SH. KAMAL KISHORE MAHAJAN,CHAMBA vs. ITO DALHOUSIE AT, BANIKHET

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ITA 1282/CHANDI/2017Status: DisposedITAT Chandigarh02 May 2018AY 2010-114 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 the obligation to get books of accounts audited arises only when books are maintained. If books are not maintained, the penalty should be levied under Section 271A, and not Section 271B. Imposing penalty under Section 271B when books are not maintained is erroneous.

What were the facts?

The Assessing Officer levied penalties under Section 271A for not maintaining books of accounts and under Section 271B for not getting them audited. The assessee argued that if books are not maintained, they cannot be audited, and imposing penalties under both sections is incorrect.

What were the issues?

Whether penalty under Section 271B for non-audit is leviable when the assessee has not maintained books of accounts, and if penalty under both Section 271A and 271B can be imposed for the same default.

Which sections of the Income-tax Act were involved?

Section 271A,Section 271B,Section 44AA,Section 44AB

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(4)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, DIVISION BENCH’A’, CHANDIGARH

Before: SMT. DIVA SINGH & DR. B.R.R. KUMAR

For Respondent: Smt. Chanderkanta
Hearing: 06/02/2018Pronounced: 02/05/2018

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH’A’, CHANDIGARH

BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER

ITA No.1282/Chd/2017 Assessment Year: 2010-11

Shri. Kamal Kishore Mahajan Vs. The ITO Near Bus Stand Tissa Dalhousie at Banikhet Tehsil Bhuraha Dist: Chamba Dist: Chamba

PAN No. AFXPM9245B

(Appellant) (Respondent)

Assessee By : Sh. P.N. Arora Revenue By : Smt. Chanderkanta

Date of hearing : 06/02/2018 Date of Pronouncement : 02/05/2018

ORDER PER DR. B.R.R. KUMAR:

The present appeal has been filed by the Assessee against the order of

the Ld. CIT(A), Palampur, H.P. dt. 19/06/2017.

2.

The assessee filed revised grounds of appeal against the order under

section 271B and prayed for substitution of grounds. Accordingly the original

grounds are not adjudicated and the revised grounds have been taken as

effective grounds which reads as under:

1.

That the penalty order passed by the Assessing Officer under section 271B thereby levying a penalty of Rs. 83,710/- is against the facts of the case and is untenable under the law. Similarly, the worthy CIT(A) has grossly erred in confirming the same.

2.

That the authorities below did not appreciate that the present case does not fall within the mischief of section 271B. As such the penalty levied by the Assessing Officer and confirmed by the CIT(A) is bad in the eyes of law and the same may be cancelled. 3. That the authorities below did not appreciate that the assessee did not maintain the books of accounts and the assessee duly admitted that the books of accounts have not been maintained. As such the provisions of section 44AB are not at all applicable to the present facts and circumstances of the case. 4. That the CIT(A) did not appreciate that Assessing Officer himself has penalized the assessee for not maintaining the books of accounts under section 271A and on the other hand he has levied the penalty under section 271B for not getting the books of accounts audited. Thus the Assessing Officer has blown hot and cold in the same breath and as such the order of the worthy CIT(A) may be cancelled. 5. That the penalty levied under section 271B may be cancelled as the same is not at all called for on the present facts and circumstances of the case.

3.

Brief facts of the case are that the Assessing Officer levied penalty under

section 271A of Rs. 25,000/- for non maintenance of books of accounts as

prescribed under section 44AA of the Income Tax Act,1961. Further the Assessing

Officer has levied penalty under section 271B of Rs. 83,710/- being the ½ % of the

total turnover of the assessee.

4.

Aggrieved the assessee contested the levy of penalty before the Ld.

CIT(A) who confirmed the same on the grounds that operation of provision of

44AB, 44AA(2) and 271A, 271B are on different defaults.

5.

Before us the AR contested that the primary issue of non maintenance of

the books has been ignored by the Ld. CIT(A) and where no books of accounts

are maintained, they cannot be audited. Moreover, when penalty has been

imposed for non maintenance of books of accounts, further penalty for non

auditing cannot be imposed. He has relied on the decision of High Court of

Gauhati in the case of Surajmal Parsuram Todi Vs. CIT (222 ITR 691), decision of

High Court of Allahabad in the case of CIT Vs. Bisauli Tractors (299 ITR 219), and

decision of High Court of Allahabad in the case of CIT and ANR Vs. S.K. Gupta &

Co. (322 ITR 86).

6.

Ld. DR vehemently supported the order of the Ld. CIT(A) and argued that

since the case laws have been brought to the notice for the first time the matter

needs to be remanded back to the file of the Ld. CIT(A) for adjudication. She

relied on the judgment of Hon’ble High Court of Madhya Pradesh in the case of

Tolla Ram Hassomal (153 Taxmann 532) (M.P.).

7.

We have gone through the material placed before us and find that the

assessee has referred only to the judgments but has not taken any additional

grounds. Hence, no remand to CIT(A) is called for in this case. On merits we

have gone through the judgments relied by the Ld. AR. In the case of Surajmal

Parsuram Todi Vs. CIT (supra) the Hon’ble High Court has held as under:

“ We have gone through the provisions of ss.44AA, 44AB, 271A and 271B of the Act. Maintenance of accounts is envisaged under section 44AA and on failure to do so the assessee shall be guilty and 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 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, in our opinion, the imposition of penalty under s. 271B is erroneous.”

In the case of CIT Vs. Bisauli Tractors (supra),the Hon’ble High Court held as under: “ Separate penalty has been provided for non-maintenance of accounts, i.e., under s. 271A and for not getting the accounts audited and not furnishing the audit report i.e., under s. 271B. In the present case, the Assessing Officer did not impose penalty under s. 271A and instead proceeded to impose penalty under s. 271B. If a person has not maintained the accounts books or any accounts the question of its audit does not arise. In such an event the imposition of penalty under the provision contained in s. 271A for the alleged non-compliance of s. 44AA may arise but the provisions of s. 44AB do not get violated in case where the accounts have not been maintained at all and, therefore, penal provisions of s. 271B would not apply.”

8.

No contrary decision has been brought to our notice by the Revenue.

Hence keeping in view the facts and circumstances of the case we hereby hold

that the requirement of getting books of accounts audited could arise only

where the books of accounts are maintained. If for some reason assessee has

not maintained the books of accounts the appropriate provision under which

penalty can be levied is under section 271A of the Act, which recourse has

already been taken by the Revenue as appear from the records.

9.

As a result, the appeal of the assessee is allowed.

Order pronounced in the open Court.

Sd/- Sd/- (DIVA SINGH) (DR. B.R.R. KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 02/05/18 AG Copy to: 1.The Appellant, 2. The Respondent, 3. The CIT(A), 4. The CIT, 5. The DR

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