Ramchandra Digambar Keluskar, Dongrewadi V. Dy.CIT., CIR -2, Kolhapur, Kolhapur

ITA 668/PUN/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7682 (ITAT-PUNE)
• Duration Of Justice: 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 03-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HEMANTKUMAR C LEUVA
• Assessee Lawyers: P S PHADNIS
• Keywords: Non compliance

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO. 668/PN/10 (ASSTT YEAR: 2006-07) SHRI RAMCHANDRA D KELUSKAR, AT & PO: DONGREWADI,TAL.KANKAVALI, SINDHUDURG .. APPELLANT PAN ACMPK8091K VS. DY. COMMISSIONER OF INCOME-TAX, CIR.2 KOLHAPUR .. RESPONDENT APPELLANT BY : SHRI P.S PHADNIS RESPONDENT BY : SHRI HEMANT KUMAR C LEUVA ORDER PER G.S. PANNU, A.M: THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE O RDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), KOLHAPUR DATE D 16.2.2010 WHEREIN PENALTY UNDER SECTION 271B OF THE INCOME-TA X ACT, 1961 (IN SHORT THE ACT) AMOUNTING TO RS 40,940/-LEVIED BY THE AS SESSING OFFICER FOR THE ASSESSMENT YEAR 2006-07 HAS BEEN SUSTAINED BY THE C OMMISSIONER OF INCOME-TAX (APPEALS) FOR THE DEFAULT IN COMPLYING W ITH THE PROVISIONS OF SECTION 44AB OF THE ACT. 2. IN BRIEF THE FACTS ARE THAT ASSESSEE IS AN INDI VIDUAL ENGAGED IN THE BUSINESS OF CIVIL CONTRACTING FOR GOVERNMENT /MUNICIPAL COUNCIL. THE ASSESSEE FILED A RETURN OF INCOME FOR THE ASSESSMEN T YEAR 2006-07 DECLARING AN INCOME OF RS 6,14,680/-, WHICH WAS NOT ACCOMPANIED BY TAX AUDIT REPORT AS PRESCRIBED UNDER SECTION 44AB OF TH E ACT. THE ASSESSING ITA NO 668/PN/10 SHRI RAMCHANDRA D KELUSKAR, SINDHUDU RG 2 OFFICER INITIATED PENALTY PROCEEDINGS UNDER SECTION 271B OF THE ACT FOR THE REASON THAT THE GROSS RECEIPTS OF THE ASSESSEE EXCE EDED THE PRESCRIBED LIMIT AND, THEREFORE, IN TERMS OF SECTION 44AB OF T HE ACT, THE ASSESSEE WAS REQUIRED TO GET HIS BOOKS OF ACCOUNT AUDITED AND FU RNISH THE AUDIT REPORT BEFORE THE SPECIFIED DATE. THE CLAIM OF THE ASSESSE E BEFORE THE ASSESSING OFFICER WAS THAT, HE WAS NOT MAINTAINING ANY ACCOUN T BOOKS AND THAT THE INCOME HAD BEEN RETURNED ON ESTIMATE BASIS. THE ASS ESSING OFFICER, WHILE NOT CONTROVERTING THE NON-MAINTENANCE OF THE ACCOUN T BOOKS, HELD THAT THE ASSESSEE WAS LIABLE FOR LEVY OF PENALTY UNDER SECTI ON 271B OF THE ACT FOR HIS FAILURE TO GET THE BOOKS OF ACCOUNT AUDITED UND ER SECTION 44AB OF THE ACT. HENCE, A PENALTY OF RS 40,940/-, BEING A SUM EQUAL TO ONE-HALF PER CENT OF THE GROSS RECEIPTS RETURNED AT RS 81,88,721 /-, WAS IMPOSED BY THE ASSESSING OFFICER. 3. IN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS), THE ASSESSEE REITERATED SIMILAR ARGUMENTS AND ALSO RELI ED UPON THE JUDGMENT OF THE HONBLE GAUHATI HIGH COURT IN THE CASE OF SU RAJMAL PARSURAM TODI V CIT 222 ITR 691 (GAU) TO SUBMIT THAT IN THE BACKG ROUND OF NON- MAINTENANCE OF ACCOUNT BOOKS, THERE IS NO POSSIBILI TY OF OFFENCE UNDER SECTION 44AB OF THE AT AND, THEREFORE, PENALTY UNDE R SECTION 271B OF THE ACT WAS NOT IMPOSABLE. THE COMMISSIONER OF INCOME-T AX (APPEALS) HAS ALSO UPHELD THE STAND OF THE ASSESSING OFFICER. ACC ORDING TO HIM, THE FACT OF ACCOUNT BOOKS NOT BEING MAINTAINED, WOULD NOT AB SOLVE THE ASSESSEE FROM THE PROVISIONS OF SECTION 44AB OF THE ACT SINC E, THE TURNOVER EXCEEDED THE PRESCRIBED LIMIT. HE, THEREFORE, UPHEL D THE LEVY OF PENALTY UNDER SECTION 271B OF THE ACT. 4. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE HAS RELIED UPON THE FOLLOWING JUDGMENTS: ITA NO 668/PN/10 SHRI RAMCHANDRA D KELUSKAR, SINDHUDU RG 3 (I) SURAJMAL PARSURAM TODI V CIT 222 ITR 691 (G AU.) AND (II) CIT V BISAULI TRACTORS 299 ITR 219 (ALL), TO SUBMIT THAT PENALTY UNDER SECTION 271B OF THE AC T CAN BE IMPOSED ONLY IN A CASE WHERE THERE IS A FAILURE TO GET THE BOOKS OF ACCOUNT AUDITED, WHEREAS IN THE PRESENT CASE THE ASSESSEE DID NOT MA INTAIN BOOKS OF ACCOUNT AND, THEREFORE, THE OFFENCE CONTEMPLATED UN DER SECTION 44AB OF THE ACT CANNOT BE ASSUMED. IN THE WRITTEN SUBMISSIO NS PLACED AT PAGES 1 TO 2 OF THE PAPER BOOK, THE APPELLANT HAS ALSO EXPL AINED THE REASONS FOR THE NON-MAINTENANCE OF THE ACCOUNT BOOKS. AS PER TH E APPELLANT, TILL THE ASSESSMENT YEAR 2004-05 THE TURNOVER WAS BELOW RS 4 0 LAKHS AND ASSESSEE HAS BEEN DECLARING INCOME ON PRESUMPTIVE B ASIS UNDER SECTION 44AB WITHOUT MAINTAINING BOOKS OF ACCOUNT. FOR THE ASSESSMENT YEAR 2005-06, THE CONTRACT RECEIPTS EXCEEDED RS 40 LAKHS , YET THE ASSESSEE DECLARED ITS INCOME BY APPLYING A FLAT RATE OF 8% O N THE RECEIPTS WITHOUT MAINTAINING ANY BOOKS OF ACCOUNT, AND FOR THE ASSES SMENT YEAR 2005-06, ASSESSEE WAS VISITED WITH A PENALTY FOR NON-MAINTEN ANCE OF ACCOUNT BOOKS AND, ACCORDINGLY, HE BECAME AWARE OF THE LEGA L PROVISIONS TO MAINTAIN THE BOOKS OF ACCOUNT. ALL ALONG ASSESSEE H AS BEEN A SMALL TIME CIVIL CONTRACTOR UNAWARE OF THE LEGAL PROVISIONS RE LATING TO MAINTENANCE OF ACCOUNT BOOKS. IT IS POINTED OUT THAT HENCEFORTH IN RELATION TO ASSESSMENT YEAR 2007-08, THE ASSESSEE HAS MAINTAINED BOOKS OF ACCOUNT AND ALSO GOT THEM AUDITED AS PRESCRIBED IN LAW. THEREFORE, NON-M AINTENANCE OF BOOKS OF ACCOUNT FOR THE YEAR UNDER CONSIDERATION WAS FOR BONA FIDE REASONS AND THIS FACT IS NOT IN DISPUTE. THUS, THE RATIO OF THE AFORESAID JUDGMENTS CLEARLY APPLIES TO THE FACTS OF THE PRESENT CASE. 5. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE, APPEARING FOR THE REVENUE HAS DEFENDED THE ACTION O F THE LOWER ITA NO 668/PN/10 SHRI RAMCHANDRA D KELUSKAR, SINDHUDU RG 4 AUTHORITIES BY POINTING OUT THAT MERELY BECAUSE THE ASSESSEE HAS NOT MAINTAINED THE ACCOUNTS AS PRESCRIBED UNDER SECTION 44AA OF THE ACT, IT CANNOT BE SAID THAT ACCOUNT BOOKS ARE NOT MAINTAINE D FOR THE PURPOSE OF SECTION 44AB OF THE ACT. ACCORDING TO THE LEARNED D EPARTMENTAL REPRESENTATIVE, ABSENCE OF BOOKS OF ACCOUNT AS PRES CRIBED UNDER SECTION 44AA OF THE ACT CANNOT BE A VALID REASON FOR NOT CO MPLYING WITH THE PROVISIONS OF THE SECTION 44AB OF THE ACT. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE ASSESSEE DID NOT MAINTAIN ANY BOOKS OF ACCOUNT FOR THE YEAR UNDER CONSIDERATION. CONSEQUEN TLY, WHEN THERE ARE NO ACCOUNT BOOKS, THE QUESTION OF THEIR AUDIT DOES NOT ARISE. THE REQUIREMENT OF AUDIT ENSHRINED IN SECTION 44AB OF T HE ACT IS IN RELATION TO THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. IN CASE THE ASSESSEE HAS NOT MAINTAINED THE BOOKS OF ACCOUNT, QUESTION O F AUDIT WOULD NOT ARISE. IN THE INSTANT CASE, THERE IS NO DENIAL TO T HE ASSERTION OF THE ASSESSEE THAT HE HAS NOT MAINTAINED BOOKS OF ACCOUN T FOR SEVERAL YEARS IN PAST ALSO. UNDER THESE CIRCUMSTANCES, IN OUR VIEW, THE PARITY OF REASONING LAID DOWN BY THE HONBLE GAUHATI HIGH COURT IN THE CASE OF SURAJMAL PARSURAM TODI V CIT (SUPRA) AND HONBLE ALLAHABAD H IGH COURT IN THE CASE OF CIT V BISAULI TRACTORS (SUPRA)IS CLEARLY A TTRACTED. THE HONBLE ALLAHABAD HIGH COURT HAS OBSERVED AS UNDER: IF A PERSON HAS NOT MAINTAINED THE ACCOUNTS BOOK O R ANY ACCOUNTS THE QUESTION OF ITS AUDIT DOES NOT ARISE. IN SUCH AN EVENT THE IMPOSITION OF PENALTY UNDER THE PROVISION CONTAINED IN S.271A OF THE ACT FOR THE ALLEGED NON COMPLIANCE OF S. 44AA OF THE ACT MAY ARISE BUT THE PROVISIONS OF S. 44AB OF THE ACT DO NOT GET VIOLATED IN CASE WHERE THE ACCOU NTS HAVE NOT BEEN MAINTAINED AT ALL AND, THEREFORE, PENAL PR OVISIONS OF S. 271B OF THE ACT WOULD NOT APPLY. 7. FOLLOWING THE AFORESAID OBSERVATIONS, WHICH ARE SQUARELY APPLICABLE TO THE PRESENT FACT SITUATION, WE FIND NO JUSTIFICA TION TO UPHOLD THE ORDER OF ITA NO 668/PN/10 SHRI RAMCHANDRA D KELUSKAR, SINDHUDU RG 5 THE COMMISSIONER OF INCOME-TAX (APPEALS) SUSTAINING THE PENALTY UNDER SECTION 271B OF THE ACT. WE, THEREFORE, SET ASIDE T HE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY IMPOSED UNDER SECTION 271B OF TH E ACT AMOUNTING TO RS 40,940/-. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. PRONOUNCED IN THE OPEN COURT ON THIS DAY OF JANUARY, 2011. (SHAILENDRA KUMAR YADAV) (G.S. PA NNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: JANUARY, 2011 COPY TO:- 1) THE APPELLANT. 2) THE DCIT, CIR. 2, KOLHAPUR 3) THE CIT (A) KOLHAPUR 4) THE CIT I KOLHAPUR 5) THE DEPARTMENTAL REPRESENTATIVE, B BENCH, ITAT, PUNE. BY ORDER TRUE COPY ASST. REGISTRAR, I.T.A.T., PUNE B