PARASURAMAN,CUDDALORE V. ASSESSING OFFICER, CUDDALORE

ITA 2093/CHNY/2025

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The case involves an appeal by Parasuraman against the penalty imposed by the Income Tax Officer for not getting his accounts audited under section 44AB of the Income Tax Act. The assessee was engaged in collecting money for stamp duty and received a commission, which he declared in his tax returns. During the scrutiny assessment, the source of cash deposits in the assessee's bank account was examined, and the explanation provided was accepted. However, the Income Tax Officer initiated penalty proceedings because the assessee's turnover exceeded the audit threshold. The tribunal, after considering the facts, ruled in favor of the assessee, stating that the commission income did not require an audit as per section 44AB.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 781311 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2022-2023
• Appeal Filed On: 29-07-2025
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C.P. SOLOMON
• Keywords: Business income
• Section: 143(3)

Judgement Text

" आयकर अपीलीय अधिकरण,’सी’ न्यायपीठ, चेन्नई IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI श्रीएम.बालगणेश, लेखासदस्यक ेसमक्षएवं. श्रीएसएसववश्वनेत्ररवव, न्याययकसदस्य BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER आयकरअपीलसं./ITA No.:2093/Chny/2025 यनिाारणवर्ा / Assessment Year:2022-23 Parasuraman, No.155/2, Middle Street, Kadampuliyur and Post, Panruti Taluk, Cuddalore, Tamil Nadu-607 103. [PAN:CLQPP6548F] vs. Income Tax Officer, Ward-2, Cuddalore. (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थीकीओरसे/Appellant by : None प्रत्यर्थीकीओरसे/Revenue by : Mr.C.P.Solomon, JCIT सुनवाईकीतारीख/Date of Hearing : 21.10.2025 घोर्णाकीतारीख/Date of Pronouncement: 21.10.2025 आदेश /O R D E R PER M. BALAGANESH, AM : This appeal by the assessee is filed against the order of the learned Commissioner of Income Tax (Appeal), NFAC, Delhi, (in short Ld.CIT(A) for the assessment year 2022-23, vide order dated 23.06.2025. 2.0 The only issue to be decided in this appeal is as to whether the Ld.CIT(A) was justified in confirming the levy of penalty u/s 271B of the act in the facts and circumstances of the instant case. Printed from counselvise.com ITA. No:2093/Chny/2025 Page 2 of 4 3.0 None appeared on behalf of the assessee despite issuance of notice. Hence, we proceed to dispose of this appeal on hearing the Ld.DR and based on materials available on record. The assessee is an individual and had filed his return of income for the AY-2022-23 on 20.10.2022 declaring a taxable income of Rs.5,04,770/- which includes net commission income. The assessee submitted that he was engaged in the business activities of collecting money from public as payment towards stamp duty and pay to Tamil Nadu Government Registration Department. For rendering this services, the assessee was getting commission which was duly offered in the tax return. During the course of scrutiny assessment of the assessee framed u/s 143(3) r.w.s. 144B of the Act on 12.02.2024 wherein the source for cash deposits made by the assessee in the bank account was subject matter of examination. The explanation offered by the assessee explaining source of cash deposit was duly accepted and assessment was completed accepting the return of income. It is pertinent to note that no shifting of head of income was even contemplated by the revenue in the quantum assessment proceedings. Further, the Ld.AO in the quantum assessment order in Page-6, para-3.4.2 had even accepted that the assessee is engaging in earning commission business income. However, the Ld.AO pleaded that assessee had received registration charges from public to the tune of Rs.3,29,58,336/- which constitute turnover of the assessee and that the said turnover had exceeded the threshold limit of getting accounts audited u/s 44AB of the Act and accordingly initiated penalty proceedings u/s 271B of the Act for not getting his accounts audited u/s. 44AB of the Act. This culminated in passing of penalty order dated 28.08.2024 levying penalty of Rs.1,50,000/- u/s 271B of the Act, which stood upheld by the Ld.CIT(A). 4.0 We find that the explanation given by the assessee explaining the source of cash deposit to be emanating out of the monies received on Printed from counselvise.com ITA. No:2093/Chny/2025 Page 3 of 4 account of registration and stamp duty charges from public had been duly accepted by the revenue. The assessee had been taking consistent stand that he is engaged in this business only for earning commission income. The said commission has been offered to tax by the assessee as income from business and which has been accepted by the Ld.AO in the scrutiny assessment as such. Hence, having accepted the assessee to be deriving only commission income and having accepted the modus operandi of the same in the quantum of proceedings, taking divergent stand that assessee has not been able to prove that is he engaged in the commission income in the penalty proceedings, does not adhere to the canons of law. We hold that this is not a fit case for levy of penalty as assessee is not required to get his accounts audited u/s. 44AB of the Act as the commission has not exceeded the threshold limit for getting accounts audited. Accordingly, the grounds raised by the assessee are allowed. 5.0 In the result, the appeal of the assessee is allowed. Order pronounced in the court 21st ,October, 2025 at Chennai. Sd/- Sd/- (एसएसववश्वनेत्ररवव) (S.S. VISWANETHRA RAVI) न्याययकसदस्य/JUDICIAL MEMBER (एम.बालगणेश) (M. BALAGANESH) लेखासदस्य/ACCOUNTANT MEMBER चेन्नई/Chennai, ददनांक/Dated 21st , October, 2025 KB/- Printed from counselvise.com ITA. No:2093/Chny/2025 Page 4 of 4 आदेशकीप्रयतललवपअग्रेवर्त/Copy to: 1. अपीलार्थी/Appellant 2. प्रत्यर्थी/Respondent 3.आयकरआयुक्त/CIT– Chennai/Coimbatore/Madurai/Salem 4. ववभागीयप्रयतयनधि/DR 5. गार्ाफाईल/GF Printed from counselvise.com "