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Income Tax Appellate Tribunal, MUMBAI BENCHES “D”, MUMBAI
Before: Shri Joginder Singh, & Shri N.K. Pradhan
आदेश / O R D E R
Per Bench This bunch of fourteen appeals is by the assessee against the impugned orders all dated 12/12/2013 of the Ld. First Appellate Authority, Mumbai, confirming penalty imposed u/s 271B and 271A of the Income Tax Act, 1961 (hereinafter the Act) as contained in the respective appeal.
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:-
“ITA No. 504/Mum/2014 to are appeals by the assessee against common order of CIT-A, for concerned assessment years wherein Ld. CIT-A has confirmed the levy of penalty of Rs. 25,000/- each u/s. 271 A.
2. ITA No. 511/Mum/2014 to ITA No. 517/mum/2014 are appeals by the assessee against common order of Ld. CIT-A wherein he has confirmed the levy of penalty of Rs. 1 lac each u/s. 271 B for the concerned assessment year.
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:-
Maintenance of accounts is envisaged under s. 44AA and on failure to do so the assessee shall be guilty and liable to be penalised under s. 271A. Even after maintenance of books of account the obligation of the assessee does not come to an end. He is required to do something more, i.e., by getting the books of account audited by an accountant. But when a person commits an offence by not maintaining the books of account as contemplated by s. 44AA the offence is complete. After that there can be no possibility of any offence as contemplated by s. 44AB and, therefore, the imposition of penalty under s. 271B is erroneous. The Tribunal has overlooked this aspect of the matter. Of course, it is apparent from the records that the assessee failed to maintain the books of account as required under s. 44AA and for that penalty is prescribed under s. 271A.
Following the order of the Coordinate Bench and the decisions from Hon'ble Allahabad High Court along with the decision in Surajmal Parsuram Todi vs CIT (supra), we direct the Assessing Officer to delete the penalty imposed u/s 271B of the Act and affirm the penalty imposed u/s 271A of the Act for the violation. Thus, the appeals u/s 271B of the Act in to 454/Mum/2014 are allowed and the remaining appeal for imposing penalty u/s 271A of the Act in ITA No.455 to 461/Mum/2014 is dismissed.
6 Dilip Sitaram Bhamare to461/Mum/2014 Finally, the appeals are disposed off in terms indicated hereinabove.
This Order was pronounced in the open court in the present of ld. representatives from both sides at the conclusion of hearing on 23/03/2017.