Case ITA No.1691/Del/2022: Mohammad Daud vs. ITO, Ward-58(1) – Appeal Against Penalty under Section 271B

Income Tax Appellate Tribunal Delhi Bench Decision: An In-depth Review

In a notable judgment by the Income Tax Appellate Tribunal, Delhi Bench, the case between Mohammad Daud, the appellant, and the Income Tax Officer (ITO), Ward-58(1), Delhi, respondent, was decided. The case, bearing ITA No.1691/Del/2022, pertained to the assessment year 2017-18, with the appeal being filed against the penalty levied under section 271B of the Income Tax Act, 1961.

Background of the Case

Mohammad Daud, an individual engaged in the retail trading of Amul Dairy Products, faced a penalty imposition by the National Faceless Assessment Centre, Delhi, under section 271B for failing to get his accounts audited as stipulated by the Act. This case highlights critical discussions on the applicability of tax audit requirements, interpretations of the Act, and the defense of reasonable cause.

The Appeal and Arguments Presented

The appellant contested the penalty, citing ignorance of the law in the initial year of business and reliance on a CBDT circular exempting certain categories from the audit requirements. Significant contentions raised included the appellant’s role as a mere courier for Amul products, thereby arguing against the turnover being attributed to him for the purposes of section 44AB.

Findings and Judgment

The Tribunal’s decision to allow the appeal sheds light on important legal interpretations and the leniency considered for non-wilful defaults. The detailed examination of the appellant’s contentions, corroborated by documentary evidence, and precedents pave a noteworthy discourse on the boundaries of legal obligations and reasonable causes under the Income Tax Act.

Conclusion and Implications

The decision in ITA No.1691/Del/2022 marks a significant precedent for similar cases, emphasizing the necessity for a nuanced understanding of tax audits and the allowances for reasonable cause under the Act. This analysis delves deep into the Tribunal’s reasoning, offering insights into its implications for taxpayers and practitioners alike.

Case ITA No.1691/Del/2022: Mohammad Daud vs. ITO, Ward-58(1) – Appeal Against Penalty under Section 271B