Medical practitioner penalty upheld for non-compliance with audit requirements

The Tribunal upheld the penalty imposed under section 271B of the Income Tax Act, 1961 on the assessee, a medical practitioner running a maternity home. The Tribunal determined that the assessee was engaged in the medical profession, not business, and therefore, the audit requirements applicable to professionals were applicable. The Tribunal found that the turnover of the assessee fell under the provisions of section 44AB, and thus upheld the penalty. The appeal was dismissed, affirming the decision of the CIT(A) on February 13, 2020.

---

---

Issues:
Penalty under section 271B of the Income Tax Act, 1961 for failure to maintain audited accounts.

Analysis:
The appeal was filed against the order of the CIT(A) confirming the penalty of Rs. 16,376/- imposed by the Assessing Officer under section 271B of the Income Tax Act, 1961. The Assessing Officer initiated penalty proceedings due to the non-audit of the assessee's accounts despite eligible turnover of professional receipts. The Assessing Officer invoked section 44AB and imposed the penalty, which was upheld by the CIT(A). The main contention was whether the assessee, a medical practitioner running a maternity home, should be considered a professional or a businesswoman for the purpose of audit requirements.

The assessee argued that since the turnover was below the threshold limits prescribed for business, the audit requirement did not apply. It was contended that the assessee conducts a business, not a profession, and therefore, the provisions of section 44AA/44AB did not apply. On the other hand, the Revenue argued that the assessee, being a medical professional, should maintain books of accounts as required for professionals. The Revenue contended that the turnover of Rs. 32,75,261/- attracted the provisions of section 44AB r.w.s. 271B of the Act.

The Tribunal analyzed the facts and concluded that the assessee, a qualified doctor running a nursing home, was engaged in the medical profession, not business. The Tribunal noted that running a nursing home was part of the medical profession and did not convert the doctor into a businesswoman. It was observed that the assessee treated patients directly without a service agreement with a hospital. Relying on precedents and the facts of the case, the Tribunal upheld the CIT(A)'s decision and dismissed the appeal, stating that the assessee was covered by the provisions of section 44AA of the Act.

The Tribunal found the order of the CIT(A) fair and reasonable, and upheld the penalty under section 271B. The appeal of the assessee was dismissed, and the order was pronounced on February 13, 2020.

---