ARVIND AGGARWAL,NEW DELHI V. ITO WARD 49(3), NEW DELHI

ITA 1035/DEL/2023

AI Insights

The case involves Arvind Aggarwal, the appellant, who contested a penalty imposed by the Income Tax Officer under Section 271B for not getting his accounts audited as required under Section 44AB of the Income Tax Act for the assessment year 2011-12. The Assessing Officer had initially completed the assessment and levied a penalty based on the total turnover from share trading. The CIT(A) upheld the penalty but remitted the issue of total turnover for recalculation. The Tribunal, however, found that the penalty under Section 271B was not applicable as the assessee had not maintained books of accounts, referencing the judicial precedent that penalties for non-maintenance of books and non-audit of accounts are distinct and cannot overlap.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 30460 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Other Referred Cases: CIT, Bareilly Vs. Bisauli Tractors, Mr. Mohit Garg Vs. ITO, Devender Chadha Vs. CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reasonable cause
• Section: 143(3); 44AB; 273B; 271B

Judgement Text

"1 ITA no. 1035/Del/2023 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘A’ NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI SUDHIR PAREEK, JUDICIAL MEMBER ITA No. 1035/Del/2023 Assessment Year: 2011-12 Arvind Aggarwal, B-67, Jeevan Niketan, LIC Colony, Paschim Vihar, New Delhi-110087. PAN: ANAPA 3492 R Vs Income Tax Officer, Ward 49(3), New Delhi. APPELLANT RESPONDENT Assessee represented by Shri Dinesh Gupta, CA & Department represented by Shri Kanv Bali, Sr. DR & Sh. Satya Prakash Sharma, Sr. DR Date of hearing 11.10.2024 Date of pronouncement 09.01.2025 O R D E R PER SUDHIR PAREEK ,J.M: This appeal, preferred by the assessee, for assessment year 2011-12, is directed against the National Faceless Appeal Centre (NFAC), Delhi’s DIN & order no. ITBA/NFAC/S/250/2022-23/1049585368(1) dated 09.02.2023 in appeal no. CIT(A), Delhi-17/10127/2019-20. The assessee has raised following grounds of appeal: 2 ITA no. 1035/Del/2023 1. That on facts and in law, the order passed by the learned Assessing Officer (AO) and the learned Commissioner of Income Tax Appeals [CIT(A)], are bad in law and void ab initio. 2. That on facts and in law, the CIT(A) has erred in holding that the assessee failed to get its accounts audited u/s 44AB of the Act, without considering the, fact that the LD AO has issued notice u/s 271A of the Act which implied that in his opinion no books of accounts were not maintained by the assessee. 3. That on facts and in law, the CIT(A) has erred in law and on facts of the case that when in the opinion of the LD AO, the assessee has not maintained the books of accounts, than there could not be nay audit of the accounts of the assesse as has been held in various case laws. 4. That on facts and in law, the AO has erred in levying penalty under Sec 271B of the Act 5. That the impugned appellate order is arbitrary, illegal, bad in law and in violation of rudimentary principles of contemporary jurisprudence. 6. The appellant craves leave to add/alter any/all grounds of appeal before or at the time of hearing of appeal 2. Facts, as emerging from the record, in brief, are that during F.Y. 2010-11 relevant to A.Y. 2011-12 the Assessing Officer completed the assessment in the case of the assessee u/s 143(3) of the Act at an income of Rs. 1,59,71/-. The Assessing Officer observed that during the impugned assessment year assessee’s total turnover from share trading was Rs. 2,80,77,311/- as reflected in form 10DB, however the assessee had not got his accounts audited as required u/s 44AAB of the Act. Accordingly, the Assessing Officer initiated penalty proceedings u/s 271B of the Act for not getting his accounts audited u/s 44AB of the Act. Subsequently, vide penalty order dated 28.06.2019 the Assessing Officer levied a penalty of Rs. 1,40,386/- u/s 271B at the minimum rate of 0.50% of Rs. 2,80,77,311/-. Aggrieved 3 ITA no. 1035/Del/2023 against it the assessee preferred appeal before the learned CIT(Appeals), who vide impugned order dated 09.02.2023 rejected the assessee’s grounds on the issue of levy of penalty u/s 271B. However, on the issue of total turnover and consequential penalty the learned CIT(A) remitted the issue to the Assessing Officer for verification and consequential recalculation of penalty, inter alia, by observing as under: “10. In ground No.3 the appellant has mentioned that the total turnover of the assessee in accordance with the Guidance Note under section 44AB of the Income Tax Act, 1961 issued by the Institute of Chartered Accountants of India is as under: 1. Sales (delivery transaction) Rs. 67,12,153/- 2. Squared up transaction (Credits) Rs. 38,689/- 3. Squared up transaction (Debits) Rs. 4,47,089/- Total Rs. 72,37,931/- Although, no penalty is to be imposed as submitted above and in any case if penalty is to be imposed the same is to imposed on a turnover of Rs. 72,37,931/- only and not on the total value of transactions of Rs.2,80,77,311/- 10.1 The contention of the appellant requires verification from its books of accounts hence the Assessing Officer is therefore directed to verify the facts needless to say after affording an opportunity being heard and recalculate the penalty amount as per applicable provisions of section 44AB and 271B of the I.T. Act if required.” 3. Still feeling aggrieved by the order of learned CIT(A) the assessee is in appeal before this Tribunal. 4 ITA no. 1035/Del/2023 4. Heard the rival submissions and carefully scanned the material available record. 5. In the course of hearing, the learned AR submitted that the learned AO has issued notice u/s. 271A of the Act which implied that in his opinion no books of accounts were maintained by the assessee/ appellant but the learned CIT(A) did not considered this fact and held that the assessee appellant failed to get its accounts audited. He further submitted when the assessee/ appellant has not maintained the books of accounts audited, there is no any possibility to audited of the books of accounts. 6. The learned AR further submitted that imposition of penalty u/s. 271B of the Act is not mandatory in view of section 273B of the Act and if any reasonable cause shown and proved no any penalty may be imposed. He further submitted that he already mentioned in the reply filed by him on 16.01.2019 before the concerned authority that has already proceeding u/s. 271A of the Act, penalty u/s. 271A of the Act been initiated for non maintain books of accounts by assessee u/s. 44AA of the Act, penalty u/s. 271B cannot be imposed. 5 ITA no. 1035/Del/2023 7. Per contra, the learned DR relied upon the orders passed by both the lower authorities. 8. The AR further submitted that Hon’ble Allahabad High Court held in the order [(2007) 165 Taxmann 1 All)] CIT, Bareilly Vs. Bisauli Tractors that the Section 271B of the Act is not attracted in a case where no account has been maintained and instead recourse u/s.271A can be taken. 9. Further, in support of his contentions the Ld. AR has relied upon following decisions :- i. “Mr. Mohit Garg Vs. ITO (ITAT Delhi) 12. At the same time, the legislature is also provided for separate levy of penalty for failure to meet each statutory requirement. In the instant case, the audit could have been conducted in the absence of books of accounts. If a person has not maintained the books of accounts, the question of audit does not arise. The infraction of Section 44AB gets attracted only when the assessee maintains the books of accounts but fail to get them audited. Hence, there is no reason to initiate penalty u/s.271B. The penalty for non-maintenance of books of accounts has already been rightly levied, hence the offence has already been taken note of and the only recourse is to levy penalty u/s.271A for non-compliance of Section 44AA. These two provisions operate under two different realms. ii. Devender Chadha Vs.CIT (ITAT Delhi-Dehradun) Considering the fact that the Judgment of Allahabad High Court in the case of Bisauli Tractor (supra) is the latest Judgment of Hon’ble High Court the same shall prevail and binding on us. Further, the ratio laid down in the Judgment of Allahabad High court in the case of Bisauli Tractor (supra) was not brought to the notice of the Kolkata 6 ITA no. 1035/Del/2023 Bench of the Tribunal while deciding the case of Rakesh Kumar Jha (supra) and Saraswati Gupta (supra), which were decided in favour of the Revenue. Thus, by following the ratio laid down by the Allahabad High court in the case of Bisauli Tractor (supra), we are of the considered opinion that the Provisions of Section 271B of the Act is not attracted as the Assessee has not maintained books of account and the Assessee is liable to the recourse u/s.271A of the Act. For the aforesaid discussions, we allow the Grounds of Appeal of the assessee and delete the order of the penalty imposed u/s. 271B of the Act in all the three Appeals.” 10. On the basis of foregoing judicial pronouncements mentioned hereinbefore and factual position of the case we find material substance in the submission advance on behalf of the assessee/ appellant. 11. From the facts mentioned here in above, we are of the considered opinion that no case of penalty U/s. 271B of the Act is made out against assessee/ appellant, hence unsustainable in law and impugned penalty deserves to be deleted. 12. Consequently, this appeal of the assessee/ appellant is allowed as stated above and levied penalty u/s. 271B of the Act is hereby deleted. Order pronounced in open court on ___09______.01.2025. SD/- SD/- (SHAMIM YAHYA) (SUDHIR PAREEK) ACCOUNTANT MEMBER JUDICIAL MEMBER *MP/NEHA, Sr. PS* "