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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
Per Dr. M. L. Meena, AM:
This appeal has been filed by the assessee against the order of the
Ld. CIT(A) National Faceless Appeal Centre (NFAC), Delhi dated 20.03.2023 in respect of Assessment Year: 2017-18, challenging therein
2 ITA No. 161/Asr/2023 Ekam Wines v. ITO confirmation of the action of the AO, imposing penalty, amounting to Rs.
1,50,000/-, u/s 271B of Income Tax Act, 1961.
At the outset, the Ld. Counsel submitted that the penalty u/s 271A of
the Act for non-maintenance of the books of accounts has already been
levied to the assessee as evident from the copy of penalty order (APB,
Pgs. 6-7). The Ld. AR argued that it is a settled law that if a person
committed the offence of not maintaining the books of account as
contemplated by section 44AA of the Act, thereafter, there can be no
possibility of any offence as contemplated by section 44AB and, therefore,
penalty cannot be imposed under section 271B of the Act. Accordingly, if
penalty has already been imposed u/s 271A of the Act for non-maintenance
of books of accounts, then, no penalty can be levied u/s 271B for non-
compliance of provisions of section 44AB because if the assessee has not
maintained the books of account, the same cannot be audited by Tax
Auditor. In support, he placed reliance on the following judgment:
• CIT vs.Bisauli Tractors (2008) 299 ITRR 219(ALL)
In the instant case, the Assessing Officer did not impose penalty under section 271A and instead proceeded to impose penalty under section 271B. If a person has not maintained the accounts book or any accounts, the question of its audit does not arise. In such an event, the imposition of penalty under the provision contained in section 271A for the alleged non-compliance of section
3 ITA No. 161/Asr/2023 Ekam Wines v. ITO 44AA may arise but the provisions of section 44AB do not get violated in a case where the accounts have not been maintained at all and, therefore, penal provisions of section 271B would not apply.
• Surajmal Parsuram Todi vs. CIT as reported in (1996) 222 ITR 691 (Gauhati)
Maintenance of accounts is envisaged under section 44AA and on failure to do so the assessee shall liable to be penalized under section 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 section 44AA the offence is complete. After that, there can be no possibility of any offence as contemplated by section 44AB and, therefore, in the instant case, the imposition of penalty under section 271B was erroneous.
• Allahabad High Court in CIT vs. S.K. Gupta & Company [2010] 322 ITR 86 (Allahabad)
Requirement of getting books of account audited could arise only where books of account are maintained. If for some reason assessee had not maintained books of account, penalty could not be imposed under section 271B.
• Ram Parkash C. Puri vs. ACIT 2001 77ITD 210 (Pune)
He is required to do something more, i.e. by getting books of account audited by an accountant. But when a person commits the offence of not maintaining the books of account as contemplated by section 44AA, the offence is complete. After that, there can be no possi-bility of any offence as contemplated by section 44AB and, therefore, penalty cannot be imposed under section 271B of the Act. Accordingly, I delete the penalty.
• Shantilal D Jain Chennai Vs. DCIT 2394/CHNY/2019 (Chennai)
• Sh. Mohit Garg Vs. ITO (ITA NO.3355/DEL/2017) wide order dated 23.06.2020 (Delhi) • Sacred Heart Inter College through Sacred Heart Catholic Educational Society Vs. CIT (ITA NO. 379 to 382/LKW/2014) wide order dated 16.09.2014 (LKW)
4 ITA No. 161/Asr/2023 Ekam Wines v. ITO When assessee has not maintained any books of account then penalty u/s 271A is imposable not penalty u/s 271B of the Act. In the absence of books of accounts net profit @ 5% has been taken of the total turnover.
• Abu Mansur Ali Vs. DCIT (CIT NO.93/KOL/2014) wide order dated 10.08.2016 (Kolkata) • Sh. Sanjeev Kumar v. Income Tax Officer, Ward -1 (14), Mansa CIT (A) (BTI) Therefore, in view of above judicial pronouncements, it is requested before your goodself the penalty levied by the Ld. AO.”
Per contra, the Ld. DR although supported the impugned order,
however, he failed to rebut the contention of the counsel.
We have heard the rival contentions, perused the material on record,
impugned order, written submission and case law cited. Admittedly, the AO
has levied penalty upon the assessee u/s 271A of the Income Tax Act,
1961 for non-maintenance of books of account. In our view, the Ld. CIT(A)
ought to have appreciated the settled principle of law that if the penalty has
been levied upon the assessee u/s 271A of the Income Tax Act, 1961 for
non-maintenance of books of account, then no penalty can be levied u/s
271B of the Act for the default of not getting the books of account audited
because in absence of maintenance of the books of account, there is
nothing that can be audited to furnish the requisite audit report as provided
u/s 44AB of the Act. Thus, the Ld. CIT(A)/NFAC order is infirm and
5 ITA No. 161/Asr/2023 Ekam Wines v. ITO perverse to the facts on record in confirming the levy of penalty, amounting
to Rs.1,50,000/- u/s 271B of Income Tax Act, 1961.
Following Hon’ble Allahabad High Court in the case of “CIT vs. S.K.
Gupta & Company”, (Supra) we hold that the requirement of getting books
of account audited could arise only where books of account are maintained.
In the present case, the AO has admitted non maintenance books of
account, as evident from levy of penalty u/s 271A of the Act and therefore,
penalty could not be imposed under section 271B of the Act.
In the above view, we hold that since, the assessee has not
maintained any books of account then penalty u/s 271B of the act is not
imposable. Accordingly, the penalty amounting to Rs.1,50,000/- levied by
AO and confirmed by the CIT(A) u/s 271B of Income Tax Act, 1961, is
hereby deleted.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 07.07.2023 Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member *GP/Sr.PS* Copy of the order forwarded to:
6 ITA No. 161/Asr/2023 Ekam Wines v. ITO (1) The Appellant: (2) The Respondent: (3) The CIT(Appeals) (4) The CIT concerned (5) The Sr. DR, I.T.A.T.