2026 (7) TMI 1718

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.... Income Tax Act, 1961 (for short, "the Act") and under section 271B of the Act, both dated 20/08/2025. We shall now take up the appeal filed by the assessee in ITA No.2154/Hyd/2025, wherein the impugned penalty imposed by the AO under section 271A of the Act has been assailed before us. 2. Succinctly stated, the AO, during the reassessment proceedings, accepted the assessee's explanation that he was carrying on business as a commission agent in the sale of agricultural produce and estimated his commission income at Rs. 4,01,626/-. However, the AO, while concluding the assessment proceedings, initiated penalty proceedings under section 271A of the Act, holding that the assessee had failed to maintain books of account as required under....

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....ertaken by the AO regarding the statutory requirements contained in section 44AA(2), nor has any opportunity been afforded to the assessee to explain the factual position with reference to the preceding three years. 6. Considering the totality of the facts and in the interest of justice, we are of the view that the issue requires fresh examination by the AO. Accordingly, we set aside the impugned order of the CIT(A) and restore the matter to the file of the AO with a direction to examine afresh whether the assessee was under a statutory obligation to maintain books of account under section 44AA of the Act having regard to the conditions prescribed therein, particularly with reference to the income and turnover, as the case may be, in the....

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.... the matter in appeal before the CIT(A), who confirmed the penalty imposed by the AO. 12. The assessee, aggrieved with the CIT(A) order, has carried the matter in appeal before us. 13. We have heard the Ld. Authorized Representatives of both parties, perused the orders of the authorities below and the material available on record. 14. Ostensibly, the AO in the assessment order has accepted that the assessee was merely acting as a commission agent and earned only commission income. Also, the Profit and Loss Account placed before us shows that the assessee was functioning as a kachha arhtia. 15. We find that the CBDT, in Circular No. 452 dated 17.03.1986, while explaining the scope of Section 44AB, has clarified that in the case o....