Tribunal overturns penalty for non-furnishing audit report due to lack of maintained books of account

The Tribunal allowed the appeal, deleting the penalty of Rs.1,50,000 imposed under section 271B of the Income Tax Act. The Tribunal found that as the assessee did not maintain books of account, the penalty for non-furnishing of an audit report was not justified, referencing precedents where penalty under section 271B was not applicable when books of account were not maintained.

---

---

Issues:
The judgment involves the issue of confirming penalty imposed under section 271B of the Income Tax Act.

Summary:
The appeal was directed against the CIT(A)'s order confirming a penalty of Rs.1,50,000 imposed under section 271B of the Income Tax Act. The assessee, an individual and distributor of a cable TV network, failed to get his books of account audited, leading to the penalty. The CIT(A) confirmed the penalty in an ex parte order as the assessee did not appear. The Tribunal proceeded with the matter in the absence of the assessee and heard the Departmental Representative. The Tribunal found that since the assessee did not maintain books of account, the penalty under section 271B for non-furnishing of an audit report was not justified.

The Tribunal referred to a case where it was held that when an assessee is liable to pay penalty under section 271A for not maintaining books of account, penalty under section 271B cannot be imposed for non-furnishing of an audit report. Another case highlighted that if an individual has not maintained books of account, the penalty under section 271B does not apply. Therefore, in the present case, since the assessee did not maintain books of account, the penalty under section 271B was deleted. Consequently, the appeal filed by the assessee was allowed.

The judgment was pronounced on March 30, 2023.

---