Pay penalty for failing to keep books of accounts

The Pune Bench of the Income-Tax Appellate Tribunal recently confirmed the penalty imposed on a doctor under Section 271A of the Income-Tax (I-T) Act, 1961, for not maintaining books of accounts.

Suresh Surana, founder, RSM India, says, “According to Section 271A of the I-T Act, if any person fails to maintain books of accounts and other documents for any financial year, as required by Section 44AA and Rule 6F, or retain them for seven financial years, tax authorities can direct him/her to pay penalty.”

Sections 44AA and 271A of the Act, are interconnected. The former requires professionals and business persons to maintain books of accounts, the latter spells out the consequences of not doing so.

Ajit Shah, partner, N. A. Shah Associates, says, “Failure to maintain these records or retain them for six years from the end of the relevant assessment year can result in a penalty of Rs. 25,000.”

Sameer Jain, managing partner, PSL Advocates & Solicitors, says, “If assessment under Section 147 is launched, then books of accounts and other documents must be retained for six years or until the assessment is completed, whichever is later.”