Agent collecting telecom payments exempt from section 271B penalty as commission below audit threshold

ITAT Visakhapatnam held that penalty under section 271B for non-audit of books cannot be imposed on an agent collecting payments for telecom principal. The assessee, acting as service provider for telecom company, collected cash deposits from customers exceeding audit threshold but earned commission below threshold limit. ITAT found reasonable cause under section 273B as assessee had bonafide belief audit wasn't required since commission income was below threshold. Following coordinate bench precedent, penalty was deleted as cash deposits were collected on behalf of principal, not as assessee's turnover.

---

---

Issues:
The judgment involves the issue of penalty levied under section 271B of the Income Tax Act, 1961 for not getting the books of account audited under section 44AB.

Summary:
The appellant, an individual operating as a service provider, appealed against the penalty imposed by the Assessing Officer (AO) under section 271B of the Act. The AO had levied a penalty of Rs. 92,181 as the cash deposits made during the year exceeded the threshold limit specified in section 44AB. The appellant contended that the cash deposits were collected on behalf of the Principal and were not part of his sales turnover. The Commissioner of Income Tax (Appeals) upheld the penalty, considering the cash deposits as the appellant's turnover. The appellant argued that he was only an agent/service provider and should not be penalized for not getting the accounts audited, as his commission income was below the threshold. The appellant cited a similar case decided in his favor by a coordinate bench of the Tribunal. The Tribunal observed the Master Service Provider Agreement between the appellant and the Principal, where the Principal was responsible for deducting tax at source. The Tribunal found merit in the appellant's argument that he had a reasonable cause for not getting the accounts audited, as the commission income was collected on behalf of the Principal. Relying on the provisions of section 273B of the Act, the Tribunal allowed the appeal, quashing the penalty imposed by the AO and directing deletion of the penalty.

Decision:
The Tribunal allowed the appeal of the assessee, quashing the penalty imposed under section 271B of the Income Tax Act, 1961, based on the reasonable cause for not getting the books of account audited as per section 44AB.

---