Manphool Singh Vs ITO (ITAT Jaipur)
ITAT Jaipur held that assessee failed to get its books of accounts audited based on a reasonable cause. Accordingly, penalty under section 271B of the Income Tax Act for failure to get books of account audited not leviable as assessee reasonable cause shown.
Facts- During the assessment proceedings, it was noticed that the total turnover/gross receipts of the assessee was at Rs.1,29,00,787/-. Therefore, the assessee was required to get his accounts audited by an accountant but as per the records the accounts of the assessee were not got audited. Based on these observation order of levying penalty u/s. 271B for an amount of Rs. 65,000/- was passed by the NeFAC. CIT(A) confirmed the levy of penalty. Being aggrieved, the present appeal is filed.
Conclusion- The reasons advanced by the assessee this he has offered the income under the head capital and under that head though the income / receipt 1 cr there is no requirement to get the books of accounts audited and therefore, this being the reasonable cause for the assessee. The provision of section 271B gives power to the taxing authority not to impose the penalty if the assessee proves that there was a reasonable cause for such failure.
Held that the assessee was prevented by sufficient cause and therefore, we are of the considered view that the penalty of levied by the lower authorities confirmed by the ld. CIT(A) u/s 271B of the Act does not have any legs to stand, therefore, the same is deleted.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
This appeal is filed by the assessee aggrieved from the order of the National Faceless Appeal Centre, Delhi [Here in after referred as (NFAC)] for the assessment year 2014-15 dated 19.10.2023, which in turn arises from the order passed by the AO under Section 271B of the Income tax Act, 1961 (in short ‘the Act’) dated 28.10.2020.
2. The assessee has taken following grounds in this appeal;
“1. That the learned Authorities below have grossly erred in law and facts in passing the order which is bad in law and facts. Hence liable to be quashed.
2. That the learned Authorities below have grossly erred in law and facts in making/confirming Penalty of Rs. 64,503/- u/s 271B of Income Tax Act on assumption and presumption basis. Hence the addition is liable to be deleted.
3. The appellant has reserved a right to add, amend or alter any ground or grounds of appeal on or before the appeal hearing.”
3. The fact as culled out from the records is that the assessee has filed his return of income for assessment year 2014-15 on 28.03.2016 declaring total income of Rs. 3,15,530/-, the case was selected for scrutiny and notice u/s 143(2) issued on 19.09.2016. The scrutiny assessment was completed on 26.12.2016 at the income of Rs. 4,14,850/-. During the assessment proceedings, it was noticed that the total turnover/gross receipts of the assessee was at Rs.1,29,00,787/-. Therefore, the assessee was required to get his accounts audited by an accountant but as per the records the accounts of the assessee were not got audited. Based on these observation order of levying penalty u/s. 271B for an amount of Rs. 65,000/- was passed by the NeFAC.
4. Aggrieved from the said action of the Assessing Officer, assessee preferred an appeal before the ld. CIT(A)/NFAC. Apropos to the grounds so raised the relevant finding of the ld. CIT(A)/NFAC is reiterated here in below:-
“This appeal is against the order u/s 271B of the Income Tax Act, 1961. During the year, the total turnover/gross receipts of the appellant was Rs.1,29,00,787/-. Therefore, appellant was required to get the accounts audited. As the accounts were not audited, penalty u/s 271B was levied. Further, the appeal filed against the assessment order was dismissed by the CIT(A)-2, Jaipur vide order dated 28.03.2019, which corroborates the findings of the Assessing Officer and appellant did not filed further appeal in ITAT.
5.1 There is a mistake in the last line of the order u/s 271B of the Act. Penalty impossible @ 1/2% of gross receipts is worked out at Rs. 64,503/-, but in the last line penalty amount is mentioned as Rs. 65,000/-. Therefore, Assessing Officer is directed to charge penalty of Rs. 64,503/- thereby relief of Rs. 497/- is given remaining amount of penalty is confirmed.”
5. As the ld. CIT(A) confirmed the levy of the penalty holding that the reasons advanced by the are not covered under the any reasonable clause and since the assessee has not complied the statutory provisions, the action of levy of penalty by the AO was confirmed. Aggrieved from the said order of the ld. CIT(A) the assessee preferred this appeal solely on the levy of the penalty u/s. 271B of the Act. To support the ground so raised the ld. AR appearing on behalf of the assessee has placed their written submission which is extracted in below;
That the appellant filled his return of income on 28/03/2016 declaring income as under:
