Naresh Kumar Vs ITO (ITAT Hyderabad)
ITAT Hyderabad held that rejection of books during assessment proceedings does not retrospectively nullify the obligation to comply with section 44AB of the Income Tax Act within the prescribed time. Accordingly, penalty under section 271B upheld.
Facts- AO noticed that the assessee had deposited cash to the tune of Rs.1,00,10,000/-in his bank account. Accordingly, the case of the assessee was reopened u/s. 147 of the Act. After considering the submissions of the assessee, AO rejected the books of account u/s. 145 of the Act and computed the net profit at the rate of 3% on the total turnover of Rs.2,53,63,877/-, arriving at net profit of Rs.7,60,916/-. After allowing deduction u/s. 80C of the Act of Rs.35,355/-, the total income was determined at Rs.7,25,561/- by order dated 27.12.2017 u/s. 143(3) r.w.s. 147 of the Act.
Subsequently, AO also initiated penalty proceedings u/s. 271B of the Act for failure on the part of the assessee to get accounts audited within the stipulated time. Accordingly, AO levied a penalty of Rs.1,26,819/- on the assessee u/s. 271B of the Act, vide his order dated 26.06.2018.
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- The statutory obligation to obtain and furnish an audit report under section 44AB of the Act arises from the turnover of the business and exists independently of the manner in which the Ld. AO ultimately determines income. Rejection of books during assessment proceedings does not retrospectively nullify the obligation to comply with section 44AB of the Act within the prescribed time.
