SHRI SHARAD KANKARIA, JAIPUR V. INCOME TAX OFFICER, WARD-6-1, JAIPUR

ITA 262/JPR/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7828 (ITAT-JAIPUR)
• Duration Of Justice: 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 27-02-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K C GUPTA
• Keywords: Reasonable cause
• Section: 143(3); 274; 271B; 44AB

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, A JAIPUR JH LAANHI XKSLKBZ] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SING H YADAV, AM VK;DJ VIHY LA- @ ITA NO. 262 & 263/JP/2019 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2011-12 SHRI SHARAD KANKARIA EF-54, MALVIYA INDUSTRIAL AREA JAIPUR 302 017 CUKE VS. THE ITO WARD- 6(1) JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ACOPK 3049 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI ROHAN SOGANI, CA & SHRI RAJEEV SOGANI, CA JKTLO DH VKSJ LS @ REVENUE BY : SHRI K.C. GUPTA, (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 13/01/2020 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 23/01/2020 VKNS'K@ ORDER PER SANDEEP GOSAIN, JM BOTH THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINST SEPARATE ORDERS OF THE LD. CIT(A), AJMER DATED 10-12-2018 AN D 27-12-2018 FOR THE ASSESSMENT YEAR 2011-12 IN THE MATTER OF CONFIRMIN G PENALTY U/S 271A AND 271B OF THE I.T. ACT, 1961 RESPECTIVELY. THE ASSES SEE HAS RAISED THE FOLLOWING GROUND IN THE RESPECTIVE APPEALS. ITA NO. 262/JP/2019 SHRI SHARAD KANKARIA VS ITO, WARD- 6(1), JAIPUR 2 ITA NO. 262/JP/2019 A.Y. 2011-12 U/S 271A IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTIONS OF A O IN LEVYING PENALTY OF RS. 25,000/- U/S 271A. THE ACTION OF TH E LD. CIT(A) IS ILLEGAL, UNJUSTIFIED, ARBITRARY AND AGAINST THE FAC TS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY QUASHING THE SAID P ENALTY OF RS. 25,000/- ITA NO. 263/JP/2019 A.Y. 2011-12 U/S 271B IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTIONS OF A O IN LEVYING PENALTY OF RS. 1,50,000/- U/S 271B. THE ACTION OF THE LD. CIT(A) IS ILLEGAL, UNJUSTIFIED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY QUASHING THE SAID P ENALTY OF RS. 1,50,000/- 2.1 THE SOLITARY GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS REGARDING CONFIRMING THE PENALTY OF RS. 25,000/- U/S 271A OF THE ACT BY THE LD. CIT(A). IN THIS APPEAL OF THE ASSESSEE, IT IS NOTED THAT THE AO HAS IMPOSED THE PENALTY OF RS. 25,000/- BY OBSERVING AS UNDER:- 4. I HAVE CONSIDERED THE MATERIAL AVAILABLE ON RECORD AND THE ASSESSEE'S ABOVE SUBMISSION. THE REP LY OF THE ASSESSEE IS NOT ACCEPTABLE. I AM SATISFIED THAT THE ASSESSEE HAS WILLFULLY AVOIDED TO MAINTAIN THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS WHICH MAY ENABLE THE AO TO COMPUTE HIS TO TAL INCOME AND ACCORDINGLY THE ASSESSEE IS LIABLE FOR I MPOSING PENALTY AS ENVISAGED U/S 271A R.W.S. 274 OF I.T. AC T, 1961. ACCORDINGLY, I HOLD THE ASSESSEE IS LIABLE FOR IMPO SING PENALTY OF RS. 25,000/- AND AS SUCH PENALTY OF RS. 25,000/- IS HEREBY IMPOSED U/S 271A R.W.S. 274 OF THE I.T. ACT, 1961. ITA NO. 262/JP/2019 SHRI SHARAD KANKARIA VS ITO, WARD- 6(1), JAIPUR 3 2.2 IN FIRST APPEAL, THE LD. CIT(A) HAS CONFIRMED T HE ACTION OF THE AO BY OBSERVING AS UNDER:- 4.3 I HAVE GONE THROUGH THE PENALTY ORDER, STATEM ENT OF FACTS, GROUNDS OF APPEAL AND WRITTEN SUBMISSION CAREFULLY. IN VIEW OF THE FACTS DISCUSSED BY THE AO IN THE PEN ALTY ORDER, I AM OF THE CONSIDERED OPINION THAT THE GROSS RECEI PTS FROM THE BUSINESS OF THE APPELLANT WAS MORE THAN RS. 10 LACS AND THE ASSESSEE WAS REQUIRED TO MAINTAIN THE BOOKS OF ACCOUNT AS PROVIDED U/S 44A. THE APPELLANT HAS FAILED T SHO W THAT THERE WAS ANY REASONABLE CAUSE FOR NON-MAINTENANCE OF BOOKS OF ACCOUNTS. THEREFORE, THE PENALTY OF RS.25, 000/- LEVIED BY THE AO U/S 271A IS HEREBY CONFIRMED. 2.3 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. BRIEF FACTS OF THE CASE ARE TH AT THE ASSESSEE FILED ITS RETURN OF INCOME ON 3-2-2012 DECLARING TOTAL INCOME OF RS. 1,85,410/- AND THE ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLE TED ON 5-03-2014 AT AN INCOME OF RS. 7,82,150/-. AS PER THE DETAILS AVA ILABLE WITH THE DEPARTMENT, THE ASSESSEE HAD RECEIVED AGGREGATE REC EIPT FROM BUSINESS OF RS. 5,82,860/- DURING THE YEAR UNDER CONSIDERATION. THE AO NOTED THAT THE ASSESSEE HAS SHOWN THE INCOME FROM BUSINESS UNDER T HE CATEGORY OF NO BOOKS CASE. THE AO FURTHER NOTED THAT AS PER THE PR OVISIONS OF SECTION 44AAA(2) OF THE ACT EVERY PERSON CARRYING ON BUSINE SS OR PROFESSION AND THE GROSS RECEIPTS EXCEEDS RS. 10 LACS IN THE JUST PRECEDING YEAR OR IN CASE ITA NO. 262/JP/2019 SHRI SHARAD KANKARIA VS ITO, WARD- 6(1), JAIPUR 4 WHERE THE BUSINESS OR PROFESSION IS NEWLY SET UP IN ANY PREVIOUS YEAR AND HIS INCOME FROM BUSINESS OR PROFESSION IS LIKELY TO EXCEED RS. 1.20 LACS OR THE TOTAL SALES, TURNOVER OR GROSS RECEIPTS AS THE CASE MAY BE LIKELY TO EXCEED RS. 10 LACS IS MANDATORY TO KEEP AND MAINTA IN SUCH BOOKS OF ACCOUNTS AND OTHER DOCUMENTS WHICH MAY ENABLE THE A O TO COMPUTE HIS TOTAL INCOME IN ACCORDANCE WITH THE PROVISIONS OF T HIS ACT. THE AO FURTHER NOTED THAT AS THE GROSS RECEIPTS OF THE AS SESSEE FROM BUSINESS WERE MORE THAN RS. 10 LACS THEREFORE, THE ASSESSEE WAS R EQUIRED TO MAINTAIN BOOKS OF ACCOUNT AND OTHER DOCUMENTS WHICH MAY ENAB LE THE AO TO COMPUTE HIS TOTAL INCOME. IN THIS CASE THE AO NOTED THAT THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNTS AND AS SUCH HE HAS COMMITTED A DEFAULT WITHIN THE MEANING OF PROVISIONS OF SEC 44A A OF THE ACT WHICH MADE THE ASSESSEE LIABLE FOR PENALTY U/S 271A OF TH E ACT. THE AO THUS IMPOSED THE PENALTY OF RS. 25,000/- U/S 271A OF THE ACT WHICH WAS CONFIRMED BY THE LD. CIT(A). DURING THE COURSE OF H EARING, THE BENCH NOTED THAT THE ASSESSEE DID NOT MAINTAIN THE BOOKS OF ACCOUNT AS PROVIDED U/S 44AA OF THE ACT AS THE GROSS RECEIPTS OF THE AS SESSEE FROM BUSINESS WAS MORE THAN RS. 10 LACS. THE LD.AR OF THE ASSESSE E DID NOT ADVANCE ANY CONTROVERTING ARGUMENTS AGAINST THE FINDINGS OF TH E LOWER AUTHORITIES. IN ITA NO. 262/JP/2019 SHRI SHARAD KANKARIA VS ITO, WARD- 6(1), JAIPUR 5 VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CA SE, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). THUS THE SOLITARY GROUND OF THE ASSESSEE AS TO CONFIRMING OF PENALTY OF RS. 25, 000/- U/S 271A OF THE ACT BY THE LD. CIT(A) IS SUSTAINED. 3.1 THE SOLITARY GROUND OF THE ASSESSEE IS REGARDIN G CONFIRMING THE PENALTY OF RS.1,50,000/- BY THE LD. CIT(A) MADE BY THE AO U/S 271B OF THE ACT. THE FACTS AS EMERGES FROM THE LD. CIT(A)S ORDER ARE AS UNDER:- 4.3 I HAVE GONE THROUGH THE PENALTY ORDER, STATE MENT OF FACTS, GROUNDS OF APPEAL AND WRITTEN SUBMISSIONS CA REFULLY. IT IS SEEN THAT THE AO HAS LEVIED THE PENALTY HOLDING THA T THE APPELLANT HAD THE TURNOVER OF RS. 3,13,27,893/- IN TRADING OF SHARES. THE APPELLANT HAS CONTENDED THAT ONLY TRANSACTION OF RS . 48,61,090/- WERE DELIVERY BASED TRANSACTIONS AND THE TRANSACTIO NS OF RS. 2,60,85,508/- WERE NON-DELIVERY BASED TRANSACTIONS. THEREFORE, TURNOVER OF THE APPELLANT WAS ONLY RS. 59,61,001/-W HICH HAS BEEN WORKED OUT BY THE APPELLANT AS UNDER:- S.N. PARTICULARS AMOUNT (RS.) 1. INTRA-DAY TURNOVER COVERED UNDER SPECULATIVE TRA NSACTIONS 56994 2. INTRA-DAY TURNOVER OTHER THAN SPECULATIVE TRANSA CTIONS 42917 3. TURNOVER FOR SALE OF SHARES (DELIVERY BASED) 486 1090 TOTAL TURNOVER 4961001 CODE NO. AMOUNT (RS.) AMOUNT (RS.) AMOUNT (RS.) 2. SALE OF AN EQUITY SHARE IN A COMPANY 776991 4084 099 4861090 ITA NO. 262/JP/2019 SHRI SHARAD KANKARIA VS ITO, WARD- 6(1), JAIPUR 6 OR A UNIT OF AN EQUITY ORIENTED FUND, WHERE 02 (A) THE TRANSACTION OF SUCH SALE IS ENTERED INTO IN A RECOGNIZED STOCK EXCHANGE; AND (B) THE CONTRACT FOR THE SALE OF SUCH SHARE OR UNIT IS SETTLED BY THE ACTUAL DELIVERY OR TRANSFER OF SUCH SHARE OR UNIT 3. SALE OF AN EQUITY SHARE IN A COMPANY OR A UNIT OF AN EQUITY ORIENTED FUND, WHERE 03 (A) THE TRANSACTION OF SUCH SALE IS ENTERED INTO IN A RECOGNIZED STOCK EXCHANGE; AND (B) THE CONTRACT FOR THE SALE OF SUCH SHARE OR UNIT IS SETTLED BY THE ACTUAL DELIVERY OR TRANSFER OF SUCH SHARE OR UNIT 1908225 24177283 26085508 THE APPELLANT WAS PROVIDED MORE THAN OPPORTUNITY TO FURNISH DOCUMENTARY EVIDENCES IN SUPPORT OF HIS CLAIM THAT THE TURNOVER OF RS. 2,60,85,508/- WAS NON-DELIVERY BASED SPECULATIV E TRANSACTIONS BUT HE COULD NOT PRODUCE THE EVIDENCE TO PROVE HIS CONTENTION. THEREFORE, THE CONTENTION OF APPELLANT THAT ONLY T RANSACTIONS OF RS. 48,61,090/- WERE DELIVERY BASED TRANSACTIONS AND AL L OTHER TRANSACTIONS WERE NON-DELIVERY BASED SPECULATIVE TR ANSACTIONS CANNOT BE ACCEPTED. AS THE APPELLANT HAS FAILED TO GET HIS ACCOUNTS AUDITED U/S 44AB AND HE HAS ALSO FAILED TO SHOW THA T THERE WAS ANY REASONABLE CAUSE FOR NOT GETTING THE BOOKS OF ACCOU NTS AUDITED, THEREFORE, THE PENALTY OF RS.1,50,000/- MADE BY THE AO U/S 271B IS HEREBY CONFIRMED. 3.2 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE OUTSET OF THE HEARING T HE LD.AR OF THE ASSESSEE RELIED ON THE DECISION OF THE ITAT COORDINATE BENCH IN THE CASE OF ITA NO. 262/JP/2019 SHRI SHARAD KANKARIA VS ITO, WARD- 6(1), JAIPUR 7 ROSHNI DEVI VS ITO (ITA NO. ITA NO. 953/JP/2017 FOR THE ASSESSMENT YEAR 2011-12) PRAYING THAT THIS ISSUE IS COVERED VIDE ORDER DATED 16-05- 2018. THE OBSERVATION OF THIS BENCH IN DELETING THE PENALTY U/S 271B IS AS UNDER:- 17. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSU ED THE MATERIAL AVAILABLE ON RECORD. IT IS AN ADMITTED PO SITION THAT THE ASSESSEE HAS NOT MAINTAINED THE BOOKS OF ACCOUNTS I N RESPECT OF HER BUSINESS RUN IN NAME AND STYLE OF M/S JHARKHAND ELECTRIC & ELECTRONICS, THE TURNOVER OF WHICH WAS DETERMINED AT RS 96.10 LACS. BASIS THE SAME, WE HAVE UPHELD THE LEVY OF PE NALTY UNDER SECTION 271A FOR NON-MAINTENANCE OF BOOKS OF ACCOUN TS. ONCE THE PENALTY HAS BEEN LEVIED FOR NON-MAINTENANCE OF BOOK S OF ACCOUNTS, THERE CANNOT BE PENALTY AGAIN FOR NON-AUD IT OF BOOKS OF ACCOUNTS WHICH WERE NOT KEPT AT FIRST PLACE. IT IS C LEARLY A CASE OF IMPOSSIBILITY OF PERFORMANCE WHERE IT IS EXPECTED TH AT THE ASSESSEE SHOULD GET HER BOOKS OF ACCOUNTS AUDITED WH EN IT IS A KNOWN AND ADMITTED FACT THAT THERE ARE NO REGULAR BO OKS OF ACCOUNTS WHICH HAVE BEEN MAINTAINED AT FIRST PLACE. OUR VIEW IS FORTIFIED BY THE DECISION OF THE HONBLE GAUHATI HI GH COURT IN CASE OF RAJMAL PARSURAM TODI (SUPRA) WHEREIN IT WAS HELD TH AT WHEN A PERSON COMMITS AN OFFENCE BY NOT MAINTAINING THE BO OKS OF ACCOUNTS AS CONTEMPLATED UNDER SECTION 44AA, THE OF FENCE IS COMPLETE AND AFTER THAT, THERE CAN BE NO POSSIBILIT Y OF ANY OFFENCE AS CONTEMPLATED UNDER SECTION 44AB AND THEREFORE, T HE IMPOSITION OF PENALTY UNDER SECTION 271A IS ERRONEO US. IN THE RESULT, THE LEVY OF PENALTY UNDER SECTION 271B IS H EREBY DELETED. SINCE THE ISSUE IN QUESTION IS COVERED BY THE DECIS ION OF THE ITAT COORDINATE BENCH IN THE CASE OF ROSHNI DEVI VS ITO (SUPRA), THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THIS BENCH O N THE ISSUE OF DELETING ITA NO. 262/JP/2019 SHRI SHARAD KANKARIA VS ITO, WARD- 6(1), JAIPUR 8 THE PENALTY U/S 271B OF THE ACT, WE DIRECT THE AO T O DELETE THE PENALTY OF RS. 1,50,000/- CONFIRMED BY THE LD. CIT(A). THUS TH E SOLITARY GROUND OF THE ASSESSEE IS ALLOWED. 4.0 IN THE RESULT, THE APPEALS OF THE ASSESSEE IN T HE CASE OF PENALTY U/S 271A IS DISMISSED AND IN THE CASE OF PENALTY U/S 2 71B IS ALLOWED WITH NO ORDER AS TO COST ORDER PRONOUNCED IN THE OPEN COURT ON 23 /01/2020 . SD/- SD/- FOE FLAG ;KNO LANHI XKSLKBZ (VIKRAM SINGH YADAV) (SANDEEP GOSAIN) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 23 /01/2020. *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI SHARAD KANKARI, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT-THE ITO, WARD- 6(1), JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 4. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR . 5. XKMZ QKBZY@ GUARD FILE {ITA NO. 262/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSTT. REGISTRAR