Case Law Details
Suresh Sharma Vs ITO (ITAT Bangalore)
Introduction: In a significant ruling, the Income Tax Appellate Tribunal (ITAT) Bangalore held that the initiation of penalty proceedings under Section 271A of the Income Tax Act is not applicable if the assessee has properly maintained the Books of Account. The case involved the appellant, Suresh Sharma, contesting the order passed under section 271A read with Section 44AA of the Act, which imposed a penalty for the failure to maintain books of accounts.
Analysis: The appeal, filed by the assessee, argued that he had maintained regular books of account for the assessment year 2017-18 and had even got the books audited under section 44AB of the Act. Despite providing the Audit report in Form 3CB-3CD and other necessary documents, the assessee was imposed a penalty of Rs. 25,000 under section 271A.
The ITAT Bangalore, after hearing both parties and considering the available material, observed that the penalty had been levied for non-maintenance of books of accounts, even though the assessee had clearly maintained them, as evidenced by the submitted audit report. The tribunal further referenced a past judgment (Dr. Vinay T. Karnavat Sillod Vs. ITO (2007) 104 ITD 108 (Pune)), which clarified that penalty under section 271A cannot be imposed in isolation and ignoring rule 6F.
Conclusion: The ruling by ITAT Bangalore provides much-needed clarity and relief to assessees who maintain proper Books of Account and highlights the importance of careful consideration of rules before levying penalties. In this case, the tribunal conclusively held that the penalty under section 271A of the Act could not be imposed given the fact that the assessee had properly maintained and audited the books of accounts.
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