Parasuraman Vs ITO (ITAT Chennai)
ITAT Chennai deletes penalty u/s 271B – commission agent not liable for audit when only earning commission income
Assessee, an individual from Cuddalore, filed his return for AY 2022-23 declaring income of ₹ 5,04,770 from commission business. He acted as an agent collecting stamp-duty payments from the public & remitting them to the Tamil Nadu Registration Department, earning a small commission thereon. During scrutiny assessment u/s 143(3) r.w.s. 144B, the AO accepted the Assessee’s explanation for cash deposits & the business model, concluding that the source of deposits was public money collected for government stamp duties. However, AO treated the total collections of ₹ 3.29 crore as the “turnover” of the Assessee & levied penalty u/s 271B for failure to get the accounts audited u/s 44AB, which was upheld by the CIT(A).
On further appeal, Tribunal observed that in the quantum assessment order itself, the Revenue had accepted that the Assessee was only earning commission income, not trading in government stamps. Having accepted this position, it was impermissible for the Department to treat the total deposits as turnover for the purpose of Sec. 44AB. The Bench held that since the commission receipts did not exceed the audit threshold, the Assessee was not required to get his accounts audited, & therefore no penalty u/s 271B could be sustained.
