HARESH GHANSHYAMDAS MAKHIJA,ULHASNAGAR vs. INCOME TAX OFFICER, WARD 2(2), KALYAN

Further aggrieved the assessee is in appeal before us. contended that the ld. A.O. in the assessment proceeding had accepted the returned income filed by the assessee but had levied penalty for the reason that the assessee has not audited his book of accounts as per the provisions of section 44AB of the Act.

The learned Departmental Representative ('ld.DR' for short), on the other hand, controverted the said facts and stated that the assessee has been non compliant before the first appellate authority and has failed to substantiate his claim before both the lower authorities. The ld. DR relied on the order of the lower authorities.

We have heard the rival submissions and perused the materials available on record. Ground no. 1 of the assessee’s appeal challenged the penalty levied u/s. 271B of the Act on the ground that once the penalty u/s. 271A has been levied, there is no locus catena of the decisions in support of his claim, which are mentioned here under:

It is a settled proposition of law that once the penalty has been levied u/s. 271A of the Act for non maintenance of books of accounts, then penalty u/s. 271B of the Act cannot be levied. The co-ordinate bench in the case of Varadagovind Parthasarthy Iyer (through the legal heir Arvind Iyer) (supra) has held the same and the relevant extract of the said decision is cited hereunder for ease of reference:

From the above observation, we are of the considered opinion that once the penalty u/s. 271A has been levied for non maintenance of books of accounts, no penalty u/s. 271B of the Act can be levied. This view has been supported by the decisions of various high courts. It is observed that in the present case in hand the ld. A.O. had levied a penalty of Rs.25,000/- u/s. 271A of the Act which according to the ld. AR has been accepted and paid by the assessee. As per the decisions cited herein above, we deem it fit for non auditing of the books of accounts where the assessee has failed to maintain the same. We hereby direct the ld. A.O. to delete the impugned penalty. Ground no. 1 raised by the assessee is hereby allowed.

As we have deleted the impugned penalty, the other grounds of appeal raised by the assessee requires no further adjudication.

In the result, the appeal filed by the assessee is allowed.

The assessee in this appeal has challenged the penalty levied u/s. 271(1)(c) of the Act amounting to Rs.53,820/-. As the facts have already been elaborated in we deem it fit to decide the issue without reproducing the facts. The ld. A.O. in the present case has levied the impugned penalty for the reason that the assessee has concealed the particulars of income during the year under consideration.

The ld. CIT(A) upheld the penalty vide an ex parte order dated 22.06.2023 holding that the assessee has failed to substantiate his claim neither by documentary evidence nor by the submission of the assessee.

The assessee is in appeal before us, challenging the impugned order passed by the ld. CIT(A).

The learned Authorised Representative ('ld. AR' for short) for the assessee contended that there has been no variation in the returned and assessed income in which on the decision of the co-ordinate bench in the case of Armoury International vs. ACIT (in to 3301/Mum/2017 vide order dated 01.01.2019).

The learned Departmental Representative ('ld.DR' for short), on the other hand, controverted the said fact and relied on the orders of the lower authorities.

We have heard the rival submissions and perused the materials available on record. It is observed that the assessee had filed his return of income in response to notice u/s. 148 of the Act, declaring total income at Rs.6,41,650/- which amounts to business income of Rs.2,96,750/- on the total turnover of Rs.15,44,870/- and commission income of Rs.3,60,865/- which aggregates to Rs.6,57,615/- out of which the assessee had claimed deduction of Rs.15,970/- under Chapter VIA of the Act. The ld. A.O. in the assessment proceeding had accepted the return of income filed by the assessee and determined the total income at Rs.6,41,650/- without any variation between the returned and the assessed income. The ld. AR has placed reliance on the decision of the Tribunal in the case of Armoury International (supra) which has held that when the returned income and the assessed income are the same, penalty u/s. 271(1)(c) of the Act cannot be levied. The relevant extract of the said decision is cited hereunder for ease of reference:

We have heard both the counsel and perused the records. We find that the assessment in this case has been completed on the returned income. Hence, when the return of income and the assessed income are same, the machinery provision for levy of penalty u/s. 271(1)(c) fails, as the penalty u/s. 271(1)(c) is levied with reference to the tax sought to be evaded, which is the difference between the income returned and that assessed by the A.O.

From the above observation, we deem it fit to hold that as there has been no variation in returned and the assessed income, there could not be any possibilities of the assessee concealing the particulars of income which could attract the provision of section 271(1)(c) of the Act. We hereby deem it fit to direct the ld. A.O. to delete the impugned penalty levied u/s. 271(1)(c) of the Act. Hence, the grounds raised by the assessee are hereby allowed.

In the result, the appeal filed by the assessee in is allowed.