Ankit Chauhan Vs ITO (ITAT Delhi)
Substance over form -Milk Dealer only a Commission Agent, Not Liable for Audit- Reasonable Cause Saves Assessee–- ITAT Delhi Quashes 271B Penalty
Delhi ITAT has deleted the penalty of ₹1,37,285 levied u/s 271B on an authorized dealer of Amul Milk, holding that there was reasonable cause for Assessee ’s failure to conduct a tax audit u/s 44AB.
Assessee had filed his return declaring an income of Rs 2,49,466 for AY 2017-18. His case was selected for scrutiny due to large cash deposits. During assessment, it was explained that daily sales proceeds were deposited into Assessee ’s bank a/c & immediately transferred to the Gujarat Cooperative Milk Marketing Federation Ltd. (Amul), the principal, on the same day. Assessee stated that he was merely a commission agent, earning a fixed commission & that it was his first year of business, being unaware of the applicability of section 44AB. AO however, treated Assessee as having crossed the audit threshold & imposed penalty u/s 271B for not getting accounts audited, which was later confirmed by CIT(A).
Before the Tribunal, Assessee argued that he was only acting as an agent of Amul & not carrying on an independent trading business. He relied on a Co-ordinate Bench decision in Mohammad Daud vs. ITO (22.05.2023), where under similar circumstances penalty was deleted, as well as other Tribunal rulings in Ved Singh, Dharam Singh & Parag Hashmukhbhai Davda.
