Penalties deleted for low turnover in speculative transactions; failure to comply with notice upheld.

The penalties under Sections 271A and 271B were deleted as the turnover from speculative transactions was below the threshold requiring maintenance of books and audit. However, the penalty under Section 271(1)(b) was confirmed due to the assessee's failure to comply with the notice under Section 142(1) without any reasonable cause. The appeals for penalties under Sections 271A and 271B were allowed, while the appeal for the penalty under Section 271(1)(b) was dismissed.

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Issues Involved:
1. Levy of penalty under Section 271A for non-maintenance of books of accounts.
2. Levy of penalty under Section 271B for not getting the books of account audited.
3. Levy of penalty under Section 271(1)(b) for non-compliance with the notice issued under Section 142(1).

Issue-wise Detailed Analysis:

1. Levy of Penalty under Section 271A for Non-Maintenance of Books of Accounts:
The assessee was found to be engaged in day-to-day trading of commodities and shares with a total turnover of Rs. 27,26,87,233/- during the relevant assessment year. Despite repeated notices, the assessee failed to produce the necessary books of accounts and other documents as required under Section 44AB of the Income Tax Act. Consequently, the Assessing Officer levied a penalty of Rs. 5,000/- under Section 271A. The CIT(A) confirmed this penalty due to continued non-compliance by the assessee. However, upon further examination, it was determined that the turnover should be calculated based on the aggregate of positive and negative differences from speculative transactions, which amounted to Rs. 3,59,632/-. Since this amount was below the threshold requiring maintenance of books, the penalty under Section 271A was deleted.

2. Levy of Penalty under Section 271B for Not Getting the Books of Account Audited:
The Assessing Officer also imposed a penalty of Rs. 1,00,000/- under Section 271B due to the assessee’s failure to get the accounts audited, as required when turnover exceeds the prescribed limit. This penalty was upheld by the CIT(A). However, the Tribunal noted that the turnover for speculative transactions, calculated as per ICAI guidelines, was only Rs. 3,59,632/-, below the threshold for mandatory audit under Section 44AB. Consequently, the penalty under Section 271B was also deleted, as the requirement for audit did not apply.

3. Levy of Penalty under Section 271(1)(b) for Non-Compliance with Notice under Section 142(1):
The assessee did not comply with the notice issued under Section 142(1) dated 13.10.2017, and no explanation was provided for this non-compliance. As a result, the Assessing Officer levied a penalty of Rs. 10,000/- under Section 271(1)(b), which was confirmed by the CIT(A). The Tribunal upheld this penalty due to the absence of any reasonable cause shown by the assessee for non-compliance.

Conclusion:
The penalties under Sections 271A and 271B were deleted as the turnover from speculative transactions was determined to be below the threshold requiring maintenance of books and audit. However, the penalty under Section 271(1)(b) was confirmed due to the assessee’s failure to comply with the notice under Section 142(1) without any reasonable cause. The appeals for penalties under Sections 271A and 271B were allowed, while the appeal for the penalty under Section 271(1)(b) was dismissed.

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