NATESA GOUNDER PONNUSAMY,ERODE vs. ITO, WARD-1(2), ERODE

आदेश / O R D E R

PER INTURI RAMA RAO, ACCOUNTANT MEMBER:

ITA No.3208/2019 :- 2 -:

The Assessee raised the following grounds of appeal: 2.

‘’1) The order of the learned CIT(A) is erroneous in law and against the principles of natural justice.

2) The learned CIT (A) erred in not considering the grounds of appeal in proper perspective.

3) The learned CIT (A) grossly erred in not considering the important fact that the appellant could not maintain books of accounts for the impugned assessment year, for his only daughter, aged about 24 years, expired on 14/05/2014. Copy of the death certificate is enclosed.

And for other reasons that may be adduced at the time of hearing, your appellant prays that the appeal be admitted, considered and justice be rendered’’.

The appellant is an individual deriving income under the head ‘’income from business’’. The return of income for the AY 2015-16 was filed on 18.03.2016 disclosing total income of Rs. 7,37,030/-. Against the said return of income, the assessment was completed by the Assessing Officer on 29.09.2017 passed u/s.143(3) of the Act at total income of �10,37,605/-. Assessee admittedly was not maintaining any books of account and he had filed return of income admitting taxable income of 2% on gross receipt of �3,00,57,570/-, whereas the Assessing Officer had assessed income at 3% of the gross receipts.

ITA No.3208/2019 :- 3 -:

The Assessing Officer was of the opinion that since he had not maintained books of accounts, penalty u/s.271A of the Act is leviable and accordingly, he issued show notice to the assessee to show cause why an order imposing penalty u/s.271A of the Act should not be made. In response to show cause notice, assessee explained that the books of accounts could not be maintained for reason that he was mentally disturbed following the death of his only daughter. However, the Assessing Officer rejected the explanation holding that in earlier years also, books of accounts were not maintained. Accordingly, he levied penalty of �25,000/- u/s.271A of the Act vide order dated 28.03.2018.

Being aggrieved, an appeal was preferred before the 4. ld.CIT(A) who vide impugned order confirmed levy of penalty.

Being aggrieved, the appellant is in appeal before us in the 5. present appeal.

We heard the rival submissions and perused the material on 6. record. The only issue involved in the present appeal relates to levy of penalty u/s.271A of the Act. The provisions of Section 44AA of the Act mandates that prescribed books of accounts should be maintained only in respect of prescribed assessees. Admittedly, assessee is not one of ITA No.3208/2019 :- 4 -: the prescribed assessees. Since the provisions of Income Tax Act does not mandates maintaining books of accounts in respect of business carried in by the assessee, no penalty can be levied u/s.271A of the Act. However, in case where the turnover exceeds the prescribed limit, assessee is required to submit statutory audit report and failure to comply with this, penalty is leviable u/s.271B of the Act.

Therefore, penalty under the provisions of Section 271A of the Act cannot be levied in the present case. Accordingly, we set aside the orders of the lower authorities and allow the appeal filed by the assessee.

Order pronounced on 27th day of August, 2019, at Chennai.