Can Penalty U/S 271A and U/S 271B be levied simultaneously?

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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.

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