The Assessee challenged the penalty imposed by the AO u/s 271A for non-maintenance of books of accounts as required by section 44AA. The AO initiated the penalty based on the Assessee’s share transactions exceeding 10 lakhs. ITAT observed that the AO failed to produce any evidence which showed the Assessee’s engagement in a business requiring the maintenance of books under section 44AA. The assessment order lacked conclusive evidence on the nature of the Assessee’s share transactions as a business activity. The ITAT criticized the AO for prematurely concluding a violation of section 44AA without establishing the essential conditions. (AY.  2011-12)