JHANTU GHOSH,BURDWAN vs. I.T.O.,WARD-1(4), BURDWAN

The captioned appeal filed by the assessee, pertaining to Assessment Year 2012-13, is directed against the order passed by the ld. Commissioner of Income Tax(Appeals), Burdwan, dated 25.02.2019, which in turn arises out of a penalty order passed by Assessing Officer u/s 271A of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’), dated 05.02.2018.

The Solitary grievance of the assessee in this appeal is that the Ld Commissioner of Income Tax (Appeals)-Burdwan failed to appreciate that none of the conditions precedent required to be satisfied for the assumption of jurisdiction u/s. 274 read with s. 271A of the Income Tax Act, 1961 existed and/or have been complied with and/or fulfilled in the instant case by the Ld. Income Tax Officer, Ward 1(4). Burdwan and his specious action in upholding the impugned order dated 05-02-2018 imposing penalty in the sum of Rs. 25,000/- in pursuance to the impugned notice dated 30-08-2017 is ab initio void and ex-facie null in law.

Brief facts qua the issue are that the assessee is an individual and is engaged in the trading business of baby food products in the name and style of "Ghosh Variety Stores". The assessee had not filed any return of income u/s 139(1) of the Income Tax Act, 1961 since his income did not exceed the basic limit. Subsequently, the Ld. Income Tax Officer, Ward 1(4), Burdwan got information from the Ld. Income Tax Officer (Intelligence & Criminal Investigation), Durgapur that the cash deposits of Rs. 1,17,11,217/- in assessee`s bank account were his sale proceeds which has escaped assessment within the meaning of section 147 of the Act and accordingly, a notice dated 28.03.2017 was issued u/s 148 of the Income Tax Act, 1961 to the assessee. In compliance thereof, the assessee had duly filed a return u/s 148 of the Act on 28-04- 2017 disclosing the income at Rs. 1,73,990/- for the assessment year under consideration. In the course of the assessment proceedings, the Ld. Assessing Officer was of the view that since the assessee had neither produced any bills and vouchers or books of accounts in support of the return, he resorted to estimate a sum of Rs. 9,36,897/- being 8% of the total sale proceeds of Rs. 1,17,11,217/- as the total undisclosed income of the assessee for the assessment year under consideration in the assessment order framed u/s. 147/143(3) of the Act on 30-08-2017.

Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has confirmed the penalty imposed by the Assessing Officer. Aggrieved, the assessee is in appeal before us.

The ld. Counsel reiterated the submissions made before the authorities below whereas the ld. DR has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity.

We have heard both the parties and perused the materials available on record. We note that it is an accepted position that the statutory prescription contained in the provision of section 44AA of the Income Tax Act 1961, mandates that an assessee is required to maintain regular books of accounts as understood in commercial parlance so as to enable the Assessing Authority to compute the total income for the concerned assessment year. It is also an admitted position that the mandate of section 271A of the Income Tax Act, 1961 is that in case of failure to keep and maintain any such books of accounts and other documents by an assessee as required u/s. 44AA of the Act and the rules framed thereunder, penalty in the sum of Rs. 25,000/- will be imposed upon him.

We note that in Form No. 3CD dated 10-06-2012 (Audit Report of CA), the auditor had stated that he had examined the Cash Book and Ledger Book (Computer System) of the assessee. The sole bone of contention of the Ld. Assessing Officer is that the supporting documents in relation to the books of accounts as well as the bills and vouchers were not produced by the assessee for which he proceeded to apply the provisions of section 44AD (presumptive basis ) of the Act in the circumstances of the instant case. In other words, the keeping and maintenance of the books of accounts and/or retaining thereof is not disputed by the Ld. Assessing Officer. His only plight is that the he is unable to compute the income of the assessee for the alleged failure to produce bills and vouchers and/or the books of accounts in the teeth of the categorical finding that "necessary details have been called for and the evidences, explanations, reports and cross-references as on record have been considered and assessment is being made accordingly." As per the facts narrated in the assessment order, it is quite clear that assessee was maintaining books of accounts therefore penalty u/s 271A should not be imposed. Thus, the whole idea to invoke the mischief of section 44AA of the Act in the instant case is devoid of any legality. Therefore, based on this factual position we delete the penalty of Rs.25,000/- In the result, the appeal of the assessee is allowed.