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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: Shri Waseem Ahmed & Shri Siddhartha Nautiyal
आदेश/ORDER PER BENCH:- This is an appeal filed by the assessee for A.Y. 2010-11 against the order of the ld. CIT(A)-3, Rajkot dated 16-11-2018, in CIT(A)-3/10074/17- 18, in proceedings under section 271A of the Income Tax Act, 1961; in short “the Act”.
The assessee has taken the following grounds of appeal:-
Page No 2 Shri Kandarp Khimjibhai Charola vs. ITO
“The grounds stated here in below are without prejudice to one another. 1. The order passed by Hon. CIT is bad in law 2. The Hon. CIT has erred in law as well as on facts upholding the Order passed by Learned AO confirming Penalty of Rs. 25000/- under section 271A of the Act. The appellant craves leave to add to, alter, delete or withdraw any of the aforesaid grounds of appeal.”
3. The brief facts of the case are that the assessee is an individual running a proprietary concern by the name of M/s Patel Enterprises trading in ceramic tiles and raw materials. During the impugned assessment year, the assessee deposited cash/credited in the bank account amounting to � 9,04,05,808/-. The AO served notices under section 147 of the Act, in response to which the assessee filed its return of income showing income of � 12,66,920/-. The AO initiated proceedings under section 271A of the Act on the ground that since the turnover of the assessee exceeded the statutory limit for maintenance of books of accounts, the assessee has failed to maintain the books of accounts, and consequently passed order under section 271A of the Act levying a penalty of Rs. 25,000/- for non-maintenance of books of accounts. In appeal, Ld. CIT(Appeals) upheld the order of the AO with the following observations:
“Decision Page No 3 Shri Kandarp Khimjibhai Charola vs. ITO
5. The penalty order u/s. 271A of the Act of the AO as well as statement of fact of the appellant have been considered. The appellant as per his statement of fact has stated that AO has levied penalty for non-maintenance of books of account though the same were produced while assessment. But this statement of the appellant is not supported by any evidences. The fact is that the appellant during the course of penalty proceedings also did not respond to the show cause notice dated 04/04/2017 as issued by the AO to him to show cause as to why the penalty u/s. 271A should not be levied in his case. Since the appellant neither attended before the AO during the course of penalty proceedings nor filed any submission and in view of this the AO levied penalty of Rs. 25,000/- u/s. 271A of the Act. Even at appellate stage also the appellant has not complied with any of the notices of hearing from time to time and there are no explanation and details to prove that he was maintaining any books of account as required u/s. 44AA of the Act. In view of these facts, it is held that the AO has correctly levied the penalty of Rs. 25,000/- u/s. 271A of the Act and therefore, such penalty of Rs. 25,000/- as levied by the AO is hereby confirmed. Thus the grounds of appeal of the appellant as reproduced in initial paragraph of this appeal order are hereby dismissed.
In result, the appeal of the appellant is dismissed."
In appeal before us, the counsel for the assessee drew our attention to page 6 of the paper book (para 4, page 2 of assessment order), wherein the AO has made the following observations: “during the course of assessment proceedings, details regarding purchase, sales, copy of bank account, in addition to assets, cash book, capital account and balance sheet etc were called for and filed”. The counsel for the assessee submitted that the above observations clearly indicate that the assessee was maintaining the accounts and same were filed before the AO during this of assessment proceedings. He further drew attention to pages 11-13 of the paper book containing the Page No 4 Shri Kandarp Khimjibhai Charola vs. ITO trading account, profit and loss account and balance sheet as on 31-03-2010 and submitted that the same were filed during the course of assessment proceedings before the AO. Therefore, the assessee submitted that AO has grossly erred in holding that no books of accounts maintained/filed during the course of assessment proceedings. In response, the Ld. DR relied on the observations made by the AO and Ld. CIT(Appeals) in their respective orders.
We have heard the rival contentions and perused the material on record. In our considered view, in light of the documentary evidence produced before us, the assessee has maintained requisite documents/accounts to enable the AO to ascertain the income of the assessee. In the case of Mehta Parvesh vs Income-Tax Officer (1998) 60 TTJ Del 278, the Delhi High Court, while deleting the penalty imposed u/s 271A of the Act made the following observations:
The details so furnished by the assessee could enable determination of taxable income in a reasonable manner. The provisions of s. 44AA was required to keep and maintain such books of accounts and documents, as may enable the AO to compute his total income in accordance with the provisions of the IT Act. Sub-s. (3) of s. 44AA authorises the Board to prescribe by rules the books of accounts and other documents to be kept and maintained and the particulars to be contained therein and the form and the manner in which and the place at which such books of accounts shall be kept and maintained. The Board has not yet prescribed any rule so far as persons deriving Page No 5 Shri Kandarp Khimjibhai Charola vs. ITO income from business are concerned. It has only prescribed r. 6F requiring the persons deriving income from profession to maintain the specified books of accounts. Since the Board has not prescribed the necessary rules relating to maintenance of accounts by the persons carrying on business, and as the assessee has furnished adequate information, so as to enable the ITO to compute his total income in accordance with the provisions of this Act, the penalty levied under s. 271A cannot be sustained on the facts and circumstances of the present case. I, therefore, cancel the said penalties for both the years under consideration.
5.1 Respectfully following the judgement of the honourable Delhi High Court in the case of Mehta Parvesh supra and on the basis of our observations in foregoing paragraphs, we are of the view that this is not a fit case to impose penalty under section 271A of the Act and hence we delete the penalty of � 25,000/-.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 16-09-2022