Case Law Details
Rupa Sanjay Nigade Vs ITO (ITAT Pune)
Introduction: In the case of Rupa Sanjay Nigade Vs ITO, ITAT Pune upheld the imposition of a penalty under Section 271B of the Income Tax Act, 1961 due to the non-audit of books of accounts. The appeal was made against an order by the National Faceless Appeal Centre (NFAC), Delhi. The assessee’s argument was dismissed as her business income exceeded the threshold, necessitating the audit of accounts under section 44AB of the Act.
Rupa Sanjay Nigade, the appellant, argued that she was not required to audit her books of accounts as her business income, a commission of Rs.4,47,770, did not exceed the prescribed limit of Rs.1 crore under Section 44AB of the Act. However, the lower appellate authority and NFAC stated that the appellant’s gross receipts exceeded Rs. 1 crore, making her liable for maintaining books of accounts and getting them audited.
The Tribunal noted that the appellant’s contention was based on a misunderstanding of the provisions of the Act. The fact that she did not maintain books of accounts did not excuse her from the requirement of getting them audited under section 271B. The appellant’s failure to provide a reasonable cause for non-imposition of penalty led to the upholding of the penalty by the Tribunal.
ITAT Pune’s judgement in the Rupa Sanjay Nigade Vs ITO case underscores the importance of complying with the Income Tax Act’s auditing requirements. The ruling clarified that the need to audit the books of accounts applies irrespective of whether or not an assessee maintains these books, as long as their income or gross receipts exceed the stipulated thresholds. The case serves as a reminder for businesses and professionals to ensure compliance with tax regulations to avoid penalties.
FULL TEXT OF THE ORDER OF ITAT PUNE
This assessee’s appeal for assessment year 20172018, arises against the National Faceless Appeal Centre [in short “NFAC”] Delhi’s Din and Order No. ITBA/NFAC/S/250/ 2022-23/1052246458(1), dated 21.04.2023, involving proceedings u/s. 271B of the Income Tax Act, 1961 (in short “the Act”).
Heard both the parties. Case file perused.
2. Coming to the assessee’s sole substantive grievance that both the learned lower authorities have erred in law and on facts in levying the impugned sec.271B penalty of Rs.71,732/-, we note that the NFAC’s lower appellate discussion affirming the same reads as under : 
submitted that she does not maintain books of accounts and that it is a prerequisite condition that appellant has to maintain books of account for audit and therefore sec 271B is not applicable.
4.2 The AO held that the appellant was liable to maintain book of account u/s 44AA of the Act as the business income of Rs 447770 for A.Y 2016-17 exceeds Rs 1,20,000 and is falling within the three preceding years from the F.Y 2016-17 and hence she was liable to maintain books of accounts. Further her gross receipts was exceeding Rs 1 crore and therefore she was liable to get her accounts audited u/s 44AB of the Act. Therefore, AO imposed penalty of Rs 71,732 u/s 271B of the Act.
4.3 I have carefully considered the facts of the case, the submission of the appellant and evidences on record. During the course of appellate proceedings, the appellant again in her submission cited the grounds of appeal against the order u/s 143(3) r.w.s 144 of the Act which has no relevance with the appeal proceedings and in the second part submitted that she does not maintain books of accounts and that it is a prerequisite condition that appellant has to maintain books of account for audit and therefore sec 271B is not applicable. This submission of the appellant is not tenable. According to section 44AA (2) of the act, in relation to any other persons engaged in any other profession or carrying on any business other than section 44AA (1), the requirement of compulsory maintenance of books of accounts applies if- either the income from business or profession exceeds Rs 1,20,000 or the turnover or gross receipts exceed Rs 10 Lakhs in any one of the three years immediately preceding the previous year. The AO has established that the appellant was liable to maintain book of account u/s 44AA of the Act as the business income of Rs 4,47,770 for A.Y 2016-17 exceeds Rs 1,20,000 and is falling within the three preceding years from the F.Y 2016-17 and hence she was liable to maintain books of accounts. Under section 44AB of the Act every person Carrying on Business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed Rs.1 Crore in any previous year, get his accounts of such previous year audited by a Chartered Accountant before the specified date and furnish by that date the report of such audit in the prescribed form, duly signed and verified, by such accountant and setting forth such particulars as may be prescribed. Failure to get the books of accounts audited will lead to imposition of penalty u/s 271B of the Act. The appellant’s gross receipts exceeded Rs 1 crore during the year.
4.4 The claim of the appellant that since she is not maintaining any books of accounts she does not need to get her books of accounts audited and hence section 271B is not applicable is not correct and is based on wrong understanding of the provisions of the Act. The appellant has not been able to also prove why she is not required to maintain books of account. Therefore, I find that the appellant has failed to offer any reasonable cause for non-imposition of penalty. In view of the above, the order of the AO levying penalty u/s 271-B of Rs.71,732/-of the Act is upheld. The appeal of the appellant on these ground are dismissed.
3. Learned counsel’s sole substantive argument in the instant case is that the assessee had merely derived small amount of commission treated as business income of Rs.4,47,770/- and, therefore, the same nowhere exceeds the prescribed threshold limit of Rs.1 crore mandatory for the purpose of maintaining the books of account u/s.44AB of the Act. We find no merit in the assessee’s instant solitary argument once it has come on record that the corresponding turnover of Rs.1 crore indeed gets satisfied in the instant case as per the CIT(A)’s detailed discussion (supra). We, therefore, reject the assessee’s vehement arguments seeking to treat her net income only in the nature of commission as business turnover not requiring her to maintain books of account. We accordingly accept the Revenue’s stand supporting the NFAC’s above detailed discussion in entirety. The assessee fails in her sole substantive grievance. Ordered accordingly.
4. This appeal of the assessee is dismissed in above terms.
Order pronounced in the open Court on 25.05.2023.
