Sh. Mohit Garg, Delhi V. ITO, New Delhi

ITA 3355/DEL/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0170 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 26-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bonafide belief
• Section: 133A; 271B; 44AB; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SH. AMIT SHUKLA, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (E-COURT MODULE) ITA NO. 3355/DEL/2017 : ASSTT. YEAR : 2012-13 SH. MOHIT GARG, PROP. LADDU GOPAL OVERSEAS, 5555/58, BASTI HAR PHOOL SINGH, SADAR BAZAR, DELHI-110006 VS INCOME TAX OFFICER, WARD-63(3), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. A YEPG4314M ASSESSEE BY : SH. SALIL KAPOOR, ADV. REVENUE BY : MS. RAKHI VIMAL, SR. DR DATE OF HEARING: 23.06.2020 DATE OF PRONOUNCEMENT: 23.06.2020 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-20, NEW DELHI DATED 19. 04.2017. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESS EE: 1. THAT THE LD. CIT(A) IS ERRED UNDER THE LAW WHIL E CONFIRMING PENALTY ORDER OF A.O. FOR RS.1,50,000/- U/S 271B INSPITE OF THE FACT THAT THE LD. AO HAS ALREAD Y IMPOSED PENALTY U/S 271A ON THE APPELLANT FOR NON MAINTENANCE OF BOOKS OF ACCOUNTS. 3. BRIEF FACTS OF THE CASE ARE THAT A SURVEY OPERAT ION U/S 133A OF THE INCOME TAX ACT, 1961 WAS CONDUCTED IN T HE MONTH OF FEBRUARY, 2013 AND UNACCOUNTED STOCK OF ALUMINUM SHEETS AND ALUMINUM FOILS WAS FOUND AND THE SAME WAS SURRE NDERED BY ITA NO. 3355/DEL/2017 MOHIT GARG 2 THE ASSESSEE FOR TAXATION IN THE ASSESSMENT YEAR 20 13-14. DURING THE ASSESSMENT PROCEEDINGS, THE FACT OF SURR ENDER OF UNDISCLOSED INCOME WAS DISPUTED AND THE AO MADE ADD ITION BASED ON THE STATEMENT RECORDED DURING THE PROCEEDI NGS U/S 133A OF THE ACT. 4. DURING THE PENALTY PROCEEDINGS U/S 271B OF THE A CT, THE ASSESSEE SUBMITTED THAT AN INCOME OF RS.10,71,164/- DECLARED BY THE ASSESSEE AS NET COMMISSION EARNED IS ON THE BASIS OF A CERTIFICATE FROM TAX CONSULTANT AND THE ASSESSEE WA S UNDER A BONAFIDE BELIEF THAT THE NET COMMISSION INCOME IS T HE BENCH MARK FOR GETTING HIS ACCOUNTS AUDITED U/S 44AB WHIC H IS LESS THAN RS.60,00,000/-. 5. THE AO HELD THAT THE THRESHOLD LIMIT THUS DETERM INED IS NOT CORRECT AND ASSESSEE IS LIABLE TO GET THE BOOKS AUD ITED OWING TO THE TURNOVER OF MORE THAN RS.60,00,000/- IN ACCORDA NCE WITH THE PROVISIONS OF SECTION 44AB. THE AO ALSO HELD TH AT DURING THE SURVEY OPERATION AND DURING THE ASSESSMENT PROCEEDI NGS, ASSESSEE HAS ACCEPTED THAT HE IS INTO THE BUSINESS OF TRADING OF ALUMINUM SHEETS AND HENCE AUDITING OF THE BOOKS OF ACCOUNTS IS A STATUTORY REQUIREMENT. 6. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE THE L D. CIT (A). DURING THE PROCEEDINGS BEFORE THE LD. CIT (A), THE ASSESSEE SUBMITTED THAT THE AO HAS ALREADY IMPOSED PENALTY U /S 271A OF RS.25,000/- FOR NON-MAINTENANCE OF BOOKS OF ACCOUNT S. IT WAS ARGUED BEFORE THE LD. CIT (A) THAT PENALTY FOR NON- MAINTENANCE OF BOOKS OF ACCOUNTS HAS ALREADY BEEN LEVIED THERE IS NO POSSIBILITY OF GETTING THE NON-EXISTING BOOKS OF AC COUNTS AUDITED AND HENCE NO PENALTY U/S 271B IS LEVIABLE. THE LD. CIT (A) ITA NO. 3355/DEL/2017 MOHIT GARG 3 CONFIRMED THE ORDER U/S 271B HOLDING THAT THE INTEN TION OF THE LEGISLATURE IS CLEAR THAT THE ASSESSEE HAS TO MAINT AIN BOOKS ACCOUNTS AS WELL AS ABOVE THE THRESHOLD LIMIT GET H IS ACCOUNT AUDITED AND FOR THE VIOLATION OF BOTH SEPARATE PENA LTY PROVISIONS ARE ATTRACTED UNDER THE IT ACT. 7. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE US. 8. HAVING THE FACTS OF THE CASE AND THE PROVISIONS OF THE ACT UNDISPUTED, THE LD. AR ARGUED ON THE STRENGTH OF TH E JUDGMENTS OF VARIOUS COURTS: S.P. TODI VS CIT 226 ITR 691 (GAU.) HELD, THAT MAINTENANCE OF ACCOUNTS IS ENVISAGED UNDER SECTION 44AA AND ON FAILURE TO DO SO THE ASSESSEE SHALL BE GUILT Y AND LIABLE TO BE PENALIZED UNDER SECTION 271A. EVEN AFT ER MAINTENANCE OF BOOKS OF ACCOUNT THE OBLIGATION OF T HE ASSESSEE DOES NOT COME TO AN END. HE IS REQUIRED TO DO SOMETHING MORE, I.E., BY GETTING THE BOOKS OF ACCOU NT AUDITED BY AN ACCOUNTANT. BUT WHEN A PERSON COMMITS AN OFFENCE BY NOT MAINTAINING THE BOOKS OF ACCOUNTS AS CONTEMPLATED BY SECTION 44AA THE OFFENCE IS COMPLET E. AFTER THAT THERE CAN BE NO POSSIBILITY OF ANY OFFEN CE AS CONTEMPLATED BY SECTION 44AB AND, THEREFORE, IN OUR OPINION, THE IMPOSITION OF PENALTY UNDER SECTION 27 1B IS ERRONEOUS. THE TRIBUNAL HAS OVERLOOKED THIS ASPECT OF THE MATTER. OF COURSE, IT IS APPARENT FROM THE RECORDS THAT THE ASSESSEE FAILED TO MAINTAIN THE BOOKS OF ACCOUNTS A S REQUIRED UNDER SECTION 44AA AND FOR THAT PENALTY IS PRESCRIBED UNDER SECTION 271A. ITA NO. 3355/DEL/2017 MOHIT GARG 4 CIT VS S.K. GUPTA AND CO. 322 ITR 86 (ALL.) HELD, THE SUBMISSION (OF COUNSEL FOR REVENUE ) IS MISCONCEIVE D FOR THE REASON THAT THE REQUIREMENT OF GETTING THE BOOK S OF ACCOUNTS AUDITED COULD ARISE ONLY WHERE THE BOOKS O F ACCOUNTS ARE MAINTAINED. IF FOR SOME REASON THE ASS ESSEE HAS NOT MAINTAINED THE BOOKS OF ACCOUNTS THE APPROP RIATE PROVISION UNDER WHICH PENALTY PROCEEDINGS CAN BE IN ITIATED IS UNDER SECTION 271A OF THE ACT WHICH RECOURSE HAS ALSO BEEN TAKEN BY THE ASSESSEE AS WOULD APPEAR FROM THE ORDER OF THE TRIBUNAL. CIT VS BISAULI TRACTORS 299 ITR 219 (ALL.) AFTER HE ARING THE COUNSEL FOR THE REVENUE IN AN EX-PARTE ORDER HELD, THAT SEPARATE PENALTY HAS BEEN PROVIDE FOR NON-MAINTENAN CE OF ACCOUNTS, I.E., UNDER SECTION 271A OF THE ACT AND F OR NO 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 ACT AND INSTEAD PROCEEDED TO IM POSE PENALTY UNDER SECTION 271B OF THE ACT. IF A PERSON HAS NOT MAINTAINED THE ACCOUNTS BOOK OR ANY ACCOUNTS THE QU ESTION OF ITS AUDIT DOES NOT ARISE. IN SUCH AN EVENT THE I MPOSITION OF PENALTY UNDER THE PROVISION CONTAINED IN SECTION 271A OF THE ACT FOR THE ALLEGED NON-COMPLIANCE. 9. ON THE OTHER HAND, THE LD. DR VEHEMENTLY ARGUED THAT THE PENALTY U/S 271A AND 271B ARE MUTUALLY EXCLUSIVE AN D OPERATE UNDER DIFFERENT DOMAINS. SHE ARGUED THAT IT IS NOT CORRECT TO HOLD THAT ONCE PENALTY U/S 271A HAS ALREADY BEEN LE VIED, THE PENALTY UNDER SECTION 271B CANNOT STAND. IT WAS ARG UED THAT IT ITA NO. 3355/DEL/2017 MOHIT GARG 5 IS A CASE OF ASSESSEE BEING IN THE BUSINESS OF TRAD ING OF ALUMINUM SHEETS & FOILS AND THE BANK STATEMENT OF T HE ASSESSEE DEPICTS TURNOVER OF MORE THAN RS.3 CRORES AND THE C ONTENTION OF THE ASSESSEE THAT HE IS IN BUSINESS OF EARNING OF C OMMISSION ALSO CANNOT BE ACCEPTED. SHE RELIED ON THE CASE OF ABHAY KUMAR & CO. VS UNION OF INDIA 164 ITR 148 (RAJ.). IT WAS ARGUED THAT WHILE THE PENALTY U/S 271A IS RS.25,000/- FOR NON-M AINTENANCE OF BOOKS OF ACCOUNTS AND RS.1,50,000/- THE MAXIMUM PENALTY U/S 271B FOR FAILURE TO GET THE ACCOUNTS AUDITED, I F THE PROPOSITION AS CANVASSED BY THE LD. AR IS ACCEPTED IT WILL ONLY ENCOURAGE THE ASSESSEES FOR NON-MAINTENANCE OF BOO KS OF ACCOUNTS AND GETTING AWAY WITH A MINOR PENALTY OF R S.25,000/- INSTEAD OF RS.1,50,000/-. 10. HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PER USED THE MATERIAL AVAILABLE ON RECORD. 11. WE FIND THAT THE DECISION OF THE LD. CIT (A) TH AT THE LEGISLATURE IS CLEAR ABOUT MAINTENANCE OF BOOKS OF ACCOUNTS AND AS WELL AS GETTING THE BOOKS AUDITED IS ACCEPTABLE TO THE EXTENT THAT THERE HAS BEEN A TWIN RESPONSIBILITY CASTED U P ON THE SHOULDERS OF THE ASSESSEE TO, A) MAINTAIN THE BOOKS OF ACCOUNTS U/S 44AA, B) TO GET THE ACCOUNTS AUDITED U/S 44AB. 12. AT THE SAME TIME, THE LEGISLATURE IS ALSO PROVI DED FOR SEPARATE LEVY OF PENALTY FOR FAILURE TO MEET EACH S TATUTORY REQUIREMENT. IN THE INSTANT CASE, THE AUDIT COULD N OT HAVE BEEN CONDUCTED IN THE ABSENCE OF BOOKS OF ACCOUNTS. IF A PERSON HAS NOT MAINTAINED THE BOOKS OF ACCOUNTS, THE QUESTION OF AUDIT DOES NOT ARISE. THE INFRACTION OF SECTION 44AB GETS ATTRACTED ITA NO. 3355/DEL/2017 MOHIT GARG 6 ONLY WHEN THE ASSESSEE MAINTAINS THE BOOKS OF ACCOU NTS BUT FAIL TO GET THEM AUDITED. HENCE, THERE IS NO REASON TO I NITIATE PENALTY U/S 271B. THE PENALTY FOR NON-MAINTENANCE O F BOOKS OF ACCOUNTS HAS ALREADY BEEN RIGHTLY LEVIED, HENCE THE OFFENCE HAS ALREADY BEEN TAKEN NOTE OF AND THE ONLY RECOURSE IS TO LEVY PENALTY U/S 271A FOR NON-COMPLIANCE OF SECTION 44AA . THESE TWO PROVISIONS OPERATE UNDER TWO DIFFERENT REALMS. 13. HENCE, KEEPING IN VIEW THE PROVISIONS OF THE AC T AND THE JUDICIAL PRONOUNCEMENTS ON THE SUBJECT MATTER, WE H EREBY DIRECT THAT THE PENALTY LEVIED BY THE AO AS CONFIRM ED BY THE LD. CIT (A) BE OBLITERATED. 14. WITH REGARD TO THE ARGUMENTS OF THE LD. DR THAT OWING TO THE DIFFERENCE IN THE PENALTIES, IT PRIMA FACIE ENCOURAGES NON- MAINTENANCE OF BOOKS OF ACCOUNTS, AT THIS JUNCTURE, WE REFRAIN OURSELVES FROM TRESPASSING THE DOMAIN OF LEGISLATUR E AS TO THE DIFFERENCE OF THE QUANTUM OF PENALTY LEVIABLE U/S 2 71A AND 271B. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23/06/2020. SD/- SD/- (AMIT SHUKLA) (DR. B. R. R. KUMAR) JUDICIAL MEMBER ACCOUNT ANT MEMBER DATED: 23/06/2020 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR