The Income Tax Appellate Tribunal (ITAT) Delhi Bench towards appeal stated that penalty does not be levied under Section 44A and 44B Income Tax Act, 1961 when the commission receipt of the taxpayer was less than the threshold limit of the relevant assessment year.
The taxpayer is Devki Nandan Bindal who is involved in cheque/ draft discounting activity on a commission basis. He furnished the petition with regard to the order that the CIT(A) has issued by confirming the order of the assessing officer.
Also Read:- ITAT Ahmedabad Cancels Order Related to Time Limit Offence U/S 153(1)
Issuing the assessment order related to the assessment year 2005-06, AO revealed that Rs 53 cr was the turnover of the taxpayer that is more than the limit furnished by section 44AA of the income tax act and he would need the information on the accounts under section 44AB and levied a penalty.
The taxpayer opposed that he was involved in cheque/draft discounting activity on the commission grounds, he obtains the commission via generating these services hence as per the Negotiable Instrument Act 1886, he acted as a payee in favour of another person. Therefore the same was always maintained in his books of accounts.
R.S. Yadav, for revenue, laid on a decision of the CIT (A) that the penalty levied via AO through invoking under sections 271A and 271B of the Income Tax Act was accurate.
Under the circular provided via CBDT on the date 17th March 1986 that directed to the applicability question of section 44AB for the case of the commission agents.
No sale is engaged in the turnover that affects on the basis of the principles, merely the gross commission is recognized for Section 44AB of the Income Tax Act. therefore the case of the taxpayer does not count under the same.
The Division bench of ITAT Delhi consisting of Pradip Kumar Kedia, Accountant Member, and Diva Singh, Judicial Member permitted the petition and stated that.
The commission being turnover/receipt for 44AA and 44AB, less than the threshold stipulated for the related assessment year, the taxpayer could not be treated as a taxpayer in default for S. 271A and S. 271B of the Act.
| Case Title | Devki Nandan Bindal V/S ITO |
| Citation | I.T.A. No.7072 & 7073/DEL/2019 |
| Date | 19.10.2022 |
| Counsel For Appellant | None |
| Counsel For Respondent | Shri R.S. Yadav, Sr.DR |
| Delhi ITAT | Read Order |
