L.S.Patro, Vizianagaram V. ITO, Ward-2, Vizianagaram

ITA 376/VIZ/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6506 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 20-06-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHRIM K SETHI
• Assessee Lawyers: SHRI GVN HARI
• Keywords: Business income

Judgement Text

IN THEINCOMETAXAPPELLATETRIBUNAL VISAKHAPATNAMBENCH,VISAKHAPATNAM BEFORESHRI V. DURGA RAO,HONBLEJUDICIAL MEMBER& SHRI D.S.SUNDERSINGH,HONBLEACCOUNTANTMEMBER ITA NO.376/VIZ/2017 (ASST.YEAR :2009-10) L.S.PATRO, 7-120,MRO OFFICEROAD, KOTHAVALASA, VIZIANAGARAM. VS. ITO,WARD-2, VIZIANAGARAM. PAN NO.ACTPL 9942 P (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRIG.V.N.HARI ADVOCATE. DEPARTMENTBY : SHRIM.K. SETHI SR.DR DATE OFHEARING : 14/11/2017. DATE OFPRONOUNCEMENT : 17/11/2017. ORDE R PERV.DURGA RAO,JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-1, VISAKHAPATNAM, DATED 26/04/2017 FORTHEASSESSMENT YEAR2009-10. 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS WHETHER THE ASSESSING OFFICER IS JUSTIFIED IN LEVYING PENALTY UNDER SECTION 271B OFTHEINCOMETAX ACT,1961 (HEREINAFTERREFERREDTO AS'ACT'). 3. FACTS OF THE CASE ARE IN BRIEF THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS OBSERVED THAT 2 ITANO.376VIZ/2017 (L.S.PATRO) ASSESSEE HAS FAILED TO GET BOOKS OF ACCOUNT AUDITED IN RESPECT OF UNACCOUNTED BUSINESS CARRIED OUT IN THE NAME OF M/S. TULASI ENTERPRISES. SUBSEQUENTLY, THE ASSESSING OFFICER HAS INITIATED PENALTY PROCEEDINGS UNDER SECTION 271B OF THE ACT AND CALLED THE ASSESSEE TO EXPLAIN THE REASONS FOR FAILURE TO GET BOOKS OF ACCOUNT AUDITED. IT WAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT HE WAS A SMALL TIME BUSINESS MAN AND HIS BANK ACCOUNTS WERE UTILIZED BY BIG DEALERS AND MADE HIM SCAPEGOAT. THE ASSESSEE ALSO SUBMITTED THAT THE ACCOUNTS COULD NOT BE AUDITED SINCE THE RELEVANT MATERIAL, BILLS/VOUCHERS WERE NOT AVAILABLE WITH HIM. THE ASSESSING OFFICER AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, HAS NOTED THAT THE ASSESSEE NEITHER DISCLOSED THE TRANSACTIONS IN THE BANK ACCOUNT NOR HAD DISCLOSED ANY INCOME ARISING FROM OUT OF THE SAID TRANSACTIONS. THE ASSESSING OFFICER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE THAT THE TRANSACTION WAS ON COMMISSION BASIS. THE ASSESSING OFFICER, THUS, ESTIMATED THE INCOME FROM UNACCOUNTED BUSINESS AT 4% AND ALSO TREATED THE INITIAL CASH DEPOSITS HELD WITH ING VYSYA BANK AS INCOME FROM UNDISCLOSED SOURCE. THE ASSESSING OFFICER HAS CONCLUDED THAT THE ASSESSEE FAILED TO DISCLOSE THE UNACCOUNTED BUSINESS CARRIED OUT IN THE TRADE NAMELY M/S. TULASI ENTERPRISES, THE TURNOVER OF WHICH EXCEEDED RS. 40 LAKHS IS LIABLE FOR AUDIT UNDER SECTION 44AB OF THE 3 ITANO.376VIZ/2017 (L.S.PATRO) ACT AND CONSIDERED IT AS A FIT CASE TO LEVY PENALTY UNDER SECTION 271BOFTHEACT ANDACCORDINGLY,LEVIED PENALTY OFRS. 1,50,000/-. 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD.CIT(A). IT WAS SUBMITTED BEFORE THE LD. CIT(A) THAT THE ASSESSEE WAS ASKED TO EXPLAIN THE TRANSACTIONS IN THE BANK ACCOUNT WITH ING VYSYA BANK, KOTHAVALASA BRANCH. THE TRANSACTIONS IN THE SAID BANK ACCOUNT WERE SOUGHT TO BE EXPLAINED AS DONE BY SOME BIG BUSINESS PEOPLE AND THE ASSESSEE GOT ONLY COMMISSION AND THE TRADING WAS NOT DONE BY HIM. THE LD. CIT(A) AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, HAS IMPOSED THE MINIMUM PENALTY OF RS. 52,261/- UNDER SECTION 271B OF THE ACT. THE RELEVANT PORTION OF THE LD. CIT(A)S ORDER IS EXTRACTED AS UNDER:- 6. I HAVE CONSIDERED THE SUBMISSIONS AND PERUSED THE DETAILS FILED. THE AO NOTED THAT THE ASSESSEE HAD NOT DECLARED TRANSACTIONS IN A BANK ACCOUNT HELD BY HIM WITH ING VYSYA BANK, KOTHAVALASA. AFTER CONSIDERING THE ASSESSEE'S EXPLANATION, THE AG CONCLUDED THAT THE TRANSACTIONS IN THE SAID ACCOUNT RELATED TO HIS UNACCOUNTED PURCHASES AND SALES AND ESTIMATED THE INCOME AT 4% OF THE CREDITS I TURNOVER OF RS.1,04,52,250/- AMOUNTING TO RS.4,18,090/-. THE AG LEVIED PENALTY U/S.271B OF RS.1,50,000/- BEING THE MAXIMUM PENALTY (THE MINIMUM PENALTY WAS NOTED TO BE RS.52,260/-). AS PER THE PROVISIONS OF SECTION 271B THE ACT, THE PENALTY LEVIABLE FOR FAILURE TO GET ACCOUNTS AUDITED SHALL BE A SUM EQUAL TO ONE-HALF PERCENT OF TOTAL SALES / TURNOVER AS THE CASE MAY BE OR RS.1 LAKH (UPTO AY 2010-11 & RS.1.5 LAKHS W.EF. A.Y.2011-12), WHICHEVER IS LESS. THE ACT MANDATES LEVY OF MINIMUM PENALTY ONLY, WHEREAS THE AO LEVIED THE MAXIMUM PENALTY. IT IS SEEN THAT THE AO HAD DETERMINED THE UNACCOUNTED TURNOVER AT RS.1,04,52,250/- AND THE CONSEQUENT MINIMUM PENALTY U/S.271B WOULD BE RS.52,261/- BEING 0.5% OF THE TURNOVER. HENCE THE LEVY OF PENALTY OF RS.1.5 LAKHS IS NOT JUSTIFIED. THOUGH THE ASSESSEE HAD TAKEN A PLEA THAT THESE TRANSACTIONS DID NOT PERTAIN TO HIM, NO EVIDENCE WAS FILED IN SUPPORT OF SUCH CLAIM. 4 ITANO.376VIZ/2017 (L.S.PATRO) THEREFORE THE AO IS JUSTIFIED IN INFERRING THAT THE IMPUGNED TRANSACTION PERTAINED TO HIS UNACCOUNTED TRADING ACTIVITY. IN THE CIRCUMSTANCES, THE AO IS DIRECTED TO LEVY MINIMUM PENALTY OF RS.52,261/-U/S.271B. 5. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLEONRECORDANDORDERSOFTHEAUTHORITIESBELOW. 6. WE FIND THAT THE ASSESSEE HAS CARRIED OUT BUSINESS ACTIVITIES IN THE NAME OF M/S. TULASI ENTERPRISES. THE ASSESSEE HAS CARRIED OUT THESE ACTIVITIES IN THE BANK ACCOUNT WITH ING VYSYA BANK, KOTHAVALASA BRANCH. WHEN ASSESSING OFFICER ASKED, THE ASSESSEE SUBMITTED THAT THOUGH THE TRANSACTIONS ARE CARRIED OUT IN HIS BANK ACCOUNT, HOWEVER, HE ONLY RECEIVED COMMISSION AND THE TRANSACTIONS ARE NOT AT ALL RELATED TO HIM. THE ASSESSING OFFICER NOT ACCEPTED THE EXPLANATION GIVEN BY THE ASSESSEE AND THE TRANSACTIONS CARRIED OUT WITH THE ING VYSYA BANK HAS CONSIDERED BY THE ASSESSING OFFICER IS BELONGING TO THE ASSESSEES BUSINESS TRANSACTIONS AND THE ASSESSEE HAS FAILED TO AUDITED THE BOOKS OF ACCOUNT IN RESPECT OF UNACCOUNTED BUSINESS CARRIED OUT BY THE ASSESSEE AND ACCORDINGLY PENALTY UNDER SECTION 271B OF RS.1,50,000/- WAS LEVIED. THE ASSESSEE REITERATED THE SUBMISSIONS BEFORE THE LD. CIT(A) AND THE LD. CIT(A) AFTER CONSIDERING THE EXPLANATION GIVEN BY THE ASSESSEE, HE IMPOSED MINIMUM PENALTY OF RS. 52,261/-. WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD.CIT(A). THUS, THISAPPEAL FILEDBY THEASSESSEEIS DISMISSED. 5 ITANO.376VIZ/2017 (L.S.PATRO) 7. INTHERESULT,APPEAL FILEDBY THEASSESSEEISDISMISSED. ORDERPRONOUNCED INOPENCOURT ONTHIS17 TH DAY OFNOV.,2017. SD/- SD/- (D.S. SUNDER SINGH) (V. DURGA RAO) ACCOUNTANTMEMBER JUDICIAL MEMBER DATED : 17 TH NOVEMBER, 2017. VR/- COPY TO: 1. THE ASSESSEE - L.S. PATRO, 7-120, MRO OFFICE ROAD, KOTHAVALASA, VIZIANAGARAM. 2. THE REVENUE ITO, WARD-2, VIZIANAGARAM. 3. THE PCIT-1, VISAKHAPATNAM. 4. THE CIT(A)1, VISAKHAPATNAM. 5. THE D.R., VISAKHAPATNAM. 6. GUARD FILE. BYORDER (VUKKEMRAMBABU) SR.PRIVATE SECRETARY, ITAT,VISAKHAPATNAM.