NAND KUMAR PRASAD SAH,MUZAFFARPUR vs. AC/DCIT CENTRAL CIRCLE, MUZAFFARPUR
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Income Tax Appellate Tribunal, “DB” BENCH, PATNA
Before: SHRI RAJPAL YADAV, VP & SHRI DR. MANISH BORAD, AM
PER BENCH:
These appeals at the instance of the assessee are directed against the orders of Commissioner of Income-tax (Appeals) [learned CIT (A)] dated 24.04.23 & 25.04.23 for A.Ys. 2014-15, 2015-16, 2016-17, 2019-20 & 2020-21. The penalties were levied by AC/DCIT under section 271B of the Act vide orders dated 22nd August, 2022, 23rd August, 2022 for A.Ys. 2014-15, 2015-16, 2016-17, 2019-20 & 2020-21 respectively.
As the common issue raised in all these appeals are raised against the levy of penalty under Section 271B of the Income-tax Act, 1961 (the Act) for failing to get the books
Assessee has raised following Grounds in ITA No. 167/PAT/2023 for A.Y. 2014-15 as under:
“A.Y. 2014-15
For that the Ld. CIT(A) has erred in passing penalty order u/s 271B and levied penalty of Rs. 1,50,000/-,
For that the Ld. CIT(A) has ignored the submission before the submission made by the appellant that no accounts books were maintained and therefore where the books of accounts are not maintained it is impossible to gets the account audited u/s 44AB of the Income Tax Act.
For that the Ld. CIT(A) has wrongly assumed that books of accounts was found in the computer system maintained in the Tally Software. It is a matter of fact and record that only sales/ turnover was found recorded in the Tally Software. No entry with respect to purchase was found recorded and therefore the appellant has offered income @ 8% in the return of income filed in response to notice. Further, in the assessment order passed the income offered was also accepted.
For that the Ld. CIT(A) has erred in passing a vague and cryptic order.
For that the Ld. CIT(A) has erred in passing the order without giving the opportunity of being heard which is against the
We have heard the rival contentions and perused the records available on record. Prior to conducting of search and survey action on 17th August, 2020, the assessee has been a regular filer of return and in the return filed under Section 139 of the Act for A.Y. 2014-15, assessee offered income on presumptive basis @8% under Section 44AD of the Act on the gross turnover of ₹87,21,829/-. Since the gross turnover was less than the prescribed limit under Section 44AB of the Income-tax Act, 1961 (the Act) the
Before us, the learned counsel for the assessee referring to the decisions has contended that in absence of any proper books of account being mentioned the assessee cannot be subjected to levy of penalty under Section 271B of the Act. Hon'ble Allahabad High Court in case of CIT vs. S.K. Gupta and Co (2010) 322 ITR 86 (Allahabad) held as under: -
“5. Sri Mahajan contended that the Tribunal has erred in law while upholding order of the Commissioner of Income-tax (Appeals) cancelling the penalty inasmuch as the assessee had failed to get its books of account audited.
The submission of Sri Mahajan is misconceived for the reason that the requirement of getting the books of account audited could arise only where the books of accounts are maintained. If for some reason the assessee has not maintained the books of account the appropriate provision under which penalty proceedings can be initiated is under section 271A of the Act
The Tribunal was, therefore, justified in upholding the order of the Commissioner of Income-tax (Appeals) cancelling the penalty imposed under section 271B of the Act.
The appeal fails and is, therefore, dismissed."
The Co-ordinate Bench in case Lokesh Kumar Sharma Vs. ITO (2023) 152 taxmann.com 130 (Jaipur-Trib.), had held as under: -
"7. Therefore, looking to the entirety of facts and circumstances of the case, I find that since the 40 himself has recorded a categorical finding in the order of assessment that no books of account were maintained by the assessee, therefore, in my view in such circumstances a question arises as to whether any penalty can be imposed under section 271B for not getting the books of account audited. In this regard, I rely upon the decision of Hon'ble Gauhati High Court in the case of Suraj Mal Parasuram Todi (supra) wherein it was held that where no books of account are maintained, penalty should be imposed for non-maintenance of books of account u's 271A of the Act and in such circumstances no penalty can be imposed under section 271B for violation of section 44AB of the Act. Therefore, while summing up the entire discussion and while relying upon the different decisions as mentioned supra, am also of the view that in the instant case since assessee was not found to have maintained the books of account, therefore, no penalty can be imposed for not getting the books of accounts audited as prescribed under section 271B of the Act for violation of section 44AB of the Act. Thus keeping in view the binding precedent and principles laid down by the
In the result, appeal of the assessee is allowed."
The Hon'ble Rajkot Bench in the case of Pradipbhai Dayabhai Aghara vs ITO [2024] 159 taxmann.com 1591 (Rajkot-Trib.) held as under: -
"7.3 Regarding the contention of the Ld. DR that the assessee has written up the books of accounts is misplaced. Indeed, the assessee has written up books of account but on a later date. As such, the Ld. DR has not brought any concrete evidence justifying that the books of accounts of the assessee were written up before the due date of filing return of income as specified under section 139 of the Act and therefore the assessee has contravened the provisions of section 44AB of the Act. In view of the above. and after considering the facts in entirety, we hold that the assessee did not maintain the books of accounts within the due date specified u/s 139(1) of the Act, so as to comply the provisions of section 44AB of the Act. Accordingly, the assessee cannot be visited to the penalty for the offence committed by the assessee for not getting accounts audited. Hence, we set aside the findings of Ld. CIT(A) and direct the AO to delete the penalty levied by him. Thus, the ground of appeal of the assessee is hereby allowed.
In the result, the appeal filed by the assessee is hereby allowed.”
Before us the learned Departmental Representative failed to controvert this fact that no proper books of account were
But in absence of all these details i.e., books of account are either not maintained or they are incomplete then there is no mechanism for conducting the tax audit under Section 44AB of the Act. That the assessee is not maintaining requisite books of accounts is supported by the fact that in original return he has opted for presumptive taxation and was not maintaining books of accounts. Under these facts and circumstances, the ratio laid down by the Hon'ble court as well as co-ordinate Benches referred (supra) are squarely applicable on the facts of instant case. Therefore, assessee could at most have been fastened with the penalty under Section 271A of the Act for not maintaining proper books of account but certainly, assessee cannot be subjected to levy of penalty under Section 271B of the Act. Hence, we delete the impugned penalty of ₹1,50,000/- levied under Section 271B of the Act and allow the effective grounds of appeal raised by the assessee.
As far as remaining appeal in ITA nos. 168,169,171 & 173/PAT/2023, for A.Ys. 2015-16,2016-17,2019-20,2020- 21 are concerned, since the issue raised are verbatim
In the result, all the appeals filed by the assessee in ITA Nos. 167,168,169,171 & 173/PAT/2023 are allowed as per terms indicated hereinunder.
Order pronounced in the open court on 28th August, 2024.
Sd/- Sd/- (RAJPAL YADAV) (DR. MANISH BORAD) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 28.08.2024 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT DR, ITAT, 4. 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata
