Commission agent turnover and tax audit penalty under section 271B failed where bank deposits were not treated as turnover.

A commission agent's bank deposits could not be treated as its turnover for attracting the audit requirement under section 44AB where the assessee only earned commission on milk product sales. On those facts, the assessee was not liable to tax audit, so the foundation for penalty under section 271B failed. The penalty was therefore held unsustainable and deleted in favour of the assessee.

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Issues: Whether penalty under section 271B was leviable when the assessee, a commission agent, had bank deposits treated by the Revenue as turnover for the purpose of section 44AB.

Analysis: The assessee was found to be only a commission agent of Gujarat Milk Cooperative Federation and to have earned commission at prescribed margins on the sale of milk products. On that basis, the bank deposits could not be treated as the assessee's turnover for attracting the audit requirement under section 44AB. Since the assessee was not liable to audit on the facts found, the foundation for penalty under section 271B did not survive.

Conclusion: The penalty under section 271B was not sustainable and was deleted in favour of the assessee.

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