Income Tax Appellate Tribunal - Chennai
Cell World,Thiruchengode vs Ito, Ward-1,, Thiruchengode on 4 May, 2026
आयकर अपीलीय अधिकरण, 'बी' न्यायपीठ, चे न्नई
IN THE INCOME TAX APPELLATE TRIBUNAL
'B' BENCH, CHENNAI
श्री एस एस विश्वनेत्र रवि, न्याविक सदस्य एवं श्री एस. आर. रघुनाथा, लेखा सदस्य के समक्ष
BEFORE SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER AND
SHRI S. R. RAGHUNATHA, ACCOUNTANT MEMBER
आयकर अपीलसं./ITA No.862/CHNY/2026
निर्धारण वर्ा / Assessment Year: 2014-15
Cell World, The Income Tax Officer,
94/2, South Car Street, vs. Ward-1,
Near Kongu Hospital, Thiruchengode.
Thiruchengode- 637 211.
[PAN: AAFFC-0098-R]
(अपीलधर्थी/Appellant) (प्रत्यर्थी/Respondent)
अपीलधर्थी की ओर से/ Appellant by : Mr. T.S. Lakshmi Venkataraman,
F.C.A (Virtual)
प्रत्यर्थी की ओर से /Respondent by : Ms. Gouthami Manivasagam,
Addl. CIT
सुिवधई की तधरीख/Date of Hearing : 16.04.2026
घोर्णध की तधरीख /Date of : 04.05.2026
Pronouncement
आदे श / O R D E R
PER S. R. RAGHUNATHA, AM:
This appeal by the assessee is arising out of the order dated 25.11.2025, passed by the Learned Commissioner of Income Tax (Appeal), NFAC, Delhi (in short "ld.CIT(A)") for the assessment year (A.Y) 2014-15 against the penalty order u/s.271B of the Income Tax Act, 1961 (hereinafter the 'Act') passed by the AO dated 27.09.2022.
2. At the threshold, we observe that there is a delay of 16 days in the filing of the present appeal by the assessee. The assessee has furnished an affidavit explaining that the assessee had not regularly checked the email and 2 ITA No.862/Chny/2026 income tax portal due to the accountant having left his employment and hence the assessee was not aware of the impugned order passed by the ld.CIT(A) during the relevant period. Further, the ld.AR stated that the practice of service of notices and orders exclusively through email and the income tax portal was not adequately understood by the office staff. Upon perusal of the affidavit and after affording due opportunity of hearing from both parties, we are satisfied that the assessee has demonstrated sufficient and reasonable cause for not presenting the appeal within the statutory period prescribed under law. Accordingly, in the interest of justice, the delay in filing the appeal is hereby condoned, and the appeal is admitted for adjudication on merits.
3. Brief facts of the case are that the assessee is authorized franchisee of BSNL, engaged in trading for retail sale of BSNL SIM Cards and Recharge (top up) at Tiruchengode, Salem and Namakkal and has filed its return of income on 30.09.2014 for A.Y.2014-15, declaring a total income of Rs.6,96,050/-. Subsequently, the case was selected for scrutiny under CASS. On verification of the ITMR and details available on record, the AO found that the assessee had a turnover of Rs.21,89,08,956/- and earned commission of Rs.1,16,63,442/- from BSNL and also derived income from trading of cell phones and accessories of Rs.18,82,937/-. During the assessment proceedings the AO found that the assessee did not maintain books of accounts and had not filed tax audit report u/s.44AB of the Act, though the assessee's turnover was Rs.21,89,08,956/- for the A.Y.2014-15. The AO concluded the assessment by accepting the return of income, however the AO initiated penalty proceedings u/s.271B of the Act for not keeping and maintaining books of accounts and getting audited for the A.Y.2014-15. In response, the assessee has submitted a reply for consideration. However, the AO was not convinced and levied penalty of Rs.1,50,000/- (being lesser of one half percent of turnover being Rs.10,94,544/- of Rs.21,89,08,956/- or Rs.1,50,000/-) and concluded the penalty proceedings by passing penalty order dated 27.09.2022 u/s.271B of the Act.
3 ITA No.862/Chny/20264. Aggrieved by the order of the AO, the assessee preferred an appeal before the ld.CIT(A). The ld.CIT(A) confirmed the penalty u/s.271B of the Act. Aggrieved by the order of the ld.CIT(A), the assessee preferred an appeal before us.
5. The ld.AR submitted that the ld.CIT(A) has erred in confirming the penalty levied by the Assessing Officer, though the assessee has not maintained the books of accounts and agreed for levy of penalty u/s.271A of the Act. The ld.CIT(A) is not justified in sustaining the levy of penalty of Rs.1,50,000/-, when the Assessing Officer has accepted that the assessee has not maintained books of accounts and hence audit u/s.44AB is not possible. Further, the ld.AR stated that the assessee requested for the dropping of penalty proceedings u/s.271B and accepted for the levy of the penalty u/s.271A of the Act. In view of the above, the ld.AR prayed that the Tribunal may be pleased to set aside the order of ld.CIT(A) and delete the penalty levied by the Assessing Officer. In support of the above arguments, the ld.AR relied on the decisions of the Chennai Tribunal in the case Balasingam Somasundaram v.ACIT [2024] 206 ITD 643 dated 06.03.2024 and Rcube Amalgamations V. DCIT, in ITA No.3164/Chny/2025 dated 22.01.2026.
6. Per contra, the ld.DR submitted that the penalty for non filing the audit report is independent of the penalty u/s.271A of the Act and hence the action of the ld.CIT(A) in confirming the penalty is in order and prayed for confirming the order of the ld.CIT(A).
7. We have heard the rival parties and perused the material available on record and gone through the orders of the lower authorities. On perusal of the assessment order, the Assessing Officer has initiated penalty for both not keeping and maintaining books of accounts u/s.271A of the Act and also u/s.271B of the Act for non-filing of tax audit report u/s.44AB of the Act. As noted in the assessment order of the Assessing Officer, the assessee has accepted to pay the penalty u/s.271A of the Act for non-maintenance of the 4 ITA No.862/Chny/2026 books of accounts. We find that in the similar set of facts, the very same issue has been decided by the Chennai Tribunal in the case of Rcube Amalgamations V. DCIT, in ITA No.3164/Chny/2025 dated 22.01.2026 in favour of the assessee by holding as under:
"4. We have heard rival submissions and perused the material on record. Admittedly, in the instant case, assessee for the relevant assessment year had not maintained the books of accounts. For non-maintenance of books of accounts, penalty u/s.271A of the Act was imposed. The Chennai Bench of the Tribunal in the case of Shri Shanthilal D Jain, (supra) after considering the judicial pronouncements on the subject had held that once penalty has been imposed u/s.271A of the Act for non-maintenance of books of accounts, again penalty u/s.271B of the Act cannot be imposed for non-furnishing of audit report u/s.44AB of the Act. The relevant finding of the Chennai Bench of the Tribunal in the case of Shri Shanthilal D Jain, (supra)reads as follows:-
"28.1 Coming to penalties levied u/s.271B of the Act, in the above 17 appeals in regard to not filing audit report u/s.44AB of the Act. The AO levied penalty u/s.271B of the Act for not producing audit report or not filing audit report u/s.44AB of the Act. The AO levied penalty u/s.271B of the Act and the CIT(A) confirmed the same. Aggrieved, now assessees are in appeal before the Tribunal.
28.2 Before us, ld.counsel for the assessee made only one statement that the Hon'ble Allahabad High Court in the case of CIT vs. S.K. Gupta & Co., (2010) 322 ITR 86, Hon'ble Madhya Pradesh High Court in the case of Bharat Construction Co. vs. ITO, (1999) 153 CTR 414 and Hon'ble Gauhati High Court in the case of Surajmal Parsuram Todi vs. CIT, (1996) 222 ITR 691 has categorically held that once books of account are not maintained and consequently penalty u/s.271A of the Act is levied and confirmed, no penalty u/s.271B of the Act for failure to get the accounts audited u/s.44AB of the Act be levied. The Hon'ble Gauhati High Court in the case of Surajmal Parsuram Todi, supra, held as under:-
We have gone through the provisions of ss. 44AA, 44AB, 271A and 271B of the Act. Maintenance of accounts is envisaged under s. 44AA and on failure to do so the assessee shall be guilty and liable to be penalised under s. 271A. Even after maintenance of books of account the obligation of the assessee does not come to an end. He is required to do something more, i.e., by getting the books of account audited by an accountant. But when a person commits an offence by not maintaining the books of account as contemplated by s. 44AA the offence is complete. After that there can be no possibility of any offence as contemplated by s. 44AB and, therefore, in our opinion, the imposition of penalty under s. 271B is erroneous. The Tribunal has overlooked this aspect of the matter. Of course, it is apparent from the records that the assessee failed to maintain the books of account as required under s. 44AA and for that penalty is prescribed under s. 271A. It is for the Tribunal to take action in accordance with law.5 ITA No.862/Chny/2026
Similarly, the Hon'ble Allahabad High Court in the case of S.K. Gupta & Co, supra, held as under:-
"The submission of Sri Mahajan is misconceived for the reason that the requirement of getting the books of account audited could arise only where the books of accounts are maintained. If for some reason the assessee has not maintained the books of account the appropriate provision under which penalty proceedings can be initiated is under section 271A of the Act which recourse has also been taken by the assessee as would appear from the order of the Tribunal.
The Tribunal was, therefore, justified in upholding the order of the Commissioner of Income-tax (Appeals) cancelling the penalty imposed under section 271B of the Act."
28.3 As the issue is squarely covered in favour of assessee and no contrary decision pointed out by Revenue, respectfully following the decision of these High Courts, we delete the penalty and reverse the orders of lower authorities. Similar are the facts in all these 16 appeals, hence taking a consistent view, all these 17 appeals relating to levy of penalty u/s.271B of the Act are allowed in favour of the assessee."
5. In light of the Co-ordinate Bench order of the Tribunal, which has considered the judicial pronouncements on the issue, we delete the penalty levied u/s.271B of the Act. It is ordered accordingly."
8. In the present facts and circumstances of the case and respectfully following the judicial precedents discussed supra, we are of the considered view that the ld.CIT(A) has erred in confirming the penalty u/s.271B of the Act of Rs.1,50,000/-, even after the assessee has accepted the fact of non maintenance of books of accounts and agreed to pay the penalty u/s.271A of the Act as mentioned in the assessment order passed u/s.147 r.w.s. 144B of the Act. Hence, we delete the penalty u/s.271B of the Act and ordered accordingly.
9. In the result, appeal filed by the assessee is allowed.
Order pronounced in the open court on 04th May, 2026 at Chennai.
Sd/- Sd/-
(एस एस विश्वनेत्र रवि) (एस. आर. रघुनाथा)
(S.S. VISWANETHRA RAVI) (S. R. RAGHUNATHA)
न्याविक सदस्य/Judicial Member लेखा सदस्य/Accountant Member
6 ITA No.862/Chny/2026
चेन्िई Chennai:
दििधंक Dated : 04th May, 2026
Devadas
आदे श की प्रतिलिपि अग्रेपिि/Copy to:
1. अपीलधर्थी/Appellant
2. प्रत्यर्थी/Respondent
3.आयकर आयुक्त/CIT- Chennai/Coimbatore/Madurai/Salem
4. ववभधगीय प्रनतनिधर्/DR
5. गधर्ा फधईल/GF DEVADAS Digitally signed by DEVADAS GOPALANAC GOPALANACHARY Date: 2026.05.08 HARY 17:22:36 +05'30'