ITAT allowed the appeal and deleted the penalty under section...

ITAT allowed the appeal and deleted the penalty under section 271A. The tribunal held that the assessee is a local authority whose income is exempt under section 10(46) and, not being engaged in business or profession, is not within the class of persons obliged to maintain accounts as prescribed by section 44AA; consequently section 44AA is inapplicable and no penal consequence under section 271A can arise. The tribunal further noted that the assessee maintained books from which financial statements were prepared, negating any finding of complete non-maintenance. All grounds of appeal of the assessee were allowed and the impugned penalty was set aside.

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