2022 (11) TMI 1495 - AT - Income Tax

Levy of penalty u/s 271B - Failure of assessee to get accounts audited as stipulated under the provisions of section 44AB - as contended that the appellant is only a commission agent and was only purchasing fruits for the said Mr. Dinanath Gupta and selling them to traders as per instruction of said person for the purpose of computing the turnover annual commission alone has to be reckoned as the gross receipts. HELD THAT - We are of the considered opinion that it is not fit case for levy of penalty u/s 271B merely because the appellant was unable to substantiate the submission that the appellant is only commission agent because there is no obligation on the part of the assessee to get the accounts audited as he was under the bona-fide belief that it is only commission receipt which can be considered as turnover for the purpose of section 44AB of the Act. Accordingly we direct the AO to delete the penalty u/s 271B of the Act. Appeals of the assessee stands allowed.

Summary

Issues Involved:
- Appeals filed by the assessee against separate orders of the Commissioner of Income Tax for assessment years 2010-11 and 2012-13.
- Whether penalty under section 271B of the Income Tax Act should be levied on the assessee.
- Identical facts and common issues in both appeals.

Analysis:
1. Assessment Year 2010-11:
- The appellant, an individual, filed a return of income for the assessment year 2010-11 declaring total income of Rs.1,73,260.
- During assessment proceedings, the Assessing Officer found cash deposits of Rs.1,48,43,428 in the appellant's bank account, alleging undisclosed business receipts.
- The Assessing Officer issued a notice under section 148 of the Income Tax Act, 1961, and completed the assessment at 8% of the cash deposits.
- A penalty under section 271B was imposed on the appellant for failure to get accounts audited as per section 44AB.
- The appellant contended being a commission agent for Mr. Dinanath Gupta and argued that only annual commission should be considered as gross receipts.
- The ITAT Pune held that the penalty under section 271B was not justified as the appellant was under a bona-fide belief regarding turnover calculation, directing the deletion of the penalty.

2. Assessment Year 2012-13:
- The facts and issues in the appeal for A.Y. 2012-13 were identical to those in A.Y. 2010-11.
- The decision taken for A.Y. 2010-11 was applied mutatis mutandis to the appeal for A.Y. 2012-13, resulting in the allowance of the appeal for A.Y. 2012-13 as well.
- Both appeals of the assessee were allowed, and the penalty under section 271B was directed to be deleted in both cases.

In conclusion, the Appellate Tribunal ITAT Pune allowed the appeals filed by the assessee against the orders of the Commissioner of Income Tax for A.Y. 2010-11 and A.Y. 2012-13, directing the deletion of the penalty under section 271B in both cases. The Tribunal emphasized the bona-fide belief of the appellant regarding the turnover calculation, leading to the decision in favor of the assessee in both appeals.