Penalty under Section 271A deleted where audited accounts filed and books unavailable due to loss despite trading addition

ITAT JAIPUR (AT) held that penalty under s. 271A for non-maintenance of books of account was unsustainable where audited accounts were filed and books were unavailable due to loss. Relying on precedent, the Tribunal deleted the penalty and allowed the appeal, concluding that penalty was not leviable despite trading addition computed by applying a gross profit rate.

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The assessee appealed the CIT(A)'s confirmation of a Rs.25,000 penalty under s.271A for alleged non-maintenance of books for AY 2007-08. Reliance was placed on the ITAT (SMC) Jaipur decision in Shri Kumud Chand Jain v. ITO (ITA No.716/JP/2015), where the Bench noted that the assessee had furnished audited accounts disclosing sales and the AO applied a gross profit rate in making trading additions, indicating the AO was satisfied that books had been maintained and thus did not initiate proceedings under s.271A. The CIT(A) later found books absent and directed initiation of s.271A proceedings. The ITAT observed: "In such a situation, penalty imposed u/s 271A for non-maintenance of books of account deserves to be deleted and thus penalty is not leviable." Applying those findings to identical facts, the Tribunal directed deletion of the s.271A penalty and allowed the appeal.

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