I never maintained books at all. Can they penalise me under 271B for not getting them audited?
No. Section 44AB requires a person to get 'his accounts' audited, which presupposes that accounts exist. Where the default is at the earlier stage of not maintaining books under s.44AA, the audit obligation never arises, and the penalty for that default is s.271A — not s.271B.
Decided by the ITAT (ITAT Jaipur Bench 'SMC' — Sandeep Gosain (Judicial Member), sitting alone; IT Appeal No. 278 (JP) of 2022; assessment year 2012-13) on 2023-02-15, reported as [2023] 152 taxmann.com 130 (Jaipur - Trib.); IT Appeal No. 278 (JP) of 2022 (AY 2012-13); also reported as 2023 TAXSCAN (ITAT) 564. It bears on section 271B, section 44AB, section 44AA, section 271A of the Income Tax Act 1961, in Presumptive Taxation & Audit and Penalty matters.
It answers the familiar order in which the officer records that no books or vouchers were maintained or produced and then levies s.271B on that very finding. Two distinct defaults carry two distinct penalties and the same fact cannot attract both. Note the limits: it does not protect against a s.271A penalty for non-maintenance, and it does not help where books were maintained and turnover crossed the audit threshold.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessment year was 2012-13. Following reopening, the assessee filed a return on 27 June 2019 declaring business income of Rs. 26,260. The assessment was completed under section 143(3) read with section 147 at Rs. 2,26,620. The assessee's case throughout was that he had suffered heavy losses, faced cheque-dishonour proceedings and was away from Jaipur, that he maintained no books of account, and that his tax consultant prepared the return from such sales, purchase and bank records as were available but refused to sign a tax audit report because no books existed. The Assessing Officer's own assessment order recorded that the assessee had failed to produce books of account and bills or vouchers. On that footing the Assessing Officer imposed a penalty of Rs. 75,297 under section 271B on 27 January 2022 for violation of section 44AB. The Commissioner (Appeals), NFAC, dismissed the appeal on 13 June 2022 and the assessee appealed to the Tribunal.
The penalty under section 271B was deleted. The Assessing Officer had himself recorded that no books of account were maintained, and where no books are maintained the question of getting them audited does not arise at all, so section 44AB is not attracted and no penalty can be imposed under section 271B for its breach. The order of the Commissioner (Appeals) was set aside and the Assessing Officer directed to delete the penalty. On the authority the Member applied, the default in such a case lies at the anterior stage of section 44AA, for which section 271A provides the penalty.
The Member reasoned from the sequence of the two obligations. Maintenance of accounts is required by section 44AA; the audit obligation in section 44AB can only be invoked once an assessee has first complied with section 44AA. Where the assessee has not maintained regular books at all, the default is complete at section 44AA and cannot travel beyond it, so it cannot be treated as a further violation of section 44AB. The decisive fact was that the Assessing Officer's own assessment order recorded that no books of account were maintained and that bills and vouchers were not produced. On that footing the Member held that no penalty could be imposed for not getting accounts audited. He reproduced paragraphs 11 to 14 of the Allahabad High Court decision in CIT v. Bisauli Tractors, which concludes that section 271B is not attracted where no account has been maintained and that recourse may instead be had to section 271A, and paragraph 6 of the Gauhati High Court decision in Surajmal Parsuram Todi v. CIT to the same effect, and followed the Tribunal decisions in Nirmal Kumar Jain v. ITO (Delhi) and the co-ordinate Jaipur bench decision in Shahnaz Khanam v. ITO.
when assessee did not maintain regular books of accounts, then the question of getting the books of account audited does not arise at all
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Handle my notice → Ask a CA on WhatsAppNo. Section 44AB requires a person to get 'his accounts' audited, which presupposes that accounts exist. Where the default is at the earlier stage of not maintaining books under s.44AA, the audit obligation never arises, and the penalty for that default is s.271A — not s.271B. This was decided by the ITAT (ITAT Jaipur Bench 'SMC' — Sandeep Gosain (Judicial Member), sitting alone; IT Appeal No. 278 (JP) of 2022; assessment year 2012-13) and bears on section 271B, section 44AB, section 44AA, section 271A of the Income Tax Act 1961. It is reported as [2023] 152 taxmann.com 130 (Jaipur - Trib.); IT Appeal No. 278 (JP) of 2022 (AY 2012-13); also reported as 2023 TAXSCAN (ITAT) 564. It answers the familiar order in which the officer records that no books or vouchers were maintained or produced and then levies s.271B on that very finding. Two distinct defaults carry two distinct penalties and the same fact cannot attract both. Note the limits: it does not protect against a s.271A penalty for non-maintenance, and it does not help where books were maintained and turnover crossed the audit threshold. If it applies to you, the first step is this: Quote the officer's own finding that no books were maintained or produced and make it the foundation of the s.271B defence.
The assessment year was 2012-13. Following reopening, the assessee filed a return on 27 June 2019 declaring business income of Rs. 26,260. The assessment was completed under section 143(3) read with section 147 at Rs. 2,26,620. The assessee's case throughout was that he had suffered heavy losses, faced cheque-dishonour proceedings and was away from Jaipur, that he maintained no books of account, and that his tax consultant prepared the return from such sales, purchase and bank records as were available but refused to sign a tax audit report because no books existed. The Assessing Officer's own assessment order recorded that the assessee had failed to produce books of account and bills or vouchers. On that footing the Assessing Officer imposed a penalty of Rs. 75,297 under section 271B on 27 January 2022 for violation of section 44AB. The Commissioner (Appeals), NFAC, dismissed the appeal on 13 June 2022 and the assessee appealed to the Tribunal. The matter was decided on 2023-02-15 by the ITAT (ITAT Jaipur Bench 'SMC' — Sandeep Gosain (Judicial Member), sitting alone; IT Appeal No. 278 (JP) of 2022; assessment year 2012-13). On those facts the ITAT held as follows. The penalty under section 271B was deleted. The Assessing Officer had himself recorded that no books of account were maintained, and where no books are maintained the question of getting them audited does not arise at all, so section 44AB is not attracted and no penalty can be imposed under section 271B for its breach. The order of the Commissioner (Appeals) was set aside and the Assessing Officer directed to delete the penalty. On the authority the Member applied, the default in such a case lies at the anterior stage of section 44AA, for which section 271A provides the penalty.
The Member reasoned from the sequence of the two obligations. Maintenance of accounts is required by section 44AA; the audit obligation in section 44AB can only be invoked once an assessee has first complied with section 44AA. Where the assessee has not maintained regular books at all, the default is complete at section 44AA and cannot travel beyond it, so it cannot be treated as a further violation of section 44AB. The decisive fact was that the Assessing Officer's own assessment order recorded that no books of account were maintained and that bills and vouchers were not produced. On that footing the Member held that no penalty could be imposed for not getting accounts audited. He reproduced paragraphs 11 to 14 of the Allahabad High Court decision in CIT v. Bisauli Tractors, which concludes that section 271B is not attracted where no account has been maintained and that recourse may instead be had to section 271A, and paragraph 6 of the Gauhati High Court decision in Surajmal Parsuram Todi v. CIT to the same effect, and followed the Tribunal decisions in Nirmal Kumar Jain v. ITO (Delhi) and the co-ordinate Jaipur bench decision in Shahnaz Khanam v. ITO. In the words reproduced by the source cited on this page: "when assessee did not maintain regular books of accounts, then the question of getting the books of account audited does not arise at all" The decision followed or applied CIT v. Bisauli Tractors [2007] 165 Taxman 1 / [2008] 299 ITR 219 (Allahabad High Court); Surajmal Parsuram Todi v. CIT [1996] 222 ITR 691 (Gauhati High Court); Nirmal Kumar Jain v. ITO [IT Appeal Nos. 6696 and 6645 (Delhi) of 2014, dated 2 March 2016]; Shahnaz Khanam v. ITO [IT Appeal No. 38 (JP) of 2018, dated 30 May 2018] (co-ordinate Jaipur bench).
It was decided by the ITAT on 2023-02-15 and is reported as [2023] 152 taxmann.com 130 (Jaipur - Trib.); IT Appeal No. 278 (JP) of 2022 (AY 2012-13); also reported as 2023 TAXSCAN (ITAT) 564. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 271B, section 44AB, section 44AA, section 271A, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The penalty under section 271B was deleted. The Assessing Officer had himself recorded that no books of account were maintained, and where no books are maintained the question of getting them audited does not arise at all, so section 44AB is not attracted and no penalty can be imposed under section 271B for its breach. The order of the Commissioner (Appeals) was set aside and the Assessing Officer directed to delete the penalty. On the authority the Member applied, the default in such a case lies at the anterior stage of section 44AA, for which section 271A provides the penalty. It arises in Presumptive Taxation & Audit and Penalty matters, on section 271B, section 44AB, section 44AA, section 271A of the Income Tax Act 1961, and was decided by ITAT Jaipur Bench 'SMC' — Sandeep Gosain (Judicial Member), sitting alone; IT Appeal No. 278 (JP) of 2022; assessment year 2012-13. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Expect the department to shift to s.271A, and keep the reasonable cause material for non-maintenance ready. Check whether accounts existed in any form, because the defence collapses if the department can point to records capable of being audited.
Searched for later treatment; none was found. That is not the same as a source affirming it. No later decision applying, following or affirming this order was found. The order was read in a subscription case-law database and carries no citator entry recording later treatment of it. What continues to be followed is the line it applies: CIT v. Bisauli Tractors [2007] 165 Taxman 1 / [2008] 299 ITR 219 (All.) and Surajmal Parsuram Todi v. CIT [1996] 222 ITR 691 (Gauhati), on which later Tribunal decisions have deleted section 271B penalties where no books were maintained. That is support for the proposition, not later treatment of this order. Caution: the defence is not absolute, and a section 271A penalty for non-maintenance can still be sustained on the same facts. That finding was checked against a published source, which is linked on this page, on 2026-08-25. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The particulars are now settled from the order itself: ITAT Jaipur 'SMC' bench, IT Appeal No. 278 (JP) of 2022, assessment year 2012-13, order of 15 February 2023, reported at [2023] 152 taxmann.com 130 (Jaipur - Trib.). It is a single-member order and binds no one; check for a contrary co-ordinate bench view. The point it decides is narrow and depends on one fact — that the Assessing Officer himself recorded in the assessment order that no books of account were maintained. Where the officer instead proceeds on the footing that books existed but were not audited, this order does not help. Note also what the relief does not do: the authority relied on says in terms that the default in such a case attracts section 271A, so an assessee arguing this point is conceding the anterior default. The Bisauli Tractors passage (paras 11 to 14) is reproduced in this order, so its citation no longer rests on secondary sources. None outstanding on the particulars. The order does not record the outcome of any section 271A proceeding, and it does not say whether the Revenue appealed. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The penalty under section 271B was deleted. The Assessing Officer had himself recorded that no books of account were maintained, and where no books are maintained the question of getting them audited does not arise at all, so section 44AB is not attracted and no penalty can be imposed under section 271B for its breach. The order of the Commissioner (Appeals) was set aside and the Assessing Officer directed to delete the penalty. On the authority the Member applied, the default in such a case lies at the anterior stage of section 44AA, for which section 271A provides the penalty.
TaxSphere, “Lokesh Kumar Sharma v ITO”, https://taxnotice.vittsphere.com/caselaw/case/lokesh-kumar-sharma-v-ito-271b/ (validity last checked 2026-08-25)
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I never maintained books of account at all. Can the department penalise me under section 271B for not getting them audited?
The officer penalised my client Rs 25,000 under s.271A for not keeping books and then another Rs 1,50,000 under s.271B for not getting them audited. Can he do both for the same year?
My client filed under s.44AD for two years and then declared below eight per cent in the third. What happens to him for the next five years, and does he now have to get audited?
They already penalised me under 271A for keeping no books. Can they levy 271B on top?
