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Income Tax Appellate Tribunal, BENGALURU “B” BENCH, BENGALURU
Smt. Vani Ramachandran vs The Income Tax Officer-3(2)(1) 40, Vishram, 4th Main BMTC Building Kalyan Nagar Koramangala Bangalore 560072 Bangalore 560095 PAN – AJTPR2276F (Appellant) (Respondent) Assessee by: Shri Ravishankar S.V., Advocate Revenue by: Shri Gudimella VP Pavan Kumar, JCIT Date of hearing: 14.03.2023 Date of pronouncement: 15.03.2023 O R D E R Per: George George K., J.M. This appeal at the instance of the assessee is directed against the order of the CIT(A) dated 03.11.2022 passed under Section 250 of the Income Tax Act, 1961 (the Act). The relevant assessment year is 2013-14.
The assessee has raised several grounds and also additional grounds. However, the solitary issue that was argued by the learned A.R. was whether the CIT(A) is justified in confirming the penalty of Rs.25,000/- imposed under Section 271A of the Act.
The brief facts of the case are as follows: - The assessee is an individual. For AY 2013-14 assessee did not file return of income. According to the assessee, she was having income below taxable limit. The AO issued notice under Section 148 of the Act and assessment
Smt. Vani Ramachandran under Section 144 r.w.s. 147 of the Act was completed on 21.09.2021 determining the total income at Rs.13,93,176/- . The AO had added a sum of Rs.13,93,176/- as unexplained investment under Section 69A of the Act. The AO had initiated penalty proceedings under Section 271A of the Act stating that the assessee has not maintained books of account as mandated under Section 44AA of the Act. As there was no compliance to the notices issued for imposition of penalty under Section 271A of the Act, the AO vide order dated 11.11.2021 imposed penalty of Rs.25,000/-.
Aggrieved by the order of the AO imposing penalty under Section 271A of the Act, the assessee filed appeal before the first appellate authority. The CIT(A) rejected the appeal of the assessee. The CIT(A) extracted the submissions of the assessee and the findings of the AO in the assessment order for rejecting the appeal of the assessee. The relevant observation of the CIT(A) reads as follows: - “Hence, as per this information, assessee has made sale of equity share and received amount Rs.13,93,176/- during the A.Y. 2013-14. Therefore, in this case assessee found to be the owner of money in the form of bogus long term capital gain but she failed to explain the source or even admit this income. She even did not file any return of income in response to notice served on her u/s 148. Since the assessee is earning income from business and profession but not maintained book. The penalty proceeding has been also initiated u/s 271A for non-maintenance of books. In view of the above, these grounds of appeal
are, accordingly, dismissed and the penalty u/s 271A of IT Act 1961 made by the Ld. AO on this account is, hereby, confirmed. Since the Appellant has not adduced any additional ground(s) and since no ground of appeal has been altered/modified/changed, this ground of appeal is dismissed as “not pressed”.”
5. Aggrieved, assessee filed the present appeal before the Tribunal. The assessee has filed a paper book comprising of 34 pages enclosing therein acknowledgement dated 08.10.2021 for response to the proceedings initiated
Smt. Vani Ramachandran under Section 271A of the Act, the show cause notice issued under Section 274 r.w.s. 270A of the Act, the copy of Demat account statement for the relevant period, copy of the approval issued under Section 151 of the Act, copy of reasons recorded, etc. The learned A.R. submitted that as against the addition of Rs.13,93,176/- under Section 69A of the Act, the assessee has filed an appeal and the same is pending adjudication before the CIT(A). The learned A.R. submitted that the assessee has not dealt with the impugned shares, namely M/s. NCL Research during the relevant assessment year. In this context the learned A.R. took us through the copy of Demat Account statement, which is placed on record from pages 11 to 20 of the paper book. The learned A.R. submitted that the above shares were purchased by the assessee only in the subsequent assessment year, namely AY 2014-15 and the assessee has incurred short term capital loss on account of purchase and sale of only 10 shares of M/s. NCL Research. The learned A.R. submitted that the assessee was having only income from capital gains and other sources and there was no necessity to maintain books of account in terms of Section 44AA of the Act. Therefore, the learned A.R. submitted that the penalty imposed under Section 271A of the Act for non-maintenance of books of account as mandated under Section 44A A of the Act is to be deleted.
The learned D.R., on the other hand, supported the orders of the AO and the CIT(A).
We have heard the rival contentions and perused the material on record. As per Section 44AA of the Act, the books of accounts has to be mandatorily maintained in the following circumstances: (a) with respect to specified professions, if the income from the profession exceeds Rs.1,20,000/- or likely to exceed if the profession is newly set up; (b) in respect of business if the profit and gains from business exceeds Rs.1,20,000/- or the total sale or gross receipt is more than Rs.10,00,000/- in any of the three years preceding the previous
Smt. Vani Ramachandran year. The assessee during the relevant assessment year had income from capital gains and other sources. The Revenue does not have a case that total receipts (from business) of the assessee in any of the 3 years preceding the relevant previous years had exceeded Rs.10,00,000/-. On perusal of the approval issued under Section 151 of the Act, which is placed at page 31 of the paper book, we find that reopening of assessment is for non-declaration of bogus capital gains. In the copy of computation of income for AY 2013-14 the assessee had income from short term capital gains of Rs.83,657/- and tuition fee received (income from other sources) of Rs.70,000/-. In the instant case there is no income from business or profession received by the assessee which exceeds Rs.1,20,000/-. Therefore, maintenance of books of account under Section 44AA of the Act is not mandated for the assessee. Hence, the imposition of penalty under Section 271A of the Act for non-maintenance of books of account is not warranted and we delete the same. It is ordered accordingly.
In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 15th of March, 2023.