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TaxTMI 
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TaxTMI 
2023 (4) TMI 459
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.... the Income Tax Act, 1961 considering the income as Rs. 2,26,620/-. Apart from this, the AO initiated penalty proceedings under section 271B of the IT Act and consequently after providing opportunity of hearing to the assessee penalty of Rs. 75,297/- was imposed under section 271B of the Act on 27.01.2022. Aggrieved by the order of the AO, assessee filed appeal before the ld. CIT (A). However, considering the submissions of both the parties, the ld. CIT (A) dismissed the appeal filed by the assessee and upheld the imposition of penalty. Aggrieved by the order of the ld. CIT (A), the assessee preferred the present appeal before the Tribunal on the ground mentioned hereinabove. 3. The solitary ground raised by the assessee before me is with regard to the challenging the order of ld. CIT (A) (NFAC) in upholding the imposition of penalty under section 271B of the Act. 4. Before me, the ld. A/R appearing on behalf of the assessee has reiterated the same arguments as made by him before the ld. CIT (A) and also relied upon his detailed written submissions which are reproduced herein below :- "Your honor, this appeal was filed against the order u/s 271B of the Income Tax Act, 1961 for ....
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....e the net profit arrived at by the assessee is not verifiable. Also, your honours assessee himself admitted the fact of not maintaing the proper books of accounts in his earlier reply filed with AO as well as Ld.CIT(A). Your honour it is worthy to note that "when the assessee did not maintain the regular books of account then the question of getting of books of accounts audited does not arise. Once, there is a violation of provisions of section 44AA of the Act the said violation cannot be extended to section 44AB of the Act. The provisions of Section 44AB of the Act can be invoked only when the assessee has complied with the provisions of Section 44AA of the Act. Therefore, the violation of Section 44AA of the Act cannot continue because once it is found that the assessee did not maintain the regular books of account the said violation cannot travel beyond the provisions of Section 44AA and hence, cannot be held as a further violation of Section 44AB of the Act. The Hon'ble Allahaband High Court in case of CIT Vs. Bisauli Tractors (supra) while dealing with this issue as held in paras 11 to 14 as under: - "11. In the case of S. Narayanappa & Bros. v. CIT [1961] 41 ITR 125 the....
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.... as relating to a case where a return has been filed but from which return particulars of income have been omitted or any particulars have been deliberately inaccurately furnished. The use of the expression 'particulars of his income' and 'particulars of such income' would be wholly inapposite in a case where no return has at all been filed; such a case would clearly come within the scope of section 28(1)(a) alone." 13. This Court in CWT v. Yadu Raj Narain Singh [2006] 286 ITR 564 also taken the same view. It has held as follows : "Thus applying the strict construction of penalty provisions contained in clause (1) of sub-section (c) of section 18 of the Act, we find that prior to the amendment in Explanation 3 by the Direct Tax Laws (Amendment) Act, 1987 with effect from 1-4-1989 in a case where the person who has previously been assessed under the Act does not file any return in response to the notice or even where time for filing ITA No. 38/JP/2018 Shahnaz Khanam vs. ITO 7 the return has expired has not filed any return there cannot be any concealment for which penalty provision can be imposed. In view of the foregoing discussions, we are of the considered opinion that in the p....
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....audit of accounts. Similar view has been taken by the Hon'ble Allahabad High Court in CIT vs. Bisauli Tractors (2008) 299 ITR 219 (All). The Hon'ble Allahabad High Court reiterated the similar view in CIT and Anr. Vs. S.K. Gupta and Co. (2010) 322 ITR 86 (All) by holding that requirement of getting the books of account audited can arise only where the books of account are maintained. In the absence of the maintenance of books of account, there can be no penalty u/s 271B of the Act. In view of the foregoing legal position emanating from the judgment of the two Hon'ble High Courts, we are convinced that penalty u/s 271B ought not to have been levied because the assessee admittedly did not maintain any books of account as has been recorded in the assessment order itself. We, therefore, order for the deletion of penalty. 4. As regards the imposition of penalty u/s 271(1)(c) of the Act on the addition of Rs.7.5o lac, we find that this addition has resulted on estimation of income at 5% on estimated sales ITA Nos.6696 & 6645/De1/2014 of Rs.1.50 crore. Except that there is no other basis for imposition of penalty. The Hon'ble Delhi High ITA No. 38/JP/2018 Shahnaz Khanam vs. ....
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....t the assessee. Apart from this, assessee also had categorically mentioned that he was not maintaining any books of accounts and even the Tax Consultants of the assessee filed his ITR by collecting information available with him i.e. sales, purchases and bank book. But the said Tax Consultants has refused to sign the Tax Audit Report mainly on the ground that no books of accounts were maintained by the assessee. 6.1. I have also gone through meticulously the orders passed by the revenue authorities and in the order passed by the AO, I noticed that he also categorically mentioned that assessee has failed to produce books of accounts and bills/vouchers for verification of purchases and other expenditures claimed in the Profit & Loss account and hence the net profit arrived at by the assessee is not verifiable. Thus from the conjoint reading of the defence as set up by the assessee before the revenue authorities, I conclude that when assessee did not maintain regular books of accounts, then the question of getting the books of account audited does not arise at all. I am also of the view that since there is a violation of provisions of section 44AA of the Act and the said violation ca....
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....ry return filed after the period of four years from the close of the assessment year is not a valid return and such a case should be regarded as if no return has been filed at all and it cannot be said in such a case that there has been a concealment of the particulars of income or deliberate furnishing of inaccurate particulars and section 28(1)(c) of the Income-tax Act, 1922 would not be applicable. The Madras High Court has held as follows : "When we come to section 28(1)(c ), it deals specifically with the concealment of 'particulars' of income or the deliberate furnishing of inaccurate 'particulars' of income. In the setting in which this subsection finds place it is impossible to construe section 28(1)(c) except as relating to a case where a return has been filed but from which return particulars of income have been omitted or any particulars have been deliberately inaccurately furnished. The use of the expression 'particulars of his income' and 'particulars of such income' would be wholly inapposite in a case where no return has at all been filed; such a case would clearly come within the scope of section 28(1)(a) alone." 13. This Court in CWT v. Yadu Raj Narain Singh [2....
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....he penalty u/s 271B is concerned, it is noticed that the AO has recorded a categorical finding on page 2 of the assessment order that no books of account were maintained by the assessee. Under such circumstances, a question arises as to whether any penalty can be imposed u/s 271B for not getting the books of account audited. The Hon'ble Gauhati High Court in Suraj Mal Parasuram Todi vs. CIT (1996) 222 ITR 691 (Gau.), has held that where no books of account are maintained, penalty should be imposed for non- maintenance of books of account u/s 271A and no penalty can be imposed u/s 271B for violation of section 44AB requiring ITA Nos.6696 & 6645/Del/2014 audit of accounts. Similar view has been taken by the Hon'ble Allahabad High Court in CIT vs. Bisauli Tractors (2008) 299 ITR 219 (All). The Hon'ble Aliahabad High Court reiterated the similar view in CIT and Anr. Vs. S.K. Gupta and Co. (2010) 322 ITR 86 (All) by holding that requirement of getting the books of account audited can arise only where the books of account are maintained. In the absence of the maintenance of books of account, there Can be no penalty u/s 271B of the Act. In view of the foregoing legal position ....