Sh. Amarjit Singh, Phagwara V. The Income Tax Officer, Phagwara

ITA 627/ASR/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0616 (ITAT-AMRITSAR)
• Duration Of Justice: 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 04-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A N MISHRA
• Assessee Lawyers: Y K SUD
• Section: 44AD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. (CAMP AT JALANDHAR) BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NOS.626 & 627(ASR)/2015 ASSESSMENT YEARS:2008-09 & 2009-10 PAN: AXSPB0238B SH. AMARJIT SINGH VS. INCOME TAX OFFICER, PHAGWARA. WARD-1, PHAGWARA. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. Y.K. SUD, CA RESPONDENT BY: SH. A.N. MISHRA, DR DATE OF HEARING: 24/06/2016 DATE OF PRONOUNCEMENT: 29/06/2016 ORDER PER A.D. JAIN, JM; THESE ARE THE ASSESSEES APPEAL FOR THE ASSESSMEN T YEAR 2008-09 & 2009-10, AGAINST THE CONFIRMATION OF PENALTY OF RS .25,000/- EACH FOR BOTH THE ASSESSMENT YEARS LEVIED UNDER SECTION 271A OF THE ACT. 2. THE FACTS ARE BEING TAKEN FROM ASSESSMENT YEAR 2008-09. THE ASSESSEE IS A CIVIL CONTRACTOR FILED HIS RETURN FOR THE YEAR UNDER CONSIDERATION 28.03.2009 DECLARING INCOME AT RS.1,25,870/-. THE RETURNED INC OME DISCLOSED BY THE ASSESSEE INCLUDED PROFITS FROM CIVIL CONTRACT BUSIN ESS AT RS.1,23,370/- APART FROM INCOME FROM OTHER SOURCES AT RS.2,500/-. THE N ET PROFIT FROM CONTRACT BUSINESS ARRIVED AT BY THE ASSESSEE UNDER THE PRESU MPTIVE PROVISIONS OF SECTION 44AD OF THE ACT BY APPLYING NET PROFIT RATE OF 8% ON GROSS CONTRACT 2 ITA NOS. 626 & 627(ASR)/2015 A.YS.20 08-09 & 2009-10 2 RECEIPTS OF RS.15,42,131/- WHICH WERE DECLARED BY T HE ASSESSEE IN HIS RETURN OF INCOME. THE AO FOUND THAT THE ASSESSEE WAS IN RECE IPT OF TOTAL CONTRACT PAYMENTS OF RS.70,40,413/- FROM VARIOUS GOVT. DEPAR TMENTS AND ALSO FROM SOME PRIVATE PARTIES/CONCERNS AND THE SAME HAD ALSO BEEN ADMITTED BY THE ASSESSEE. THE AO ALSO FOUND THAT THE ASSESSEE IS NO T MAINTAINING BOOKS OF ACCOUNT AS REQUIRED UNDER THE PROVISIONS OF SECTION 44A OF THE ACT. IN THE ABSENCE OF BOOKS OF ACCOUNT, THE AO APPLIED NET PRO FIT RATE OF 8% ON GROSS CONTRACT RECEIPTS OF RS.70,40,413/- TO WORK OUT TA XABLE INCOME OF THE ASSESSEE FROM CONTRACT BUSINESS. THE AO HAS ADOPTED INCOME OF THE ASSESSEE FROM CONTRACT BUSINESS AT RS.5,63,233/- (8% OF 70,40,413 /-) AS AGAINST DECLARED BY THE ASSESSEE AT RS.1,23,370/-. THE ASSESSMENT WAS U LTIMATELY COMPLETED BY THE AO AT AN ASSESSED INCOME OF RS.5,65,733/-. AS T HE ASSESSEE COULD NOT OFFER ANY JUSTIFIABLE EXPLANATION FOR NON MAINTENANCE O F BOOKS OF ACCOUNT, THE AO HAS LEVIED A PENALTY OF RS.25,000/- FOR NON MAINTE NANCE OF BOOKS OF ACCOUNT AS PER PROVISIONS OF SECTION 44AA OF THE ACT, VIDE ORDER U/S 271A OF THE ACT. 3. CONFIRMING THE PENALTY, THE LD. CIT(A) HELD AS F OLLOWS: 5.2. I HAVE CONSIDERED THE OBSERVATIONS OF THE AO AS MADE BY HER IN THE IMPUGNED PENALTY ORDER, I HAVE ALSO CONSIDERED THE WRITTEN SUBMISSIONS OF THE ASSESSEE FILED VIDE LETTER DATED 09.10.2015. ON CAREFUL CONSIDERATION OF THE RIVAL CONTENTIONS, I AM ALSO OF THE OPINION THAT THE ASSESSEE WAS CERTAINLY REQUIRED TO MAINTAIN BOOKS OF ACCOUNT AS PER PROVISIONS OF SECTION 44AA OF THE ACT, AS THE TURNOVER/GROSS RECEIPTS OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION IS ADMITTEDLY MORE THAN RS .40,00,000/-. MOREOVER, THE ASSESSEE DURING THE COURSE OF ASSESSM ENT PROCEEDINGS HAS HIMSELF ADMITTED THAT THE REGULAR BOOKS OF ACCOUNT HAVE NOT BEEN MAINTAINED BY HIM. IN MY OPINION, THE ADMITTED FACT S NEED NOT BE PROVED AGAIN. 3 ITA NOS. 626 & 627(ASR)/2015 A.YS.20 08-09 & 2009-10 3 5.3. IN VIEW OF THE ABOVE STATED FACTS AND IN THE C IRCUMSTANCES OF THE CASE, I AM OF THE CONSIDERED OPINION THAT THE AO IS FULLY JUSTIFIED IN LEVYING PENALTY OF RS.25,000/- IN THIS CASE U/S 271A OF THE ACT FOR FAILURE ON THE PART OF THE ASSESSEE TO MAINTAIN BOOKS OF ACCOUNT A S PER PROVISIONS OF SECTION 44AA OF THE ACT. THE PENALTY OF RS.25,000/- LEVIED BY THE AO IN THIS CASE U/S 271A OF THE ACT IS, THEREFORE, UPHELD . 4. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED B EFORE US, REITERATING THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND A S PER THE PROVISIONS OF SECTION 271A, WHICH DEALS WITH THE FAILURE TO KEEP, MAINTAIN OR RETAIN BOOKS OF ACCOUNTS, DOCUMENTS, ETC., IF ANY PERSON FAILS TO K EEP AND MAINTAIN ANY SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS AS REQUIRED BY SECTION 44AA OR THE RULES MADE THEREUNDER, IT MAY BE DIRECTED BY THE CO NCERNED AUTHORITY THAT SUCH PERSON SHALL PAY PENALTY OF RS.25,000/-. IT H AS BEEN CONTENDED THAT ACCORDING TO SECTION 44AA, EVERY PERSON CARRYING O N LEGAL, MEDICAL, ENGINEERING OR ARCHITECTURAL PROFESSION OR THE PROFESSION OF AC COUNTANCY OR TECHNICAL CONSULTANCY OR INTERIOR DECORATION OR ANY OTHER PRO FESSION AS IS NOTIFIED BY THE BOARD IN THE OFFICIAL GAZETTE SHALL KEEP AND MAINTA IN SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS AS MAY ENABLE THE AO TO COMPUTE HIS TOTAL INCOME IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. IT HAS B EEN HIGHLIGHTED THAT SIMILAR ARE THE REQUIREMENTS OF KEEPING OF BOOKS WHERE THE ASSESSEE IS A BUSINESSMAN HAS BEEN LAID DOWN IN THE PROVISIONS OF SECTION 44A A(2) OF THE ACT, WHERE THE INCOME EXCEEDS RS. ONE LAKH TWENTY FIVE THOUSAND OR HIS TOTAL SALES, TURNOVER OR GROSS RECEIPTS, IN THE BUSINESS OR PROFESSION EX CEEDS RS. TEN LAKH IN ANY ONE OF THE THREE YEARS IMMEDIATELY PRECEDING THE PREVIO US YEAR. IT HAS BEEN CONTENDED THAT THE CONTRACT OF THE ASSESSEE IS ENTI RELY IN KEEPING WITH THE 4 ITA NOS. 626 & 627(ASR)/2015 A.YS.20 08-09 & 2009-10 4 AFORESAID PROVISIONS OF LAW AND, THEREFORE, CANNOT AT ALL BE SAID THAT THE ASSESSEE HAS MADE ANY INFRINGEMENT OF THE PROVISION S OF SECTION 44AA AND LEVY OF PENALTY UNDER SECTION 271A IS ENTIRELY UNC ALLED FOR, WHICH HAS WRONGLY BEEN UPHELD BY THE LD. CIT(A) FOR ALL THE THREE YEA RS UNDER CONSIDERATION, BE DELETED. 5. THE LD. DR, ON THE OTHER HAND, STRONGLY RELIED O N THE IMPUGNED ORDER. 6. HAVING HEARD THE RIVAL CONTENTIONS IN THE LIGHT OF THE MATERIAL AVAILABLE ON RECORD, WE FIND THE GRIEVANCE OF THE ASSESSEE IS TO BE QUITE JUSTIFIED. 7. THE PROVISIONS, AS APPLICABLE, I.E., THOSE OF SE CTION 44A(1) & 2) ARE VERY CLEAR. IN THE PRESENT CASE, THERE IS NO DISPUTE THA T THERE IS ANY INFRINGEMENT AT THE HANDS OF THE ASSESSEE. EVEN THE LD. CIT(A) DOES NOT DISPUTE THE ASSESSEE HAVING MAINTAINED BOOKS OF ACCOUNT. THAT BEING SO, IN OUR CONSIDERED OPINION, THERE IS NO OCCASION EITHER FOR LEVY OF PENALTY IN QUESTION FOR ANY OF THE THREE YEARS INVOLVED. ACCORDINGLY, THESE PENALTIES ARE DE LETED. 8. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29TH JUNE, 2016. SD/- SD/- (T. S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 29 /06/2016. /SKR/ COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE:SH. AMARJIT SINGH, PHAGWARA. (2) THE ITO, WARD-1, PHAGWARA. (3) THE CIT(A), JLR (4) THE CIT, JLR (5) THE SR DR, I.T.A.T. TRUE COPY BY ORDER