Short Overview: When there are no books of account, the question of its audit does not arise, so as to impose penalty under section 271B.

Assessee assailed the imposition of penalty under section 271B imposed by AO on account of failure to get accounts audited under section 44AB. Assessee contended that penalty was not justified as no books of account were maintained by assessee.

It is held that AO himself recorded that no books were maintained by assessee and penalty under section 271B is to be imposed when any person fails to get his accounts audited. Admittedly there was no dispute that no books were maintained by the assessee and as rightly contended by assessee the question of getting the same audited did not arise at all. If there is any fault in the matter, the said fault can be examined with reference to non-maintenance of Books of Account.

Decision: In assessee’s favour