SH. IMRAN,GHAZIABAD vs. ITO, GHAZIABAD

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ITA 4224/DEL/2015Status: DisposedITAT Delhi17 September 2018AY 2009-108 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that since the quantum proceedings, which formed the basis for the penalty, were set aside and remanded to the CIT(A) for fresh adjudication, the penalty proceedings were not sustainable at this stage. The matter was restored to the AO for fresh decision after the quantum issue is decided.

What were the facts?

The assessees failed to produce books of account during assessment proceedings, leading to additions for unverifiable expenses. Consequently, penalties were levied under Sections 271A and 271B for non-maintenance of books and failure to get accounts audited.

What were the issues?

The primary issue was the sustainability of penalties levied for non-maintenance of books and failure to audit accounts when the underlying quantum assessment was not finalized. The assessees also claimed to be 'Kachha Arhtiya' which impacted the requirement for maintaining books.

Which sections of the Income-tax Act were involved?

Section 271A,Section 271B,Section 44AA,Section 44AB,Section 142(1),Section 274

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘C’ : NEW DELHI

Before: SHRI N.K. SAINI & SHRI KULDIP SINGH

For Appellant: Ms. Saubhagya Agarwal, Shri, Ms. Naina Jain
For Respondent: Shri Subhash Verma, Senior DR
Hearing: 13.09.2018

of consolidated order to avoid repetition of discussion.

2.

The appellant, Shri Irshad (hereinafter referred to as ‘the assessee’) by filing the present appeals, sought to set aside the impugned order dated 09.03.2015 passed by Ld. CIT (Appeals), Muzaffarnagar qua the assessment year 2009-10 on the grounds inter alia that:-

“ITA NO.4221/DEL/2015 1. That the Learned CIT (Appeals) has erred the law and on facts in confirming the action of the Learned AO for imposing the penalty.

2. That having regards to the fact and circumstances of the case, Learned CIT (Appeals) has erred in justifying the penalty of Rs.25000/- U/s 271A as law does not prescribed the specific books of accounts which were required to be maintained. .

3. That the appellant has a bonafide belief, that there is no requirement for maintaining the books of accounts. The Ld. AO was in position to calculate the profit of the assessee on the basis of the documents / other papers.

4. The Ld. CIT(A) have wrongly support the views taken by the Ld. AO in respect of flat rate of profit on sale without raising the question of books of accounts and without any reservation on his part as regard the accounts.” “ITA No.4222/Del/2015

2. That having regards to the fact and circumstances of the case, Learned CIT (Appeals) has erred in establishing the nature of work of the assessee i.e. the assessee is worked as Kacchha Arhitya during the year, and confirm the action of Ld. AO of imposing the penalty of Rs.68,940/- (wrongly mentioned Rs.1,00,000/- in the grounds of appeal) U/s 271B of the Income Tax Act, 1961.

3. That Learned CIT(A) has wrongly confirmed the action of the Ld. AO, that appellant turnover exceeds the monetary limit as prescribed under section 44AB of the Act and no audit has been conducted of his accounts, therefore, the penalty was attracted.

4. That the Learned CIT(A) did not considered the version of the assessee that the appellant was a Kacchha Arhtia.

5. That Ld. CIT(A) wrongly mentioned In his order that assessee could not established that the assessee is Kacchha Arhtia and the turnover made by him was on behalf of the agriculturists. The assessee has filed complete details and evidence regarding Kachha Arhtia because appellant has contended that he was a retail trader of tomato and his turnover from agriculture produce was Rs. 35,29,2101- and income U/s 44AF @ 5%.

6. That Ld. CIT(A) did considered the facts and circumstances of the case, that penalty U/s 271B for failure to get books of accounts audited where there is failure of to maintain the books of accounts and penalty U/s 271A was levied for this failure.” 3. The appellant, Shri Imran (hereinafter referred to as ‘the assessee’) by filing the present appeals, sought to set aside the impugned order dated 09.03.2015 passed by Ld. CIT (Appeals), inter alia that:-

““ITA NO.4223/DEL/2015

1. That the Learned CIT (Appeals) has erred the law and on facts in confirming the action of the Learned AO for imposing the penalty.

2. That having regards to the fact and circumstances of the case, Learned CIT (Appeals) has erred in justifying the penalty of Rs.25000/- U/s 271A as law does not prescribed the specific books of accounts which were required to be maintained. .

3. That the appellant has a bonafide belief, that there is no requirement for maintaining the books of accounts. The Ld. AO was in position to calculate the profit of the assessee on the basis of the documents / other papers.

4. The Ld. CIT(A) have wrongly support the views taken by the Ld. AO in respect of flat rate of profit on sale without raising the question of books of accounts and without any reservation on his part as regard the accounts.”

1.

That the Learned CIT (Appeals) has erred the law and on facts in confirming the action of the Learned AO for imposing the penalty.

2. That having regards to the fact and circumstances of the case, Learned CIT (Appeals) has erred in establishing the nature of work of the assessee i.e. the assessee is worked as Kacchha Arhitya during the year, and confirm the action of Ld. AO of imposing the penalty of Rs.1,00,000/- U/s 271B of the Income Tax Act, 1961.

3.

That Learned CIT(A) has wrongly confirmed the action of the Ld. AO, that appellant turnover exceeds the monetary limit as prescribed under section 44AB of the Act and no audit has been conducted of his accounts, therefore, the penalty was attracted.

5 & 4222/Del./2015 ITA Nos.4223 & 4224/Del./2015 4. That the Learned CIT(A) did not considered the version of the assessee that the appellant was a Kacchha Arhtia.

5. That Ld. CIT(A) wrongly mentioned In his order that assessee could not established that the assessee is Kacchha Arhtia and the turnover made by him was on behalf of the agriculturists. The assessee has filed complete details and evidence regarding Kachha Arhtia because appellant has contended that he was a retail trader of tomato and his turnover from agriculture produce was Rs.32,83,100/- and income U/s 44AF @ 5%.

6.

That Ld. CIT(A) did considered the facts and circumstances of the case, that penalty U/s 271B for failure to get books of accounts audited where there is failure of to maintain the books of accounts and penalty U/s 271A was levied for this failure.” BRIEF FACTS OF ITA No.4221/Del/2015 & ITA No.4222/Del/2015

4.

Briefly stated the facts necessary for adjudication of the controversy at hand in the aforesaid two appeals are : During the assessment proceedings, notices under section 142(1) dated 22.07.2011 in case of Irshad for AY 2009-10 were issued to produce the books of account along with bills and vouchers but the assessee has failed to produce the same and consequently addition of Rs.12,18,290/- was made to the assessee on account of expenses claimed but not verifiable. Consequently, penalty proceedings were initiated vide notice issued u/s 274 read with section 271A and 271B for non-maintenance of books of account in view of the provisions contained u/s 44AA and for not getting the same has been filing return showing income on presumptive basis u/s 44AF, penalty to the tune of Rs.25,000/- and Rs.68,940/- in & 4222/Del/2015 u/s 271A & 271B respectively has been levied.

BRIEF FACTS OF &

5.

Briefly stated the facts necessary for adjudication of the controversy at hand in the aforesaid two appeals are : During the assessment proceedings, notices under section 142(1) dated 22.07.2011 in case of Imran for AY 2009-10 were issued to produce the books of account along with bills and vouchers but the assessee has failed to produce the same and consequently addition of Rs.18,98,680/- was made to the assessee on account of expenses claimed but not verifiable. Consequently, penalty proceedings were initiated vide notice issued u/s 274 read with section 271A and 271B for non-maintenance of books of account in view of the provisions contained u/s 44AA and for not getting the same audited. Declining the contentions raised by the assessee that he has been filing return showing income on presumptive basis u/s 44AF, penalty to the tune of Rs.25,000/- and Rs.1,00,000/- in ITA respectively has been levied.

6. Assessees carried the matter by way of appeals before the ld. CIT (A) who has confirmed the penalties levied by AO by dismissing the appeals. Feeling aggrieved, the assessees have come up before the Tribunal by way of filing the present appeals.

7.

We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.

8.

AT the very outset, it is brought to our notice by the ld. AR for the assessees that the quantum order passed by the AO / ld. CIT (A) on the basis of which penalty proceedings were initiated, have been set aside by the coordinate Bench of the Tribunal to the file of the Ld. CIT (A) with direction to pass a speaking order as the assessees have raised the question before ld. CIT (A) that he being a ‘Kachha Arhatiya’ and as such, he is not maintaining books of account and this issue remained undecided in the quantum proceedings. In the face of these undisputed facts, we are of the considered view that since the quantum proceedings have not yet attained finality having been pending before the ld. CIT (A), the penalty proceedings are not sustainable. So, impugned orders providing an opportunity of being heard to the assessee when the question raised by the assessee that he is a ‘Kachha Arhatiya’ is ‘decided by the ld. CIT (A)’. Consequently, all the aforesaid appeals filed by the assessees are allowed for statistical purposes. Order pronounced in open court on this 17th day of September, 2018.

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