Iliyas Badshah Shaikh, Sangli V. Income-tax Officer,

ITA 2124/PUN/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 85095 (ITAT-PUNE)
• Duration Of Justice: 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 05-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR

Judgement Text

INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NOS. 2124 TO 2129/PN/2013 (ASSESSMENT YEARS : 2003-04 TO 2008-09) SHRI ILIYAS BADSHAH SHAIKH, 100 FEET ROAD, OPP : D-MART, SANGLI PAN NO. AXWPS8917P .. APPELLANT VS. ITO, WARD-1(2), SANGLI .. RESPONDENT ASSESSEE BY : NONE DEPARTMENT BY : SHRI B.C. MALAKAR DATE OF HEARING : 28-10-2014 DATE OF PRONOUNCEMENT : 29-10-2014 ORDER PER R.K. PANDA, AM : THE ABOVE SIX APPEALS FILED BY THE ASSESSEE ARE DIR ECTED AGAINST THE CONSOLIDATED ORDER DATED 10-10-2013 OF THE CIT(A), KOLHAPUR RELATING TO ASSESSMENT YEARS 2003-04 TO 20 08-09 RESPECTIVELY. FOR THE SAKE OF CONVENIENCE, ALL THE SE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CO MMON ORDER. 2. DESPITE SERVICE OF NOTICE, NONE APPEARED ON BEHA LF OF THE ASSESSEE WHEN THE NAME OF THE ASSESSEE WAS CALLED. THEREFORE, THESE APPEALS ARE BEING DISPOSED OF ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND AFTER HEARING THE LD. DEPAR TMENTAL REPRESENTATIVE. 2 ITA NO.2124/PN/2013 (A.Y. 2003-04) : 3. THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE READS AS UNDER : 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED ON FACTS AND IN LAW IN SUSTAINING PENALTY U/S 27IB. HE OU GHT TO HAVE APPRECIATED THAT THE ASSESSEE HAS ALREADY SUFFERED WITH PENALTY U/S 271A FOR NON-MAINTENANCE OF BOOKS AND CANNOT BE FURT HER VISITED WITH PENALTY U/S 27IB FOR NOT GETTING THE BOOKS AUDI TED. HE OUGHT TO HAVE APPRECIATED THAT THE ISSUE IS WELL SETTLED BY VARI OUS DECISIONS SUCH AS 222 ITR 691 (GAU), 299 ITR 219 (ALL), 322 ITR 86 (ALL) ETC. 3.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSES SEE IS AN INDIVIDUAL AND IS THE PROPRIETOR OF SHAMA CHIRMURE STALL. THERE WAS A SURVEY ACTION U/S.133A OF THE I.T. ACT IN THE PRE MISES OF THE ASSESSEE ON 20-11-2009 DURING WHICH CERTAIN INCRIMI NATING DOCUMENTS WERE IMPOUNDED AND STATEMENT OF THE ASSES SEE WAS RECORDED ON OATH. FROM THE IMPOUNDED MATERIAL AND T HE RECORDED STATEMENT, IT WAS NOTICED THAT SUBSTANTIAL BUSINESS TRANSACTIONS HAD TAKEN PLACE DURING THE PREVIOUS YEAR. THE ASSESSEE IS IN THE SAME LINE OF BUSINESS SINCE THE YEAR 2000. DURING THE CO URSE OF ASSESSMENT PROCEEDINGS IT WAS FOUND THAT THE ASSESS EE FAILED TO GET HIS ACCOUNTS AUDITED UNDER SECTION 44AB BEFORE THE SPECIFIED DATE INSPITE OF HIS TURNOVER EXCEEDING RS.40 LAKHS. ON B EING SHOW CAUSED IT WAS REPLIED THAT HE HAS NOT MAINTAINED BO OKS OF ACCOUNT AND THEREFORE, THE SAME HAS NOT BEEN AUDITED. IT WA S ARGUED THAT HE SHOULD NOT BE PUNISHED TWICE FOR THE SAME VIOLATION . 4. HOWEVER, THE AO WAS NOT SATISFIED WITH THE EXPLA NATION GIVEN BY THE ASSESSEE. HE HELD THAT THE ASSESSEE D ID NOT MAINTAIN BOOKS OF ACCOUNT AND ALSO DID NOT GET HIS ACCOUNTS AUDITED. 3 ACCORDING TO THE AO, PENALTY PROCEEDINGS UNDER SECT IONS 271A AND 271B ARE SEPARATE PROCEEDINGS FOR SEPARATE DEFAULTS UNDER THE INCOME-TAX ACT, 1961. THEREFORE, PENALTY UNDER SECT ION 271B IS ATTRACTED. REJECTING VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE THE AO LEVIED PENALTY OF RS.61,790/- BEING % OF THE TU RNOVER OF RS.1,23,58,028/-. 5. BEFORE CIT(A) THE ASSESSEE REITERATED THE SAME A RGUMENTS AS MADE BEFORE THE AO AND SUBMITTED THAT HE HAS ALREAD Y BEEN PENALIZED U/S.271A FOR NON MAINTENANCE OF BOOKS, TH EREFORE, PENALTY U/S.271B FOR FAILURE TO GET ACCOUNTS AUDITE D CANNOT BE IMPOSED. 6. HOWEVER, THE CIT(A) WAS ALSO NOT CONVINCED WITH THE ARGUMENTS ADVANCED BY THE ASSESSEE AND UPHELD THE P ENALTY LEVIED BY THE AO. WHILE DOING SO HE HELD THAT THE ASSESSE E HAS COMMITTED 2 DIFFERENT VIOLATIONS UNDER THE I.T. ACT. ALTHOUGH THE OCCURRENCE OF THE SECOND VIOLATION IS DEPENDING ON THE FIRST, HOWEVER, BOTH THE PROCEEDINGS ARE SEPARATE UNDER THE I.T. ACT. 7. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSE SSEE IS N APPEAL BEFORE US. 8. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUP PORTED THE ORDER OF THE CIT(A). REFERRING TO THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ANIL GANESHMAL JAIN VS. DCIT VIDE ITA NOS. 731 TO 739/PN/2012 ORDER DATED 07-06-2013 FOR A.YRS. 2001-02 TO 2008-09 HE SUBMITTED THAT THE TRIBUNAL I N ITA 4 NO.732/PN/2012 HAS SUSTAINED THE PENALTY LEVIED BY THE AO AND UPHELD BY THE CIT(A) U/S.271B OF THE I.T. ACT. REF ERRING TO PARA 12 OF THE ORDER OF THE TRIBUNAL HE DREW THE ATTENTI ON OF THE BENCH TO THE FOLLOWING: 12. . . . . . . . . . . . . . . . . . . . . . . . . . .FURTHER, IN OUR OPINION PENALTY U/S.271A AND PENALTY U/S.271B ARE UNDER TWO DIFFERENT PROVISIONS, THEREFORE, MERELY BECAUSE THE ASSESSING OFFICER HAS NOT L EVIED PENALTY U/S.271A CANNOT BE A GROUND FOR NOT LEVYING PENALTY U/S.271B OF THE I.T. ACT. SINCE THE ASSESSEE IN THE INST ANT CASE HAS COMMITTED A DEFAULT U/S.44AB AS HIS GROSS COMMISSION RECEI PT IS MORE THAN THE PRESCRIBED LIMIT, THEREFORE, THE ASSESSEE IS LIABLE FOR PENALTY U/S.271B OF THE I.T. ACT. IN THIS VIEW OF TH E MATTER, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) CONFIRM ING THE PENALTY OF RS.60,020/- LEVIED BY THE ASSESSING OFFICER U/S.271B OF T HE I.T. ACT. WE ACCORDINGLY UPHOLD THE SAME. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY DISMISSED. HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE LD.C IT(A) BE UPHELD. 9. WE HAVE CONSIDERED THE ARGUMENTS ADVANCED BY THE LD. DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIA L ON RECORD. IN THE INSTANT CASE, ADMITTEDLY NO BOOKS OF ACCOUNT WERE MAINTAINED FOR WHICH PENALTY U/S.271A HAS BEEN LEVIED BY THE A O. THEREFORE, WHEN NO BOOKS OF ACCOUNT ARE MAINTAINED, IT IS NOT POSSIBLE FOR ANY AUDITOR TO AUDIT THE ACCOUNTS OF THE ASSESSEE. AUD IT OF ACCOUNTS WOULD ARISE ONLY WHEN THE BOOKS OF ACCOUNTS ARE MAI NTAINED. THEREFORE, IN OUR CONSIDERED OPINION, PENALTY US.27 1B IN THE INSTANT CASE SHOULD NOT HAVE BEEN LEVIED FOR NOT GETTING TH E ACCOUNTS AUDITED. 9.1 WE FIND THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF S.K. GUPTA AND CO., REPORTED IN 322 ITR9 86 HAS OBS ERVED AS UNDER: 5 WE HAVE HEARD SRI A.N. MAHAJAN, LEARNED STANDING C OUNSEL FOR THE REVENUE AND SRI R.R. KAPOOR, LEARNED COUNSEL APPEAR ING FOR THE RESPONDENT ASSESSEE. SRI MAHAJAN CONTENDED THAT THE TRIBUNAL HAS ERRED I N LAW WHILE UPHOLDING ORDER OF THE COMMISSIONER OF INCOME-TAX (AP PEALS) CANCELLING THE PENALTY INASMUCH AS THE ASSESSEE HAD FAIL ED TO GET ITS BOOKS OF ACCOUNT AUDITED. THE SUBMISSION OF SRI MAHAJAN IS MISCONCEIVED FOR THE RE ASON THAT THE REQUIREMENT OF GETTING THE BOOKS OF ACCOUNT AUDI TED COULD ARISE ONLY WHERE THE BOOKS OF ACCOUNTS ARE MAINTAINED. IF FOR SOME REASON THE ASSESSEE HAS NOT MAINTAINED THE BOOKS OF ACCOU NT THE APPROPRIATE PROVISION UNDER WHICH PENALTY PROCEEDING S CAN BE INITIATED IS UNDER SECTION 271A OF THE ACT WHICH RECO URSE HAS ALSO BEEN TAKEN BY THE ASSESSEE AS WOULD APPEAR FROM THE ORDE R OF THE TRIBUNAL. THE TRIBUNAL WAS, THEREFORE, JUSTIFIED IN UPHOLDING T HE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) CANCELLING THE P ENALTY IMPOSED UNDER SECTION 271B OF THE ACT. THE APPEALS FAILS AND IS, THEREFORE, DISMISSED. 9.2 WE FIND THE HONBLE GUWAHATI HIGH COURT IN THE CASE OF SURAJMAL PARSURAM TODI VS. CIT ORDER DATED 06-08-1 996 REPORTED IN 222 ITR 691 HAS HELD AS UNDER: WE HAVE GONE THROUGH THE PROVISIONS OF SECTIONS 44AA, 44AB, 271A AND 271B OF THE ACT. MAINTENANCE OF ACCOUNTS IS ENVISAGED UNDER SECTION 44AA AND ON FAILURE TO DO SO THE ASSESSEE SH ALL BE GUILTY AND LIABLE TO BE PENALISED UNDER SECTION 271A. EVEN AFTER MAINTENANCE OF BOOKS OF ACCOUNT THE OBLIGATION OF TH E ASSESSEE DOES NOT COME TO AN END. HE IS REQUIRED TO DO SOMETHING MO RE, I.E., BY GETTING THE BOOKS OF ACCOUNT AUDITED BY AN ACCOUNTAN T. BUT WHEN A PERSON COMMITS AN OFFENCE BY NOT MAINTAINING THE BOOK S OF ACCOUNT AS CONTEMPLATED BY SECTION 44AA THE OFFENCE IS COMPLET E. AFTER THAT THERE CAN BE NO POSSIBILITY OF ANY OFFENCE AS CONTEMPL ATED BY SECTION 44AB AND, THEREFORE, IN OUR OPINION, THE IMP OSITION OF PENALTY UNDER SECTION 271B IS ERRONEOUS. THE TRIBUNAL HAS OVERLOOKED THIS ASPECT OF THE MATTER. OF COURSE, IT IS APPARENT FROM THE RECORDS THAT THE ASSESSEE FAILED TO MAINTAIN THE BO OKS OF ACCOUNT AS REQUIRED UNDER SECTION 44AA AND FOR THAT P ENALTY IS PRESCRIBED UNDER SECTION 271A. IT IS FOR THE TRIBUNAL TO TAKE ACTION IN ACCORDANCE WITH LAW. 9.3 WE FIND THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF REPORTED IN 299 ITR 219 HAS OBSERVED AS UNDER (SHOR T NOTES): 6 A PENALTY PROVISION IN A TAXING STATUTE HAS TO BE STRI CTLY CONSTRUED. PENALTY IS EXIGIBLE ONLY WHERE A PERSON FALLS WITHIN T HE FOUR CORNERS OF THE PENAL PROVISIONS, OTHERWISE NOT. SEPARATE PENALTY HAS BEEN PROVIDED FOR NON-MAINTENA NCE OF ACCOUNTS, I.E. UNDER SECTION 271A OF THE INCOME-TAX A CT, 1961, AND FOR NOT GETTING THE ACCOUNTS AUDITED AND NOT FURNISHI NG THE AUDIT REPORT, I.E. UNDER SECTION 271B. IF A PERSON HAS NOT MAINTAINED ACCOUNT BOOKS OR ANY ACCOUNTS THE QUESTION OF AUDIT DO ES NOT ARISE. IN SUCH AN EVENT THE IMPOSITION OF PENALTY UNDER THE PROVISION CONTAINED IN SECTION 271A FOR ALLEGED NON-COMPLIANCE WITH SECTION 44AA MAY ARISE BUT THE PROVISIONS OF SECTION 44AB DO NO T GET VIOLATED IN A CASE WHERE ACCOUNTS HAVE NOT BEEN MAINT AINED AT ALL AND THEREFORE THE PENAL PROVISIONS OF SECTION 271B OF THE ACT WOULD NOT APPLY. 9.4 SO FAR AS THE ARGUMENT OF THE LD. DEPARTMENTAL REPRESENTATIVE THAT IN VIEW OF THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ANIL GANESHMAL JAIN THE PENALTY U/S.271B SHOULD BE UPHELD, WE FIND THE SAME IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THAT CASE, THE A O HAS NOT LEVIED PENALTY U/S.271A. HOWEVER, IN THE INSTANT CASE, PE NALTY HAS BEEN LEVIED U/S.271A FOR NON-MAINTENANCE OF BOOKS OF ACC OUNT. MOREOVER, THE DECISIONS OF THE VARIOUS HIGH COURTS CITED (SUPRA) WOULD PREVAIL OVER THE DECISION OF THE TRIBUNAL. I N THIS VIEW OF THE MATTER AND CONSIDERING THE FACT THAT THE AO HAS ALR EADY LEVIED PENALTY U/S.271A FOR NON MAINTENANCE OF BOOKS OF AC COUNTS, WE HOLD THAT LEVY OF PENALTY U/S.271B FOR THE IMPUGNED ASSESSMENT YEAR IS NOT JUSTIFIED. ACCORDINGLY, THE SAME IS DI RECTED TO BE DELETED AND THE GROUND RAISED BY THE ASSESSEE IS AL LOWED. ITA NOS. 2125 TO 2129/PN/2013 (A.YRS. 2004-05 TO 20 08-09) : 10. AFTER HEARING BOTH THE SIDES, WE FIND THE GROUN DS OF APPEAL IN THE ABOVE APPEALS ARE IDENTICAL TO GROUNDS OF APPEA L IN ITA NO.2124/PN/2013. WE HAVE ALREADY DECIDED THE ISSUE AND THE 7 GROUND RAISED BY THE ASSESSEE HAS BEEN ALLOWED AND THE PENALTY LEVIED BY THE ASSESSING OFFICER AND UPHELD BY THE C IT(A) HAS BEEN DELETED. FOLLOWING THE SAME RATIO, THE PENALTY LEV IED FOR THE ABOVE 5 ASSESSMENT YEARS ARE DIRECTED TO BE DELETED AND T HE GROUNDS RAISED IN THE ABOVE 5 APPEALS ARE ALLOWED. 11. IN THE RESULT, ALL THE SIX APPEALS FILED BY THE ASSESSEE ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 29-10-2014. SD/- SD/- (R.S. PADVEKAR) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED: 29 TH OCTOBER, 2014 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A), KOLHAPUR 4. CIT, KOLHAPUR 5. THE D.R, A PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR, ITAT, PUNE BENCHES, PUNE