudication after final clarity in quantum-appeal qua the activity/turnover of assessee. Needless to mention that while deciding penalty issue, the CIT(A) shall also consider the decision in Anunoy Mukherjee (supra).

Order pronounced in the open court on 25.10.2023.