Rcube Amalgamations Vs DCIT (ITAT Chennai)
No Double Penalty for Same Default: ITAT Chennai Deletes Section 271B Penalty Where Penalty under Section 271A Already Levied
The Chennai Bench of the ITAT allowed the assessee’s appeal for AY 2017-18 and deleted the penalty of ₹1.50 lakh levied under section 271B for failure to furnish audit report under section 44AB. The Tribunal held that once penalty had already been imposed under section 271A for non-maintenance of books of account, a further penalty under section 271B could not be sustained.
The assessee explained that books of account could not be maintained during the relevant year due to a genuine hardship, as the accountant met with a serious accident. The Assessing Officer accepted the fact of non-maintenance of books and levied penalty under section 271A. However, the AO additionally levied penalty under section 271B for non-furnishing of audit report, which was confirmed by the CIT(A), NFAC.
The ITAT relied on settled judicial principles laid down by multiple High Courts, including Gauhati High Court in Surajmal Parsuram Todi, Allahabad High Court in CIT v. S.K. Gupta & Co. and Madhya Pradesh High Court in Bharat Construction Co., and followed the coordinate Chennai Bench decision in Shanthilal D. Jain v. DCIT. It was reiterated that the obligation to get accounts audited under section 44AB arises only if books of account are maintained. Where the offence of non-maintenance is complete and penalised under section 271A, there can be no further default attracting section 271B.
Accordingly, the Tribunal held that levy of penalty under section 271B amounted to double penalisation for the same default, which is impermissible in law. The penalty was deleted in full and the assessee’s appeal was allowed
FULL TEXT OF THE ORDER OF ITAT CHENNAI
