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Income Tax Appellate Tribunal, DELHI BENCH ‘E’, NEW DELHI
Before: Sh. Amit ShuklaDr. B. R. R. Kumar
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the assessee against the order of the ld. CIT(A)-20, New Delhi dated 19.04.2017.
Following grounds have been raised by the assessee:
1. That the Ld. CIT(A) is erred under the law while confirming penalty order of A.O. for Rs.1,50,000/- u/s 271B inspite of the fact that the Ld. AO has already imposed penalty u/s 271A on the appellant for non maintenance of books of accounts.”
Brief facts of the case are that a survey operation u/s 133A of the Income Tax Act, 1961 was conducted in the month of February, 2013 and unaccounted stock of aluminum sheets and aluminum foils was found and the same was surrendered by 2 Mohit Garg the assessee for taxation in the assessment year 2013-14. During the assessment proceedings, the fact of surrender of undisclosed income was disputed and the AO made addition based on the statement recorded during the proceedings u/s 133A of the Act.
During the penalty proceedings u/s 271B of the Act, the assessee submitted that an income of Rs.10,71,164/- declared by the assessee as net commission earned is on the basis of a certificate from tax consultant and the assessee was under a bonafide belief that the net commission income is the bench mark for getting his accounts audited u/s 44AB which is less than Rs.60,00,000/-.
The AO held that the threshold limit thus determined is not correct and assessee is liable to get the books audited owing to the turnover of more than Rs.60,00,000/- in accordance with the provisions of Section 44AB. The AO also held that during the survey operation and during the assessment proceedings, assessee has accepted that he is into the business of trading of aluminum sheets and hence auditing of the books of accounts is a statutory requirement.
Aggrieved the assessee filed appeal before the ld. CIT (A). During the proceedings before the ld. CIT (A), the assessee submitted that the AO has already imposed penalty u/s 271A of Rs.25,000/- for non-maintenance of books of accounts. It was argued before the ld. CIT (A) that penalty for non-maintenance of books of accounts has already been levied there is no possibility of getting the non-existing books of accounts audited and hence no penalty u/s 271B is leviable. The ld. CIT (A)
3 Mohit Garg confirmed the order u/s 271B holding that the intention of the legislature is clear that the assessee has to maintain books accounts as well as above the threshold limit get his account audited and for the violation of both separate penalty provisions are attracted under the IT Act.
Aggrieved the assessee filed appeal before us.
Having the facts of the case and the provisions of the Act undisputed, the ld. AR argued on the strength of the judgments of various courts:
• S.P. Todi Vs CIT 226 ITR 691 (Gau.) held, “that maintenance of accounts is envisaged under section 44AA and on failure to do so the assessee shall be guilty and liable to be penalized under section 271A. Even after maintenance of books of account the obligation of the assessee does not come to an end. He is required to do something more, i.e., by getting the books of account audited by an accountant. But when a person commits an offence by not maintaining the books of accounts as contemplated by Section 44AA the offence is complete. After that there can be no possibility of any offence as contemplated by Section 44AB and, therefore, in our opinion, the imposition of penalty under section 271B is erroneous. The Tribunal has overlooked this aspect of the matter. Of course, it is apparent from the records that the assessee failed to maintain the books of accounts as required under section 44AA and for that penalty is prescribed under section 271A”.
4 Mohit Garg • CIT Vs S.K. Gupta and Co. 322 ITR 86 (All.) held, “the submission (of counsel for revenue ) is misconceived for the reason that the requirement of getting the books of accounts audited could arise only where the books of accounts are maintained. If for some reason the assessee has not maintained the books of accounts the appropriate provision under which penalty proceedings can be initiated is under section 271A of the Act which recourse has also been taken by the assessee as would appear from the order of the Tribunal.”
• CIT Vs Bisauli Tractors 299 ITR 219 (All.) after hearing the counsel for the revenue in an ex-parte order held, “that separate penalty has been provide for non-maintenance of accounts, i.e., under section 271A of the Act and for no getting the accounts audited and not furnishing the audit report i.e., under section 271B of the Act. In the present case, the Assessing Officer did not impose penalty under section 271A of the Act and instead proceeded to impose penalty under section 271B of the Act. If a person has not maintained the accounts book or any accounts the question of its audit does not arise. In such an event the imposition of penalty under the provision contained in section 271A of the Act for the alleged non-compliance.”
On the other hand, the ld. DR vehemently argued that the penalty u/s 271A and 271B are mutually exclusive and operate under different domains. She argued that it is not correct to hold that once penalty u/s 271A has already been levied, the penalty under Section 271B cannot stand. It was argued that it
5 Mohit Garg is a case of assessee being in the business of trading of aluminum sheets & foils and the bank statement of the assessee depicts turnover of more than Rs.3 crores and the contention of the assessee that he is in business of earning of commission also cannot be accepted. She relied on the case of Abhay Kumar & Co. Vs Union of India 164 ITR 148 (Raj.). It was argued that while the penalty u/s 271A is Rs.25,000/- for non-maintenance of books of accounts and Rs.1,50,000/- the maximum penalty u/s 271B for failure to get the accounts audited, if the proposition as canvassed by the ld. AR is accepted it will only encourage the assessee’s for non-maintenance of books of accounts and getting away with a minor penalty of Rs.25,000/- instead of Rs.1,50,000/-.
Heard the arguments of both the parties and perused the material available on record.
We find that the decision of the ld. CIT (A) that the legislature is clear about maintenance of books of accounts and as well as getting the books audited is acceptable to the extent that there has been a twin responsibility casted up on the shoulders of the assessee to, a) Maintain the books of accounts u/s 44AA, b) To get the accounts audited u/s 44AB.
At the same time, the legislature is also provided for separate levy of penalty for failure to meet each statutory requirement. In the instant case, the audit could not have been conducted in the absence of books of accounts. If a person has not maintained the books of accounts, the question of audit does not arise. The infraction of Section 44AB gets attracted
6 Mohit Garg only when the assessee maintains the books of accounts but fail to get them audited. Hence, there is no reason to initiate penalty u/s 271B. The penalty for non-maintenance of books of accounts has already been rightly levied, hence the offence has already been taken note of and the only recourse is to levy penalty U/s 271A for non-compliance of Section 44AA. These two provisions operate under two different realms.
Hence, keeping in view the provisions of the Act and the judicial pronouncements on the subject matter, we hereby direct that the penalty levied by the AO as confirmed by the ld. CIT (A) be obliterated.
With regard to the arguments of the ld. DR that owing to the difference in the penalties, it prima facie encourages non- maintenance of books of accounts, at this juncture, we refrain ourselves from trespassing the domain of legislature as to the difference of the quantum of penalty leviable u/s 271A and 271B.
In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 23/06/2020.