Once Penalty Stood Levied U/s 271A For Non-Maintenance Of Books Of A/c, No Further Penalty U/s 271B Can Be Levied: Mumbai ITAT
Referring to the decision of Varadagovind Parthasarthy Iyer (through the legal heir Arvind Iyer) vs. ITO (in ITA No.1716/Mum/2023), the Mumbai ITAT ruled that penalty u/s. 271B of the Income tax Act cannot be levied in the present facts of the case for non-auditing of the books of accounts where the assessee has failed to maintain the same.The Bench of S. Rifaur Rahman (Accountant Member)...
Referring to the decision of Varadagovind Parthasarthy Iyer (through the legal heir Arvind Iyer) vs. ITO (in ITA No.1716/Mum/2023), the Mumbai ITAT ruled that penalty u/s. 271B of the Income tax Act cannot be levied in the present facts of the case for non-auditing of the books of accounts where the assessee has failed to maintain the same.
The Bench of S. Rifaur Rahman (Accountant Member) and Kavitha Rajagopal (Judicial Member) observed that “It is a settled proposition of law that once the penalty has been levied u/s. 271A of the Act for non-maintenance of books of accounts, then penalty u/s. 271B of the Act cannot be levied”. (Para 11)
As per the brief facts of the case, the assessee is an individual engaged in the business of trading in plastic bags and also into the business of cheque discounting where the assessee received commission @ 1.5% to 2%. The assessee's case was reopened u/s 147 for the reason that the assessee has deposited cash in his bank accounts and the total turnover of the assessee was less in comparison to the total credit made in the bank account of the assessee during the year under consideration and that the sources of the difference in the amount credited in the bank account of the assessee remains unexplained. The assessee had filed return in response to the said notice declaring total income at Rs.2,96,750/- on gross receipts of Rs.15,44,870/- and commission income of Rs.3,60,865/- and after claiming deduction in Chapter VIA, the total income is declared at Rs.6,41,650/-. The AO thereafter, passed order u/s 271B and levied a penalty of Rs.80,566/- being 0.5% of the turnover of Rs.1,61,13,210/-.
The Bench noted the submission of the AR that the AO in the assessment proceeding had accepted the returned income filed by the assessee but had levied penalty for the reason that the assessee has not audited his book of accounts as per the provisions of section 44AB.
The Bench also referred to the submission of the AR that the AO had initiated the penalty proceedings u/s. 271A and 271B of the Act for failure to maintain the books of accounts and for not getting the same audited.
The Bench observed that in the present case, the AO had levied a penalty of Rs.25,000/- u/s. 271A of the Act which according to the AR has been accepted and paid by the assessee.
Accordingly, the ITAT allowed the assessee's appeal and concluded that once penalty u/s 271A stands levied for non-maintenance of books of accounts, no penalty u/s 271B can be levied.
Counsel for Appellant/ Assessee: Manisha Ghind
Counsel for Respondent/ Revenue: P D Chougule
Case title: Haresh Ghanshyamdas Makhija verses ITO
Case Number: ITA Nos. 2904 & 2906/Mum/2023