Devika Sankathal , Warangal V. Income Tax Officer, Ward-5, Hyderabad

ITA 1850/Hyd/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0991 (ITAT-HYDERABAD)
• Duration Of Justice: 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 18-07-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 11-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 44AD; 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES SMC : HYDERABAD BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER I.T.A. NO. 1850 /HYD/201 8 ASSESSMENT YEAR: 2014 - 15 DEVIKA SANKATHAL, WARANGAL [PAN: BYRPS6566B ] VS INCOME TAX OFFICER , WARD - 5 , WARANGAL (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI M.V.ANIL KUMAR, AR FOR REVENUE : SHRI NILANJAN DEY , DR DATE OF HEARING : 18 - 0 7 - 2019 DATE OF PRONOUNCEMENT : 6 - 0 9 - 2019 O R D E R T HIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY THE ORDER OF LD.CIT(A) - 3 , HYDERABAD, DATED 1 8 - 0 6 - 201 8 FOR THE AY. 2014 - 15 IN ITA NO. 0 17 2/ ITO - 5 / WGL/CIT(A) - 3 /2017 - 18 PASSED U/S.271B R.W.S. 250(6) OF THE INCOME TAX ACT [ACT] . 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN H ER APPEAL , HOWEVER , THE CRUX OF THE ISSUE IS THAT , THE LD.CIT(A) HAS ERRED IN UPHOLDING THE ORDER OF LD.A.O WHO HAD LEVIED PENALTY BY INVOKING THE PENAL PROVISIONS U/S.271B OF THE ACT BECAUSE THE BOOKS OF ACCOUNTS OF THE ASSESSEE WAS NOT AUDITED IN SPITE OF THE FACT THAT THE ASSESSMENT WAS COMPLETED U/S.44AD OF THE IT A. NO. 1850 / HYD / 201 8 : - 2 - : ACT BEING A SPECIAL PROVISION FOR COMPUTING PROFIT AND GAINS OF BUSINESS ON PRESUMPTIVE BASIS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL, ENGAGED IN THE BUSINESS OF RETAIL SALE OF SAREES , FILED HER RETURN OF INCOME ELECTRONICALLY FOR THE AY.2014 - 15 ON 26 - 06 - 2015, ADMITTING TOTAL INCOME OF RS. 2, 8 2 ,450/ - . THEREAFTER, THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS . DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, IT WAS OBSERVED BY THE LD.AO THAT THE ASSESSEE HAS ADMITTED TURNOVER OF RS.61,76,146/ - AND ARRIVED AT THE PROFIT OF RS. 3,82,450/ - WHICH WORKS OUT TO APPROXIMATELY 6% OF THE TURNOVER WITHOUT FURNISHING THE AUDIT REPORT U/S. 44A D(5) R.W.S 44AB OF THE ACT THOUGH THE TURNOVER OF THE ASSESSEE WAS BELOW THE SPECIFIED MONETARY LIMIT OF ONE CRORE RUPEES . THE LD.AO THEREAFTER COMPLETED THE ASSESSMENT U/S. 44AD OF THE ACT ON PRESUMPTIVE BASIS AND ACCORDINGLY ADOPTED 8% OF THE TURNOVER AS THE INCOME OF THE ASSESSEE AT RS.4,94,092/ - AS AGAINST THE ADMITTED PROFIT OF RS. 3,82,450/ - . THEREBY THE DIFFERENCE OF RS.1,11,642/ - WAS ADDED TO THE INCOME OF THE ASSESSEE BY THE LD.A.O . F URTHER THE LD.AO INVOKED THE PENAL PROVISIONS OF U/S. 271B OF THE ACT AND LEVIED PENALTY AT % OF IT A. NO. 1850 / HYD / 201 8 : - 3 - : THE TURNOVER WHICH WORKS OUT TO RS.30,880/ - AS THE ASSESSEE HAS NOT AUDITED HER BOOKS OF ACCOUNT S AS PER SECTION 44AD(5) R.W.S. 44AB OF THE ACT . 4. ON APPEAL THE LD. CIT (A) CONFIRMED THE ORDER OF THE LD. AO BY OBSERVING AS UNDER: - PARA - VII)..THE PENALTY ORDER U/S. 271B OF THE ACT IS SELF - CONTAINED AND SPEAK FOR ITSELF. AS PER SUB - SECTION 5 OF SECTION 44AD, AN APPELLANT WHO CLAIMS THAT HIS PROFITS AND GAINS FROM THE ELIGIBLE BUSINESS ARE LOWER THAN THE PROFITS AND GAINS SPECIFIED AND WHOSE TOTAL INCOME EXCEEDS THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME TAX, SHALL BE REQUIRED TO KEEP AND MAINTAIN SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS A S REQUIRED UNDER SUB - SECTION (2) OF SECTION 44AA AND GET THEM AUDITED AND FURNISH A REPORT OF SUCH AUDIT AS REQUIRED U/S. 44AD. EVEN AS PER SECTION 44AB(D), THE APPELLANT IS LIABLE TO MAINTAIN BOOKS OF ACCOUNTS AND FURNISH THE AUDIT REPORT TO THE DEPARTME NT, BEFORE THE SPECIFIED DATE. CONSIDERING THAT THESE FACTUAL ASPECTS HAVE BEEN BROUGHT OUT IN THE PENALTY ORDER U/S. 271B AND THAT THE SUBMISSIONS OF THE APPELLANT DO NOT COVER THESE ISSUES. GROUNDS NOS. 2 AND 3 IN APPEAL ARE DISMISSED. 5. BEFORE US THE LD. AR ARGUED BY STATING THAT WHEN THE ASSESSMENT IS COMPLETED BY THE LD. AO ON PRESUMPTIVE BASIS U/S. 44AD OF THE ACT WHICH IS ACCEPTED BY THE ASSESSEE THEN THE LD. AO OUGHT NOT TO HAVE INVOKED THE PENAL PROVISIONS U/S. 271B OF THE ACT AS THE PROVISIO N IS DISCRETIONARY. THE LD. AO FURTHER SUBMITTED THAT THE ASSESSEE HAD MAINTAINED THE BOOKS OF ACCOUNTS AND ONLY BY OVERSIGHT HAD NOT OBTAINED THE AUDIT REPORT. HENCE IT WAS PLEADED THAT THE PENALTY LEVIED BY THE LD. AO WHICH WAS SUBSEQUENTLY CONFIRMED BY THE LD. CIT IT A. NO. 1850 / HYD / 201 8 : - 4 - : (A) MAY BE DELETED. THE LD. DR ON THE OTHER HAND ARGUED IN SUPPORT OF THE ORDERS OF THE LD. REVENUE AUTHORITIES. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD. FROM THE FACTS OF THE CASE, IT IS APPARENT THAT THE ASSESSEE HAS AGREED TO BE ASSESSED ON PRESUMPTIVE BASIS U/S. 44AD OF THE ACT AS PROPOSED BY THE LD.AO . MOREOVER, THERE IS NO FINDING BY THE LD.AO TO SUGGEST ANY DISCREPANCY IN THE BOOKS MAINTAINED BY THE ASSESSEE. IN FACT, THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE IS NOT REJECTED BY THE LD.AO . THE LD.AO HAD SIMPLY PROPOSED TO ASSESSEE THE ASSESSEE U/S. 44AD OF THE ACT ONLY FOR THE REASON THAT SHE HAD FAILED TO FURNISH THE AUDIT REPORT , PROBABLY DUE TO OVERSIGHT. IT IS ALSO OBVIOUS THAT PROVISIONS OF SECTION 271B OF THE ACT IS NOT A MANDATORY PROVISION A S THE ASSESSING OFFICER HAS DISCRETION FOR NOT INVOKING THE PROVISION CONSIDERING THE FACTS AND CIRCUMSTANCE OF THE CASE , BECAUSE THE PROVISION STIPULATES THAT , -------- THE ASSESSING OFFICER MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY ---------- . CONSIDERING THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE PRESENT CASE BEFORE US IS NOT A FIT CASE FOR LEVY OF PENALTY INVOKING THE PROVISIONS OF SEC. 271B OF THE IT A. NO. 1850 / HYD / 201 8 : - 5 - : ACT BECAUSE, THE ASSESSEE HAS CONCEDED FOR THE ASSESS MENT TO MADE ON PRESUMPTIVE BASIS U/S. 44AD OF THE ACT BEFORE THE LD.AO AND FOR THE REASON THAT THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE WAS NOT REJECTED BY CITING ANY VALID DISCREPANCIES . THEREFORE, WE HEREBY DIRECT THE LD. AO TO DELETE THE PENALTY LEVIED U/S. 271B OF THE ACT. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06 TH SEPTEMBER , 2019 SD/ - ( A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER HYDERABAD, DATED 06 TH SEPTEMBER , 2019 TNMM /OKK COPY TO : 1. DEVIKA SANKATHAL, C/O. M. ANANDAM & CO., CHARTERED ACCOUNTANTS, 7A, SURYA TOWERS, S.P.ROAD, SECUN DERABAD. 2. INCOME TAX OFFICER , WARD - 5 , WARANGAL . 3. THE CIT(APPEALS) - 3 , HYDERABAD . 4. THE PR.C IT - 3 , HYDERABAD . 5 . D.R. ITAT, HYDERABAD. 6 . GUARD FILE.