DILIP SHAH,MUMBAI vs. DCIT CEN CIR 11, MUMBAI

During hearing of these appeals, the ld. counsel for the assessee, Ms. Vinita Shah, contended that similarly penalty was levied in the case of Atul Sanghavi, partner of the assessee, who also filed before the Tribunal, wherein, vide order dated 16/03/2017 (ITA No.504 to 517/Mum/2014) dismissed the appeal in to 510/Mum/2014 and allowed the appeal in ITA No.511 to 517/Mum/2014, therefore, same view may be taken. This factual matrix was not controverted by Shri Purushottam Kumar, ld. DR, though he defended the penalty imposed by the Assessing Officer.

3 Dilip Sitaram Bhamare to461/Mum/2014 2.1. We have considered the rival submissions and perused the material available on record. In view of the above, we are reproducing hereunder the relevant portion from the order dated 16/03/2017 in the case of Atul A. Sanghavi for ready reference and analysis:-

Since the appeals were heard together these are being consolidated and disposed of together by this common order.

Appeal against penalty u/s. 271 A.

At the outset Ld. Counsel submitted that penalty has been levied for non-maintenance of books of accounts. He submitted that assessee has not been doing any business he was only receiving commission. Ld. Counsel fairly agreed that for the earning of commission income too assessee should have maintained books of accounts. In view of the aforesaid admission by the Ld. Counsel of the assessee that assessee has not maintained required books of accounts we do not find any infirmity of the order of Ld. CIT-A. Accordingly we uphold the same.

Appeals against levy of penalty u/s. 271 B.

On this issue we note that penalty has been levied for not getting the accounts audited u/s. 44AB. On this issue Ld. Counsel of the assessee submitted that when the assessee has been found to be not maintaining books of accounts, there is no question of levy of penalty u/s. 271 B for failure to get the 4 Dilip Sitaram Bhamare ITA No.448 to461/Mum/2014 accounts audited. In thisregard Ld. Counsel placed reliance upon following Hon’ble Allahabad High Court decision wherein it was held that where no books of accounts are maintained by the assessee penalty u/s. 271 B is not attracted. i) CIT vs. S. K Gupta & Company (322 ITR 0086). ii) CIT vs. Bisauli Tractors (299 ITR 0219) 8. No jurisdictional High Court decision contrary to the above proposition was brought before us.

Accordingly respectfully following the precedents from the Hon’ble High Court decision as above we set aside the above orders of authorities below and delete the levy of penalty u/s. 271 B. In the result assessee’s appeals in to 510 are dismissed and assessee’s appeal in ITA No. 511 to 517 are allowed.” 2.2. We find that in the aforesaid case, penalty was levied for non-maintenance of books of accounts as the assessee was not doing any business and was merely receiving commission. It was fairly agreed that for earning commission income also the assessee was to maintain books of accounts, therefore, on that count, the order of the Ld. Commissioner of Income Tax (Appeal) was upheld. So far as, levy of penalty u/s 271B is concerned, it was levied for not getting the accounts audited u/s 44AB of the Act. In that situation, when the assessee was not maintaining books of account, there was no question of getting the accounts audited, therefore, there was no question of levy penalty u/s 271B of the Act for such failure. The Tribunal while coming to a particular conclusion, relied upon the decision in the case of CIT vs S.K. Gupta & Co. 322 ITR 86 (ALL.) and CIT 5 Dilip Sitaram Bhamare ITA No.448 to461/Mum/2014 vs Bsauli Tractors 299 ITR 219 (All.). No contrary decision was cited from either side. In the present appeals also similar facts were argued to exist, which was not controverted by the Revenue. The Hon'ble Gauhati High Court in Surajamal Parsuram Todi vs CIT (222 ITR 691)(Gau.) held as under:-