Thirupathy Construction Company, Hosur V. DCIT, Salem

ITA 2876/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86373 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 24-11-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR BHUSARI
• Assessee Lawyers: S SRIDHAR
• Keywords: Rejection of books of accounts; Reasonable cause

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . , ! # $ , % & BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NOS. 2870, 2871 & 2876/MDS/2014 ( / ASSESSMENT YEARS: 2007-08, 2009-10 & 2008-09) M/S. THIRUPATHY CONSTRUCTION COMPANY, H-5, AVALAPALLI HOUSING BOARD, BAGALUR MAIN ROAD, HOSUR-636 109. VS DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, SALEM-636 007. PAN: AAGFT6153K ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. S.SRIDHAR, ADVOCATE /RESPONDENT BY : DR.BHUSARI, CIT /DATE OF HEARING : 4 TH MARCH, 2015 /DATE OF PRONOUNCEMENT : 27 TH MARCH, 2015 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: ALL THESE THREE APPEALS ARE FILED BY THE ASSESSEE AGAINST DIFFERENT ORDERS OF COMMISSIONER OF INCOM E TAX (APPEALS), SALEM DATED 22.09.2014 FOR THE ASSESSME NT YEARS 2007-08, 2009-10 AND 2008-09 RESPECTIVELY IN CONFIRMING PENALTY LEVIED UNDER SECTION 271A OF THE ACT. 2. COUNSEL FOR THE ASSESSEE SUBMITS THAT ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271A OF THE AC T FOR ALL THESE THREE ASSESSMENT YEARS, AS THE ASSESSEE DID N OT MAINTAIN BOOKS OF ACCOUNTS AS PER SECTION 44AA OF T HE ACT. 2 ITA NOS.2870, 2871 & 2876/MDS/2014 COUNSEL FOR THE ASSESSEE SUBMITS THAT THOUGH THE AS SESSEE DID NOT MAINTAIN BOOKS OF ACCOUNT, STILL THE INCOME OF THE ASSESSEE WOULD BE ESTIMATED AT 10% OF TOTAL TURNOVE R OF THE ASSESSEE. THEREFORE, THE COUNSEL SUBMITS THAT THERE IS NO FINDING GIVEN BY THE ASSESSING OFFICER THAT HE WAS UNABLE TO COMPUTE THE INCOME FROM BUSINESS AND THE INCOME WAS COMPUTED ON APPLICATION OF FLAT RATE AND THEREFORE, PENALTY CANNOT BE LEVIED FOR NON-MAINTENANCE OF BOOKS OF AC COUNTS. COUNSEL FOR THE ASSESSEE FURTHER SUBMITS THAT PARTN ERS OF THE ASSESSEE FIRM ARE NOT WELL EDUCATED AND THEY ARE I GNORANT OF LAWS, THUS THERE IS A REASONABLE CAUSE FOR NOT MAIN TAINING BOOKS OF ACCOUNT. 3. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTS THE ORDERS OF LOWER AUTHORITIES IN IMPOSING PENALTY UND ER SECTION 271A OF THE ACT FOR NON-MAINTENANCE OF BOOKS OF ACC OUNT. DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITS THAT TH IS IS A SEARCH CASE, PURSUANT TO SEARCH ASSESSEE ADMITTED H UGE INCOME AND THERE IS NO REASON AS TO WHY ASSESSEE D ID NOT MAINTAIN BOOKS OF ACCOUNT WHEN THE ASSESSEE IS HAVI NG RETURNED HUGE INCOME OF ` 57,52,310/- , ` 23,36,130 AND 3 ITA NOS.2870, 2871 & 2876/MDS/2014 ` 11,76,700/- FOR THE ASSESSMENT YEARS 2007-08, 2008 -09 AND 2009-10 RESPECTIVELY. 4. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES. THE ASSESSEE CONTENDED BEFORE THE ASSESSING OFFICER THAT PARTNERS WERE NOT WELL EDUCATED AND THEY ARE IGNORA NT OF LAWS AND THEREFORE THEY COULD NOT MAINTAIN BOOKS OF ACCO UNTS AS PER SECTION 44AA OF THE ACT. HOWEVER, THE ASSESSIN G OFFICER DID NOT CONVINCE WITH THE REPLY SUBMITTED BY THE AS SESSEE AND LEVIED PENALTY UNDER SECTION 271A OF THE ACT FO R ALL THESE THREE ASSESSMENT YEARS. ON FURTHER APPEAL, COMMISS IONER OF INCOME TAX (APPEALS) SUSTAINED PENALTY FOR ALL THE THREE ASSESSMENT YEARS OBSERVING AS UNDER:- 6.1. IN THE ASSESSMENT ORDER, THE ASSESSING OFFI CER HAS MADE THE FOLLOWING TABLE. AY RETURNS OF INCOME U/S.139 RETURNS OF INCOME ADDITIONAL INCOME OFF U/S.153A/153C OFFERED U/S.153A/153C DATE OF FILING INCOME DATE OF FILING INCOME (RS.) RETURNED RETURNED 05-06 --- --- 30.11.2010 NIL --- 06-07 --- --- 24.12.2010 63,86,610 63,86,610 07-08 --- --- 24.12.2010 57,52,310 57,52,310 08-09 --- --- 24.12.2010 23,36,130 23,36,130 09-10 --- --- 24.12.2010 11,76,700 11,76,700 4 ITA NOS.2870, 2871 & 2876/MDS/2014 6.2. IN VIEW OF THE FACT THAT THE ASSESSED INCOME (AND ALSO THE RETURNED INCOME) IS RS.63,81,610/- T HE LIABILITY OF THE BOOKS OF ACCOUNTS TO BE MAINTAINED AS PER SECTION 44AA IS ESTABLISHED. IT IS ALSO A FACT THAT THE APPELLANT HAS NOT MAINTAINED THE BOOKS OF ACCOUNTS. 6.3. THE APPELLANT ARGUES THAT THE MAINTENANCE OF BOOKS SHOULD BE TO ENABLE THE ASSESSING OFFICER TO COMPUTE THE TOTAL INCOME IN ACCORDANCE WITH THE PROVISION OF THE INCOME TAX ACT. THERE HAS BEEN NO FINDING BY THE ASSESSING OFFICER THAT HE WAS UNABLE TO COMPUTE THE INCOME FROM BUSINESS. THE AUTHORIZED REPRESENTATIVE RELIES ON THE FOLLOWI NG CITATIONS. I). [2007] 291 ITR (AT) 226 (CHD), AND II). [2008] 308 ITR (AT) 310 (COCHIN). 6.4. I HAVE PERUSED THE ABOVE TWO CITATIONS OF THE APPELLANT. BOTH THE CASES ARE FACTUALLY DISTINGUISH ABLE FROM THE CASE OF THE APPELLANT. IN THE CASE OF HON'BLE CHANDIGARH BENCH, THE APPELLANT WAS MAINTAINING BOOKS OF ACCOUNTS, BUT TH E ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNTS AN D ESTIMATED THE PROFIT. THE RATIO OF THE JUDGMENT ESSENTIALLY IS THAT, THE APPELLANT HAS TO SUFFER TH E CONSEQUENCES IN ASSESSMENT FOR NON-MAINTENANCE BY WAY OF ADDITIONS, BUT IT CANNOT BE A GROUND FOR PENALTY U/S.271A FOR NON-MAINTENANCE OF BOOKS. IN THE PRESENT CASE THE APPELLANT HAS NOT MAINTAINED ANY BOOKS AND THE QUESTION OF REJECTION DOES NOT ARRIVE. IN THE SECOND CITATION RELIED UPON BY THE APPELLANT ALSO THE FACTS ARE DIFFERENT. IN THE CASE RELIED UPON THE ORDER IMPOSING PENALTY U/S.271A HAS BEEN PASSED BEFORE FINALIZATION OF THE ASSESSMENT ORDER ITSELF. IN THE PRESENT CASE THE ORDER HAS BEE N FORMULATED MUCH AFTER THE ASSESSMENT ORDER, AFTER GIVING SUFFICIENT OPPORTUNITY TO THE APPELLANT. 6.5. IN VIEW OF THE ABOVE, IT IS HELD THAT THE ASSESSING OFFICER IS CORRECT IN IMPOSITION OF THE PENALTY AND THE GROUNDS OF THE APPELLANT ARE NOT ALLOWED. 5 ITA NOS.2870, 2871 & 2876/MDS/2014 5. ON GOING THROUGH THE ABOVE ORDER, WE DO NOT FIND ANY GOOD REASON TO REVERSE THE FINDINGS OF THE COMMISSI ONER OF INCOME TAX (APPEALS) FOR CANCELLING THE PENALTY LE VIED UNDER SECTION 271A OF THE ACT FOR THESE THREE ASSESSMENT YEARS. WE ALSO DO NOT FIND ANY VALID REASON FOR NOT MAINTA INING BOOKS OF ACCOUNTS BY THE ASSESSEE. THUS, WE SUSTAIN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) I N CONFIRMING THE PENALTY LEVIED UNDER SECTION 271A OF THE ACT FOR ALL THESE THREE ASSESSMENT YEARS. 6. IN THE RESULT, ALL THESE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH DAY OF MARCH, 2015 AT CHENNAI. SD/- SD/- ( . ) ( ( *+ ) ( A.MOHAN ALANKAMONY ) ( CHALLA NAGENDRA PRASAD ) - / ACCOUNTANT MEMBER * - / JUDICIAL MEMBER * /CHENNAI, / /DATED 27 TH MARCH, 2015 SOMU 12 32 / COPY TO: 1. APPELLANT 2. RESPONDENT 3. 4 () /CIT(A) 4. 4 /CIT 5. 2 7 /DR 6. /GF .