ITAT confirms both penalty u/s 271A for not maintaining books and u/s 271B for not getting Tax Audit

The Income Tax Appellate Tribunal(ITAT Kolkata) in the matter of Saraswati Gupta vs. Income Tax Officer has confirmed the penalty levied under section 271A for not maintaining books of account and a penalty under section 271B of the Act for not getting the books of account audited

The facts in brief are that the assessee is an individual. She declared her return of income at Rs.1,96,350/- on 05.03.2012. The assessment proceedings were carried out by issuance of a notice under section 148 of the Act and the assessment was completed under section 143(3) read with section 147 of the Act. So far as the additions made in the assessment order are concerned, the same are not in dispute before us. However, we notice that in the course of assessment proceedings, the ld. Assessing Officer noticed that there was a cash deposit of Rs.2,73,54,650/-, which ld. Assessing Officer considered it as a business turnover and computed the income @ 8%. The ld. Assessing Officer came to a conclusion that the assessee is liable to pay penalty under section 271A of the Act for not maintaining the books of account as provided under section 44AA of the Act and also liable to pay penalty under section 271B of the Act for not getting the books of account audited since the gross turnover for the year exceeded the limits of turnover provided under section 44AB of the Act. Accordingly penalty proceeding was initiated and after considering the submissions of the assessee, penalty under section 271A levied at Rs.25,000/- and penalty under section 271B of the Act levied at Rs.1,36,773/-.

So far as the two appeals for assessment year 2012-13 are concerned, the facts involved therein are same to that for A.Y. 2011-12 and ld. Assessing Officer levied penalty at Rs.25,000/- under section 271A of Act and at Rs.1,19,650/- under section 271B of the Act.

The assessee challenged the alleged penalties before the ld. CIT(Appeals), but on the dates of hearing, the assessee neither appeared nor filed any written submission and accordingly ld. CIT(Appeals) confirmed the levy of penalty by way of a speaking order. Being aggrieved, the assessee is now in appeal before this Tribunal for A.Ys. 2011-12 and 2012-13 challenging the levy of penalties under section 271A and 271B of the Act.

The Tribunal stated, “We have heard the rival contentions and gone through the record placed before us. We notice that for A.Ys. 2011-12 and 2012-13, there was huge cash deposit in the Bank account of the assessee and the transactions appearing therein were not declared in the income tax return. The cash deposited during the assessment years 2011-12 and 2012-13 exceeded the limits provided under section 44AB of the Act, which specifies the turnover beyond which the books of account of the assessee are required to be maintained. However, ld. Assessing Officer rather than making an addition for the total cash deposits found in the bank account during the year concluded the assessment proceeding by treating it as a business turnover and estimated the net profit thereon. So far as the action of the ld. Assessing Officer is concerned, the same has not been disputed by the assessee at any stage. Thus it remains an admitted fact that since assessee has accepted the finding of ld. Assessing Officer treating the cash deposit during the year as business turnover, and the gross turnover from the business for the year under appeal exceeds the prescribed limits as provided under section 44AB of the Act and the assessee is required to get the accounts audited and failure to do so attracts the penalty under section 271B of the Act. Now for the purpose of getting the books of account audited, the assessee should maintain the books of account, but in this case, the assessee has not maintained books of account also. Based on these observations, the ld. Assessing Officer initiated the penalty proceedings under section 271A of the Act for not maintaining the books of account and under section 271B of the Act for not getting the books of account audited. The contentions of the ld. Counsel for the assessee is that since the assessee has not maintained the books of account, it should be charged only with the penalty under section 271A of the Act and since books of account are not maintained, the assessee should not be penalized for not getting the books of account audited under section 271B of the Act. Further it has been submitted that since the assessee based on some reasons did not maintain the books of account for A.Y. 2011-12 and the same is also applicable for A.Y. 2012-13, the assessee deserves to get relief for being penalties imposed under section 271A and 271B of the Act for A.Y. 2012-13 under the provisions of section 273B of the Act.”

They also observe that penalty under section 271A of the Act is leviable in a case when the assessee does not maintain the books of account as provided under section 44AA of the Act i.e. for noncompliance of section 44AA of the Act. Whereas penalty under section 271B of the Act is leviable for not getting the books of account audited. Now the contention of the assessee is that the assessee intends to get benefit for its own wrong doing. On one hand, since the turnover of the assessee exceeds the limit prescribed under section 44AB of the Act and to get the books of account needs to be audited but since she has not maintained the books of account, it is pleaded that only penalty for not maintaining the books of account should be leviable and no penalty should be levied for not getting the books of account audited. If such plea is considered, then in case of a person, who is required to maintain the books of account but does not maintain the books of account and even not filed the return of income and thereafter when the ld. Assessing Officer wants to examine credit entries in the bank account, which assessee is unable to explain, then it cannot be pleaded by the assessee that since it has not maintained books of account, therefore, provision under section 68 of the Act cannot be invoked.

The tribunal notice that recently similar issue came for adjudication before the Coordinate Bench Ranchi in the case of Rakesh Kumar Jha –vs.- ITO (2023) 150 taxmann.com 298 and this Tribunal after considering the judicial precedence on this issue has decided it against the assessee holding that in case of not maintaining books of account by a person, whose gross business turnover exceeds the prescribed limit under section 44AB of the Act, then both the penalties i.e. under section 271A and 271B are leviable.

After going through the decision of the Coordinate Bench, Ranchi, the IT Appellate Tribunal is of the view that the same is squarely applicable on the facts of the present case and respectfully following the same and confirm the finding of the ld. CIT(Appeals) and accordingly penalties for A.Y. 2011-12 and 2012-13 levied under section 271A for not maintaining books of account and penalty under section 271B of the Act for not getting the books of account audited stand confirmed.

In the result, all the appeals of the assessee are dismissed.

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