Appeal allowed against penalty order for non-compliance. Efforts to rectify and lack of evidence key.

The Tribunal allowed the appeal against the penalty order imposed under section 271B of the Income Tax Act, 1961 for Assessment Year 2014-15. The Tribunal found that the assessee's efforts to rectify non-compliance by auditing accounts, coupled with a bona fide belief in not furnishing the audit report due to incurring losses, constituted substantial compliance. Emphasizing the lack of evidence disproving the son's involvement in share transactions, the Tribunal deemed the penalty unwarranted and set it aside, ultimately allowing the appeal on 02/12/2019 at Ahmedabad.

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Issues:
- Appeal against penalty order under section 271B of the Income Tax Act, 1961 for Assessment Year 2014-15.

Analysis:
1. Grounds of Appeal: The assessee challenged the penalty imposed under section 271B for non-audit of books of accounts under section 44AB. The key contention was the lack of proper appreciation by the AO of the facts and penalty reply submitted by the appellant.

2. Assessee's Transactions: The assessee, an Individual, engaged in significant share transactions resulting in a loss of Rs. 6,416. However, the capital gain transactions were not declared in the income tax return, only reporting interest income of Rs. 16,42,070, which was accepted by the AO under section 143(3) of the Act.

3. Non-Maintenance of Books: The AO observed that the assessee did not maintain books of account, profit and loss accounts, or get accounts audited under section 44AB despite exceeding the turnover threshold due to share transactions. The AO issued a show cause notice for penalty under section 271B.

4. Assessee's Defense: The assessee claimed she was unaware of the requirement to maintain audited accounts for share transactions as they were conducted by her son. Subsequently, the assessee got the accounts audited under section 44AB, but the AO still imposed the penalty.

5. Appellate Proceedings: The CIT-A upheld the penalty, stating the failure to audit accounts under section 44AB. The assessee appealed, arguing substantial compliance and a bona fide belief in not furnishing the audit report due to the loss incurred.

6. Tribunal Decision: The Tribunal noted the assessee's efforts to rectify the non-compliance by auditing accounts and found no infirmity in the audit report. Considering the bona fide belief and substantial compliance, the Tribunal set aside the penalty under section 271B, leading to the appeal being allowed.

7. Conclusion: The Tribunal's decision highlighted the importance of substantial compliance, the assessee's good faith efforts to rectify the audit requirement, and the lack of evidence to disprove the son's involvement in share transactions. Consequently, the penalty under section 271B was deemed unwarranted, and the appeal was allowed on 02/12/2019 at Ahmedabad.

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