M/S. AGARWAL TRANSPORT CORPORATION,CUTTACK vs. ITO, WARD-2(1), CUTTACK

आयकर अपीऱीय अधिकरण, कटक न्यायपीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI C.M. GARG, JM & SHRI L.P. SAHU, AM आयकर अपीऱ सं./ITA Nos.406&407/CTK/2019 (नििाारण वषा / Assessment Years :2012-2013 & 2013-2014) M/s Agarwal Transport Corp. Vs. ITO, Ward-2(1),Cuttack At: Bagha Mangala Lane, Mangalabag, PO: Buxi Bazar,Cuttack-753001 स्थायी लेखा सं./PAN No. : AAFFA 2795 K (अऩीलाथी /Appellant) (प्रत्यथी / Respondent) : ननधाारिती की ओर से /Assessee by : Shri S.N.Sahu & Shri Somnath Sahu, Advocates िाजस्व की ओर से /Revenue by : Shri Subhendu Dutta, DR सुनवाई की तािीख / Date of Hearing : 28/11/2019 घोषणा की तािीख/Date of Pronouncement : 16/12/2019 आदेश / O R D E R Per L.P.Sahu, AM: These two appeals filed by the assessee against the order of CIT(A), Cuttack, dated 07.09.2018 & 31.08.2018 for the assessment years 2012-2013 & 2013-2014. 2. The sole issue involved in both the appeals of the assessee is with regard to confirming the penalty levied u/s.271A of the Act. 3. Brief facts of the case are that the assessee derives income from execution of transportation works in the name & style of ‘M/s Agarwala Transport’ and filed its return of income on 27.09.2012 for the A.Y.2012-2013 declaring total income at Rs.11,61,300/-. Similarly, the assessee filed its return of income for A.Y.2013-2014 on 21.09.2013

2 ITA Nos.406&407/CTK/2018 declaring total income at Rs.10,67,380/-. Both the cases of the assessee

were selected for scrutiny and statutory notices were issued to the

assessee. During the course of assessment proceedings, the AO found

that the assessee has not filed books of account, therefore, the AO

estimated the net profit @1% of the gross transportation receipts and

assessed the total income of the assessee at Rs.38,02,740/- for the

assessment year 2012-2012. Similarly, the AO assessed the total

income of the assessee for assessment year 2013-2014 at

Rs.1,20,76,270/- after estimating net profit @5% of the total gross

receipts. Subsequently, the AO initiated penalty proceedings u/s.271A

of the Act levying penalty of Rs.25,000/- each for both the assessment

years under consideration and passed penalty order accordingly.

assessee preferred appeal before the CIT(A), however, the CIT(A)

dismissed the appeals of the assessee observing that in absence of

maintenance of books of accounts as prescribed u/s.44AA of the Act,

the income of the assessee cannot be accurately computed and upheld

the action of AO.

appeals before the Income Tax Appellate Tribunal.

confirming the penalty levied u/s.271A of the Act by the AO without

3 ITA Nos.406&407/CTK/2018 rejecting the books of accounts of the assessee u/s.145(3) of the Act. It

was the further contention of ld. AR that the assessee has submitted

the bank accounts, work bill statement and other ledger accounts

before both the authorities below for determination of income of the

assessee. It was also contended that no specific books of account for

contract work business have been prescribed u/s.44AA of the Act read

with rule 6F of the I.T.Rules, 1962. However, without considering the

submission and documents produced by the assessee, levy of penalty

u/s.271A of the Act in both the assessment years under consideration

deserve to be quashed. In this regard, ld. AR relied on the following

case laws :-

i) ACIT Vs. Aggarwal Construction Company, (2007) 107 TTJ (Chd) 623; and ii) Harilal Dhanwani Vs. ITO (1993) 45 TTJ (Del) 437.

below. He further submitted that the levy of penalty under this section

is mandatory in the case of not maintaining books of accounts. The

assessee could not produce the books of account as required by the AO.

The ld. AO gave opportunity for production of books of accounts in

spite of that he did not comply. As per the section 44AA of the Act, the

assessee is required to maintain the books of accounts. For non-

complying the mandatory provisions, the penalty must be levied.

4 ITA Nos.406&407/CTK/2018 8. After considering the arguments of both the sides and carefully

perusing the entire material available on record, we find that the AO

has levied penalty u/s.271A of the Act for both the assessment years

under consideration taking a view that the assessee was required to

keep and maintain such books of accounts and other documents as may

enable the AO to compute the total income in accordance with the

provisions of the Income-tax Act. As the assessee failed to comply with

the provisions of Section 44AA of the Act by not maintaining the

regular books of accounts, the CIT(A) also confirmed the penalty levied

u/s 271A of the Act . On perusal of the penalty order dated 30.09.2016

for the assessment year 2013-2014, the AO in 2nd para of last page has

mentioned that the Auditor in the Audit Report has certified in Form

3CD that the assessee maintains various books of account viz. cash

book & ledger. In the assessment order also, the AO in para 2.1 noted

that the authorised representative of the assessee appeared and

produced audit report, copy of acknowledgement of e-Return filed,

copies of bank account details, Vakalatanama & copy of Service Tax

Return. However, the only dispute raised by both the authorities below

that the assessee has not produced books of account, whereas the AO

has himself admitted that the return of income filed was accompanied

by audit report and other documents. The assessee has produced the

tax audit report which has been accepted by the AO. The auditor has

5 ITA Nos.406&407/CTK/2018 also certified that the various books have been maintained. The

revenue has not brought any cogent material on record so as to

establish that the assessee has not maintained books and such

documents as required u/s.44AA of the Act or the rules made

thereunder. Therefore, the penalty levied u/s.271A for both the

assessment years under consideration cannot be sustained on the facts

and circumstances of the present case.

we find that both the authorities below have only pointed out that the

assessee has failed to produce books of accounts before the AO. In this

regard, the assessee has explained with reasonable cause for non-

production of the same before the AO, which has been incorporated in

the assessment order for the assessment year 2012-2013 in para 2.1.,

as under :-

“2.1 In response to the above, the authorized representative of the assessee appeared on 15/12/2014 and produced bank statement, audit report and confirmations from the unsecured loan creditors, details of TDS made on payment of interest to unsecured loan creditors and also proof of payment of outstanding service tax payable amounting to Rs.7,15,404/-. As regards production of books of account as maintained by the assessee, the authorized representative vide his written submission dtd. 15/12/2014 submitted as under :- "In response to your query regarding the production of books of account, the assessee begs to submit that the accountant of the assessee was asked about the books of account. The accountant replied that the books of account are with the auditor, but when the assessee inquired with the auditor about the books of account, the auditor replied that it was returned back immediately after the audit was over. As the books of account are misplaced and are not traceable at present, it is difficult on the part of the assessee to produce the books of account,"

6 ITA Nos.406&407/CTK/2018 Therefore, for this reason also the assessee gets immunity from the

provisions of Section 273B of the Act. In the light of these facts and circumstances of the case, we are of the considered opinion that the CIT(A) was not justified in sustaining the penalty imposed by the AO under Section 271A of the Act for both the assessment years consideration. Accordingly, we set aside the order of the CIT(A) and

cancel the impugned penalty levied for the assessment years 2012- 2013 & 2013-2014. The grounds of appeal of the assessee are accordingly allowed. 10. In the result, both appeals of the assessee are allowed.

Order pronounced in the open court on 16/12/ 2019. Sd/- Sd/- (C.M.GARG) (L.P.SAHU) न्यानयक सदस्य / JUDICIAL MEMBER ऱेखा सदस्य / ACCOUNTANT MEMBER कटक Cuttack; ददनांक Dated 16/12/2019 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : अऩीलाथी / The Appellant- 1. M/s Agarwal Transport Corp. At: Bagha Mangala Lane, Mangalabag, PO: Buxi Bazar,Cuttack-753001 प्रत्यथी / The Respondent- 2. ITO, Ward-2(1),Cuttack आयकि आयुक्त(अऩील) / The CIT(A), 3. आयकि आयुक्त / CIT 4. ववभागीय प्रनतननधध, आयकि अऩीलीय अधधकिण, कटक / DR, ITAT, 5. Cuttack गार्ा पाईल / Guard file. 6. सत्यावऩत प्रनत //True Copy// आदेशािुसार/ BY ORDER,

(Senior Private Secretary) आयकर अपीऱीय अधिकरण, कटक / ITAT, Cuttack