Tax audit failure despite no books kept under s. 44AA-s. 271B penalty still applies; appeal dismissed.

The dominant issue was whether penalty under s. 271B could be avoided on the ground that the assessee did not maintain books under s. 44AA. The ITAT held that ss. 44AA and 44AB operate independently, apply to different classes and thresholds, and penalties under ss. 271A and 271B are neither alternate nor substitutive. Since the object of s. 44AB is to secure a clear and reliable audit trail enabling correct assessment, failure to get accounts audited attracts s. 271B irrespective of non-maintenance of books, following HC precedent. Consequently, the penalty under s. 271B was upheld and the appeal was dismissed.

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Issues Involved:
1. Whether penalty under section 271B can be levied when books of account are not maintained.
2. Distinction between sections 44AA and 44AB of the Income Tax Act.
3. Applicability of the decision in CIT vs. Bisauli Tractors.
4. Separate and distinct nature of penalties under sections 271A and 271B.

Issue 1: Penalty under Section 271B
The assessee argued that penalty under section 271B could not be levied for failure to get books of account audited when the books were not maintained at all. The assessee relied on the decision in CIT vs. Bisauli Tractors. However, the Tribunal found that the case was one of rejection of books of account, not non-maintenance. Thus, the cited decision was not applicable.

Issue 2: Distinction between Sections 44AA and 44AB
The Tribunal explained that sections 44AA and 44AB are separate and distinct provisions. Section 44AA mandates maintenance of books for specified professions and businesses exceeding certain turnover limits, while section 44AB requires audit of accounts for businesses exceeding higher turnover limits. Penalties for non-compliance with these sections are also distinct, with section 271A for non-maintenance and section 271B for non-audit.

Issue 3: Applicability of CIT vs. Bisauli Tractors
The Tribunal noted that the decision in CIT vs. Bisauli Tractors was not applicable because the present case involved rejection of books, not non-maintenance. The Tribunal emphasized that allowing a person to escape penalty for non-maintenance by claiming non-audit would be unjust.

Issue 4: Separate and Distinct Penalties under Sections 271A and 271B
The Tribunal referred to the decision in Bharat Construction Co. v. ITO, which held that defaults under sections 271A and 271B are separate and distinct. The Tribunal reiterated that penalties under these sections are not interchangeable, and a person failing to maintain books and get them audited can be penalized under both sections.

Conclusion
The Tribunal upheld the penalty under section 271B, stating that the assessee's failure to get books audited attracted the penalty. The appeal was dismissed.

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