Sh. Naresh Kumar Vs ITO (ITAT Delhi)
In the case of Naresh Kumar vs. ITO, the Delhi Income Tax Appellate Tribunal (ITAT) ruled in favor of the appellant, a Mother Dairy agent and ex-serviceman, by overturning a penalty imposed under Section 271B of the Income Tax Act. The assessee’s case was scrutinized due to cash deposits of ₹25.59 lakhs during the demonetization period. Although his income was derived from a dairy booth in Greater Kailash, the assessing officer observed gross sales of ₹1.70 crore, deeming him liable to maintain audited accounts as per Section 44AB. However, the assessee argued that his income was limited to a commission on sales rather than the gross turnover, and he lacked formal accounting knowledge. The ITAT recognized that his daily earnings depended solely on commission and that he lacked books of account as he only recorded collections. Furthermore, the ITAT noted that it was the duty of the authorities to consider the appellant’s capacity to comply with audit requirements given his limited role and income. Applying discretionary power, the tribunal concluded that the penalty was unjust and directed its deletion, as the appellant’s activities did not warrant strict adherence to Section 44AB’s audit provisions.
