Appeal successful: Penalty under Income Tax Act section 271B deleted. Company's business activities exempt from audit. The appeal was allowed, and the penalty imposed under section 271B of the Income Tax Act was deleted. The Tribunal determined that the company was engaged ...
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Appeal successful: Penalty under Income Tax Act section 271B deleted. Company's business activities exempt from audit.
The appeal was allowed, and the penalty imposed under section 271B of the Income Tax Act was deleted. The Tribunal determined that the company was engaged in business activities, not professional activities, and therefore, the turnover did not exceed the limit requiring an audit. Consequently, the penalty was deemed unjustified and removed.
Issues: Appeal against penalty imposed under section 271B of the Income Tax Act for non-audit of accounts due to exceeding turnover limit.
Analysis: 1. Issue: The appeal was filed against the penalty imposed under section 271B of the Income Tax Act for not auditing the accounts due to exceeding the turnover limit.
Judgment: The appeal was initially dismissed for non-prosecution but was later recalled for hearing on merits. The only ground taken by the assessee was the upholding of the penalty by the CIT(A) under section 271B of the Act.
2. Issue: Interpretation of whether the assessee was engaged in professional activities or business activities.
Judgment: The assessee, a private limited company providing medical facilities through professional doctors, declared receipts of &8377; 54,45,940/-. The authorities held it to be professional activity subject to audit under section 44AB(a). However, it was argued that the company did not possess any professional qualifications and was engaged in commercial activities for profit, not professional activities requiring specialized skills.
3. Issue: Applicability of section 44AB(b) for determining audit requirement based on turnover limit.
Judgment: The Tribunal differentiated between business and profession, emphasizing the need for professional qualifications for professional activities. As the company lacked such qualifications and was engaged in business activities, section 44AB(b) applied. The turnover limit for audit was &8377; 60 lacs, while the turnover was &8377; 54,45,940/, making the audit unnecessary. Consequently, the penalty under section 271B was deemed unjustified and deleted.
4. Outcome: The appeal of the assessee was allowed, and the penalty imposed under section 271B was deleted. The Tribunal pronounced the order in the open court on 26/04/2019.
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