When books of accounts are not maintained, levying penalty u/s 271B for not getting books audited unjustified

Lokesh Kumar Sharma Vs ITO ( ITAT Jaipur)

ITAT Jaipur held that where no books of account are maintained, penalty should be imposed for non-maintenance of books of account u/s 271A of the Income Tax Act. However, in such circumstances imposing penalty u/s. 271B for not getting books of accounts audited is not justifiable.

Facts- AO initiated penalty proceedings under section 271B of the IT Act for violation of provisions of section 44AB 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.

Conclusion- Held that since the AO himself has recorded a categorical finding in the order of assessment that no books of accounts were maintained by the assessee, therefore, in my view in such circumstances a question arises as to whether any penalty can be imposed under section 271B for not getting the books of accounts audited. In this regard, I rely upon the decision of Hon’ble Gauhati High Court in the case of Suraj Mal Parasuram Todi vs. CIT (supra) wherein it was held that where no books of account are maintained, penalty should be imposed for non maintenance of books of account u/s 271A of the Act and in such circumstances no penalty can be imposed under section 271B for violation of section 44AB of the Act. Therefore, while summing up the entire discussion and while relying upon the different decisions as mentioned supra, I am also of the view that in the instant case since assessee was not found to have maintained the books of account, therefore, no penalty can be imposed for not getting the books of accounts audited as prescribed under section 271B of the Act for violation of section 44AB of the Act.

FULL TEXT OF THE ORDER OF ITAT JAIPUR

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