2026 (5) TMI 613

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.... PER B.M. BIYANI, A.M.: Feeling aggrieved by the order of first appeal dated 11.08.2025 passed by learned Commissioner of Income-tax (Appeals)-3, Bhopal ["Ld. CIT(A)"], which in turn arises out of the penalty-order dated 28.05.2019 passed by learned DCIT/ACIT-1(1), Indore ["Ld. AO"] u/s 271B of Income-tax Act, 1961 ["the Act"] for assessment-year ["AY"] 2016-17, the assessee has filed this ap....

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....n" head. During scrutiny-assessments, the AO re-characterized assessee's income as taxable under the "Income from Business or Profession" head and consequently, the Ld. AO imposed penalties u/s 271B in both years, through separate orders, for not getting accounts audited or non-filing of audit report u/s 44AB. The present appeal relates to AY 2016-17 for which the AO has imposed a penalty of Rs. 1....

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....see if he proves that there was reasonable cause for such failure. Whether a particular activity is trading/business or is an investment activity is a debatable issue. Without commenting on the AO's conclusions in the assessment order, I am of the considered opinion that the very fact that the appellant held the belief that his activity was one of investment and returned income accordingly con....

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....al opinions. In such circumstances, when the assessee has adopted one of the possible views and acted under a bona fide belief, it cannot be said that there was a deliberate failure to comply with the provisions of section 44AB. Section 273B clearly provides that no penalty shall be imposable if the assessee proves that there was reasonable cause for the failure. In present case, the assessee's be....