ABU MANSUR ALI,KOLKATA vs. DCIT, CC-XVIII, KOLKATA, KOLKATA

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ITA 93/KOL/2014Status: DisposedITAT Kolkata10 August 2016AY 2009-20104 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the revenue had already imposed a penalty under Section 271AAA for failure to maintain books of accounts, it could not simultaneously contend that books were maintained for the purpose of Section 271B. Therefore, the penalty under Section 271B was not sustainable.

What were the facts?

The assessee failed to get its books of accounts audited as required under Section 44AB. The assessee claimed it did not maintain regular books of accounts, but later prepared them after a search operation. The revenue authorities imposed a penalty under Section 271B for this failure.

What were the issues?

Whether penalty under Section 271B is leviable when the assessee has already been penalized for failure to maintain books of accounts under Section 271AAA for the same assessment year.

Which sections of the Income-tax Act were involved?

Section 44AB,Section 271B,Section 271AAA

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “C” BENCH : KOLKATA

Before: Hon’ble Sri N.V.Vasudevan, JM & Dr.Arjun Lal Saini, AM]

ORDER

Per N.V.Vasudevan, JM

1.

This is an appeal by the Assessee against the order dated 25.11.2013 of C.I.T.(A)-Central-II, Kolkata relating to AY 2009-10.

2.

In this appeal the assessee challenged the order of CIT(A) whereby the CIT(A) confirmed the order of AO imposing the penalty on the assessee u/s 271B of the Income Tax Act, 1961 (Act).

3.

The penalty u/s 44AB was imposed for the failure of assessee to get its books of accounts audited and to file the report of such audit before the specified date mentioned in Sec.44AB of the Act. There is no dispute that the provisions of section 44AB of the Act are application in the case of the assessee. The plea of the Assessee before the revenue authorities was that the assessee had not maintained any books of accounts and therefore there was no question of getting the same audited by a Chartered Accountant u/s 44AB of the Act. The CIT(A) did not agree with the stand of the assessee in this regard for the following reasons :-

2 Abu Mansur Ali A.Yr.2009-10 “4. During the course of appellate proceedings, it is submitted on behalf of appellant that the AO was not justified in imposing the penalty u/s 271B of the Act for the failure of getting the books of account audited u/s 44AB of the Act. It is contended by the Ld. A.R. that there is no dispute on the fact that, the appellant had acted as a middleman for Kaushalya Group for arranging purchase of land at Rajarhat. It is also a fact on record that for the year under consideration the appellant did not maintain regular books of account in a systematic manner and the transactions of land dealing were recorded in diaries in haphazard manner. These diaries were seized in the course of search operation. Thus, the fact is that the appellant did not maintain the regular books of account for the year under consideration. Based on the noting in the seized diaries and other documents the appellant prepared the books of account after the search operation. These books of account were rejected by the AO being unreliable and, therefore, he estimated the income by arriving on the turnover on the basis of seized diaries and other documents in the form of land agreements etc. It is argued by the Ld. A. R. that on these facts the AO was not justified in imposing the penalty u/s 271B for the failure of the appellant in getting the books of account audited. He has failed to appreciate that when no regular books of account were maintained by the appellant then there was no question of getting the books of account audited u/s 44AB of the Act. Under the circumstances, no penalty should have been imposed by him u/s 271B of the Act., The reliance is placed on the decision in the case of Surajmal Parsuram Todi Vs CIT, 222 ITR 691 (Gauhati): CIT vs. S. K. Gupta & Co., 322 ITR 86 (All); K.V.ramchandran vs. DCIT, 32 Taxmann.com 200 (Cochin) and Ram Prakash Puri vs. ACIT, 77 ITD 210(Pune). It is further submitted by the Ld. A.R. that since the appellant had only worked as a middleman in arranging the purchase of land and earning commission/price difference in between, the cost of land as per agreements cannot be treated as the turnover of the appellant for the purpose of provisions of section 44AB of the Act. In view of above, the appellant pleaded that the AO be directed to delete the penalty imposed by him u/s 271B of the Act.

5. I have considered the submission of the appellant and perused the assessment order. I have also gone through the decisions relied upon by the appellant. On careful consideration of facts, I am of the opinion that for the year under consideration the AO was justified in imposing the penalty u/s 271B at Rs.1,00,000/-. It is true that initially the appellant has not maintained the books of account. But, subsequent to date of search on 26.03.2009, the appellant prepared his books of account which were produced by him before the AO in the course of assessment proceedings. Therefore, the appellant was required to get his books of account audited by 30.09.2009 in compliance to provisions of section 44AB of the Act. However, the appellant did not get his books of account audited. The judicial decisions relied upon by the appellant are not applicable for the year under consideration. The claim of the appellant that the agreement value of land cannot be treated as turnover for the purpose of section 44AB is not acceptable. In fact, as per the profit and loss account submitted by the appellant along with the return of income, his gross receipts for the year under consideration were more than Rs.40 lakhs. In view of above, it is held that the AO was justified in imposing the penalty u/s 271B at Rs.1,00,000/-. His action is in accordance with law, therefore, penalty imposed by him is confirmed. The ground no. 1 to 4 are dismissed.”

3 Abu Mansur Ali A.Yr.2009-10 4. The ld. Counsel for the assessee in the course of hearing brought to our notice that the revenue has imposed penalty on the assessee for A.Y.2009-10 for failure to maintain books of accounts u/s 271AAA of the Act. In this regard our attention was drawn to the order of CIT(A) dated 19.11.2013 wherein the CIT(A) confirmed the order of AO imposing penalty on the assessee u/s 271AAA of the Act for failure to maintain books of accounts. It was his submission that in the light of the aforesaid finding of the CIT(A), no penalty could be imposed on the assessee u/s 271B of the Act and in this regard he relied on the decision of the Hon’ble Gauhati and Allahabad High Court in the case of Surajmal Parsuram Todi and CIT Vs. S.K.Gupta & Co. respectively. The ld. DR relied on the order of CIT(A).

5.

We have heard the rival submissions. We are of the view that in the light of the fact that the assessee was imposed penalty u/s 271AAA of the Act in the very same assessment year. The revenue has clearly taken a stand that the assessee does not maintain books of accounts. In such circumstances for the purpose of imposing penalty u/s 271B of the Act the revenue cannot take a stand that the assessee does maintain the books of account. We therefore following the decision of the Hon’ble Gauhati High Court in the case of Surajmal Parsuram Todi (supra) wherein it was held that if an assessee does not maintain books of accounts then there is no question of getting the books of accounts getting audited u/s 44AB of the Act and there is no question of imposing penalty u/s 271B of the Act, we hold that no penalty u/s.271B of the Act could be imposed on the Assessee. In the light of the above judicial pronouncements which are directly applicable to the facts of the present case, we hold that penalty imposed on the assessee cannot be sustained and the same is directed to be cancelled and the appeal of the assessee is allowed.

Order pronounced in the Court on 10.08.2016.

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