Sunil Sharma Vs ITO (ITAT Delhi)
The appeals pertained to Assessment Years 2013-14 and 2014-15 concerning penalties under Section 271B for failure to audit accounts. The assessee had declared turnover exceeding Rs. 1 crore in both years but did not get his accounts audited as required under Section 44AB. Consequently, the Assessing Officer imposed penalties of Rs. 81,564 and Rs. 78,588, which were upheld by the CIT(A)/NFAC.
Before the ITAT, the assessee did not provide any satisfactory explanation or mitigating circumstances that could constitute “reasonable cause” under Section 274 to excuse the non-compliance. The Tribunal observed that statutory obligations under Section 44AB are mandatory, and failure to comply attracts penalties under Section 271B. In the absence of any valid justification, the ITAT agreed with the findings of the lower authorities and upheld the penalties in both cases.
No other arguments were raised before the Tribunal. Accordingly, the twin appeals were dismissed, reinforcing that non-compliance with statutory audit requirements, without reasonable cause, leads to automatic levy of penalties under Section 271B.
FULL TEXT OF THE ORDER OF ITAT DELHI
This assessee’s twin appeals ITA Nos.1904 & 1905/Del/2025 for assessment years 2013-14 & 2014-15, arise against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s orders, both dated 24.02.2025 having DIN and order no. ITBA/NFAC/S/250/2024- 25/1073652389(1) and ITBA/NFAC/S/250/2024-25/ 1073652514(1) involving proceedings under section 271B of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’); respectively.
