Smt. Shanta Singhvi, Sojat City, Pali. V. ITO, Ward-3, Pali.

ITA 293/JODH/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5724 (ITAT-JODHPUR)
• Duration Of Justice: 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 07-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bonafide belief

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI N.K.SAINI, VICE PRESIDENT AND SHRI N.K. CHOUDHRY, JUDICIAL MEMBER ITA NOS. 293 & 294/JODH/2018 (ASSESSMENT YEAR -2012-13 SMT. SHANTA SINGHVI, SOJAT CITY, PALI VS THE ITO, WARD-3, PALI (APPELLANT) (RESPONDENT) PAN: ANPOS8818F REVENUE BY SH. P.K. SINGI, DR ASSESSEE BY SH AMIT KOTHARI, CA DATE OF HEARING 03.05.2019 DATE OF PRONOUNCEMENT 03.05.2019 O R D E R PER N.K. SAINI, V.P. : THESE TWO APPEALS BY THE ASSESSEES ARE DIRECTED AGA INST THE SEPARATE ORDERS EACH DATED 26.04.2018 OF THE CIT(A)-1, JODHP UR FOR THE A.Y. 2012-13. 2. IN THE APPEAL IN ITA NO. 293/JODHPUR/2018 FOR THE A.Y. 2012-13, THE ONLY GRIEVANCE OF THE ASSESSEE RELATES TO THE SUSTE NANCE OF THE PENALTY LEVIED 2 BY THE ASSESSING OFFICER U/S 271A OF THE INCOME TAX ACT, 1961 [IN SHORT' THE ACT']. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSIN G OFFICER LEVIED THE IMPUGNED PENALTY BY OBSERVING THAT THE ASSESSEE WAS ENGAGED IN BUSINESS OF TRADING OF SHARES, DERIVATIVES AND COMMODITIES ETC AND THE TURNOVER OF THE ASSESSEE WAS TO THE TUNE OF RS. 2,45,98,66,113/-. D URING THE YEAR UNDER CONSIDERATION THE ASSESSEE WAS REQUIRED TO MAINTAIN THE BOOKS OF ACCOUNT AS PER THE PROVISIONS OF SECTION 44AA OF THE ACT BUT T HE ASSESSEE DID NOT MAINTAIN THE BOOKS OF ACCOUNT. HE, THEREFORE, IMPO SED THE PENALTY OF RS. 25,000/-. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND FURNISHED THE WRITTEN SUBMISSIONS WHICH HAD BEEN IN CORPORATED IN PAR 5 OF THE IMPUGNED ORDER. FOR THE SAKE OF REPETITION, THE SAM E ARE NOT REPRODUCED HEREIN. 5. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE SUSTAINED THE PENALTY BY OBSERVING IN PARA 6 OF THE IMPUGNED ORDER AS UNDER:- 6. I HAVE CONSIDERED THE ASSESSMENT ORDER AND APPELLANTS SUBMISSIONS. I FIND THAT THE APPELLANT HAS DONE FREQUENT TRANSACTIONS WHILE TRADING IN COMMODITIES, STOCKS AND SHARES DURING THE YEAR UNDER CONSIDERATION DUE TO WHICH THE TOTAL TURNOVER OF THE APPELLANT HAS REACHED TO THE TUNE OF 3 RS.2,45,98,66,113/- WHICH IS IN EXCESS OF THE LIMIT PRESCRIBED UNDER SECTION 44AA AND 44AB OF THE ACT. THE APPELLA NT WAS REQUIRED TO MAINTAIN THE BOOKS OF ACCOUNTS DURING T HE YEAR UNDER CONSIDERATION. THE AR OF THE APPELLANT PLEAD ED THAT THE APPELLANT HAS NOT MADE SUCH TRADING TRANSACTION S EITHER IN THE PAST YEARS OR SUBSEQUENT YEARS TO THE YEAR UNDE R CONSIDERATION, THEREFORE, THE SAME SHOULD NOT BE TE RMED AS THE APPELLANTS BUSINESS ACTIVITIES. THE LD. AR OF THE ASSESSEE ALSO SUBMITTED THAT DUE TO IGNORANCE, THE APPELLATE WAS IN BONAFIDE BELIEF THAT THERE IS NO REQUIREMENT OF MAI NTENANCE OF BOOKS OF ACCOUNTS. HOWEVER, I AM NOT INCLINED TO AG REE WITH THE SUBMISSIONS OF LD. AR. I FIND THAT THE APPELLAN T DEALING WITH DIFFERENT STOCK EXCHANGES AND HAVING TRANSACTI ONS OVER RS. 245 CRORE CANNOT BE TREATED AS IGNORANT PERSON NOT AWARE OF THE FACT THAT SHE DID NOT REQUIRE TO MAINTAIN TH E BOOKS OF ACCOUNTS. NOR IT CAN BE ACCEPTED THAT THESE SHOULD NOT BE TREATED AS BUSINESS ACTIVITIES. NOR IT CAN BE ACCEP TED THAT THESE SHOULD NOT BE TREATED AS BUSINESS ACTIVITIES MERELY BECAUSE THE APPELLANT DID NOT HAVE SIMILAR TRANSACT ION EITHER IN THE PAST OR IN THE FUTURE. THIS STATUS ALONG, CA NNOT TURN SUCH ACTIVITIES OTHER THAN BUSINESS ACTIVITIES. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE INST ANT CASE, AND ALSO RELYING ON THE RATIO IN THE CASES OF RAJA BAHADUR KAMAKHYA NARAIN SINGH V CIT (77 ITR 253) & CIT VS. SUTLEJ COTTON MILLS SUPPLY AGENCY LTD (100 ITR 706), I FIN D THAT THE ASSESSING OFFICER IS PERFECTLY CORRECT IN IMPOSING PENALTY OF RS. 25,000/- UNDER SECTION 271A OF THE ACT IN THIS CASE FOR NOT MAINTAINING THE BOOKS OF ACCOUNTS DURING THE YEAR U NDER CONSIDERATION, THEREFORE, THE SAME IS HEREBY, SUSTA INED. THE 4 APPELLANT FAILS ON THIS ISSUE. THE GROUND NOS. 1 T O 5 RAISED BY THE APPELLANT REGARDING THIS ISSUE ARE, HEREBY, DIS MISSED. 6. NOW THE ASSESSEE IS IN APPEAL. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE, LD. COUNSEL FOR THE ASSESSEE ALTHOUGH SUBMITTED THAT THE PENALTY U/S 271A OF THE ACT WAS NOT LEVIABLE BUT COULD NOT CONTROVERT THE FINDINGS GIVEN BY THE LD. CIT(A) IN THE IMPUGNED ORDER. WE, THEREFORE, CONSIDERING THE TOTALITY OF F ACTS ARE OF THE VIEW THAT THE PENALTY LEVIED U/S 271A OF THE ACT WAS RIGHTLY SUS TAINED BY THE LD. CIT(A) SINCE THE ASSESSEE INSPITE OF HAVING THE TURNOVER O F RS. 2,45,98,66,113/- HAD NOT MAINTAINED THE BOOKS OF ACCOUNT WHICH WERE REQU IRED TO BE MAINTAINED U/S 44AA OF THE ACT. IN THAT VIEW OF THE MATTER, WE DO NOT FIND ANY VALID GROUND TO INTERFERE WITH THE FINDINGS GIVEN BY THE LD. CIT(A) FOR SUSTAINING THE PENALTY OF RS. 25,000/- LEVIED BY THE ASSESSING OFFICER U/S 271A OF THE ACT. 8. IN ITA NO. 294/JODH/2018, THE ONLY GRIEVANCE OF THE ASSESSEE RELATES TO SUSTENANCE OF PENALTY LEVIED BY THE ASSESSING OF FICER U/S 271B OF THE ACT FOR A SUM OF RS. 1,50,000/-. 9. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF TRADING OF SHARES, COMMODITIES ETC AND THE TURNOVER OF THE 5 ASSESSEE WAS TO THE TUNE OF RS. 2,45,98,66,113/- DU RING THE YEAR UNDER CONSIDERATION AND THE ASSESSEE WAS REQUIRED TO MAIN TAIN THE BOOKS OF ACCOUNT AS PER THE PROVISIONS OF SECTION 44AA OF THE ACT A ND GOT THE SAME AUDITED AS PER THE PROVISIONS CONTAINED IN SECTION 44AB OF THE ACT BUT THE ASSESSEE DID NOT GET THE ACCOUNTS AUDITED, THEREFORE, THE ASSESS ING OFFICER LEVIED THE PENALTY OF RS. 1,50,000/- U/S 271B OF THE ACT FOR N OT GETTING THE BOOKS OF ACCOUNT AUDITED. 10. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R TO THE LD. CIT(A) AND FURNISHED THE WRITTEN SUBMISSIONS WHICH HAS BEEN R EPRODUCED IN PARA 5 OF THE IMPUGNED ORDER BY THE LD. CIT(A), FOR THE SAKE OF REPETITION, THE SAME IS NOT REPRODUCED HEREIN. 11. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE SUSTAINED THE PENALTY LEVIED BY THE ASSESSING OFFIC ER BY OBSERVING IN PARA 6 OF THE IMPUGNED ORDER AS UNDER:- 6. I HAVE CONSIDERED THE PENALTY ORDER AND APPELL ANTS SUBMISSIONS. I FIND THAT THE APPELLANT HAS DONE FRE QUENT TRANSACTIONS WHILE TRADING IN COMMODITIES, STOCKS A ND SHARES DURING THE YEAR UNDER CONSIDERATION DUE TO WHICH TH E TOTAL TURNOVER OF THE APPELLANT HAS REACHED TO THE TUNE O F RS.2,45,98,66,113/- WHICH IS IN EXCESS OF THE LIMIT PRESCRIBED UNDER SECTION 44AA AND 44AB OF THE ACT. THE APPELLA NT WAS REQUIRED TO MAINTAIN THE BOOKS OF ACCOUNTS DURING T HE YEAR UNDER CONSIDERATION AND GET THE SAME AUDITED TOO. THE ARS PLEA THAT THE APPELLANT HAS FAILED TO MAINTAIN THE BOOKS OF ACCOUNTS DURING THE YEAR UNDER CONSIDERATION, THERE FORE, THE AUDIT OF THE BOOKS OF ACCOUNTS OF NOT POSSIBLE AT A LL IS NOT 6 ACCEPTABLE. MERELY BECAUSE THE APPELLANT DID NOT MA INTAIN BOOKS OF ACCOUNTS CANNOT BE A GROUND FOR NOT LEVYIN G PENALTY WITH REGARD TO AUDIT UNDER SECTION 44AB OF THE ACT. MAINTAINING BOOKS OF ACCOUNTS AND AUDIT OF BOOKS OF ACCOUNTS ARE MANDATORY UNDER RELEVANT SECTIONS OF T HE INCOME TAX ACT, 1961 AND PENALTIES ARE ALSO IMPOSAB LE UNDER THE SECTIONS RELEVANT THERETO. THESE TWO ACTS ARE I NDEPENDENT OF EACH OTHER AND THE DEFAULTS ARE ALSO TO BE TREAT ED SEPARATELY. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE, I FIND THAT THE AO IS CORRECT IN IMPO SING PENALTY OF RS. 1,50,000/- UNDER SECTION 271B OF THE ACT IN THIS CASE, THEREFORE, THE SAME IS, HEREBY, SUSTAINED. THE APPE LLANT FAILS ON THIS ISSUE. THE GROUND NOS. 1 TO 5 RAISED BY THE APPELLANT REGARDING THIS ISSUE ARE, HEREBY, DISMISSED. 12. NOW THE ASSESSEE IS IN APPEAL. 13. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS NOT HAVING THE BOOKS OF ACCOUNT SO THERE WAS NO QUESTIO N OF GETTING THE SAME AUDITED AND THAT A PENALTY U/S 271A OF THE ACT FOR NON MAINTAINING THE BOOKS OF ACCOUNT WAS LEVIED BY THE ASSESSING OFFICER AND SINCE THERE WERE NO BOOKS OF ACCOUNT, PENALTY LEVIED U/S 271B OF THE ACT FOR NOT GETTING THOSE AUDITED WAS NOT JUSTIFIED. RELIANCE WAS PLACED ON THE FOLLO WING CASE LAWS:- A) CIT VS. S.K. GUPTA AND CO., [2010] 322 ITR 86 (A LL.) B) CIT VS. BISAULI TRACTORS [2008] 299 ITR 219 (A LL.) 14. IN HIS RIVAL SUBMISSIONS, THE LD. SR. DR STRONG LY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7 15. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND HAVE CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE ASSESSEE DID NOT MA INTAIN THE BOOKS OF ACCOUNT, SO THERE WAS NO QUESTION OF GETTING THOSE AUDITED. FOR THAT DEFAULT I.E. NON- MAINTENANCE OF THE BOOKS OF ACCOUNT, THE ASSESSING OFFICER HAS ALREADY LEVIED PENALTY U/S 271A OF THE ACT. 16. ON A SIMILAR ISSUE THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. S.K. GUPTA AND CO. [2010] 322 ITR 86 (ALL.) (SUPRA) HELD AS UNDER:- THE REQUIREMENT OF GETTING THE BOOKS OF ACCOUNT AUDITED COULD ARISE ONLY WHERE THE BOOKS OF ACCOUNT ARE MAINTAINED. IF FOR SOME REASON THE ASSESSEE HAS NOT MAINTAINED THE BOOKS OF ACCOUNT, PENALTY CANNOT BE LEVIED UNDER SECTION 271B OF THE INCOME-TAX ACT, 1961. 17. SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE ALLA HABAD HON'BLE HIGH COURT IN THE CASE OF CIT VS. BISAULI TRACTORS [20 08] 299 ITR 219 (ALL.), WHEREIN, IT HAS BEEN HELD AS UNDER:- A PENALTY PROVISION IN A TAXING STATUTE HAS TO BE STRICTLY CONSTRUED. PENALTY IS ELIGIBLE ONLY WHERE A PERSON FALLS WITHIN THE FOUR CORNERS OF THE PENAL PROVISIONS, OTHERWISE NOT. SEPARATE PENALTY HAS BEEN PROVIDED FOR NON- MAINTENANCE OF ACCOUNTS, I.E. UNDER SECTION 271A OF THE INCOME-TAX ACT, 1961, AND FOR NOT GETTING THE AMOUN TS AUDITED AND NOT FURNISHING THE AUDIT REPORT, I.E. U NDER SECTION 271B. IF A PERSON HAS NOT MAINTAINED ACCOUN T BOOKS OR ANY ACCOUNTS THE QUESTION OF AUDIT DOES NO 8 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 NOT GET VIOLATED IN A CASE WHERE ACCOUNTS HAVE NOT BEEN MAINTAINED AT ALL AND THEREFORE THE PENAL PROVISIONS OF SECTION 271B OF T HE ACT WOULD NOT APPLY. 18. SO, RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HONBLE ALLAHABAD HIGH COURT IN THE AFORESAID REFERRED TO C ASES, THE PENALTY LEVIED BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT( A) U/S 271B OF THE ACT IS DELETED. 19. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO. 293/JODH/2018 IS DISMISSED AND IN ITA NO. 294/JODH/2018 IS ALLOWED. (ORDER PRONOUNCED IN THE COURT ON .05.2019) SD/- SD/- (N.K. CHOUDHRY) (N.K. SAINI) JUDICIAL MEMBER VICE PRESIDENT DATED : 03. 05.2019 . . .. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. / CIT 4. ( )/ THE CIT(A) 5. , ' , % / DR, ITAT, JODHPUR 6. ( / GUARD FILE / BY ORDER / ASSISTANT REGISTRAR