Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM & HON’BLE SHRI MANOMOHAN DAS
आदेश / O R D E R Per Manomohan Das, JM: This set of two appeals by the assessee are directed against the orders of the learned Commissioner of Income-Tax, (Appeals), Chennai -20 [CIT(A) dated 26-09-2023 in respect of the levy of penalty under section 271B of the Income-Tax Act, 1961 which pertains to the Assessment Years [AYs] 2013-14- & 2014-15.
ITA Nos.1199 & 1200/Chny/2023 - 2 -
The grounds of appeals of the assessee are as under:
“1. The Order of the Learned Commissioner (Appeals) is illegal and void of legal reasoning. 2. The Learned Commissioner (Appeals) erred in not properly considering and appreciating the replies and objections submitted by the Appellant including various binding precedents . 3. The Learned CIT(A) erred in not understanding the very fundamental that once the appellant does not maintain books of accounts, the offence is complete and therefore, getting them audited also does not arise. [Relying on 222 ITR 691 (Gau)]. 4. Without prejudice to the generality of the foregoing grounds, the Learned Commissioner (Appeals) erred in not following the decisions cited, including the jurisdictional Tribunal decision rendered in ITA No. 3279/Chny/2018 dated 27/03/2019, despite mentioning them in the Order passed under Section 250. 5. Without prejudice, the Learned Commissioner (Appeals) affirmed and confirmed the levy of penalty under Section 271B of the Act, merely on the reason that the said penalty is higher when compared to that of Section 271A, which reasoning is extraneous, irrelevant and hence, illegal.”
The facts involved in both the appeals are common except the
Assessment years. Hence, first we take up the appeal in ITA
No.1199/Chny/2023 for adjudication.
The brief facts of the case are that the assessee is engaged in the
business of Real Estate and assessed to income tax. A survey operation
under section 133A was conducted at the business premises of the
assessee on 13-08-2018. During the course of the survey, it was noticed
that the assessee deposited cash to the tune of Rs. 7,83,18,750/- and also
invested a sum of Rs. 60,33,000/-. Therefore, notice under section 148 of
the Act was issued to the assessee for assessing the escaped income. The
assessee in response, filed the return of income for the AY 2013-14 on 16-
04-2021 admitting total income of Rs. 36,30,130/-. Thereafter, notice under
ITA Nos.1199 & 1200/Chny/2023 - 3 -
section 143(2) was issued to the assessee on 03-12-2021 in response to
which the assessee submitted the details. It was the submission of the
assessee that he has not maintained proper books of account and
accordingly he estimated his income @ 4% on the gross receipts of Rs.
9,07,14,781/-. The ld. AO, after considering the submissions of the
assessee observed that the assessee was subjected to tax audit under
section 44AB of the Act on the basis of its gross receipts. Also, the ld. AO
estimated the total income of the assessee at 8% of the gross receipts and
accordingly made addition of Rs.45,20,661/- to the total income of the
assessee. Subsequently, penalty proceedings under section 271B initiated
against the assessee for failure to get the accounts audited under section
44AB of the Act and vide order dated 26-09-2022, Ld. A.O levied a penalty
of Rs. 1,50,000/- upon the assessee.
Being aggrieved, the assessee filed appeal before the ld. CIT(A),
Chennai. The ld. CIT(A) vide order dated 26-09-2023 dismissed the appeal
of the assessee.
Being aggrieved, the assessee filed the present appeal before the
Tribunal.
Heard the representatives of both the parties and perused the
materials on record.
ITA Nos.1199 & 1200/Chny/2023 - 4 -
The Ld. AR submitted that the assessee did not maintain books of
accounts and in similar cases the Hon’ble Chennai Tribunal and the Hon’ble
Gauhati High Court decided the issue in favour of the assessee. On the
other hand, the Ld. DR supported the order of the ld. CIT(A).
We have carefully considered the submissions of both the parties and
perused the materials on record. The ld. CIT(A), after considering the case
of the assessee, observed that the case of the assessee could be
considered as a case of non-production of books of accounts and not
getting the books of accounts audited u/s 44AB rather than a case of non-
maintenance of books of accounts. The ld. CIT(A) observed that the
assessee did not maintain proper books of account. The ld. CIT(A) further
observed that there is a difference between non-maintenance of books
accounts and not maintaining proper books of accounts. Not maintaining
proper books of accounts means books of accounts are maintained but not
as expected to be maintained as per applicable rules.
We observe from the copy of the written submissions which was
placed before the ld. CIT(A) that the assessee did not maintain books of
accounts for AYs 2013-14 and 2014-15. The Ld. AR also submitted that the
assessee did not maintain books of accounts for the AYs. 2013-13 and
2014-15.
ITA Nos.1199 & 1200/Chny/2023 - 5 -
We observe that the maintenance of books accounts is a must as per
section 44AA of the Act so as to enable the Income-Tax Authorities to
assess the income of an assessee correctly and for this purpose it can be
said that books of account must be a proper books of accounts. Otherwise,
the purpose of the Act will not be fulfilled. We observe that the assessee did
not submit before the ld. AO that he maintained books of accounts which is
not in a proper form. Hence, the assessee’s submission before the ld. AO
that he did not maintain proper books of account will carry the meaning that
books of account were not maintained by the assessee.
On the issue of non-maintenance of books of account, we observe
that the Hon’ble Chennai Tribunal vide order dated 27-03-2019 in the case
of Shri Natesan Ravi vs. Asst. Commissioner of Income Tax (Appeal No.
3279/Chny/2018) decided the similar issue in favour of the assessee. The
Hon’ble Tribunal while deciding the issue considered the cited decision of
the Hon’ble Guwahati High Court. The Hon’ble Guwahati High Court in the
case of Surajmal Parsuram Todi vs. Commissioner of Income Tax [1996]
222 ITR 691 (Gau) held that “maintenance of accounts is envisaged under
section 44AA and on failure to do so the assessee shall be liable to be
penalized under section 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
ITA Nos.1199 & 1200/Chny/2023 - 6 -
accountant. But when a person commits an offence by not maintaining the
books of account as contemplated by section 44AA, the offence is complete.
After that there can be no possibility of any offence as contemplated by
section 44AB and, therefore, the imposition of penalty under section 271B
was held to be erroneous.
The case in our hands is similar. The assessee did not maintain books
of account. As he did not maintain books of account, no question for
producing the books of account before the Tax Authority will arise. The
assessee violated section 44AA of the Act and for this action, penalty is
levied u/s. 271A of the Act. However, the Tax authorities levied penalty u/s
271B of the Act due to non-submission of books of account. As no books of
accounts were maintained by the assessee he could not produce books of
account before the Tax authority and therefore, no question will arise for
production of books of account.
In view of the aforesaid discussion, it is our considered opinion that
penalty imposed by Ld. A.O u/s 271B of the Act is erroneous. Accordingly,
we direct ld. AO to delete the impugned penalty. The reasons given by us in the preceding paragraphs shall mutatis mutandis apply to appeal in ITA
No.1200/Chny/2023 as well. Therefore, for the similar reasons, we direct the
Assessing Officer to delete penalty levied in this appeal also.
ITA Nos.1199 & 1200/Chny/2023 - 7 -
In the result, both the appeals of the assessee are allowed.
Order pronounced on 06th March, 2024.
Sd/- Sd/- (MANOJ KUMAR AGGARWAL) (MANOMOHAN DAS) लेखा सद3 / ACCOUNTANT MEMBER �ाियक सद3 /JUDICIAL MEMBER चे,ई / Chennai; िदनांक / Dated 06.03.2024 EDN/-
आदेश की Sितिलिप अ/ेिषत/Copy of the Order forwarded to : 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु5/CIT 4. िवभागीय �ितिनिध/DR 5. गाड� फाईल/GF