Late Mahendra Kumar Jena, Bhubaneswar V. ACIT, Bhubaneswar

ITA 190/CTK/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65112 (ITAT-CUTTACK)
• Duration Of Justice: 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 07-08-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 15-03-2012
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY
• Assessee Lawyers: G NAIKR KAR ARS
• Section: 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 190 AND 191/CTK/2012 / ASSESSMENT YEAR S 2006 - 07 AND 2007 - 08 LATE M AHENDRA KUMAR JENA, REPRESENTED THROUGH LEGAL HEIR SRI DILLIP KUMAR JENA, 2508, LEWIS ROAD, BHUBANESWAR 2 PA N: AAPPJ 5975 L - - - VERSUS - ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 1(1), BHUBANESWAR. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI G.NAIK/ R.KAR, ARS / FOR THE RESPONDENT: / SHRI S.C.MOHANTY, DR / DATE OF HEARING: 07.08.2012 / DATE OF PRONOUNCEMENT: 14.09.2012 / ORDER . . . , SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER . THESE TWO APPEALS ARE FILED BY THE LEGA L HEIR OF LATE MAHENDRA KUMAR JENA ( ASSESSEE ) HAVING BEEN AGGRIEVED BY THE COMMON ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) DT.30.12.2011 FOR THE AYS 2006 - 07 AND 2007 - 08 IN CASE OF THE ASSESSEE. 2. THE ASSESSEE HAS RAISED ISSUE CHAL LENGING LEVY OF PENALTY U/S.271A OF THE I.T.ACT,1961 OF 25,000 FOR EACH ASSESSMENT YEAR IMPOSED BY THE ASSESSING OFFICER AGAINST THE ASSESSEE AND CONFIRMED BY THE LEARNED CIT(A) IN THE APPEAL ORDER. 3. BOTH THE PARTIES WERE HEARD REGARDING THE ISSUE RAISED IN THE BOTH THE APPEALS AND ITS LEGAL IMPLICATIONS. I.T.A.NO. 190 AND 191/CTK/2012 2 4. ON CAREFUL CONSIDERATION OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL IN THE LIGHT OF THE SUBMISSIONS OF BOTH THE PARTIES, THE UNDISPUTED FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE IS THE LEGAL REPRESENTATIVE OF LATE MAHENDRA KUMAR JENA WHO USED TO DERIVE INCOME FROM EXECUTION OF CONTRACT WORKS. DURING THE ASSESSMENT PROCEEDINGS, THE LEGAL REPRESENTATIVE W AS ASKED TO PRODUCE ALL THE BOOKS OF ACCOUNT SPECIFICALLY THE DETAILS WHICH INCLUDED THE NAME AND ADDRESS OF THE TRADE CREDITORS AND EXPENDITURE DETAILS INCLUDING BILLS AND VOUCHERS, DETAILS OF ADVANCES RECEIVABLE AND DETAILS OF INTEREST PAYMENT. THE ASSESSEE COULD NOT PRODUCE THE BOOKS OF ACCOUNTS, BILLS AND VOUCHERS EXCEPT ONE GENERAL LEDGER. THE ASSESSING OFFICER HAS FOUND FROM THE AUDITORS R EPORT THAT THE ASSESSEE IS NOT MAINTAINING PROPER BOOKS OF ACCOUNT. THE CASH BOOK WAS NOT MAINTAINED. CONSEQUENTLY THE ASSESSING OFFICER WAS UNABLE TO COMPUTE ASSESSEES TOTAL INCOME IN ACCORDANCE WITH THE PROVISIONS OF ACT. HENCE, THE AO ESTIMATED THE NET PROFIT TAXABLE IN THE HANDS OF THE DECEASED ASSESSEE. AT THE SAME TIME, HE INITIATED PENALTY PROCEEDINGS U/S.271A OF THE ACT FOR NON - MAINTENANCE OF BOOKS OF ACCOUNT. 4.1. DURING THE PENALTY PROCEEDINGS, THE LEGAL REPRESENTATIVE OF THE ASSESSEE HAS CONTEND ED THAT U/S44A(3) OF THE ACT, THE CBDT HAS FRAMED RULES SPECIFYING AS TO WHAT ACCOUNTS ARE TO BE MAINTAINED BY THE SPECIFIC ASSESSEES. CONTRACT WORKS IS NOT SPECIFIED IN THESE PROVISIONS AS PER THE RULES FRAMED BY THE CBDT. THEREFORE, THERE IS BEING NO D EFAULT ON THE PART OF THE ASSESSEE U/S.44AA TO IMPOSE PENALTY UNDER THE PROVISIONS OF SECTION 271A. THIS EXPLANATION OF THE ASSESSEE WAS NOT FOUND FAVOUR ED TO THE ASSESSING OFFICER. HENCE, THE ASSESSING OFFICER HAS IMPOSED PENALTY OF 25,000 IN EACH AYS BY PASSING THE IMPUGNED PENALTY ORDERS. I.T.A.NO. 190 AND 191/CTK/2012 3 5. AGGRIEVED BY THIS ORDERS OF PENALTY, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) AND THE LEARNED CIT(A) AFTER HEARING THE ASSESSEE AND CONSIDERING THE MATERIAL AVAILABLE IN THE PENALTY RECORDS HAS COME TO THE CON CLUSION THAT THE ASSESSING OFFICERS STAND IS VERY MUCH RIGHT AND ACCORDINGLY HE UPHELD THE PENALTY LEVIED BY THE ASSESSING OFFICER BY DISMISSING THE ASSESSEES APPEALS. HENCE, THE PRESENT APPEALS HAVE BEEN FILED BY THE ASSESSEE (I.E., LEGAL REPRESENTATIVE OF THE DECEASED ASSESSEE). 6. DURING THE COURSE OF HEARING THE LEARNED AR OF THE ASSESSEE APART FROM REITERATING WHAT WAS CANVASSED BEFORE THE LOWER AUTHORITIES, CONTENDED THAT THIS TRIBUNAL S OF DELHI C BENCH ORDER PASSED IN THE CASE OF SANT CONSTRUCTI ON CO. V. INCOME - TAX OFFICER (53 TTJ (DEL) 399 IS SQUARELY APPLICABLE TO THE FACTS OF THE ASSESSEES CASE, WHEREIN THE TRIBUNAL HAS CLEARLY CONSIDERED THE PROVISIONS CONTAINED IN SECTION 44AA AND SECTION 271A OF THE I.T.ACT AND CAME TO THE CONCLUSION THAT SINCE CONTRACT WORK IS NOT MENTIONED IN THE CBDT CIRCULAR ISSUED U/S.44AA AND CONSEQUENTLY PENALTY IS LEVIED U/S.271A FOR NON - MAINTENANCE OF BOOKS OF ACCOUNT WAS HELD INVALID. IN THE SAME LINES THIS TRIBUNAL S OF CHANDIGARH B BENCH BY MAJORITY VIEW ALS O HELD THE SAME PROPOSITION IN THE CASE OF ASST.COMMISSIONER OF INCOME - TAX V. AGGARWAL CONSTRUCTION COMPANY (106 ITD 129 (CHAD)(TM) WHEREIN ALSO THE PROVISIONS OF SECTION 44AA AND SECTION 271A ARE CONSIDERED THREAD BARE. ACCORDINGLY, THE LEARNED AR OF THE ASSESSEE HAS SOUGHT FOR CANCELLATION OF THE PENALTY IMPOSED IN THE AYS UNDER CONSIDERATION AND CONFIRMED BY THE LEARNED CIT(A) AGAINST THE ASSESSEE. 7. CONTRARY TO THIS, THE LEARNED DR HAS VEHEMENTLY ARGUED SUPPORTING THE IMPUGNED ORDERS AND ASSAILING THE CONTENTION OF THE ASSESSEE MADE BEFORE THE TRIBUNAL AND SOUGHT FOR UPHOLDING THE SAME BY DISMISSING THE APPEALS OF THE ASSESSEE. I.T.A.NO. 190 AND 191/CTK/2012 4 8. ON CAREFUL ANALYSIS OF THE IMPUGNED ORDERS IN THE LIGHT OF THE RIVAL SUBMISSIONS OF BOTH PARTIES AND IN THE LIGHT OF THE CIT ATIONS RELIED ON BY THE RESPECTIVE AUTHORITIES AND THE LEARNED AR OF THE ASSESSEE , IT IS NOTICED THAT IN THE CASE OF ASST.COMMISSIONER OF INCOME - TAX V. AGGARWAL CONSTRUCTION CO., DECIDED BY CHANDIGARH B BENCH (SU P RA), THE THEN PRESIDENT SHRI VIMAL GANDH I ACTING AS THIRD MEMBER HAS DECIDED THE ISSUE AFTER EXAMINATION OF THE PROVISIONS CONTAINED IN SECTION 44AA AND SECTION 271A OF THE I.T.ACT AND HAS UPHELD THE VIEW TAKEN BY THE ACCOUNTANT MEMBER WHO HAD CANCELLED THE PENALTY LEVIED US.271 A . WHILE DOING S O IT WAS HELD THAT SUB - SECTION (2) OF SECTION 44AA DOES NOT SAY THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE SHOULD BE TRUE AND CORRECT AND SECTIONS 144 AND 1 45 OF THE I.T.ACT DEALS WITH UNRELIABLE ACCOUNTS. THE ASSESSING OFFICER COULD DISALLOW OR ADD BACK IN ADMISSIBLE EXPENSES. THE ASSESSING OFFICER FACES ANY INABILITY IN SUCH SITUATION THEN ONLY PENALTY U/S.271A IS IMPOSED AND BUT NOT IN CASES WHERE ASSESSING OFFICER FACES NO INABILITY. IN THE PRESENT CASE ON HAND ALSO THE AO IS NOT EXPERIENCING ANY INABILIT Y IN COMPUTING THE TAXABLE INCOME IN THE HANDS OF THE DECEASED ASSESSEE. SINCE THE ASSESSEE IS NOT ABLE TO PRODUCE ANY RECORD BEFORE HIM AND BASING ON THE AUDIT REPORT ISSUED U/S.44AB HE ESTIMATED THE PROFIT TO BE TAXED IN THE HANDS OF THE ASSESSEE BY PASS ING NECESSARY ASSESSMENT ORDERS. BESIDES THAT SECTION 44AA HAS NOT INCLUDED THE CONTRACT BUSINESS IN THE CIRCULAR ISSUED BY THE CBDT. THEREFORE, NO SET OF BOOKS OF ACCOUNT WERE REQUIRED TO BE MAINTAINED UNDER THE CBDT CIRCLE TO BE MAINTAINED BY A PERSON CARRYING ON CONTRACT WORKS. HENCE, WE ARE OF THE CONSIDERED VIEW RESPECTFULLY FOLLOWING THE THIRD MEMBER DECISION OF THE TRIBUNAL IN CHANDIGARH B BENCH (SUPRA), THAT THE LEVY OF PENALTY IMPOSED BY THE ASSESSING OFFICER AS UPHELD BY THE LEARNED I.T.A.NO. 190 AND 191/CTK/2012 5 CIT(A) I N THE PRESENT CASE ARE NOT SUSTAINABLE AND THEREFORE, THE SAME IS HEREBY CANCELLED BY ALLOWING THE APPEALS OF THE ASSESSEE. 9. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. SD/ - SD/ - ( . . ) , , (K.K.GUPTA), AC COUNTANT MEMBER. ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( ) DATE: 14.09.2012 - COPY OF THE ORDER FORWARDED TO: 1. / THE APPELLANT : LATE M AHENDRA KUMAR JENA, REPRESENTED THROUGH LEGAL HEIR SRI DILLIP KUMAR JENA, 2508, LEWIS ROAD, BHUBANESWAR 2 2 / THE RESPONDENT: ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 1(1), BH UBANESWAR 3. / THE CIT, 4. ( ) / THE CIT(A), 5. / DR, CUTTACK BENCH 6. GUARD FILE . / TRUE COPY, / BY ORDER, APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 03.09.2012 . 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 04.08.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S 14.09.2012 . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER .. ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY.