Can Penalty U/S 271A and U/S 271B be levied simultaneously?
Introduction:
1. Maintenance of accounts is envisaged under section 44AAand on failure to do so the assessee shall be guilty and liable to be penalized under section 271A.
2. Penalty u/s 271B can be initiated or levied if the assessee fails to get the accounts audited and obtain a report u/s 44AB before the specified date, i.e. due date u/s 139(1)
3. The moot point is can Penalty U/S 271A and Sec 271B overlap or are they mutually exclusive?
Judgements which have laid down that once penalty is levied U/S 271A, no penalty can be levied U/S 271B (mutually exclusive):
a. ALLAHABAD HIGH COURT in CIT vs. Bisauli Tractors reported in (2007) 165 taxman
b. ALLAHABAD HIGH COURT in CIT Vs S.K. Gupta and Co . 322 ITR 86
c. DELHI ITAT in MOHIT GARG VS ITO (ITA No. 3355/Del/2017)
d. JAIPUR ITAT in Bhawani Shankar Gupta Vs ITO (ITA. No. 43/JP/2023)
The reasoning behind the above judgements is as follows:
1. Once the assessee found to have not maintaining the regular books of account as contemplated by Section 44AA of the Act the default was completed.
2. So after there is a default of not maintaining the books of accounts there cannot be a further default for not getting the same audited as required U/s 44AB of the Act.
Judgements which have laid down that Penalty U/S 271A and U/S 271B are separate provisions and are applicable separately (overlap):
a. RANCHI ITAT in Rakesh Kumar Jha Vs ITO (I.T.A. No. 72/Ran/2022)
b. MP HIGH COURT decision in Bharat Construction Co. v. ITO reported in [1999] 106 Taxman 460
The reasoning behind the above judgements is as follows:
1. The earlier penalty levied by the Assessing Officer u/s 271A of the Act was only for non-maintenance of books of account and the same did not cover the penalty for not getting the books audited u/s 271B of the Act
2. The second notice issued by the Assessing Officer for levy of penalty u/s 271B of the Act was not barred by limitation by reckoning the limitation period from the date of issue of earlier notice for levy of penalty u/s 271A of the Act.
