Panalty u/s 271b

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

14 April 2014 a retailer whose turnover for last 4 year endings 13/03/09 Rs.655140 31/03/10 Rs.682200
31/03/11 Rs.725000 and for 31/03/12 Rs.7915120. This sudden rise is due change in
format of business, retailer to wholesaler
Now for incometax purpose he submitted his
return on the basis of sec 44AD maintaining
8% profit.Now AO wants to impose panatly for
year end 31/03/12.Is there any points to
challenge AO ?

Rupesh Jain

Rupesh Jain (Expert)
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14 April 2014 till year ending 31.3.2012 u/s 44Ad turnover limit was Rs. 60 lacs

your sales was 7915120/-

so you are not file return u/s 44Ad declare the profit @ 8%
you was liabile to audit your books u./s 44AB.
now no way to challenge the AO

Querist : Anonymous

Querist : Anonymous (Querist)

14 April 2014 Thanks
as far year ending 31/03/12 turnover
has crossed limit. But my query is since proceeding last 3 years before year ending 31/03/12 the turnover was much below than
10 lakhs limit as per sec 44AA so if I am correct though for year ending 12 turnover has suddenly crossed, the question of
maintaing book of account for 12 may not be
mandatory,advice

Nikhil Kaushik

Nikhil Kaushik (Expert)
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14 April 2014 Rupesh is right.

The penalty is levied on the particular assessment year. you were not covered under 44AD. 44AB/44AA applies and penalty can be levied.

However, you can definitely plead before AO to not to levy penalty on grounds of inadvertent mistake.

Querist : Anonymous

Querist : Anonymous (Querist)

15 April 2014 Thanks Rupesh & Nikhil! actually what I want to discuss if we scan the provision u/s 44AA(2)
what impression we get person carring on profession or business are required to maintain books of account and other documents
No 1 ... if their annual income from the profession or business exceeds Rs.120000 or
No 2 ... gross receipts or turnover exceeds
Rs.1000000 in any one of the three years
immediately preceding the previous year.
Now don't you think the case I narrated above identically fitted case.The concern dealer used to do business in small scale, he shifted to large scale,as a result his turnover increased but he can't be punished for not maintaining book for the year ending 12 obviously for 13 next year he deserve punishment if he continued same
practice. comments .....

Nikhil Kaushik

Nikhil Kaushik (Expert)
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15 April 2014 dear friend penalty is leviable because you are not covered in that particular year. You need to consider provisions of 44AD first.. once you are not covered under 44AD, then 44AA/44AB shall apply.

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