If the taxpayer fails to maintain accounting records as per the requirements of Section 44AA, a penalty may be levied under section 271A. The maximum penalty that can be charged is Rs. 25,000. However, if the taxpayer can prove there is a reasonable cause for failure to maintain accounting records – such penalty may not be levied.
If the taxpayer fails to get the accounting records audited or furnish audit report as per the requirements of Section 44AB, a penalty may be levied under section 271B. The minimum penalty that can be charged is 0.5% of the total sales, turnover or gross receipts. The maximum penalty is Rs 1,50,000. However, if the taxpayer has a reasonable cause for failure to get an audit done – such penalty may not be levied.
