Jafar Hussain, Lucknow V. ITO Range- Vi (2), Lucknow

ITA 132/LKW/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 5136 (ITAT-LUCKNOW)
• Duration Of Justice: 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-11-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 11-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ALOK MITRA
• Assessee Lawyers: H P SINGH
• Section: 44AD

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.132/LKW/2013 A.Y.:2008 - 2009 SHRI JAFAR HUSSAIN, 450/188, ALIWALI GALI, MUFTIGANJ, LUCKNOW. PAN:ABQPH5507G VS. INCOME TAX OFFICER, RANGE - VI(2), LUCKNOW. (APPELLANT) (RESPONDENT) APPELLANT BY SHRI H. P. SINGH, ADVOCATE RESPONDENT BY SHRI ALOK MITRA, D.R. DATE OF HEARING 11/11/2013 DATE OF PRONOUNCEMENT 2 2 /11/2013 O R D E R PER A. K. GARODIA, A.M. THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORDER OF LEARNED CIT(A) - II, LUCKNOW DATED 31/12/2012 FOR ASSESSMENT YEAR 2008 - 09. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. THE LEARNED CIT(A) ERRED IN LAW & FACTS OF THE CASE IN UPHOLDING THE LEVY OF PENALTY OF RS.25,000/ - U/S 271(A) OF THE I.T. ACT, 1961. 2. ANY OTHER GROUND WHICH THE APPELLANT MAY TAKE DURING THE COURSE OF HEARING WITH THE KIND PERMISSION OF THE HON'BLE TRIBUNAL. 2 2. THE LEARNED A.R. OF THE ASSESSE E SUBMITTED THAT THE ASSESSING OFFICER HAS ACCEPTED THE PROFIT DECLARED BY THE ASSESSEE AND THEREFORE, THERE IS NO JUSTIFICATION IN LEVY OF PENALTY FOR NON MAINTENANCE OF BOOKS OF ACCOUNT. HE PLACED RELIANCE ON THE JUDGMENT OF SMC BENCH OF THE TRIBUNAL RE NDERED IN THE CASE OF INCOME TAX OFFICER VS. M.G. BHATIA [1996] 86 TAXMAN 90 (DELHI) (MAG.) (SMC). 3. THE LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDER OF LEARNED CIT(A). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RE CORD AND THE DECISION OF THE TRIBUNAL CITED BY LEARNED A.R. OF THE ASSESSEE. WE FIND THAT IT IS NOTED BY THE ASSESSING OFFICER IN PARA 3 OF THE ASSESSMENT ORDER THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF EMBROIDERY ON JOB WORK BASIS WITH M/S FAIR LAD Y AND DURING THIS YEAR, THE ASSESSEE HAS SHOWN NET PROFIT OF RS.1,20,427/ - AGAINST GROSS RECEIPTS OF RS.14,15,855/ - . IN THE LIGHT OF THESE FACTS, NOW WE EXAMINE THE APPLICABILITY OF THE PROVISIONS OF SECTION 44A A OF THE ACT. THE CLAUSE (I) OF SUB SECTION 2 OF SECTION 44A A IS RELEVANT AND THE SAME IS REPRODUCED BELOW: IF HIS INCOME FROM BUSINESS OR PROFESSION EXCEEDS [ONE LAKH TWENTY THOUSAND RUPEES] OR HIS TOTAL SALES, TURNOVER OR GROSS RECEIPTS, AS THE CASE MA Y BE, IN BUSINESS OR PROFESSION EXCEED OR EXCEEDS [TEN LAKH] RUPEES IN ANY ONE OF THE THREE YEARS IMMEDIATELY PRECEDING THE PREVIOUS YEAR. 4.1 FROM THE ABOVE CLAUSE OF SUB SECTION 2 OF SECTION 44AA, IT IS REQUIRED THAT THE INCOME OF THE ASSESSEE SHOULD B E MORE THAN RS.1.20 LAKHS OR HIS TOTAL SALES/TURNOVER/GROSS RECEIPTS SHOULD EXCEED RS.10 LAKH IN 3 ANY OF THE THREE YEARS IMMEDIATELY PRECEDING THE PREVIOUS YEAR. IN THE ASSESSMENT ORDER, PENALTY ORDER AND IN THE ORDER OF LEARNED CIT(A), THERE IS DISCUSSION REGARDING INCOME AND TURNOVER OF THE PRESENT YEAR, WHICH IS IN EXCESS OF RS.1.20 LAKH AND RS.10 LAKH RESPECTIVELY BUT THERE IS NO DISCUSSION REGARDING THE INCOME AND TURNOVER IN ANY OF THE THREE PRECEDING YEARS BUT IN THE PAPER BOOK, FILED BY THE ASSESSEE, THE ASSESSEE HAS SUBMITTED A COPY OF RETURN OF INCOME FOR ASSESSMENT YEAR 2006 - 2007 ALONG WITH THE COMPUTATION OF INCOME FOR THAT YEAR AND AS PER THE SAME, IN THAT YEAR, THE ASSESSEE WAS HAVING A TURNOVER OF RS.19,48,689/ - AND THE ASSESSEE DECLARED AN IN COME OF RS.1,55,890/ - @8%. IT IS NOT THE CASE OF THE ASSESSEE THAT THE ASSESSEE IS COVERED BY THE PROVISIONS OF SECTION 44AD OF THE ACT ALTHOUGH THE ASSESSEE HAS DECLARED INCOME @8% OF ITS TURNOVER. IN THE COURSE OF HEARING, A SPECIFIC QUERY WAS MADE BY THE BENCH REGARDING THE APPLICABILITY OF THE PROVISIONS OF SECTION 44AD AND IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT THE PROVISIONS OF SECTION 44AD ARE NOT APPLICABLE IN THE PRESENT CASE. UNDER THESE FACTS, THE PROVISIONS OF SECTION 44AA ARE APPLICABLE IN THE PRESENT YEAR BECAUSE IN ASSESSMENT YEAR 2006 - 07 , THE ASSESSEE WAS HAVING INCOME OF MORE THAN RS.1.20 LAKH AND TURNOVER OF MORE THAN RS.10 LAKH. 4.2 NOW WE EXAMINE THE APPLICABILITY OF THE TRIBUNALS DECISION CITED BY LEARNED A.R. OF THE ASSESSEE. FIRST OF ALL , WE WOULD LIKE TO OBSERVE THAT THIS TRIBUNAL DECISION IS A DECISION OF SMC BENCH AND, THEREFORE, NOT BINDING ON DIVISION BENCH. STILL WE EXAMINE THE APPLICABILITY OF THIS DECISION TO SEE ITS APPLICABILITY BECAUSE EVEN IF IT IS NOT BINDING, IT HAS PERSUASIVE VALUE. WE FIND THAT IN THAT CASE , IT WAS STATED BY THE ASSESSEE THAT THE ASSESSEE MAINTAINED BANK PASS - BOOK, COPY OF BILLS, THE 4 GOVERNMENT PAYMENT RECEIPTS, VOUCHERS ETC. AND HE WAS UNDER BONA FIDE BELIEF THAT THE RECORDS MAINTA INED BY HIM WOULD MEET THE REQUIREMENT OF THE PROVISIONS OF RELEVANT RULES BUT IN THE PRESENT CASE, IT IS NOT SHOWN BY THE ASSESSEE THAT THE ASSESSEE IS MAINTAINING EVEN THESE RECORDS AND HENCE , FOR THIS REASON THAT THE FACTS ARE DIFFERENT, THIS TRIBUNAL D ECISION IS NOT APPLICABLE IN THE PRESENT CASE. WE ALSO FIND THAT IN ASSESSMENT YEAR 2006 - 07 , THE ASSESSEE WAS HAVING TURNOVER OF ABOUT RS.20 LAKH AND STILL HE DID NOT MAINTAIN ANY BOOKS OF ACCOUNT IN THAT YEAR OR IN THE PRESENT YEAR AND THE ASSESSEE DECL ARED INCOME ON PRESUMPTIVE BASIS INSPITE OF SPECIFIC REQUIREMENT OF ACT REGARDING MAINTENANCE OF BOOKS OF ACCOUNT. HENCE, WE DO NOT FIND ANY JUSTIFICATION FOR NOT IMPOSING THE PENALTY IN THE PRESENT CASE. THIS WAS ALSO A SUBMISSION OF THE ASSESSEE THAT T HE ASSESSEE IS A SMALL BUSINESSMAN BUT WE DO NOT AGREE WITH THIS SUBMISSION BECAUSE THE REQUIREMENT OF MAINTENANCE OF BOOKS OF ACCOUNT IS PRESCRIBED FOR A PERSON HAVING ANNUAL TURNOVER OF MORE THAN RS.10 LAKH AND THE ASSESSEE WAS HAVING TURNOVER OF RS.15.1 5 LAKH IN THE PRESENT YEAR AND TURNOVER OF RS.19.48 LAKH IN ASSESSMENT YEAR 2006 - 07 AND, THEREFORE, IT IS SEEN THAT THE ASSESSEE IS HAVING TURNOVER OF ALMOST TWICE THE AMOUNT OF MINIMUM TURNOVER FOR WHICH THE REQUIREMENT OF MAINTENANCE OF BOOKS OF ACCOUNT STARTS. IN ASSESSMENT YEAR 2007 - 08 ALSO , THE ASSESSEE W AS HAVING A TURNOVER OF RS.16.35 LAKH AS PER THE COMPUTATION OF INCOME FOR THIS YEAR AVAILABLE IN THE PAPER BOOK. THEREFORE, IT IS NOT ACCEPTABLE THAT THE ASSESSEE IS A SMALL BUSINESSMAN BECAUSE THE LAW REQUIRED A PERSON HAVING TURNOVER EXCEEDING RS.10 LA KH TO MAINTAIN BOOKS OF ACCOUNT AND THE ASSESSEE IS REGULARLY HAVING TURNOVER OF TWICE OR 1 TIMES OF PRESCRIBED TURNOVER IN THE PRESENT YEAR AS WELL AS IN THE PRECEDING TWO YEARS AND, THEREFORE, IT IS NOT ACCEPTABLE THAT THE ASSESSEE IS A SMALL BUSINESSMA N TO 5 COMPLY WITH THE REQUIREMENT OF MAINTAINING THE BOOKS OF ACCOUNT. WE, THEREFORE, DECLINE TO INTERFERE IN THE ORDER PASSED BY LEARNED CIT(A). 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE D ATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 2 / 1 1 / 2 0 1 3 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. DR, ITAT, LUCKNOW