Mr. Rinku, an individual whose total sales in the business of food grains for the year ending 31.3.2026 was ₹ 305 lakhs, did not maintain books of…

Mr. Rinku is required to maintain books of account as per section 44AA for the P.Y.2025-26 since his turnover exceeded ₹ 25 lakhs in the P.Y. 2024-25. He also has to get them audited under section 44AB, since his gross sales in the P.Y.2025-26 exceeds ₹ 1 crore. He is liable to pay penalty under section 271A for not maintaining his books of account as per section 44AA. Accordingly, the action of the Assessing Officer in levying penalty of ₹ 25,000 under section 271A is correct. However, where books of account have not been maintained, there cannot be a question of getting them audited. Audit of books of account presupposes maintenance of books of account. When admittedly Mr. Rinku has not maintained books, he cannot obviously get the audit done. In Surajmal Parsuram Todi v. CIT (1996) 222 ITR 691, the Guwahati High Court has held that when a person commits an offence by not maintaining books of accounts as contemplated by section 44AA, the offence is complete and after that there can be no possibility of any offence as contemplated by section 44AB and, therefore, the imposition of penalty under section 271B is erroneous. Therefore, in this case, the Assessing Officer is not justified in levying penalty under section 271B.