Virender Pahuja, Rohtak V. ITO, Rohtak

ITA 217/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3423 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 21-07-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 19-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHANISH VERMA
• Assessee Lawyers: K L GUGLANI
• Keywords: Business income; Set aside
• Section: 80C; 143(3)

Judgement Text

I.T.A. NO. 2945,217,219 /DEL/2009 1/11 IN THE INCOME TAX APPELLATE TRIBUNAL, NEW DELHI, BENCH I BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI A K GARODIA, ACCOUTANT MEMBER ITA NO. 2945, 217 /DEL/2009 (ASSESSMENT YEAR 2006-07) SHRI VIRENDER PAHUJA, VS. ITO ,WARD 2, PROP. M/S. GURU NANAK ROHTAK, (HARYANA) TUBEWELL ENGG. WORKS, C/O 597/24, DLF COLONY, ROHTAK (HARYANA) I.T.A. NO. 219/DEL/2009 (ASSESSMENT YEAR 2006-07) ITO, WARD 2, VS. SHRI VIRENDER PAHUJA, ROHTAK, (HARYANA) PROP. M/S. GURU NANAK, TUBEWELL ENGG. WORKS, C/O 597/24, DLF COLONY, ROHTAK (HARYANA) (APPELLANTS) (RESPONDENTS) PAN / GIR NO. AJPPP4462K APPELLANT BY: SHRI K L GUGLANI, ADV. RESPONDENT BY: SHRI MOHANISH VERMA, DR ORDER PER A. K. GARODIA, AM: 1. OUT OF THESE THREE APPEALS, THERE ARE TWO CROSS APP EALS OF THE ASSESSEE AND THE REVENUE ARISING OUT OF ASSESSMENT ORDER DATED 28.09.2007 PASSED BY THE A.O. U/S 143(3) AND THE RE MAINING ONE APPEAL IS OF THE ASSESSEE IN CONNECTION WITH PE NALTY IMPOSED BY THE A.O. U/S 271B OF RS.28,566/-. ALL T HESE APPEALS I.T.A. NO. 2945,217,219 /DEL/2009 2/11 ARE IN CONNECTION WITH THE ASSESSMENT YEAR 2006-07. FOR THE SAKE OF CONVENIENCE, ALL THESE APPEALS ARE BEING DI SPOSED OF BY THIS COMMON ORDER. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 05.05.2006 DECLARING A NET INCOME OF RS.98,520/-. IT IS NOTED BY THE A.O. THAT IN THE R ETURN OF INCOME, THE BUSINESS INCOME WAS ESTIMATED AT RS.1,25,700/- AND OTHER INCOME WAS DECLARED AT RS.1628/- TOTALING RS.1,27,3 28/-. DEDUCTION U/S 80C (FOR LIC) WAS CLAIMED OF RS.28,80 6/- RESULTING IN THE NET INCOME OF RS.98,520/-. IT IS NOTED BY THE A.O. THAT LATER ON, PHOTOCOPY OF INCOME TAX RETURN, COMPUTATION SHEET ALONG WITH A SET OF AUDITED ACCOUNTS SUCH AS FORM 3 CD, TRADING AND P & L ACCOUNT, BALANCE SHEET AND CAPITA L ACCOUNT ETC. DULY SIGNED BY THE ASSESSEE AND SHRI SANJEEV K RISHAN, CA WAS RECEIVED. IT IS NOT STATED BY THE A.O. IN THE ASSESSMENT ORDER THAT FROM WHERE, THESE DOCUMENTS WEE RECEIVED . IT IS FURTHER NOTED BY THE A.O. THAT THE CA HAS STATED DU RING ASSESSMENT PROCEEDINGS BEFORE HIM THAT THE BOOKS OF ACCOUNTS HAVE BEEN AUDITED BY HIM AND THE AUDIT RESULTS HAVE BEEN PREPARED ON THE BASIS OF BOOKS OF ACCOUNTS WHEREAS THE VERSION OF THE ASSESSEE IS THAT HE WAS NOT MAINTAINING ANY BOOKS OF ACCOUNTS AND THE AUDITED RESULTS WERE PREPARED FOR GETTING A LOAN FROM ICICI BANK ON THE INSTANCE OF AN AGENT. THE C ASE OF THE ASSESSEE IS THAT HE IS HAVING INCOME ON ACCOUNT OF JOB WORK AND HE IS NOT ENGAGED IN ANY PURCHASE AND SALE OF GOODS BUT AS PER THE AUDITED ACCOUNTS RECEIVED BY THE A.O. IN THE CO URSE OF ASSESSMENT PROCEEDINGS, THE TURNOVER OF THE ASSESSE E WAS SHOWN I.T.A. NO. 2945,217,219 /DEL/2009 3/11 AT RS.52,50,789/- WITH OPENING STOCK OF 8.05 LACS, PURCHASE OF RS.43.77 LACS AND CLOSING STOCK OF RS.6.25 LACS. TH E GROSS PROFIT WAS SHOWN AT RS.4,56,959/- AND THE NET PROFIT WAS S HOWN AT RS.1,25,701/-. IN THE CAPITAL ACCOUNT, OPENING BAL ANCE WAS SHOWN AT RS.10,63,566/- AND CLOSING CAPITAL BALANCE WAS SHOWN AT RS.11,65,267/-. THE A.O. RECORDED THE STATEMENT OF THE ASSESSEE ON 10.09.2007. IT IS NOTED BY THE A.O. TH AT IN THE STATEMENT, THE ASSESSEE ALLEGED THAT HIS SIGNATURES WERE OBTAINED ON PLAIN PAPER AND HE SIGNED THESE DOCUMENTS TO RAI SE LOAN FROM ICICI BANK THROUGH AN AGENT AND HE DOES NOT KNOW HI S NAME AND ADDRESS. IT IS ALSO NOTED BY THE A.O. ON PAGE 4 OF THE ASSESSMENT ORDER THAT THE ASSESSEE ADMITTED OF HAVI NG ACCOUNT WITH CENTRAL BANK OF INDIA BEING NO.300137/-. IT I S ALSO NOTED BY THE A.O. THAT THE ASSESSEE OBTAINED OD LIMIT OF RS.3.86 LACS FROM CENTRAL BANK OF INDIA. IT IS ALSO NOTED BY TH E A.O. THAT DURING THIS YEAR, TRANSACTION WITH VARIOUS PARTIES WERE MADE THROUGH BANK. IT IS ALSO NOTED THAT CHEQUES WERE I SSUED AND RECEIVED FROM DIFFERENT PARTIES AND CASH WAS ALSO D EPOSITED INTO BANK. IT IS NOTED BY THE A.O. THAT TOTAL DEBIT AND CREDIT ENTRIES IN THE BANK ACCOUNT WERE OF RS.13,30,726/- AND RS.10,3 5,223/- RESPECTIVELY RESULTING INTO CLOSING DEBIT BALANCE A T RS.2,68,503/. IT IS ALSO NOTED BY THE A.O. THAT THE ASSESSEE HAS ADMITTED THIS OD BALANCE WITH THE BANK AND THE SAME WAS DISCLOSED IN THE AUDITED BALANCE SHEET. FROM THESE ENTRIES IN THE B ANK, THE A.O. DRAWN AN INFERENCE THAT THE ASSESSEE DID BUSINESS D URING THE YEAR AND THE RESULTS DECLARED IN THE AUDITED ACCOUN TS RELATE TO THE ASSESSEES BUSINESS. THE A.O. DID NOT ACCEPT THE E XPLANATION OF I.T.A. NO. 2945,217,219 /DEL/2009 4/11 THE ASSESSEE THAT THESE AUDITED ACCOUNTS WERE PREPA RED ONLY FOR OBTAINING LOAN FROM ICICI BANK AND PURCHASE AND SAL ES ETC. SHOWN IN THESE ACCOUNTS ARE NOT ACTUAL TRANSACTIONS OF THE ASSESSEE. THEREAFTER, THE A.O. PROCEEDED TO ESTIMA TE THE INCOME OF THE ASSESSEE ON THE BASIS OF 5% OF THE TOTAL TUR NOVER OF RS.52.50 LACS AND THE INCOME WAS ASSESSED BY HIM ON THIS ACCOUNT AT RS.2,62,539/-. THE A.O. FURTHER MADE AD DITION OF RS.4,37,685/- BY ALLEGING THAT THIS MUCH AMOUNT WAS INVESTED BY THE ASSESSEE FOR PURCHASE OF GOODS OF RS.43,76,8 59/-. THIS AMOUNT WAS ALSO ADDED. REGARDING THE OPENING BALAN CE SHOWN BY THE ASSESSEE IN HIS CAPITAL ACCOUNT AS PER THE A UDITED ACCOUNTS AT RS.10,63,566/-, IT IS NOTED BY THE A.O. THAT IN THE INCOME TAX RETURN FOR THE ASSESSMENT YEAR 2005-06, CLOSING BAL ANCE OF CAPITAL ACCOUNT WAS SHOWN AT RS.2,87,516/- AND HENC E ON ACCOUNT OF THIS DIFFERENCE IN THE OPENING BALANCE I N CAPITAL ACCOUNT SHOWN AS PER THESE AUDITED ACCOUNTS AS AGAI NST CLOSING BALANCE OF CAPITAL ACCOUNT SHOWN IN THE INCOME TAX RETURN IN THE PRECEDING YEAR, THE A.O. MADE FURTHER ADDITION OF R S.7,76,050/-. IT IS NOTED BY THE A.O. THAT ASSESSEE HAS DEPOSITED A SUM OF RS.5.20 LACS IN CASH INTO BANK ON VARIOUS DATES. T HE A.O. ASKED THE ASSESSEE TO EXPLAIN THE SOURCE OF CASH DEPOSIT INTO THIS BANK ACCOUNT ON SEVERAL DATES. IT IS NOTED BY THE A.O. THAT NO SPECIFIC REPLY WAS FURNISHED BY THE ASSESSEE REGARDING SOURC E OF CASH DEPOSIT INTO BANK. THEREAFTER, IT IS OBSERVED BY T HE A.O. THAT HE HAS NO ALTERNATIVE BUT TO CALCULATE PEAK AMOUNTS OF CASH DEPOSITED INTO BANK AND THE SAME WAS WORKED OUT BY THE A.O. AT RS.2.75 LACS AND THE ADDITION WAS MADE OF THIS AMOU NT ALSO. I.T.A. NO. 2945,217,219 /DEL/2009 5/11 THEREAFTER, IT IS NOTED BY THE A.O. IN PARA 8 OF TH E ASSESSMENT ORDER THAT A PERUSAL OF THE BALANCE SHEET ATTACHED WITH THE RETURN SHOWS THAT THE ASSESSEE OWNS ASSETS OF RS.3,18,671/ - INCLUDING VALUE OF TOOLS AT RS.10,215/- WHEREAS IN THE AUDITE D BALANCE SHEET, THIS VALUE HAS BEEN DECLARED AT RS.2,42,501/ - AND ON ACCOUNT OF THIS DIFFERENCE BETWEEN VALUE OF ASSETS AS PER THESE TWO BALANCE SHEETS, I.E. RS.3,18,671/- AND RS.2,42, 501/-, THE A.O. MADE ADDITION OF THE BALANCE AMOUNT OF RS.76,1 70/- ALSO. THEREAFTER, IT IS NOTED BY THE A.O. IN PARA 9 OF TH E ASSESSMENT ORDER THAT THE ASSESSEE HAS CLAIMED HOUSE HOLD EXPE NSES AT RS.48,000/- BUT OUT OF THIS AN AMOUNT OF RS.28,806/ - HAVE BEEN PAID TOWARDS LIC RESULTING INTO BALANCE WITHDRAWAL OF RS.20,000/- APPROXIMATELY TO MEET THE HOUSE HOLD EX PENSES. BEFORE THE A.O. IT WAS SUBMITTED BY THE ASSESSEE TH AT A SUM OF RS.42,000/- WAS ALSO SHOWN AS DRAWING BY HIS WIFE W HO IS ALSO INCOME TAX ASSESSEE. BUT THE A.O. WAS NOT SATISFIE D AND ON ACCOUNT OF LOW HOUSE HOLD WITHDRAWAL ALSO, THE A.O. MADE AN ADDITION OF RS.20,000/-. IN THIS MANNER, THE A.O. ASSESSED THE INCOME OF THE ASSESSEE AT RS.19,45,960/- AS AGAINST THE INCOME OF RS.98,520/- DECLARED BY THE ASSESSEE IN THE RETU RN OF INCOME. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATER IN APPEAL BEFORE THE LD. CIT(A) WHO DELETED ALL OTHER ADDITIONS EXCE PT THE ADDITION OF RS.7,76,050/- WHICH WAS MADE BY THE A.O . ON ACCOUNT OF DIFFERENCE IN OPENING BALANCE OF CAPITAL ACCOUNT SHOWN IN THE AUDITED BALANCE SHEET OF THE PRESENT Y EAR WITH THE CLOSING BALANCE OF CAPITAL ACCOUNT SHOWN IN THE RET URN FOR THE PRECEDING YEAR. HE HAS CONFIRMED THE ADDITION OF R S.7,76,050/- I.T.A. NO. 2945,217,219 /DEL/2009 6/11 AND DELETED ALL OTHER ADDITIONS. NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US REGARDING THE ADDITION CONFIRMED B Y LD. CIT(A) FOR AN AMOUNT OF RS.7,76,050/- WHEREAS THE R EVENUE IS IN APPEAL FOR THE ADDITION DELETED BY THE LD. CIT(A ). APART FROM THIS, THE A.O. ALSO IMPOSED A PENALTY OF RS.28 ,566/- U/S 271B WHICH WAS UPHELD BY THE CIT(A) AND THE ASSESSE E IS IN FURTHER APPEAL BEFORE US AGAINST THIS PENALTY CONFI RMED BY THE LD. CIT(A). 3. IN THE COURSE OF HEARING BEFORE US, IT WAS SUBMITTE D BY THE LD. A.R. FOR THE ASSESSEE THAT THESE AUDITED ACCOUNTS A RE NOT ACTUAL ACCOUNTS AND THESE ACCOUNTS WERE PREPARED ONLY FOR OBTAINING LOAN FROM ICICI BANK AND ULTIMATELY, THE ASSESSEE D ID NOT OBTAIN LOAN AND THERE WAS SOME DISPUTE WITH THE AGENT. TH E AUDITED ACCOUNTS WERE PREPARED BY THE AGENT FOR THE PURPOSE OF RAISING LOAN FROM ICICI BANK AND SINCE, THERE WAS DISPUTE W ITH THE ASSESSEE, HE HAS FORWARDED THESE ACCOUNTS TO THE A. O. WITH THE ULTERIOR MOTIVE AND HENCE, THE ADDITION MADE BY THE A.O. ARE NOT JUSTIFIED. IT IS ALSO SUBMITTED THAT FOR THE S AME REASONS, THE PENALTY LEVIED BY THE A.O. IS ALSO NOT JUSTIFIED. A QUERY WAS RAISED BY THE BENCH THAT AS PER THE NOTING ON PAGE 4 OF THE ASSESSMENT ORDER, THE ASSESSEE WAS HAVING AN ACCOUN T WITH CENTRAL BANK OF INDIA AND IN THAT ACCOUNT, THERE WA S DEBIT ENTRIES OF RS.13.30 LACS AND CREDIT ENTRIES OF RS.1 0.35 LACS. A QUERY WAS RAISED REGARDING NATURE OF THESE TRANSACT ION IN THIS BANK ACCOUNT AND WHETHER THE ASSESSEE CAN ESTABLISH THAT THESE TRANSACTIONS IN THEIR BANK ACCOUNT ARE ON ACCOUNT O F JOB WORK WHICH WAS CARRIED OUT BY THE ASSESSEE AS PER THE AS SESSEES I.T.A. NO. 2945,217,219 /DEL/2009 7/11 VERSION OR WHETHER THESE ENTRIES ARE IN CONNECTION WITH ANY PURCHASE AND SALE OF GOODS AS PER THE AUDITED ACCOU NTS RELIED UPON BY THE A.O. IT WAS SUBMITTED BY THE LD. A.R. THAT THIS ASPECT OF MATTER WAS NOT EXAMINED BY THE AUTHORITIE S BELOW AND THE NECESSARY DETAILS AND EVIDENCES ARE NOT READILY AVAILABLE WITH HIM AND HENCE, THE MATER MAY BE RESTORED BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION AFTER EXAMINING AN D VERIFYING THIS ASPECT. THE LD. D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. 4. REGARDING PENALTY IMPOSED BY THE A.O. U/S 271B, IT WAS SUBMITTED BY THE LD. A.R. THAT AS PER THE RETURN OF INCOME FILED BY THE ASSESSEE, THE ASSESSEE IS NOT LIABLE FOR GET TING ITS ACCOUNTS AUDITED U/S 44AB AND IF THE A.O. IS TAKING THE AUDI TED ACCOUNTS AS A REAL ACCOUNT OF THE ASSESSEE, THEN ALSO PENALT Y U/S 271B IS NOT JUSTIFIED BECAUSE IT IS THE CASE OF THE A.O. TH AT THE AUDITED ACCOUNTS AUDITED ALONG WITH TAX AUDIT REPORT IN FOR M 3 CD WAS AVAILABLE WITH HIM AND HENCE PENALTY IMPOSED BY THE A.O. IS NOT AT ALL JUSTIFIED. LD. D.R. SUPPORTED THE ORDER S OF AUTHORITIES BELOW WITH REGARD TO THE PENALTY ISSUE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED T HE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHO RITIES BELOW. WE FIND THAT THE ONLY BASIS OF THE ASSESSME NT ORDER OF THE A.O. IS THE AUDITED ACCOUNTS, WHICH ARE RECEIVE D BY THE A.O. FROM SOME SOURCE AND THE SOURCE WAS NOT DISCLOSED B Y THE A.O. IN THE ASSESSMENT ORDER. BE THIS AS IT MAY BE WE H AVE TO DECIDE AS TO WHETHER, THESE AUDITED ACCOUNTS ARE DEPICTING ACTUAL TRANSACTIONS OF THE ASSESSEE. IT IS NOTED BY THE A .O. HIMSELF ON I.T.A. NO. 2945,217,219 /DEL/2009 8/11 PAGE 4 OF THE ASSESSMENT ORDER THAT THE ASSESSEE IS HAVING BANK ACCOUNT IN CENTRAL BANK OF INDIA AND IN THIS BANK A CCOUNT, THERE ARE TRANSACTIONS OF RS.13.30 LACS DEBIT AND RS.10.3 5 LACS CREDIT. IF THE ASSESSEE CAN ESTABLISH ALONG WITH THE EVIDEN CE THAT THESE TRANSACTIONS ARE IN CONNECTION WITH THE BUSINESS OF JOB WORK BEING CARRIED BY HIM AND THESE TRANSACTIONS ARE NOT IN CONNECTION WITH PURCHASE AND SALE OF GOODS, THEN IN OUR OPINION, THESE AUDITED ACCOUNTS CANNOT BE RELIED UP ON. AT THE SAME TIME, IF THE A.O. CAN ESTABLISH THAT THESE TRA NSACTIONS IN THE BANK ACCOUNT WITH CENTRAL BANK OF INDIA ARE IN CONNECTION WITH PURCHASE/SALE OF GOODS, THEN THESE AUDITED ACC OUNTS HAVE TO BE ACCEPTED AS DEPICTING ACTUAL TRANSACTION OF THE ASSESSEE AND IN THAT SITUATION, THE ASSESSEE HAS TO FURNISH NECE SSARY EVIDENCE BEFORE THE A.O. WITH REGARD TO THESE TRANSACTIONS. THIS ASPECT WAS NOT EXAMINED BY THE AUTHORITIES BELOW AND WE FE EL THAT THIS GOES TO THE ROOT OF THE MATTER. WE, THEREFORE, FEE L THAT THE ENTIRE ISSUE SHOULD GO BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION AFTER EXAMINING THIS ASPECT OF THE MATTER. WE, TH EREFORE, SET ASIDE THE ORDER OF LD. CIT(A) AND RESTORE THE ENTIR E MATTER BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION. THE B URDEN IS ON THE ASSESSEE TO ESTABLISH THAT THESE TRANSACTIONS IN TH E BANK ACCOUNT OF THE ASSESSEE WITH THE CENTRAL BANK OF INDIA ARE IN CONNECTION WITH HIS JOB WORK BUSINESS AND NONE OF THESE TRANSA CTIONS ARE IN CONNECTION WITH BUSINESS OF PURCHASE/ SALE OF GOODS . THE ASSESSEE HAS TO FURNISH THE NAMES AND ADDRESSES OF THE PARTIES FROM WHOM CHEQUES WERE RECEIVED BY THE ASSESSEE ALO NG WITH COPY OF BILLS RAISED ON THEM ON ACCOUNT OF JOB WORK CHARGES OR I.T.A. NO. 2945,217,219 /DEL/2009 9/11 SALE OF GOODS, AS THE CASE MAY BE. SIMILARLY, ON A CCOUNT OF PAYMENTS MADE THROUGH THIS BANK ACCOUNT ALSO, THE A SSESSEE HAS TO FURNISH THE NAMES AND ADDRESSES OF THE PARTIES T O WHOM THE CHEQUES WERE ISSUED ALONG WITH COPIES OF THE BILLS RAISED BY THESE PARTIES. ON THE BASIS OF THESE BILLS RAISED BY THE ASSESSEE AS WELL AS BY THE OUTSIDE PARTIES ON THE ASSESSEE, THE ASSESSEE HAS TO ESTABLISH THAT THERE IS NO SUCH TRANSACTION AS PER THIS BANK ACCOUNT IN CONNECTION WITH ANY BUSINESS OF PURCHASE /SALE OF GOODS. IF THE ASSESSEE CAN ESTABLISH THIS, THEN TH ESE AUDITED ACCOUNTS SHOULD BE IGNORED BY HOLDING THAT THESE AU DITED ACCOUNTS DO NOT REFLECT ACTUAL TRANSACTION OF THE A SSESSEE BUT IF THE ASSESSEE FAILS TO DO SO THEN THESE AUDITED ACCO UNTS HAVE TO BE ACCEPTED AS THE ACCOUNTS DEPICTING THE ACTUAL TRANS ACTION OF THE ASSESSEE AND IN THAT CASE, THE A.O. CAN MAKE INQUIR IES WITH REGARD TO PURCHASE EXPENSES AND THE ASSESSEE HAS TO SATISFY REGARDING THE ALLOWABILITY OF EXPENSES CLAIMED IN T HE AUDITED ACCOUNTS AND THEREAFTER, THE A.O. SHOULD PASS NECES SARY ORDER AS PER LAW. IF THE ASSESSEE SUCCEEDS IN ESTABLISHING THAT ALL THE TRANSACTIONS IN THIS BANK ACCOUNT WITH CENTRAL BANK OF INDIA ARE IN CONNECTION WITH JOB WORK BUSINESS ONLY, THEN THE AUDITED ACCOUNTS HAS TO BE IGNORED ALTOGETHER AND IN THAT S ITUATION, NO QUESTION CAN BE RAISED WITH REGARD TO OPENING BALAN CE IN CAPITAL ACCOUNT ALSO AS PER THESE AUDITED ACCOUNTS. WITH T ENSE OBSERVATIONS, WE RESTORE THE MATTER BACK TO THE FIL E OF THE A.O. 6. WITH REGARD TO PENALTY ISSUE, WE FIND THAT THIS PEN ALTY IMPOSED BY THE A.O. U/S 271B CANNOT BE SUSTAINED BECAUSE IF THE VERSION OF THE ASSESSEE IS ACCEPTED THAT THE ASSESSEE IS DO ING JOB WORK I.T.A. NO. 2945,217,219 /DEL/2009 10/11 ONLY, IN THAT SITUATION, THERE IS NO REQUIREMENT OF GETTING THE BOOKS AUDITED AND HENCE HERE IS NO CASE FOR LEVY OF ANY PENALTY U/S 271B OF THE ACT. IF THE VERSION OF THE A.O. IS ACCEPTED AFTER IT IS ESTABLISHED THAT THE AUDITED ACCOUNTS RECEIVE D BY THE A.O. IN THE COURSE OF ASSESSMENT PROCEEDINGS SHOWS THE A CTUAL TRANSACTION OF THE ASSESSEE, IN THAT SITUATION ALSO , NO PENALTY CAN BE LEVIED BECAUSE THE BOOKS ARE AUDITED AS REQUIRED U/S 44AB AND THERE IS NO VIOLATION OF SECTION 44AB. THE CAS E OF THE A.O. IS THAT THE AUDIT REPORT WAS NOT FURNISHED BY THE A SSESSEE ALONG WITH RETURN OF INCOME. AS PER OUR DECISION IN QUAN TUM PROCEEDINGS, WE HAVE HELD THAT THE RELIABILITY OF T HESE AUDITED ACCOUNTS ITSELF IS IN DOUBT AND WE HAVE RESTORED TH E MATTER BACK TO THE FILE OF THE A.O. FOR EXAMINING THE ISSUE AFR ESH BY EXAMINING THE NATURE OF ENTRIES IN THE BANK ACCOUNT OF THE ASSESSEE IN CENTRAL BANK OF INDIA AND THEREAFTER ON LY IT WILL BE ULTIMATELY DECIDED AS TO WHETHER THESE AUDITED ACCO UNTS DEPICTS ACTUAL TRANSACTION OF THE ASSESSEE OR NOT. IN VIEW OF THIS, WE FEEL THAT THE PENALTY IMPOSED BY THE A.O. U/S 271B CANNO T BE UPHELD BECAUSE THIS ISSUE ITSELF HAS NOT YET CRYSTALLIZED AS TO WHETHER THE TURNOVER OF THE ASSESSEE WAS IN EXCESS OF THE P RESCRIBED LIMIT U/S 44AB REQUIRING THE ASSESSEE TO GET ITS ACCOUNTS AUDITED U/S 44AB AND TO FURNISH THE SAME WITH THE RETURN OF INC OME. HENCE, THE PRESENT PENALTY IMPOSED BY THE A.O. U/S 271B CANNOT BE SUSTAINED AND WE DELETE THE SAME. HOWEVE R, WE WOULD LIKE TO OBSERVE THAT IN CASE IT IS HELD BY TH E A.O. IN QUANTUM PROCEEDINGS THAT THESE AUDITED ACCOUNTS WER E DEPICTING ACTUAL TRANSACTION OF THE ASSESSEE AND THE TURNOVER WAS I.T.A. NO. 2945,217,219 /DEL/2009 11/11 EXCEEDING THE PRESCRIBED LIMIT U/S 44AB REQUIRING T HE ASSESSEE TO GET HIS ACCOUNTS AUDITED UNDER THIS SECTION, IN THAT SITUATION, THE A.O. WILL BE AT LIBERTY TO INITIATE PENALTY PRO CEEDINGS AFRESH IF HE FEELS SO. AT THAT POINT OF TIME, THE ASSESSE E CAN ARGUE ABOUT JUSTIFICATION OF PENALTY FOR THE DEFAULT OF N ON-FURNISHING THE AUDIT REPORT ALONG WITH RETURN OF INCOME. BUT AT THE PRESENT, THE PENALTY IS NOT SUSTAINABLE AND HENCE WE DELETE THE SAME. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN PENALT Y PROCEEDINGS I.E. I.T.A. NO. 2945/DEL/2009 IS ALLOWED AND THE RE MAINING TWO CROSS APPEALS OF THE ASSESSEE AND THE REVENUE ARE A LLOWED FOR STATISTICAL PURPOSES. 8. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT ON 3 0 TH JULY 2010. SD./- SD./- (RAJPAL YADAV) (A K GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30 TH JULY 2010 SP. COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT TRUE COPY: BY ORDER 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI