Income Tax Appellate Tribunal

Tasavver Husain, Farrukhabad vs. Income-tax Officer

MANU/IA/0024/2024

12.06.2024

Direct Taxation

Penalty is not leviable where there is a reasonable cause or where assessee establishes its bonafides

In present case, during the course of assessment proceedings, the Assessing Officer has levied penalty, under Section 271B and various other sections of the Income-tax Act. Thereafter, the Assessing Officer vide his order has levied penalty under Section 271B on the ground that the assessee failed to get his accounts audited despite the fact that the volume of assesee's turnover was covered by the provisions of Section 44AB of the Income Tax Act.

The Assessing Officer was of the view that, the assessee has violated the provisions of Section 44AB and hence, liable to be punished under Section 271B of the Act. Accordingly, the Assessing Officer levied penalty of Rs.72,378. Aggrieved with the order of Assessing Officer, the assessee filed appeal before learned CIT(Appeals). The learned CIT(Appeals) dismissed the appeal of the assessee vide impugned order.

In facts of the present case, the assessee was distributor of Mother Dairy, retired army personnel, under the bona fide belief that no books of accounts are required to be maintained since only source of earning income was commission as fixed by Mother Diary on sales of milk and other products, and there is no need of any audit of accounts appears to be bona fide belief of the assessee. Penalty is not leviable.

Section 273B of the Income Tax Act has categorically provided immunity from penalty under Section 271B to those assessees who establish, having regard to the facts, that there was a bona fide belief or a reasonable cause with respect to violation of provisions of Section 271B. There is catena of decisions, where in the context of Section 271B, Hon'ble Courts have held that, penalty is not leviable where there is a reasonable cause or where assessee establishes its bonafides. Therefore, the penalty levied in this case is legally not tenable.

There is a small delay of 40 days in filing of this appeal, for which there is an application for condonation of delay. Considering the smallness of amount and ordinate delay of 40 days, present Tribunal deem it fit to condone the delay in the interest of justice. It is settled position of law that, when technical consideration and substantial justice are pitted against each other, cause of substantial justice should be given credence. Appeal of the assessee is allowed.

Tags : Assessment Penalty Imposition

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