Shri Ashok Kumar Varshney S/o Manik ChandVarshney, Hathras V. ITO, Hathras

ITA 160/AGR/2009

• Counselvise Citation: 16020314 RSA 2009
• Duration Of Justice: 3 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 29-08-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 20-04-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Assessee Lawyers: ANURAG SINHNA
• Keywords: Period of limitation; Reasonable cause
• Section: 44AD; 12; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 160/AGRA/2009 ASSTT. YEAR : 2005-06 SHRI ASHOK KUMAR VARSHNEY VS. INCOME-TAX OFFICER , S/O SH. MANIK CHAND VARSHNEY, 3(4), HATHRAS. BAIJ NATH ROAD, SADABAD, HATHRAS. (PAN : ACEPV 2620 H) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANURAG SINHNA, ADVOCATE. RESPONDENT BY : SHRI K.K. MISHRA, JR. D.R. DATE OF HEARING : 29.08.2012 DATE OF PRONOUNCEMENT OF ORDER : 07.09.2012 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. CIT(A), GHAZIABAD DATED 05.12.2008 FOR THE ASSESSMENT YEAR 2005-06 CONFIRMING LEVY OF PENALTY U/S. 271-A OF THE IT ACT. 2. THE ASSESSEE IN COLUMN NO. 9 OF THE APPEAL PAPER S STATED 30 TH JANUARY, 2009 AS THE DATE OF COMMUNICATION OF THE ORDER APPEALED AGAINST. HOWEVER, THE APPEAL IS FILED IN THE OFFICE OF THE TRIBUNAL ON 20.04.2009. ACCORDING TO THE OFFICE, THE APPEAL IS TIME BARRED BY 20 DAYS. THE ASSESSEE FILE D APPLICATION FOR CONDONATION OF ITA NO. 160/AGRA/2009 2 DELAY. IT WAS SUBMITTED THAT THE ASSESSEE HAD FALLE N ILL AND REMAINED CONFINED TO BED FROM 20.03.2009 TO 18.04.2009. MEDICAL CERTIFIC ATE OF DR. RAJESH GUPTA IS FILED IN SUPPORT OF THE CLAIM. IT IS ALSO SUPPORTED BY THE AFFIDAVIT OF THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE, CONTEN DED THAT THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM FILING THE APPEA L WITHIN THE PERIOD OF LIMITATION AND NOMINAL DELAY MAY BE CONDONED. THE LD. DR HAS N O OBJECTION ON CONDONATION OF DELAY. CONSIDERING THE EXPLANATION OF THE ASSESS EE SUPPORTED BY MEDICAL CERTIFICATE AND AFFIDAVIT OF THE ASSESSEE AND PARTI CULARLY WHEN THE DR HAS NO OBJECTION, WE ARE SATISFIED THAT THE ASSESSEE WAS P REVENTED BY SUFFICIENT CAUSE FROM FILING THE APPEAL WITHIN THE PERIOD OF LIMITATION. THE DELAY IN FILING THE APPEAL IS, ACCORDINGLY, CONDONED. 3. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE FILED RETURN OF INCOME ON 31.03.2006 DECLARING TOTAL INCOME OF RS.76,620/-. T HE ASSESSEE DECLARED INCOME FROM RUNNING OF RETAIL CLOTH SHOP. THE CASE WAS SEL ECTED FOR SCRUTINY ON THE BASIS OF AIR INFORMATION. AS PER AIR INFORMATION, THE TOTAL TRANSACTIONS OF RS.29,92,410/- WERE MADE ON DIFFERENT DATES BY THE ASSESSEE THROUG H HIS BANK ACCOUNT WITH SYNDICATE BANK, HATHRAS. DURING THE COURSE OF ASSES SMENT PROCEEDINGS, FULL INFORMATION IN REGARD TO OTHER BANK ACCOUNTS WERE A LSO COLLECTED FROM SYNDICATE BANK, HATHRAS AND IT WAS FOUND THAT THE ASSESSEE HA S ANOTHER ACCOUNT IN HIS NAME ITA NO. 160/AGRA/2009 3 THROUGH WHICH THE TRANSACTION OF RS.61,000/- HAS BE EN MADE DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE WAS DIRECTED TO PRODUCE THE BOOKS OF ACCOUNT ALONGWITH BILLS AND VOUCHERS, BUT THE ASSESSEE REPL IED THAT HE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT. THE PROFIT WAS SHOWN ON ESTIM ATE BASIS ONLY. IT WAS ALSO EXPLAINED THAT THE TRANSACTIONS MADE IN BOTH THE BA NK ACCOUNTS ARE ONLY WITH REGARD TO THE SALES OF CLOTHS AND NOTHING ELSE. HOWEVER, T HE ASSESSEE DID NOT PRODUCE ANYTHING BEFORE THE AO FOR VERIFICATION OF INCOME D ECLARED IN THE RETURN. IN THESE CIRCUMSTANCES, THE AO DID NOT FIND ANY ALTERNATE EX CEPT TO TREAT THE TOTAL TRANSACTIONS OF BOTH THE BANK ACCOUNTS AS SALE OF C LOTHS MADE DURING THE YEAR UNDER CONSIDERATION AND PROFIT WAS COMPUTED BY APPLYING T HE PROVISIONS OF SECTION 44AF TO ASCERTAIN THE NET PROFIT FROM BUSINESS. THE AO, AFTER FINDING CREDIT ENTRIES ETC. COMPUTED THE TOTAL TRANSACTIONS IN BOTH THE ACCOUNT S AT RS.30,66,153/- (RS.30,05,153 + RS.61,000/-) AND BY APPLYING PROFI T OF 5% AS PER SECTION 44AF, THE NET PROFIT WAS DETERMINED AT RS.1,53,308/-. THE PENALTY PROCEEDINGS U/S. 271-A WAS INITIATED FOR NON-MAINTENANCE OF BOOKS OF ACCOU NT. THE ASSESSEE SUBMITTED IN RESPONSE TO THE PENALTY NOTICE THAT THE ASSESSEE AC CEPTED THE APPLICATION OF PROVISIONS OF SECTION 44AF DURING THE COURSE OF ASS ESSMENT PROCEEDINGS, AS HE HAD NOT MAINTAINED ANY BOOKS OF ACCOUNT AND TAX LEVIED THEREON HAS BEEN PAID. THE ASSESSEE CO-OPERATED WITH THE DEPARTMENT AND HAS NO BAD INTENTION AND INCOME WAS DECLARED IN GOOD FAITH. THEREFORE, THE NOTICE OF PE NALTY SHOULD BE VACATED. THE AO, ITA NO. 160/AGRA/2009 4 ACCORDINGLY, FOUND THAT THE ASSESSEE HAD NOT MAINTA INED ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS FOR HIS BUSINESS ACTIVITIES TO ARRI VE AT THE CORRECT FIGURE OF INCOME. THE ASSESSEE ADMITTED THAT NO BOOKS OF ACCOUNT HAVE BEEN MAINTAINED FOR THE BUSINESS. THEREFORE, 5% PROFIT WAS APPLIED AS PER S ECTION 44AF. SINCE THE ASSESSEE FAILED TO KEEP AND MAINTAIN ANY BOOKS OF ACCOUNT AN D DOCUMENTS ETC. AS REQUIRED U/S. 44AA OF THE IT ACT, THEREFORE, THE ASSESSEE IS LIABLE TO PENALTY AND ACCORDINGLY, PENALTY OF RS.25,000/- WAS IMPOSED U/S . 271A OF THE IT ACT VIDE SEPARATE ORDER. 3.1 THE PENALTY ORDER WAS CHALLENGED BEFORE THE LD. CIT(A) AND THE SAME CONTENTIONS WERE REITERATED. THE LD. CIT (A) FOUND THAT THE TURNOVER OF THE ASSESSEE EXCEEDED RS.10,00,000/- FROM THE BUSINESS. THEREFOR E, THE ASSESSEE WAS LIABLE TO MAINTAIN THE BOOKS OF ACCOUNT AS PER PROVISIONS OF SECTION 44AA(2) AND FURTHER THE ASSESSEE HAS CLAIMED HIS INCOME TO BE LOWER THAN TH E PROFITS AND GAINS SO DEEMED OF THE BUSINESS. THEREFORE, PROVISIONS OF SECTION 4 4AA ARE APPLICABLE IN THIS CASE. THE LD. CIT(A) ALSO FOUND THAT THE ASSESSEE HAS NOT BEEN ABLE TO FURNISH ANY COGENT REASONS FOR NON-MAINTENANCE OF BOOKS OF ACCOUNT AND ACCORDINGLY, PENALTY WAS CONFIRMED AND THE APPEAL OF THE ASSESSEE WAS DISMIS SED. ITA NO. 160/AGRA/2009 5 4. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT WHEN INCOME WA S COMPUTED U/S. 44AF, PENALTY SHOULD NOT BE LEVIED. HE HAS ALSO SUBMITTED THAT ACCORDING TO SECTION 44AA (2) WHEN THE ASSESSEE KEEPS AND MAINTAINS SUCH BOOK S OF ACCOUNT AND OTHER DOCUMENTS ENABLING THE AO TO COMPUTE THE BUSINESS I NCOME OF THE ASSESSEE AND THE ASSESSEE PRODUCED BANK ACCOUNT TO THE AO SHOWIN G THE TOTAL TURNOVER MADE THROUGH THE ABOVE BANK ACCOUNTS, THE ASSESSEE MADE SUFFICIENT COMPLIANCE. HE HAS SUBMITTED THAT WHEN THE PROVISIONS OF SECTION 44AF ARE APPLIED, THERE IS NO NEED TO MAINTAIN ANY BOOKS OF ACCOUNT. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE FOLLOWING DECISIONS : (I). ACIT VS. AGARWAL CONSTRUCTION CO., 106 ITD 129 (CHD.) (TM), IN WHICH IT WAS NOT RECORDED IN THE ASSESSMENT ORDER T HAT THE AO WAS UNABLE TO COMPUTE INCOME OF THE ASSESSEE FROM BUSINESS OF CON TRACTOR. THE AO ADMITTED THAT RECORDS OF INCOME AND EXPENDITURE WER E AVAILABLE IN THE BOOKS, THEREFORE, NO FAILURE TO COMPLY WITH THE PROVISIONS WAS FOUND. (II). BLUE HEAVEN CONSTRUCTION VS. ITO, 39 SOT 39 ( KOL), IN WHICH THE AO OBSERVED, AS THE ASSESSEE IS DEVELOPER AND BUILD ER IN CIVIL CONSTRUCTION HAD FAILED TO COMPLY WITH AS-7 PRESCRIBED BY ICAI AND HENCE, THERE WAS ITA NO. 160/AGRA/2009 6 VIOLATION OF PROVISIONS OF SECTION 44AA. PENALTY WA S IMPOSED. PENALTY WAS CANCELLED WHERE THE ASSESSEE MAINTAINED BOOKS OF AC COUNT WHICH WERE PRODUCED BEFORE THE AO. THE ONLY GRIEVANCE WAS THAT THE ASSESSEE HAS FAILED TO COMPLY WITH CERTAIN REQUISITION AS PER ACCOUNTIN G STANDARD AS-7. (III). CIT VS. BABU REDDY, 38 DTR (KER) 147, IN WHI CH IT WAS HELD THAT IN THE ABSENCE OF PRESCRIBED FORMAT FOR CIVIL CONTRACT ORS, NO BOOKS OF ACCOUNT HAVE BEEN PRESCRIBED UNDER RULES FOR BUSINESS OF CI VIL CONTRACTOR AND THE AO ACCEPTED THE RETURN ON THE BASIS OF BOOKS OF ACC OUNT PRODUCED BY HIM. THEREFORE, NO PENALTY HAS TO BE LEVIED. (IV). SANT CONSTRUCTION CO. VS. ITO, 53 TTJ (DEL.) 399, IN WHICH THE ASSESSEE WAS A CIVIL CONTRACTOR AND NO DIFFICULTY W AS FELT BY THE AO IN MAKING ASSESSMENT FOR LACK OF COMPLETE RECORDS. (V). MEHTA PARVESH VS. ITO, 60 TTJ (DEL.) 278, IN W HICH, IT WAS HELD THAT CBDT HAS NOT YET PRESCRIBED ANY RULE FOR MAINTENANC E OF SPECIFIC BOOKS AS FAR AS PERSONS DERIVING INCOME FROM BUSINESS ARE CO NCERNED. THEREFORE, PENALTY IS NOT LEVIABLE BECAUSE THE ASSESSEE FURNIS HED ADEQUATE INFORMATION ITA NO. 160/AGRA/2009 7 SO AS TO ENABLE THE AO TO COMPUTE HIS TOTAL INCOME IN ACCORDANCE WITH THE PROVISIONS OF SECTION 44AF. 5. ON THE OTHER HAND, THE LD. DR RELIED UPON THE OR DERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE CLAIMED LOWER PROFI T AS AGAINST THE PROVISIONS OF SECTION 44AF IN THE RETURN OF INCOME. THEREFORE, PR OVISIONS OF SECTION 44AA(2)(III) AND SUB-CLAUSE (5) OF SECTION 44AF WOULD APPLY IN THE CASE OF THE ASSESSEE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND GON E THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT WOULD BE RELEVANT TO REPRODUC E RELEVANT PROVISIONS OF THE ACT APPLICABLE TO THE ASSESSMENT YEAR UNDER APPEAL FOR BETTER UNDERSTANDING OF THE ASSESSEES CASE. SECTION 271A OF THE IT ACT PROVIDES - FAILURE TO KEEP, MAINTAIN OR RETAIN BOOKS OF ACCOUN T, DOCUMENTS, ETC. 271A. WITHOUT PREJUDICE TO THE PROVISIONS OF SECTION 271 , IF ANY PERSON FAILS TO KEEP AND MAINTAIN ANY SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS AS REQUIRED BY SECTION 44AA OR THE RULES MADE THEREUNDER, IN RESPECT OF ANY PREVIOUS YEAR OR TO RETAIN SUCH B OOKS OF ACCOUNT AND OTHER DOCUMENTS FOR THE PERIOD SPECIFIED IN THE SAI D RULES, THE 77 [ASSESSING] OFFICER OR THE COMMISSIONER (APPEALS) MAY DIRECT THAT ITA NO. 160/AGRA/2009 8 SUCH PERSON SHALL PAY, BY WAY OF PENALTY, A SUM OF TWENTY-FIVE THOUSAND RUPEES. SECTION 44AA OF THE IT ACT PROVIDES MAINTENANCE OF ACCOUNTS BY CERTAIN PERSONS CARRYIN G ON PROFESSION OR BUSINESS. 44AA. (1) EVERY PERSON CARRYING ON LEGAL, MEDICAL, ENGIN EERING OR ARCHITECTURAL PROFESSION OR THE PROFESSION OF ACCOU NTANCY OR TECHNICAL CONSULTANCY OR INTERIOR DECORATION OR ANY OTHER PRO FESSION AS IS NOTIFIED BY THE BOARD IN THE OFFICIAL GAZETTE SHALL KEEP AND MAINTAIN SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS AS MAY EN ABLE THE ASSESSING OFFICER TO COMPUTE HIS TOTAL INCOME IN AC CORDANCE WITH THE PROVISIONS OF THIS ACT. (2) EVERY PERSON CARRYING ON BUSINESS OR PROFESSION NOT BEING A PROFESSION REFERRED TO IN SUB-SECTION (1) SHALL, (I) IF HIS INCOME FROM BUSINESS OR PROFESSION EX CEEDS ONE LAKH TWENTY THOUSAND RUPEES OR HIS TOTAL SALES, TURNOVER OR GRO SS RECEIPTS, AS THE CASE MAY BE, IN BUSINESS OR PROFESSION EXCEED OR EX CEEDS TEN LAKH RUPEES IN ANY ONE OF THE THREE YEARS IMMEDIATELY PR ECEDING THE PREVIOUS YEAR; OR (II) WHERE THE BUSINESS OR PROFESSION IS NEWLY SE T UP IN ANY PREVIOUS YEAR, IF HIS INCOME FROM BUSINESS OR PROFESSION IS LIKELY TO EXCEED ONE LAKH TWENTY THOUSAND RUPEES OR HIS TOTAL SALES, TURNOVER OR GROSS RECEIPTS, AS THE CASE MAY BE, IN BUSINESS OR PROFESSION ARE O R IS LIKELY TO EXCEED TEN LAKH RUPEES, DURING SUCH PREVIOUS YEAR; OR (III) WHERE THE PROFITS AND GAINS FROM THE BUSINES S ARE DEEMED TO BE THE PROFITS AND GAINS OF THE ASSESSEE UNDER SECTION 44A D OR SECTION 44AE OR SECTION 44AF OR SECTION 44BB OR SECTION 44BBB], AS THE CASE MAY BE, AND THE ASSESSEE HAS CLAIMED HIS INCOME TO BE L OWER THAN THE ITA NO. 160/AGRA/2009 9 PROFITS OR GAINS SO DEEMED TO BE THE PROFITS AND GA INS OF HIS BUSINESS, AS THE CASE MAY BE, DURING SUCH PREVIOUS YEAR; KEEP AND MAINTAIN SUCH BOOKS OF ACCOUNT AND OTHER D OCUMENTS AS MAY ENABLE THE ASSESSING OFFICER TO COMPUTE HIS TOTAL I NCOME IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT. (3) THE BOARD MAY, HAVING REGARD TO THE NATURE OF T HE BUSINESS OR PROFESSION CARRIED ON BY ANY CLASS OF PERSONS, PRES CRIBE, BY RULES, THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS (INCLUDING INV ENTORIES, WHEREVER NECESSARY) TO BE KEPT AND MAINTAINED UNDER SUB-SECTION (1) OR SUB-SECTION (2), THE PARTICULARS TO BE CONTAINED THEREIN AND THE FORM AND THE MANNER IN WHICH AND THE PLACE AT WHICH THEY SHALL BE KEPT AND MAINTAINED. (4) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECT ION (3), THE BOARD MAY PRESCRIBE, BY RULES, THE PERIOD FOR WHICH THE B OOKS OF ACCOUNT AND OTHER DOCUMENTS TO BE KEPT AND MAINTAINED UNDER SUB -SECTION (1) OR SUB-SECTION (2) SHALL BE RETAINED. THE PROVISIONS OF SECTION 44AF OF THE IT PROVIDE A S UNDER : SPECIAL PROVISIONS FOR COMPUTING PROFITS AND GAINS OF RETAIL BUSINESS. 44AF. (1) NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTA INED IN SECTIONS 28 TO 43C, IN THE CASE OF AN ASSESSEE ENGA GED IN RETAIL TRADE IN ANY GOODS OR MERCHANDISE, A SUM EQUAL TO FIVE PE R CENT OF THE TOTAL TURNOVER IN THE PREVIOUS YEAR ON ACCOUNT OF SUCH BU SINESS OR, AS THE CASE MAY BE, A SUM HIGHER THAN THE AFORESAID SUM AS DECLARED BY THE ASSESSEE IN HIS RETURN OF INCOME SHALL BE DEEMED TO BE THE PROFITS AND GAINS OF SUCH BUSINESS CHARGEABLE TO TAX UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' : ITA NO. 160/AGRA/2009 10 PROVIDED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL A PPLY IN RESPECT OF AN ASSESSEE WHOSE TOTAL TURNOVER EXCEEDS AN AMOUNT OF FORTY LAKH RUPEES IN THE PREVIOUS YEAR. (2) ANY DEDUCTION ALLOWABLE UNDER THE PROVISIONS OF SECTIONS 30 TO 38 SHALL, FOR THE PURPOSES OF SUB-SECTION (1), BE DEEM ED TO HAVE BEEN ALREADY GIVEN FULL EFFECT TO AND NO FURTHER DEDUCTI ON UNDER THOSE SECTIONS SHALL BE ALLOWED : PROVIDED THAT WHERE THE ASSESSEE IS A FIRM, THE SALARY AND I NTEREST PAID TO ITS PARTNERS SHALL BE DEDUCTED FROM THE INC OME COMPUTED UNDER SUB-SECTION (1) SUBJECT TO THE CONDITIONS AND LIMITS SPECIFIED IN CLAUSE (B) OF SECTION 40. (3) THE WRITTEN DOWN VALUE OF ANY ASSET USED FOR TH E PURPOSE OF THE BUSINESS REFERRED TO IN SUB-SECTION (1) SHALL BE DE EMED TO HAVE BEEN CALCULATED AS IF THE ASSESSEE HAD CLAIMED AND HAD B EEN ACTUALLY ALLOWED THE DEDUCTION IN RESPECT OF THE DEPRECIATIO N FOR EACH OF THE RELEVANT ASSESSMENT YEARS. (4) THE PROVISIONS OF SECTIONS 44AA AND 44AB SHALL NOT APPLY IN SO FAR AS THEY RELATE TO THE BUSINESS REFERRED TO IN S UB-SECTION (1) AND IN COMPUTING THE MONETARY LIMITS UNDER THOSE SECTIONS, THE TOTAL TURNOVER OR, AS THE CASE MAY BE, THE INCOME FROM THE SAID BU SINESS SHALL BE EXCLUDED. (5) NOTWITHSTANDING ANYTHING CONTAINED IN THE FOREG OING PROVISIONS OF THIS SECTION, AN ASSESSEE MAY CLAIM LOWER PROFITS A ND GAINS THAN THE PROFITS AND GAINS SPECIFIED IN SUB-SECTION (1), IF HE KEEPS AND MAINTAINS SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS AS REQUIRED UNDER SUB-SECTION (2) OF SECTION 44AA AND GETS HIS ACCOUNTS AUDITED AND FURNISHES A REPORT OF SUCH AUDIT AS REQUIRED UN DER SECTION 44AB. 6.1 ACCORDING TO SECTION 271A, IF THE ASSESSEE FAILS TO KEEP AND MAINTAIN ANY SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS AS REQUIR ED BY SECTION 44AA AND THE RULES IN ANY PREVIOUS YEAR, PENALTY IS LEVIABLE. SE CTION 44AA(2)(I) AND (II) ITA NO. 160/AGRA/2009 11 PROVIDES THAT EVERY PERSON CARRYING ON BUSINESS SHA LL KEEP AND MAINTAIN SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS AS MAY ENABLE THE AO TO COMPUTE HIS TOTAL INCOME IN ACCORDANCE WITH THE PROVISIONS OF THIS AC T. IF HIS INCOME FROM BUSINESS EXCEEDS RS.1,20,000/- OR HIS TOTAL SALES, TURNOVER OR GROSS RECEIPTS, AS THE CASE MAY BE IN ANY BUSINESS EXCEED OR EXCEEDS RS.10,00,000/- IN ONE OF THE THREE YEARS IMMEDIATELY PRECEDING THE PREVIOUS YEAR. ACCORDING TO SECTION 44AA(2)(III), NOTED ABOVE, THE ASSESSEE SHALL HAVE TO MAINTAIN SUCH BOO KS OF ACCOUNTS AND OTHER DOCUMENTS WHERE THE PROFIT AND GAINS FROM BUSINESS IS DEEMED TO BE THE PROFITS AND GAINS OF THE BUSINESS UNDER SECTIONS 44AD OR 44AE O R 44AF OR 44BB OR 44BBB, AS THE CASE MAY BE, AND ASSESSEE CLAIMED HIS INCOME TO BE LOWER THAN THE PROFITS AND GAINS SO DEEMED TO BE PROFIT & GAINS OF HIS BUS INESS DURING SUCH PREVIOUS YEAR. THE PROVISIONS OF SECTION 44AF(5) ALSO SPECIFY THAT THE ASSESSEE MAY CLAIM LOWER PROFITS AND GAINS THAN THE PROFITS AND GAINS SPECIF IED IN SUB-SECTION (1), IF HE KEEPS AND MAINTAINS SUCH BOOKS OF ACCOUNT AND OTHER DOCUM ENTS AS REQUIRED UNDER SUB- SECTION (2) OF SECTION 44AA AND GETS HIS ACCOUNTS A UDITED. CONSIDERING THE ABOVE PROVISIONS TO THE FACTS OF THE CASE, IT IS CLEAR TH AT THE ASSESSEE DID NOT MAINTAIN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS TO SHOW HIS COR RECT INCOME TO SUPPORT THE INCOME DECLARED IN THE RETURN. THE ASSESSEE FURNISH ED RETURN OF INCOME AT RS.76,620/- WHICH WAS NOT FILED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 44AF OF THE IT ACT. FURTHER, THE ASSESSEE CLAIMED LOWER PROFIT AND GAINS AS AGAINST THE ITA NO. 160/AGRA/2009 12 PROVISIONS OF SECTION 44AF. THEREFORE, IT WAS MANDA TORY FOR THE ASSESSEE TO KEEP AND MAINTAIN SUCH BOOKS OF ACCOUNT AND OTHER DOCUME NTS AS REQUIRED U/S. 44AA(2)(III) OF THE ACT. ADMITTEDLY, THE TOTAL TURN OVER, SALES OR GROSS RECEIPTS OF THE ASSESSEE ARE MORE THAN RS.10.00 LACS AND THE AS SESSEE FAILED TO SUPPORT ITS CLAIM OF LOWER PROFIT. THEREFORE, MERELY BECAUSE THE AO C OMPUTED INCOME SUBSEQUENTLY WITH THE AID OF SECTION 44AF WOULD NOT ABSOLVE THE ASSESSEE FROM MAINTENANCE OF ACCOUNT BOOKS AND OTHER DOCUMENTS AS REQUIRED BY LA W. THE AO HAS MENTIONED THAT NOTHING WAS PRODUCED BEFORE HIM FOR VERIFICATI ON OF THE INCOME DECLARED IN THE RETURN OF INCOME. THE AO DID NOT FIND ANY ALTERNATE EXCEPT TO ESTIMATE THE INCOME U/S. 44AF. THUS, THE ASSESSEE DID NOT MAINTAIN ANY BOOKS OF ACCOUNT AND OTHER DOCUMENTS SO AS TO ENABLE THE AO TO COMPUTE HIS TOT AL INCOME IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. THEREFORE, THE PROVISION S OF SECTION 44AA(2)(III) AND 44AF(5) WOULD CLEARLY APPLY IN THE CASE OF THE ASSE SSEE. THE PROVISIONS OF SECTION 44AF(4) WOULD APPLY TO SUCH BUSINESS REFERRED TO IN SUB-SECTION (1) FOR COMPUTING THE INCOME FROM SUCH BUSINESS. SINCE THE ASSESSEE D ID NOT FILE RETURN OF INCOME AS PER PROVISIONS OF SECTION 44AF AND CLAIMED LOWER PR OFIT IN THE RETURN OF INCOME, THEREFORE, PENALTY IS ATTRACTED IN THE CASE OF THE ASSESSEE. THE DECISIONS CITED BY THE LD. COUNSEL FOR THE ASSESSEE WOULD NOT SUPPORT THE CASE OF THE ASSESSEE AND ARE CLEARLY DISTINGUISHABLE ON FACTS. CONSIDERING THE T OTALITY OF THE FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDERS OF THE ITA NO. 160/AGRA/2009 13 AUTHORITIES BELOW. FURTHER, THE LD. CIT(A) HAS SPE CIFICALLY NOTED IN THE IMPUGNED ORDER THAT THE LD. COUNSEL FOR THE ASSESSEE HAS NOT BEEN ABLE TO FURNISH ANY COGENT REASONS FOR NON-MAINTENANCE OF ACCOUNTS. DURING THE COURSE OF ARGUMENTS BEFORE US ALSO, THE LD. COUNSEL FOR THE ASSESSEE HAS NOT E XPLAINED ANY REASONABLE CAUSE WHICH PREVENTED THE ASSESSEE FROM MAINTAINING THE B OOKS OF ACCOUNT IN ACCORDANCE WITH LAW. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE ASSESSEE. THE SAME I S, ACCORDINGLY, DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY