Section 271B penalty deleted as assessee didn't maintain books of accounts, not failed to produce existing ones

ITAT Chennai allowed the assessee's appeal against penalty under section 271B for non-production of books of accounts. The tribunal held that since the assessee did not maintain books of accounts, the question of producing them before tax authorities did not arise. The penalty under section 271B was erroneous as it requires non-production of existing books. The appropriate penalty would be under section 271A for violation of section 44AA regarding maintenance of books. The tribunal directed deletion of the penalty.

---

---

Issues involved:
The judgment involves the levy of penalty under section 271B of the Income-Tax Act, 1961 for Assessment Years 2013-14 and 2014-15.

Adjudication of the Appeal in ITA No.1199/Chny/2023:
The case pertains to a Real Estate business assessed to income tax, where a penalty was imposed under section 271B for failure to get accounts audited u/s 44AB. The appellant contended that the penalty was unjustified, citing non-maintenance of proper books of accounts. The Commissioner (Appeals) upheld the penalty, leading to the appeal before the Tribunal.

Key Details:
- A survey operation revealed cash deposits and investments by the assessee.
- The assessee estimated income at 4% of gross receipts due to lack of proper books of accounts.
- The Assessing Officer (AO) estimated income at 8% of gross receipts, resulting in additional income.
- Penalty proceedings u/s 271B initiated and a penalty of Rs. 1,50,000/- imposed.
- The appeal before the CIT(A) was dismissed, prompting the present appeal before the Tribunal.

Tribunal's Observations:
- The Tribunal considered the distinction between non-maintenance and improper maintenance of books of accounts.
- The appellant did not maintain books of accounts for the relevant assessment years.
- The obligation to maintain proper books of accounts under section 44AA is crucial for correct income assessment.
- The Tribunal referenced a Chennai Tribunal decision and a Guwahati High Court case supporting the assessee's position.
- As the assessee did not maintain books of accounts, the penalty under section 271B was deemed erroneous.
- The Tribunal directed the AO to delete the imposed penalty in both appeals.

Conclusion:
The Tribunal allowed both appeals, emphasizing that the penalty under section 271B was unwarranted due to the non-maintenance of books of accounts, as per the provisions of the Income-Tax Act.

This summary encapsulates the legal judgment involving the levy of penalty under section 271B of the Income-Tax Act, 1961, highlighting the key issues, details, adjudication process, tribunal's observations, and the ultimate conclusion reached in favor of the appellant.

---