Tribunal Deletes Penalty u/s 271B, Citing Absence of Maintained Accounts; Section 271A May Apply Instead.

The tribunal allowed the assessee's appeal, resulting in the deletion of the penalty under section 271B. The tribunal determined that since the assessee did not maintain any books of accounts, the penalty under section 271B was inappropriate. Instead, the tribunal referenced precedents indicating that when no accounts are maintained, section 271A should apply.

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Issues involved:
The issue involves the levy of penalty under section 271B for the assessment year 2015-16 due to the failure of the assessee to get the accounts audited as required by Section 44AB.

Summary:

Issue 1: Levy of penalty under section 271B
The assessee filed an appeal against the penalty imposed under section 271B amounting to Rs.1,50,000. The Assessing Officer treated the short term capital loss declared by the assessee as a business loss due to the nature of trading activities. The turnover from future and option transactions exceeded the limit prescribed in Section 44AB, leading to the initiation of penalty proceedings. The assessee contended that the investments were made as an investor, not a trader, but failed to provide a plausible reason for not auditing the accounts, resulting in the confirmation of the penalty by the CIT (A).

Issue 2: Maintenance of books of accounts and penalty imposition
The counsel for the assessee argued that since the assessee did not maintain any books of accounts, there was no requirement to get the accounts audited, and therefore, penalty under section 271B should not apply. Citing relevant court decisions, it was highlighted that when no accounts are maintained, the penalty under section 271A for non-maintenance of books of accounts should be applied instead of section 271B. The tribunal concurred, stating that the penalty under section 271B is not attracted when no books of accounts are maintained, and the penalty was deleted based on the precedents set by the Allahabad and Guwahati High Courts.

In conclusion, the tribunal allowed the appeal of the assessee, and the penalty under section 271B was deleted based on the non-maintenance of books of accounts.

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