Section 271B of the Income Tax Act

The decision most relied on for Section 271B is Ashok Pai v. CIT (292 ITR 11), cited in 812 of the 1,993 judgments on BharatTax that turn on this section.

Leading authorities on Section 271B

Ashok Pai v. CIT
292 ITR 11 · 2007 · Supreme Court
812
citing judgments

“Concealment of particulars of income” and “furnishing inaccurate particulars of income” are two distinct offences under Section 271(1)(c) of the Income Tax Act. A penalty cannot be levied under one limb if the show cause notice or basis for penalty specifies the other, as this constitutes a complete variance in the reasons for assuming jurisdiction.

Surajmal Parsuram Todi v. CIT
222 ITR 691 · 1996 · High Court
114
citing judgments

A penalty under Section 271B for failure to get accounts audited cannot be levied if a penalty under Section 271A has already been imposed for non-maintenance of books of account.

CIT v. S.K. Gupta & Co.
322 ITR 86 · 2010 · High Court
110
citing judgments

If a penalty is levied under Section 271A for failure to maintain books of account, then a separate penalty under Section 271B for failure to get accounts audited under Section 44AB cannot also be levied.

CIT v. Bisauli Tractors
299 ITR 219 · 2008 · High Court
81
citing judgments

If an assessee has not maintained books of accounts, the question of getting those accounts audited under Section 44AB does not arise, and therefore, a penalty under Section 271B for failure to get accounts audited cannot be levied. Non-maintenance of books is separately punishable under Section 271A.

Azadi Bachao Andolan v. Union of India
252 ITR 471 · 2001 · High Court
57
citing judgments

A penalty under sections like 271D or 271E is not automatically imposed if the assessee proves there was a reasonable cause for the failure. The interpretation of 'reasonable cause' is that which would prevent a person of average intelligence and ordinary prudence from acting negligently or in bad faith.

DIT v. Mahindra & Mahindra Ltd.
365 ITR 560 · 2014 · High Court
56
citing judgments

If a sum is not chargeable to tax in the hands of the recipient, the payer is not obligated to deduct tax at source, and consequently, no disallowance under section 40(a)(i) can be made. The Bombay High Court also affirmed that penalty proceedings under section 271B may be quashed in certain circumstances.

Premier Breweries Ltd. v. Commissioner of Income Tax
372 ITR 180 · 2015 · Supreme Court
52
citing judgments

Whether an assessee has shown 'reasonable cause' under Section 273B, particularly in the context of penalties under Section 271D for violations of Section 269SS, is a question of law involving a legal inference from primary facts. Penalties under Section 271D are not leviable if reasonable cause is established, even for journal entries, provided transactions are genuine and bona fide.

Bharat Construction Co. v. ITO
153 CTR 414 · 1999 · High Court
49
citing judgments

When an assessee fails to maintain books of account, resulting in a confirmed penalty under section 271A, no additional penalty under section 271B can be levied for the failure to get accounts audited under section 44AB, as there are no accounts to audit.

P.Senthil Kumar v. PCIT
416 ITR 336 · 2019 · High Court
48
citing judgments

Penalty under section 271B is not leviable for a venial technical breach, such as the late filing of a tax audit report, if there is no mala fide intention and the assessee demonstrates reasonable cause.

Bhailal Manilal Patel v. CIT
49 Taxmann.com 539 · 2014 · High Court
47
citing judgments

Penalty under section 271(1)(c) cannot be imposed based on a protective assessment order. Initiation of penalty proceedings is impermissible without a substantive assessment order that finally adds income to the assessee's hands.

Judgments on Section 271B

Century Pharmaceuticals Ltd., Vadodara vs. Assessment Unit, Income Tax Department Present Jurisdiction the DCIT, Circle-1(1)(1), Vadodara

ITA 867/AHD/2024[2016-17]Status: DisposedITAT Ahmedabad30 Jul 2024AY 2016-17

Bench: Smt.Annapurna Guptaआयकर अपील सं / Ita No. 867/Ahd/2024 िनधा"रण वष"/Assessment Year: 2016-17 Century Pharmaceuticals Ltd., बनाम Assessment Unit, 406, World Trade Centre, Income Tax Department Vs. Sayajigunj, Vadodara Represented Through Gujarat-390005 Dcit, Circle-1(1)(1), Baroda Pan: Aaacc 7646 K अपीलाथ"/ (Appellant) "" यथ"/ (Respondent) Shri M.J. Shah & Shri Rushin Patel, Ars िनधा"रती की ओर से / Assessee By : Shri Hrishikesh Hemant Patki, Sr Dr ""थ" की ओर से / Revenue By: सुनवाई क" तारीख/Date Of Hearing : 24/07/2024 घोषणा क" तारीख /Date Of Pronouncement: 30/07/2024 आदेश/O R D E R The Present Appeal Has Been Filed By The Assessee Against The Order Passed By The Commissioner Of Income Tax (Appeals), National Faceless Appeal Centre (Nfac), Delhi [In Short Referred To As “Ld. Cit(A)”] Under Section 250 Of The Income Tax Act, 1961 [In Short Referred To As “The Act”] Dated 26.02.2024, Confirming The Levy Of Penalty Of Rs.1,50,000/- U/S 271B Of The Act, For Delayed Furnishing Of Tax Audit Report As Required U/S 44Ab Of The Act, Pertaining To Assessment Year (Ay) 2016-17. 2. The Grounds Raised By The Assessee Are Descriptive & Argumentative In Nature. I Am, Therefore, Reproducing Only The Highlighted Portion Of The Grounds Of Appeal Which Are As Follows:- “1. On The Facts & On The Facts & In The Circumstances Of Your Appellant’S Case & In Law, The Honorable Cit-Appeals (Nfac) Has Erred In Confirming The Action Of The Ld. Ao Of Invoking Provision Of Section 271B, In Our Case After The Six Years By Violating The Provision Of The Section 275(1) Of The Act.

For Appellant: Shri Hrishikesh Hemant Patki, Sr DR
Section 139(1)Section 250Section 271Section 271BSection 275(1)Section 44A