DATTATRAYA SHIVAJI BANDAL,,SATARA vs. DEPUTY COMMISSIONER OF INCOME-TAX,,

आदेश / ORDER

PER SUSHMA CHOWLA, JM Out of the bunch of 8 appeals, four appeals in ITA Nos.908 to 911/PUN/2016 are against separate orders of the Commissioner of Income Tax (Appeals) – 4, Pune dt.13.02.2016 relating to assessment years 2007-08 to 2010-11 against the levy of penalty under Section 271A of the Income Tax Act, 1961 (in short ‘the Act’). The balance four appeals in ITA Nos.912 to 915/PUN/2016 are against separate orders of the Commissioner of Income Tax (Appeals) – 4, Pune dated 15.02.2016 relating to assessment years 2007-08 to 2010-11 against the levy of penalty under Section 271B of the Act.

disposed of by this consolidated order for the sake of convenience.

271A / 271B of the Act. However, we proceed to dispose of the bunch

of appeals after referring to the facts and issue in ITA

No.908/PUN/2016.

grounds of appeal :

“1. On the facts and circumstances of the case and in law the Ld.CIT(A)-4, Pune was not justified in confirming the penalty levied by the AO under Section 271-B of the Act. The penalty be deleted. 2. The appellant craves to leave, add / amend or alter any of the above grounds of appeal.”

the return of income for assessment year 2007-08 declaring total

income of Rs.1,63,750/- and agricultural income of Rs.69,045/-. The

said return was processed under Section 143(1) of the Act. The survey

under Section 133A of the Act was carried out at the business premises

of assessee on 25.02.2010. During the course of survey, it was noticed

that there were unrecorded sales as well as purchases recorded in the

separate registers which were found and impounded during the course

of survey proceedings. The assessee filed revised return on 31.03.2010

declaring total income of Rs.6,08,920/- and agricultural income of

Rs.69,045/-. The Assessing Officer held the said return to be a nonest

return of the income, since it was not filed within the prescribed period

and also because the original return was not filed on or before the due

date of filing the return of income of the relevant year. The assessment

in this case was completed under Section 143(3) r.w.s. 147 of the Act

determining the total income at Rs.7,08,920/- and agricultural income

of Rs.69,045/-. The Assessing Officer also initiated penalty

proceedings under section 271A of the Act as assessee had failed to

maintain regular books of accounts in terms of provisions of Section

44AA of the Act. The Assessing Officer took note of the fact that the

turnover of the assessee for the year under consideration was

Rs.49,81,251/- and as such the assessee was required to maintain the

books of accounts. However, no such books of accounts were initially

maintained by the assessee. Later on, the assessee obtained the

photocopies of all the records and prepared the books of accounts. The

assessee had also not got the accounts audited though it was

statutorily required to do so as the turnover of the business exceeded

Rs.40 lacs. Since the assessee had failed to comply with the provisions

of Section 44AA and 44AB of the Act, penalty proceedings under

Section 271A of the Act for failure to maintain the books of accounts

and under section 271B of the Act for failure to get such accounts

audited, were separately initiated. The assessee was show caused in

this regard. The assessee explained that though no accounts were

maintained but there was no defect in computation of the taxable

income since all other details necessary for computation of such

income were available and were also produced before the Assessing

Officer during the course of assessment proceedings. The Assessing

Officer rejecting the said plea, held the assessee to have defaulted in

non-compliance of provisions of Section 44AA of the Act and levied

penalty of Rs.25,000/-. The Commissioner of Income Tax (Appeals)

upheld the levy of penalty under section 271A of the Act against which

the assessee is in appeal before us.

that there was no merit in the aforesaid levy of penalty under section

271A of the Act since the Assessing Officer had accepted the books of

accounts prepared by the assessee after survey and no addition has

been made in the hands of the assessee.

reliance on the orders of the authorities below.

The first issue which arises in the present appeal is against the levy of

penalty under section 271A of the Act for violation of provisions of

Section 44AA of the Act.

business or profession, not being a profession referred to in sub-section

(1), shall (i) if his income from business or profession exceeds rupees

one lakh twenty thousand rupees, (ii) or his total sales, turnover or

gross receipts, as the case may be, in the business or profession exceed

or exceeds ten lakh rupees, in any one of the three years immediately

preceding the previous year; then he is under obligation to keep and

maintain such books of accounts and other documents, which may

enable the Assessing Officer to compute his total income in accordance

with the provisions of the Act. The requirement of Section is that where

the income of the assessee from business or profession exceeds rupees

one lakh twenty thousand or his sales , turnover or gross receipts

exceeds rupees ten lakhs, then there is an obligation on the assessee to

maintain the books of accounts and on failure to maintain such books

of accounts, the assessee is liable to levy of penalty under Section 271A

of the Act. In such default the penalty of Rs.25,000/- can be levied.

the return of income. However, after survey proceedings under Section

133A of the Act, the assessee prepared the books of accounts on the

basis of the impounded registers and documents which reflected higher

sales than the sales declared by the assessee in the original return of

income. Consequent to the survey in the case of the assessee, the

assessment was completed under section 143(3) r.w.s. 147 of the Act

at a higher income. The turnover of the assessee exceeded the limit

prescribed under Section 44AA of the Act under which it was obligatory

upon the assessee to maintain the books of account. The requirement

of the section is that in cases where the income exceeds the threshold

limit or turnover then it was obligatory upon the person to maintain

proper books of accounts and in the absence of the same, assessee was

liable to levy of penalty under Section 271A of the Act. We find that the

survey team on the basis of the impounded documents found during

the course of survey, had computed the income of the assessee for the

relevant assessment years and found the assessee to have violated the

provisions of Section 44AA of the Act for not maintaining the books of

accounts as required under the Act. Where the assessee had

defaulted, then he is liable for levy of penalty under section 271A of the

Act. We hold so. In such circumstances, we uphold the levy of penalty

u/ 271A of the Act at Rs.25,000/-.

2011-12, the facts and circumstances are identical i.e., the receipts are

more than the prescribed limit and the assessee had failed to maintain

required books of accounts. It is only on the basis of the sales

registers / documents found and impounded during the course of

survey, assessee filed the return of income for the said years offering

the said income. In view thereof, where the facts and issue are

identical to the facts in assessment year 2007-08, we uphold the levy of

penalty under section 271A of the Act at Rs.25,000/- for each of the

years respectively.

under Section 271B of the Act was levied for not auditing the books of

accounts. It is an admitted position that no books of accounts were

maintained by the assessee. We have upheld the penalty order of the

authorities below under section 271A of the Act in the above paras at

Rs.25,000/- for each of the years respectively. Once the books of

accounts have not been maintained by the assessee in the regular

course of business then the next consequence follows i.e. the audit of

the said accounts of the assessee from year to year. In the above said

factual circumstances, where the assessee had defaulted for not

maintaining of books of account, additional default, though attracted

for non audit of books of account under Section 271B of the Act, is not

leviable against the assessee because of the provisions of Sec.273B of

the Act. The said section clearly provides that where the assessee had

reasonable cause for the default then no penalty is to be levied. Where

the assessee had failed to maintain books of account, then such non

existing books of account cannot be audited. We find merit in the

plea of the assessee and accordingly direct the Assessing Officer to

delete the penalty levied under Section 271B of the Act, for the relevant

assessment years.

Order pronounced on 24th day of April, 2018.

Sd/- Sd/- (ANIL CHATURVEDI) (SUSHMA CHOWLA) लेखा सद�य / ACCOUNTANT MEMBER �या�यक सद�य / JUDICIAL MEMBER

पुणे Pune; �दनांक Dated : 24th April, 2018. Yamini

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. CIT(Appeals)-4, Pune. 4. Pr.CIT-3, Pune. 5 �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “बी” / DR, ITAT, “B” Pune; 6. गाड� फाईल / Guard file.

आदेशानुसार/ BY ORDER

// True Copy //

व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.