Tribunal rules in favor of assessee on Section 44AB turnover issue, deleting penalty.

The Tribunal allowed the appeal, ruling in favor of the assessee. It held that the turnover declared did not breach the Section 44AB limit, emphasizing that turnover for Section 44AB should be from the assessee's books, not third-party sources. The addition made by the Assessing Officer based on undisclosed turnover was deemed irrelevant for Section 44AB purposes, leading to the deletion of the penalty under Section 271B.

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Issues:
1. Confirmation of penalty under Section 271B of the Income Tax Act by the ld. CIT(A).
2. Inclusion of undisclosed turnover by the Assessing Officer to determine the limit prescribed under Section 44AB of the Act.

Issue 1: Confirmation of penalty under Section 271B
The appeal was against the penalty order passed under Section 271B of the Income Tax Act for the Assessment Year 2011-12. The Assessing Officer added an amount to the turnover of the assessee based on bank deposits of a third party, resulting in a violation of the conditions of Section 44AB. The penalty was levied for this violation. The assessee argued that the turnover declared did not exceed the limit specified under Section 44AB, and the addition made by the Assessing Officer should not attract penalty provisions. The AR contended that the turnover for Section 44AB should be based on gross receipts or sale value recorded in the books, not on third-party statements. Citing a previous Tribunal decision, the AR argued that the addition made did not automatically trigger the penalty provisions.

Issue 2: Inclusion of undisclosed turnover for Section 44AB limit
The Assessing Officer included an undisclosed turnover in the assessment, leading to a breach of the Section 44AB limit. The ld. DR argued that since the assessee accepted the addition, the undisclosed turnover was relevant for Section 44AB. However, the Tribunal found that the turnover declared by the assessee did not exceed the Section 44AB limit, and the addition was based on a survey conducted on a third party. The Tribunal emphasized that the turnover for Section 44AB should be from the assessee's books, not third-party statements. Citing a previous Tribunal decision, the Tribunal held that the addition made by the Assessing Officer did not constitute turnover for Section 44AB purposes, and therefore, the penalty under Section 271B was deleted.

In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing that the turnover declared by the assessee did not necessitate audit under Section 44AB, and the addition made by the Assessing Officer based on unaccounted turnover did not warrant the penalty under Section 271B. The Tribunal's decision was based on the principle that turnover for Section 44AB should be from the assessee's regular books of account, not from third-party sources.

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