V Seetharaman, Villupuram V. ACIT, Villupuram Circle, Villupuram

ITA 229/CHNY/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2737 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 31-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reasonable cause; Non compliance
• Section: 27; 273B; 143(3); 271B; 44AB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI , , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./ ITA NO.229/CHNY/2019 /ASSESSMENT YEAR: 2015-16 SHRI V. SEETHARAMAN, NO.5, KAPPIYAMPULIYUR MAIN ROAD, VILLUPURAM 605 601. [PAN: AACPR 0873L] VS. THE ASST. COMMISSIONER OF INCOME TAX, VILLUPURAM CIRCLE, VILLUPURAM. ( /APPELLANT) ( &'( /RESPONDENT) ( / APPELLANT BY : MR. S. SRIDHAR, ADVOCATE &'( /RESPONDENT BY : MR. AR.V. SREENIVASAN, ADDL. CIT /DATE OF HEARING : 06.10.2021 / DATE OF PRONOUNCEMENT : 06.10.2021 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), P UDUCHERRY IN I.T.A NO.63/CIT(A)-PDY/2017-18 DATED 15.11.2018 REL EVANT TO THE ASSESSMENT YEAR 2015-16. ITA NO.229/CHNY/2019 - 2 - 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE AR E REPRODUCED AS UNDER: 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APP EALS), PUDUCHERRY DATED 15.11.2018 IN 1TANO.63/CIT(A)-PDY/ 2017-18 FOR THE ABOVE MENTIONED ASSESSMENT YEAR IS CONTRARY TO LAW, FACTS, AND IN THE CIRCUMSTANCES OF THE CASE. 2. THE CIT (APPEALS) ERRED IN SUSTAINING THE LEVY O F PENALTY U/S 271B OF THE ACT FOR THE PRESUMED VIOLATION OF SECTION 44 AB OF THE ACT WITHOUT ASSIGNING PROPER REASONS AND JUSTIFICATION. 3. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE SUSTENANCE OF LEVY OF PENALTY FOR THE REASONS STATED FROM PARA 5 OF THE I MPUGNED ORDER WAS NOT CORRECT WHILE FURTHER OUGHT TO HAVE APPRECIATED THAT THE RELEVANT FACTS WHICH WOULD FORTIFY THE STAND OF THE APPELLAN T FOR DELETING THE PENALTY IMPOSED BY THE ASSESSING OFFICER WERE COMPL ETELY OVERLOOKED PROVING PERVERSITY IN THE FINDINGS RECORDED IN RELA TION THERETO. 4. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE STAND CONSISTENTLY TAKEN BY THE APPELLANT ON THE NON APPLICABILITY OF SECTION 44AB READ WITH SECTION 271B OF THE ACT WOULD CONSTITUTE REASO NABLE CAUSE WITHIN THE SCOPE OF SECTION 273B OF THE ACT WHILE VITIATIN G THE LEVY OF PENALTY IN RELATION THERETO MECHANICALLY. 5. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE ORDER IMPOSING PENALTY U/S 271B OF THE ACT WAS PASSED OUT OF TIME, INVALID, PASSED WITHOUT JURISDICTION AND NOT SUSTAINABLE BOTH ON FA CTS AND IN LAW. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A CIVIL CONTRACTOR, FILED HIS RETURN OF INCOME BY ADMITTING TOTAL INCOME OF RS. 21,01,840/- ON ESTIMATE BASIS. THE A.O HAS COMPLETE D THE ASSESSMENT U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTE R AS THE ACT) AT RS. 55,80,009/- BY DISALLOWING 5% OF THE EXPENSES ON TH E GROUND THAT NON SUBMISSIONS OF BILLS AND VOUCHERS. SUBSEQUENTLY, TH E A.O HAS INITIATED PENALTY PROCEEDINGS U/S. 271B OF THE ACT ON THE GRO UND THAT THE ASSESSEE HAS FAILED TO COMPLY WITH THE PROVISIONS O F S. 44AB OF THE ACT AND IMPOSED PENALTY OF RS. 1,50,000/-. THE ASSESSEE HAS SUBMITTED ITA NO.229/CHNY/2019 - 3 - BEFORE THE A.O IN HIS REPLY DATED 03.07.2017 TO THE NOTICE U/S. 271B OF THE ACT, WHICH IS REPRODUCED AS UNDER: 'DURING THE FINANCIAL YEAR- 2014-15, I EXECUTED NEA TLY 25 CONTRACT WORKS AT VARIOUS PLACES. I HAVE TO PROCURE MATERIAL, ORGANIZ E THE LABOURS FOR EXECUTING THE SAID CONTRACT WORKS. THE NATURE OF MY BUSINESS IS SUCH THAT I AM UNABLE TO MAINTAIN BOOKS OF ACCOUNTS, I STUDIED UPTO SSLC AND ALSO I AM HAVING NO KNOWLEDGE IN MAINTAINING THE BOOKS OF ACCOUNTS FOR THE PURPOSE OF MY BUSINESS.... I HUMBLY SUBMIT THAT IF A PERSON HAS NOT MAINTAINED ACCOUNT BOOKS OR ANY ACCOUNTS, THE QUESTION OF AUDIT DOES NOT ARISE AND THE PROVISION OF SECTION 44 AB DO NOT GET VIOLATED IN A CASE WHERE ACCOUNTS HAVE NOT BEEN MAINTAINED AT ALL AND THEREFORE THE PENAL PROVISION S OF SECTION 271 B OF THE I. T. ACT WOULD NOT APPLY (COMMISSIONER OF INCOME T AX VS BISUALI TRACTORS 299 ITR 219 (ALL). 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE A.O HAS NOTED AS UNDER: THE ASSESSEE-QUOTED THE ABOVE-MENTIONED ORDER OF H ON. ALLAHABAD HIGH COURT AS RELEVANT TO HIS CASE. IT IS A CASE OF UNDISPUTED NON-MAINTENANCE OF BOOKS OF ACCOUNTS. E MPHASIS IS PLACED ON THIS POINT. THE RELEVANT SENTENCE FROM PA RA L OF THE JUDGEMENT IS PRODUCED BELOW: UNDISPUTEDLY, THE ASSESSES IS NOT MAINTAINING BOOKS-OF ACCOUNTS. BUT IN THIS CASE, THERE EXISTED TRIAL BALANCE FROM WHICH BALANCE-SHEET AND PROFIT AND LOSS ACCOUNT WERE PREP ARED AND WITHOUT BOOKS OF ACCOUNTS, TRIAL .BALANCE COULD NOT HAVE BEEN PREPARED. THE ASSESSES CANNOT TAKE STRENGTH FROM THE HON. HIGH COURT, JUDGEMENT, SINCE IT IS IRRELEVANT TO THIS CASE. INTERESTINGLY, THE TERM. 'BOOKS OF 'ACCOUNTS' IS NO WHERE MENTIONED IN THE SECTION AND 271-B. THE TERM USED IN BOTH THE SECTIONS IS 'ACCOUNTS' IS A RECORD OR STATEMENT OF FINANCIAL EXPENDITURE AND RECEIPTS RELATING TO A PARTICULAR P ERIOD OR PURPOSE. THEREFORE, IT IS NOT NECESSARY TO HAVE BOOKS OF ACC OUNTS TO GET THE ACCOUNTS AUDITED. FOR INSTANCES, THE ACCOUNTS MAY BE (A) AUDIT THROUGH EXPENSES. (B) AUDIT THROUGH PROJECTS UNDERTAKEN. (C) AUDIT THROUGH BANK STATEMENTS. THEREFORE, THE ASSESSEES CONTENTION IS WITHOUT ANY MERIT AND IRRELEVANT TO THE PRESENT FACTS. THEREFORE, IT IS CLEAR THAT THE ASSESSEE, WITHOUT REASONABLE CAUSE, FAILED TO COMPL ETE WITH THE ITA NO.229/CHNY/2019 - 4 - PROVISIONS OF SECTION 44-AB OF THE INCOME TAX ACT, 1961. HENCE, IT IS A FIT CASE FOR LEVY OF PENALTY U/S. 271B OF THE INCOME TAX ACT, 1961OF SUM EQUAL TO ONE-HALF PERCENTAGE OF THE GROS S RECEIPTS OR ONE FIFTY THOUSAND RUPEES WHICHEVER IS LESS (0.5% O F 4,76,00,080/- IS RS. 2,38,004/-). THEREFORE, A PENALTY OF RS. 1, 50,000/- U/S. 271B OF THE INCOME TAX ACT, 1961 IS HEREBY LEVIED ON THE ASSESSEE FOR THE NON COMPLIANCE OF SECTION 44-AB OF THE INCOME T AX ACT, 1961. AS DETAILED IN THE PENALTY ORDER, THERE IS NO REASO NABLE CAUSE MAINTAINING AND AUDITING THE HOOKS OF ACCOU NTS. THE ASSESSE HAS RELEVANT ACCOUNTS STATEMENTS TO BANK TH ROUGH A CHARTERED ACCOUNTANT. NO REASONS -WITH SUPPORTING E VIDENCES HAVE BEEN SUBMITTED FOR NON-COMPLIANCE TO SECTION 44AB. CLAIM THAT HE HAS BEEN PENALIZED UNDER SECTION 271A CANNOT ABSOLV E HIM FOR THE PENAL CONSEQUENCE U/S 271B. PENALTY IS CONFIRMED. 5. ON APPEAL, THE LD. CIT(A) HAS CONFIRMED THE ORDE R PASSED BY THE A.O. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT WHEN THE ASSESSEE HAS NOT MAINTAINED THE BOOKS OF A CCOUNTS, THE AUDITING OF ACCOUNT DOES NOT ARISE, THEREFORE, PENA LTY U/S. 271B OF THE ACT CANNOT BE LEVIED. IT IS ALSO SUBMITTED THAT IT IS NOT POSSIBLE FOR THE ASSESSEE TO GET ACCOUNTS AUDITED BECAUSE OF NON MAI NTENANCE OF BOOKS OF ACCOUNTS AND SUBMITTED THAT S. 271B OF THE ACT CANNOT BE IMPOSED. HE STRONGLY RELIED ON THE JUDGMENT OF THE HONBLE HIGH COURT OF ALLAHABAD IN THE CASE OF CIT V. BISUALI TRACTORS [2008] 299 ITR 219 (ALL.). 7. ON THE OTHER HAND, THE LD. D.R STRONGLY RELIED O N THE ORDER PASSED BY THE A.O AS WELL AS LD. CIT(A). ITA NO.229/CHNY/2019 - 5 - 8. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERI AL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. THE ASSESSEE IS A CIVIL CONTRACTOR EXECUTED VARIOUS PRO JECTS AND OFFERED HIS INCOME FOR TAXATION AT 4% ON ESTIMATE BASIS. THE A .O HAS ACCEPTED THE ESTIMATION OF INCOME MADE BY THE ASSESSEE. IN THE ASSESSMENT ORDER, THE A.O ONLY DISALLOWED 5% OF THE EXPENSES O N THE GROUND THAT NON SUBMISSION OF BILLS AND VOUCHERS. IT IS AN ADM ITTED FACT THAT THE ASSESSEE HAS NOT MAINTAINED BOOKS OF ACCOUNTS FOR T HAT THE ASSESSEE HAS FILED A DETAILED SUBMISSION BEFORE THE A.O AS W ELL AS LD. CIT(A). WHEN THE ASSESSEE IS NOT MAINTAINED THE BOOKS OF AC COUNTS, THE QUESTION OF AUDITING DOES NOT ARISE, BUT, IT DOES N OT MEAN THAT THE ASSESSEE NEED NOT MAINTAIN THE BOOKS OF ACCOUNTS. IT IS THE OBLIGATION ON THE PART OF THE ASSESSEE TO MAINTAIN THE BOOKS O F ACCOUNTS U/S. 44AA OF THE ACT. THE ASSESSEE HAS FAILED TO MAINTA IN THE BOOKS OF ACCOUNTS ON THAT THE A.O HAS POWER TO IMPOSE PENALT Y U/S. 271A OF THE ACT. HOWEVER, IN THE PRESENT CASE, THE A.O HAS NOT IMPOSED PENALTY U/S. 271A AND IMPOSED PENALTY U/S. 271B OF THE ACT. UNDER SIMILAR FACTS AND CIRCUMSTANCES OF THE CASE, THE HONBLE HI GH COURT OF ALLAHABAD HAS OBSERVED IN THE CASE OF CIT V. BISUALI TRACTORS (SUPRA), WHICH IS REPRODUCED AS UNDER: 5. WE HAVE HEARD SRI A.N. MAHAJAN, LEARNED STANDING COUNSEL APPEARING FOR THE REVENUE. NOBODY HAD APPEARED FOR THE RESPON DENT ASSESSEE. ITA NO.229/CHNY/2019 - 6 - 6. LEARNED STANDING COUNSEL FOR THE REVENUE SUBMITT ED THAT UNDER SECTION 44AB OF THE ACT IT IS OBLIGATORY ON THE PART OF THE ASSESSEE WHOSE TURNOVER EXCEEDED THE MAXIMUM LIMIT IN THE RELEVANT PREVIOUS YEAR, TO GET THE ACCOUNTS AUDITED AND FAILURE TO DO SO WOULD MAK E LIABLE SUCH PERSON FOR PENALTY AS PROVIDED UNDER SECTION 271B OF THE A CT. ACCORDING TO HIM NON-MAINTENANCE OF ACCOUNT, AS REQUIRED UNDER SECTI ON 44AA OF THE ACT ATTRACTS PENALTY PROVISIONS UNDER SECTION 271A OF T HE ACT BUT THAT WOULD NOT TAKE OUT THE JURISDICTION OF THE ASSESSING AUTH ORITY TO IMPOSE PENALTY UNDER SECTION 27IB OF THE ACT. THE SUBMISSION IS WH OLLY MISCONCEIVED. SECTION 44AB OF THE ACT READ AS FOLLO WS: 44AB. AUDIT OF ACCOUNTS OF CERTAIN PERSONS CARRYING ON BUSINESS OR PROFESSION. EVERY PERSON (A) CARRYING ON BUSINESS SHALL, IF HIS TOTAL SALES, TURNOVER OR GROSS RECEIPT AS THE CASE MAY BE IN BUSINESS EXCEED OR EX CEEDS FORTY LAKH RUPEES IN ANY PREVIOUS YEAR, OR (B) CARRYING ON PROFESSION SHALL, IF HIS GROSS RECE IPTS IN PROFESSION EXCEEDS TEN LAKH RUPEES IN ANY PREVIOUS YEAR, GET H IS ACCOUNTS OF SUCH PREVIOUS YEAR AUDITED BY AN ACCOUNTANT BEFORE THE SPECIFIED DATE AND OBTAIN BEFORE THAT DATE THE REPORT OF SUCH AUDIT IN THE PRESCRIBED FORM DULY SIGNED AND VERIFIED BY SUCH AC COUNTANT AND SETTING FORTH SUCH PARTICULARS AS MAY BE PRESCRIBED . THE PENALTY PROVISIONS ARE CONTAINED IN SECTIONS 27 1A AND 271B OF THE ACT WHICH ARE REPRODUCED BELOW: 271 A. FAILURE TO KEEP, MAINTAIN OR RETAIN BOOKS OF ACCOUNT, DOCUMENTS, ETC. 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 THEREUND ER, IN RESPECT OF ANY PREVIOUS YEAR OR TO RETAIN SUCH BOOKS OF ACCOUN T AND OTHER DOCUMENTS FOR THE PERIOD SPECIFIED IN THE SAID RULE S, THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY A SUM OF TWENTY FIVE THOUSAND RUPEES . 271B. FAILURE TO GET ACCOUNTS AUDITED. IF ANY PERSO N FAILS TO GET HIS ACCOUNTS AUDITED IN RESPECT OF ANY PREVIOUS YEAR OR YEARS RELEVANT TO AN ASSESSMENT YEAR OR FURNISH A REPORT OF SUCH AUDIT A S REQUIRED UNDER SECTION 44AB THE ASSESSING OFFICER MAY DIRECT THAT SUCH PERSON SHALL PAY, BY WAY OF PENALTY, A SUM EQUAL TO ONE HA LF PER CENT OF THE TOTAL SALES, TURNOVER OR GROSS RECEIPTS, AS THE CASE MAY BE, IN BUSINESS, OR OF THE GROSS RECEIPTS IN PROFESSION, IN SUCH PREVIOUS YEAR OR YEARS OR A SUM OF ONE HUNDRED THOUSAND RUPEES, WHICHEVER IS LESS. 7. IT MAY BE MENTIONED HERE THAT SEPARATE PENALTY H AS BEEN PROVIDED FOR NON-MAINTENANCE OF ACCOUNTS, I.E., UNDER SECTION 27 1A OF THE ACT AND FOR NOT GETTING THE ACCOUNTS AUDITED AND NOT FURNISHING THE AUDIT REPORT I.E., UNDER SECTION 271B OF THE ACT. IN THE PRESENT CASE, THE ASSESSING OFFICER DID NOT IMPOSE PENALTY UNDER SECTION 271A OF THE AC T AND INSTEAD PROCEEDED TO IMPOSE PENALTY UNDER SECTION 271B OF T HE ACT. IF A PERSON HAS NOT MAINTAINED THE ACCOUNTS BOOK OR ANY ACCOUNT S THE QUESTION OF ITS ITA NO.229/CHNY/2019 - 7 - AUDIT DOES NOT ARISE. IN SUCH AN EVENT THE IMPOSITI ON OF PENALTY UNDER THE PROVISION CONTAINED IN SECTION 271A FOR THE ALLEGED NONCOMPLIANCE OF SECTION 44AA MAY ARISE BUT THE PROVISIONS OF SEC TION 44AB DOES NOT GET VIOLATED IN CASE WHERE THE ACCOUNTS HAVE NOT BE EN MAINTAINED AT ALL AND, THEREFORE, PENAL PROVISIONS OF SECTION 271B WO ULD NOT APPLY. IT IS WELL SETTLED BY THE APEX COURT IN THE CASE OF CIT V. VEG ETABLE PRODUCTS LTD. (SC) THAT IF THE LANGUAGE IS AMBIGUOUS OR CAPABLE O F MEANINGS MORE THAN ONE, THEN WE HAVE TO ADOPT THAT INTERPRETATION WHIC H FAVOURS THE ASSESSEE, MORE PARTICULARLY SO BECAUSE THE PROVISIO N RELATES TO IMPOSITION OF PENALTY. THE CONSTITUTION BENCH OF THE APEX COUR T IN THE CASE OF J.K. SYNTHETICS LTD. V. CTO HAS HELD THAT PENALTY PROVIS ION IN A TAXING STATUTE HAS TO BE STRICTLY CONSTRUED. PENALTY IS EXIGIBLE O NLY WHERE A PERSON FALLS WITHIN THE FOUR CORNERS OF THE PENAL PROVISIONS OTH ERWISE NOT. FURTHER IN THE TAX MATTER INTERPRETATION IN FAVOUR OF THE ASSE SSEE HAS TO BE ADOPTED. WE MAY MENTION HERE THAT IN CASE WHERE THE RETURNS ARE NOT BEING FILED, THERE IS UNANIMOUS JUDICIAL VIEW THAT NO PENALTY CA N BE IMPOSED FOR CONCEALMENT OF INCOME AND THAT IS WHY THE PARLIAMEN T HAD TO MAKE SUITABLE AMENDMENT IN THE PENALTY PROVISION BY INSE RTING EXPLANATION 3 TO SECTION 271 OF THE ACT AND EXPLANATION 3 TO SECT ION 18 OF THE WEALTH TAX ACT, 1957. 8. THE QUESTION AS TO WHETHER AN ASSESSEE HAS CONCE ALED THE PARTICULARS OF HIS TURNOVER WHERE HE HAS NOT FILED THE RETURN C AME UP FOR CONSIDERATION BEFORE THE APEX COURT IN THE CASE OF NARAIN DAS SURAJBHAN V. CST (1968) 21 STC 104 (SC). THE APEX COURT WHILE CONSIDERING THE PROVISIONS REGARDING THE IMPOSITION OF PENALTY PROV IDED UNDER CLAUSE (B) OF SECTION 15A(1) OF THE U.P. SALES TAX ACT HAS HEL D AS FOLLOWS: IN OUR OPINION, CLAUSE (B) OF SECTION 15A(1) IS ATT RACTED AS SOON AS IT IS SHOWN THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF ITS TURNOVER OR DELIBERATELY FURNISHED INACCURATE P ARTICULARS OF SUCH TURNOVER IN THE RETURN FILED UNDER SECTION 7 OF THE ACT. IT IS MANIFEST THAT FROM THE GRAMMATICAL POINT OF VIEW THE WORDS ' INACCURATE PARTICULARS OF SUCH TURNOVER' IN CLAUSE (B) OF SECT ION 15A(1) REFER BACK TO CLAUSE (A) WHERE THE RETURN UNDER SECTION 7 IS SPECIFIED. IN OTHER WORDS, CLAUSE (B) REFERS TO DEFAULT IN RES PECT OF A RETURN FURNISHED UNDER SECTION 7 AND CANNOT POSSIBLY REFER TO ANY DEFAULT IN RESPECT OF ANYTHING DONE BY THE ASSESSEE IN A PR OCEEDING UNDER SECTION 21. AS THERE IS NO QUESTION OF FURNIS HING A RETURN OF A TURNOVER IN A PROCEEDING UNDER SECTION 21, THE AS SESSEE CANNOT BE GUILTY OF CONCEALING PARTICULARS OF ITS TURNOVER FROM, OR OF FURNISHING INACCURATE PARTICULARS IN A PROCEEDING U NDER SECTION 21. THE CONCEALMENT OR FURNISHING INACCURATE PARTICULAR S MUST BE IN THE RETURN FURNISHED UNDER SECTION 7. CLAUSE (A) OF SECTION 15A(1) DEALS WITH THE FAILURE OF THE ASSESSEE TO FU RNISH THE RETURN OF THE TURNOVER, WHICH HE IS REQUIRED TO FURNISH UN DER SECTION 7 OR THE FAILURE OF THE ASSESSEE TO FURNISH IT WITHIN TH E TIME ALLOWED OR IN THE MANNER PRESCRIBED. CLAUSE (B) OF THE SECTION DE ALS WITH THE CONCEALMENT OR INACCURATE FURNISHING OF PARTICULARS OF THE TURNOVER IN RESPECT OF WHICH THE RETURN WAS REQUIRED TO BE F ILED AND WHICH IS REFERRED TO IN CLAUSE (A)? 9. THIS COURT, IN THE CASE OF CST V. SHAHID HUSSAIN RAKESH KUMAR (1977) 39 STC 520 HAS HELD THAT IN A CASE WHERE NO RETURN HAS BEEN FILED ITA NO.229/CHNY/2019 - 8 - PENAL PROCEEDINGS CAN BE INITIATED ONLY UNDER SECTI ON 15A(1)(A) AND NOT 15A(1)(B) OF THE U.P. SALES TAX ACT, 1948. IT HAS H ELD AS FOLLOWS: A PERUSAL OF THE TWO PARTS CLEARLY ESTABLISHES THAT SECTION 15A(1)(A) APPLIES IN A CASE WHERE THE DEALER HAS FA ILED TO FURNISH THE RETURN UNDER SECTION 7, WHERE SUB-CLAUSE (B) AP PLIES IN A CASE WHERE THE RETURN HAS BEEN FURNISHED BUT THERE IS DE LIBERATE CONCEALMENT OR THE RETURN FURNISHED IS INACCURATE. THE LEGISLATURE HAS IN THE TWO SUB-CLAUSES MENTIONED TWO DIFFERENT CATEGORIES AND HAS ALSO LAID DOWN DIFFERENT PENALTIES IN SUBCLAUSE (C). THEY DEAL WITH DIFFERENT SITUATIONS, AND THE SALES TAX OFFICE R IN THIS CASE PROCEEDED UNDER SECTION 15A(1)(A) AND FROM THE AMOU NT OF PENALTY IMPOSED, IT IS CLEAR THAT HE EXERCISED HIS JURISDICTION UNDER SECTION 15A(1)(B) AND NOT UNDER SECTION 15A(1 )(A). THE LANGUAGE OF THE SECTION CLEARLY INDICATES THAT IN A CASE WHERE NO RETURN HAS BEEN FILED PENAL PROCEEDINGS CAN BE INIT IATED ONLY UNDER SECTION 15A(1)(A). THERE ARE OBSERVATIONS IN A DECISION OF THE SUPREME COURT IN NARAIN DAS SURAJBHAN V. CST WH ICH SUPPORTS THE VIEW THAT WE ARE TAKING. 10. IN THE CASE OF THOPPIL KUTTI EROOR V. CIT THE K ERALA HIGH COURT WHILE CONSIDERING THE QUESTION OF IMPOSITION OF PENALTY U NDER SECTION 38(1)(C) OF THE COCHIN INCOME TAX ACT WHICH PROVIDES IMPOSITION OF PENALTY FOR CONCEALMENT OR FOR FURNISHING INACCURATE PARTICULAR S HAS HELD AS FOLLOWS: IT IS IMPOSSIBLE TO SAY THAT WHEN A PERSON HAS FAIL ED TO FURNISH ANY RETURN AT ALL WHAT HE HAS DONE IS TO CONCEAL THE PA RTICULARS OF INCOME OR TO DELIBERATELY FURNISH INACCURATE PARTIC ULARS OF SUCH INCOME WITHIN THE MEANING OF CLAUSE (C) OF SECTION 38(1) OF THE ACT. WE ENTERTAIN NO DOUBT THAT THE OFFENCE IN SUCH A CASE SHOULD BE CONSIDERED AS ONE COMING UNDER CLAUSE (A) AND NO T UNDER CLAUSE (C) OF SUB-SECTION (1) OF SECTION 38. 11. IN THE CASE OF S. NARAYANAPPA & BROS. V. CIT TH E MYSORE HIGH COURT HAS HELD AS FOLLOWS: WHAT WAS URGED BEFORE US WAS THAT IN A CASE WHERE A N ASSESSEE HAS FURNISHED NO RETURN AT ALL BEFORE THE INCOME TA X OFFICER, IT SHOULD BE PRESUMED FOR THE PURPOSES OF SECTION 28(1 )(B) THAT HE HAS FURNISHED A RETURN OF HIS INCOME INTIMATING THE INCOME TAX OFFICER THAT HIS INCOME IS NIL IT SEEMS TO ME THAT THE LANGUAGE OF SECTION 28(1) DOES NOT ADMIT OF ANY SUCH CONSTRU CTION SINCE THE CLEAR REQUIREMENT OF THE PROVISIONS OF THIS SUB-SEC TION IS THAT AN ASSESSEE ON WHOM A PENALTY IS PROPOSED TO BE IMPOSE D UNDER SECTION 28(1)(B) SHOULD HAVE IN THE FIRST INS TANCE FURNISHED HIS RETURN. THAT, IN MY OPINION, IS THE ORDINARY AN D GRAMMATICAL MEANING OF THE WORDS OCCURRING IN THE ACT. TO INTER PRET THE LANGUAGE OF THIS PROVISION IN THE MANNER SUGGESTED BY THE LEARNED GOVERNMENT PLEADER WOULD, IN MY OPINION, BE TOO ART IFICIAL AND TOO FAR-FETCHED TO COMMEND ITSELF FOR ACCEPTANCE. ALTHO UGH IT IS TRUE THAT THE PROVISIONS OF A STATUTE LIKE THOSE CONTAIN ED IN SECTION 28(1)(B) HAVE TO RECEIVE TO CONSTRUCTION SO AS TO P ROMOTE THE OBJECT OF THE STATUTE, IT IS CLEAR THAT WHEN WE INT ERPRET A PENAL PROVISION LIKE THAT CONTAINED IN SECTION 28(1)(B), THE INTERPRETATION ITA NO.229/CHNY/2019 - 9 - WE SHOULD PLACE UPON IT MUST ACCORD WITH REASON AND JUSTICE AND MUST BE IN ACCORDANCE WITH THE PLAIN ORDINARY AND R ATIONAL MEANING OF THE WORDS CONTAINED IN THOSE PROVISIONS. SO INTERPRETED, I WOULD NOT, IN MY OPINION, BE RIGHT I N PLACING ON SECTION 28(1)(B) THE CONSTRUCTION FOR WHICH THE LEARNED GOVERNMENT PLEADER CONTENDS. 12. THE MADRAS HIGH COURT IN THE CASE S. SANTHOSA N ADARV. FIRST ADDL ITO HAS GONE TO THE EXTENT THAT A VOLUNTARY RETURN FILED AFTERTHE PERIOD OF FOUR YEARS FROM THE CLOSE OF THE ASSESSMENT YEAR IS NOT A VALID RETURN AND SUCH A CASE SHOULD BE REGARDED AS IF NO RETURN HAS BEEN FILED AT ALL AND IT CANNOT BE SAID IN SUCH A CASE THAT THERE HAS BEEN A CONCEALMENT OF THE PARTICULARS OF INCOME OR DELIBERATE FURNISHING OF I NACCURATE PARTICULARS AND SECTION 28(1)(C) OF THE INCOME TAX ACT, 1922 WO ULD NOT BE APPLICABLE. THE MADRAS HIGH COURT HAS HELD AS FOLLO WS: WHEN WE COME TO SECTION 28(1)(C), IT DEALS SPECIFIC ALLY WITH THE CONCEALMENT OF 'PARTICULARS' OF INCOME OR THE DELIB ERATE FURNISHING OF INACCURATE 'PARTICULARS' OF INCOME. IN THE SETTI NG IN WHICH THIS SUB-SECTION FINDS PLACE IT IS IMPOSSIBLE TO CONSTRU E SECTION 28(1)(C) EXCEPT AS RELATING TO A CASE WHERE A RETUR N HAS BEEN FILED BUT FROM WHICH RETURN PARTICULARS OF INCOME HAVE BE EN OMITTED OR ANY PARTICULARS HAVE BEEN DELIBERATELY INACCURATELY FURNISHED. THE USE OF THE EXPRESSION 'PARTICULARS OF HIS INCOME' A ND 'PARTICULARS OF SUCH INCOME' WOULD BE WHOLLY INAPPOSITE IN A CASE W HERE NO RETURN HAS AT ALL BEEN FILED; SUCH A CASE WOULD CLE ARLY COME WITHIN THE SCOPE OF SECTION 28(1)(A) ALONE. 13. THIS COURT IN CWT V. YADU RAJ NARAIN SINGH ALSO TAKEN THE SAME VIEW. IT HAS HELD AS FOLLOWS: THUS APPLYING THE STRICT CONSTRUCTION OF PENALTY PR OVISIONS CONTAINED INCLAUSE (1) OF SUB-SECTION (C) OF SECTIO N 18 OF THE ACT, WE FIND THAT PRIOR TOTHE AMENDMENT IN EXPLANATION 3 BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987 WITH EFFECT FROM 1-4 -1989 IN A CASE WHERE THE PERSON WHO HAS PREVIOUSLY BEEN ASSES SED UNDER THE ACT DOES NOT FILE ANY RETURN IN RESPONSE TO THE NOTICE OR EVEN WHERE TIME FOR FILING THE RETURN HAS EXPIRED HAS NO T FILED ANY RETURN THERE CANNOT BE ANY CONCEALMENT FOR WHICH PENALTY P ROVISION CAN BE IMPOSED. IN VIEW OF THE FOREGOING DISCUSSIONS, W E ARE OF THE CONSIDERED OPINION THAT IN THE PRESENT CASE THE RES PONDENT ASSESSEE HAS NOT CONCEALED THE PARTICULARS OF HIS I NCOME FOR WHICH WEALTH NO PENALTY UNDER CLAUSE (1) OF SUB-SEC TION (C) OF SECTION 18 OF THE ACT IS EXIGIBLE. 14. THEREFORE, SECTION 27IB OF THE ACT IS NOT ATTRA CTED IN A CASE WHERE NO ACCOUNT HAS BEEN MAINTAINED AND INSTEAD RECOURSE UN DER SECTION 271A CAN BE TAKEN. 15. IN VIEW OF THE FOREGOING DISCUSSIONS WE ANSWER THE QUESTION REFERRED TO US IN THE AFFIRMATIVE, I.E., IN FAVOUR OF THE AS SESSEE AND AGAINST THE REVENUE. THERE WILL BE NO ORDER AS TO COSTS. ITA NO.229/CHNY/2019 - 10 - 9. THE LD. D.R HAS NOT PLACED ANY MATERIAL TO SHOW THAT THE JUDGMENT OF THE HONBLE HIGH COURT OF ALLAHABAD IN THE CASE OF CIT V. BISUALI TRACTORS (SUPRA) HAS BEEN REVERSED BY HONBLE SUPREME COURT. FURTHER, THE LD. D.R HAS NOT PLACED THE DEC ISION OF HONBLE JURISDICTIONAL HIGH COURT, WHICH SUPPORTS THE CASE OF THE A.O. 10. IN THIS CASE, THE ASSESSEE HAS NOT MAINTAINED A NY BOOKS OF ACCOUNTS AND THE ASSESSEE HAS OFFERED AN INCOME ON ESTIMATE BASIS AND THE SAME IS ACCEPTED BY THE A.O. KEEPING IN VIE W OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO RESPEC TFULLY FOLLOWING THE DECISION OF THE HONBLE HIGH COURT OF ALLAHABAD IN THE CASE OF CIT V. BISUALI TRACTORS (SUPRA), PENALTY U/S. 271B IMPOSED BY THE A.O IN TH IS CASE CANNOT BE SUSTAINED. THEREFORE, THE PENALTY IM POSED BY THE A.O AND CONFIRMED BY THE LD. CIT(A) IS CANCELLED. THUS , THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 06 TH OCTOBER, 2021 IN CHENNAI. SD/- SD/- ( ) (G. MANJUNATHA) / ACCOUNTANT MEMBER ( ) (V. DURGA RAO) /JUDICIAL MEMBER /CHENNAI, /DATED: 06 TH OCTOBER, 2021 . EDN/- ITA NO.229/CHNY/2019 - 11 - / COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT 5. /DR 6. /GF