Tribunal cancels penalty for failure to audit accounts under 44AB, finding obligation unjustified.

The Tribunal ruled in favor of the assessee, deleting the penalty imposed under section 271B for failure to get accounts audited under section 44AB. The Tribunal found that since the assessee did not maintain any books of account, the obligation to get accounts audited under section 44AB did not arise. Therefore, the penalty was deemed unjustified, and the appeal was allowed in favor of the assessee.

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Issues:
Levy of penalty under section 271B for failure to get accounts audited under section 44AB.

Detailed Analysis:

Issue 1: Levy of Penalty under Section 271B
The appeal was against the order of the DC (Appeals) dated 4-2-1991 for the assessment year 1987-88, where the AO had imposed a penalty under section 271B on the assessee for not filing the Audit Report prescribed under section 44AB read with Rule 6G without reasonable cause explained. The AO charged that the assessee had not maintained account books as required by section 44AA and failed to get the accounts audited as mandated by section 44AB. The AO held that even if the assessee did not maintain account books, it was implied that some form of accounts should have been kept, especially for a business with gross receipts exceeding Rs. 40 lakhs. The DC (Appeals) upheld the penalty, stating that non-maintenance of account books did not exempt the assessee from the requirements of section 44AB. However, the Tribunal found that the assessee had not maintained any books of account and had declared profits on an estimated basis. The Tribunal noted that the Assessing Officer's penalty was based on the assumption that some form of accounts should have been maintained, overlooking the fact that the assessee had clearly stated the absence of any accounts. The Tribunal held that since the assessee did not maintain any books of account, the obligation to get accounts audited under section 44AB did not arise. Therefore, the Tribunal deleted the penalty imposed under section 271B, as it was not justified in the absence of maintained accounts.

Conclusion:
The Tribunal allowed the appeal, ruling in favor of the assessee and deleting the penalty imposed under section 271B for failure to get accounts audited under section 44AB.

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