Penalty under Section 271A confirmed for non-maintenance of books but Section 271B penalty vacated for non-audit

The ITAT Jaipur held that penalty u/s 271A for non-maintenance of books of accounts was confirmed as the assessee failed to appear or file submissions despite seven opportunities. However, penalty u/s 271B for non-audit of books was vacated. The tribunal ruled that once penalty is levied for non-maintenance of books, a separate penalty for not getting non-existent books audited cannot be imposed, as penalty u/s 271B applies only when books are maintained but not audited.

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Issues Involved:

1. Imposition of penalty for not getting the books of accounts audited.
2. Validity of notice assuming jurisdiction by the Assessing Officer.
3. Calculation of turnover and applicability of Section 271A.
4. Principles of natural justice and opportunity of being heard.
5. Penalty on estimation basis and immunity under Section 273B.
6. Reliance on incorrect facts in the order.

Summary:

1. Imposition of Penalty for Not Getting the Books of Accounts Audited:
The assessee argued that no books of accounts were maintained, so the question of audit does not arise. The Tribunal noted that the assessee was penalized under Section 271A for non-maintenance of books, and therefore, a separate penalty under Section 271B for not getting the books audited was not justified. The Tribunal referenced the case of Shahnaz Khanan, Jhalawar Vs. ITO, stating, "The provisions of Section 44AB of the Act can be invoked only when the assessee has complied with the provisions of Section 44AA of the Act." Consequently, the penalty under Section 271B was vacated, and the appeal in ITA No. 280/JPR/2023 was allowed.

2. Validity of Notice Assuming Jurisdiction by the Assessing Officer:
The assessee contended that the notice by which jurisdiction was assumed was vague and invalid. However, this issue was not elaborated upon in the judgment.

3. Calculation of Turnover and Applicability of Section 271A:
The assessee disputed the calculation of turnover, arguing that total deposits were wrongly reckoned as turnover instead of commission receipts. The Tribunal upheld the penalty under Section 271A, stating, "The appellant failed to maintain books of accounts as required u/s 44AA of the Act." The appeal in ITA No. 281/JPR/2023 was dismissed.

4. Principles of Natural Justice and Opportunity of Being Heard:
The assessee claimed that the penalty order was passed without a reasonable opportunity of being heard. The Tribunal noted that the assessee was given seven opportunities but did not appear or file any adjournment application, indicating a lack of seriousness in pursuing the appeal.

5. Penalty on Estimation Basis and Immunity Under Section 273B:
The assessee argued that no penalty can be levied where the assessment is made on an estimation basis and claimed immunity under Section 273B. The Tribunal dismissed this contention, noting that the penalty under consideration was not directly linked to the quantum of addition but to the failure to maintain books of accounts.

6. Reliance on Incorrect Facts in the Order:
The assessee contended that the penalty was based on incorrect facts. However, the Tribunal found no merit in this claim and upheld the penalties imposed by the lower authorities.

Conclusion:
The appeal in ITA No. 280/JPR/2023 was allowed, vacating the penalty under Section 271B, while the appeal in ITA No. 281/JPR/2023 was dismissed, confirming the penalty under Section 271A. The order was pronounced in the open Court on 21/09/2023.

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