Meena Jain Vs ITO (ITAT Bangalore)
The assessee has placed P&L Account for the relevant year ending, i.e. 31.03.2018. On perusal of the same it is clear that the assessee has received cheque discounting commission and interest, both totalling to Rs.92,22,002/-. The guidance note on tax audit under Section 44AB of the Act clearly mandates that interest, commission and brokerage has to be taken as turnover in the case of money lending business and Chit business. Admittedly, the assessee is in the business of cheque discounting and finance. The gross turnover in the case bill discounting/finance would be commission/interest received. During the previous year assessee has received commission of only Rs.57,47,973/- along with interest income of Rs.34,74,029/-. Therefore, the gross turnover of the assessee is only Rs.92,22,002/-. As the turnover of the assessee was less than the prescribed limit fixed for tax audit, provisions of Section 44AB of the Act are not applicable to the assessee. When the provisions of Section 44 AB of the Act are not applicable to the facts of the case, levy of penalty under Section 271B of the Act does not arise.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This appeal at the instance of assessee is directed against the CIT(A)’s order dated 13.12.2022 passed under Section 250 of the Income Tax Act, 1961 (the Act). The relevant assessment year is 2018-19.
2. The solitary issue raised in the appeal is whether the CIT(A) is justified in confirming the penalty imposed under Section 271B of the Act.
3. The brief facts of the case are as under: –
The assessee is an individual who is engaged in the business of cheque discounting and finance. For AY 2018-19 return of income was filed on 30.08.2018 declaring total income of Rs.23,17,010/-. The assessment was completed under Section 143(3) of the Act vide order dated 16.04.2021 assessing the total income of the assessee at 1,65,98,550/- as against the returned income of Rs. 23,17,010/-.
4. The Assessing Officer (AO) initiated penalty proceedings under Section 271B r.w.s. 274 of the Act stating that the assessee’s turnover was Rs.148,64,73,069/- and was liable to get his accounts audited and having failed to do so, why penalty under Section 271B of the Act ought not to be imposed. The assessee filed reply to the show cause notice for imposition of penalty under Section 271B of the Act on 26.04.2021 stating that he had preferred appeal against the assessment order completed and therefore the penalty proceedings may be kept in abeyance till disposal of the appeal. The AO, however, was of the view that the assessee had committed default under Section 271B of the Act and penalty of Rs.1,50,000/- is to be levied for not getting the accounts audited. The relevant findings of the AO for imposing the penalty under Section 271B of the Act read as follows: –
“6. Considering the facts and circumstances of the case and material available on records, I am satisfied that the Assessee has committed default u/s. 271B of the I.T. Act. Therefore, in my opinion, this is a fit case for levying of penalty u/s. 271B of the I.T. Act. As per provisions of section 271B of I.T. Act, Penalty will be one-half per cent of total sales, turnover or gross receipts, etc., or Rs.1,50,000, whichever is less. In this instant case Assessee had achieved turnover of Rs.1l48,64,73,069/- during the year under consideration, therefore, penalty u/s 271B of I.T. Act is calculated as under: –
