Section 271B penalty applies when accounting records exist and turnover crosses the audit threshold without required audit compliance.

Penalty under Section 271B applies where the assessee's own records show accounting material in existence, including VAT returns and debtor lists, and the turnover crosses the audit threshold. Books of account are not limited to ledgers and cash books; Section 2(12A) covers other relevant records as well. On these facts, the assessee was required to maintain proper books and obtain audit under Section 44AB, and non-compliance justified the statutory penalty. The cited case law was found inapplicable on the present facts, and the penalty was sustained.

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Issues: Whether penalty under Section 271B of the Income-tax Act, 1961 was leviable where the assessee claimed that no proper books of account were maintained, while the record showed VAT returns, debtor lists and turnover above the audit threshold.

Analysis: The assessee's own materials showed that business records existed in some form, including a list of sundry debtors and VAT returns, and the turnover exceeded the statutory limit. The Tribunal noted that books of account are not confined only to ledgers and cash books but include other records as well under Section 2(12A). On the facts, the assessee was required to maintain proper books and obtain audit under Section 44AB, and the failure to do so attracted the statutory penalty under Section 271B. The Tribunal also found the assessee's reliance on the cited case law inapplicable on the present facts.

Conclusion: Penalty under Section 271B was rightly sustained; the assessee's challenge failed.

Ratio Decidendi: Where the assessee's records and returns show the existence of accounting material and the turnover crosses the audit threshold, failure to comply with the statutory requirement of maintaining audited books attracts penalty under Section 271B.

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