Sh. Yashpal Singh Aulakh, New Delhi V. DCIT, New Delhi

ITA 676/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3701 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 08-07-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 15-02-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANUSHA KHURANA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I ; NEW DELHI BEFORE SHRI C.L. SETHI, JM AND SHRI K.D. RANJAN, AM I.T.A. NOS.676 & 677/DEL OF 2010 ASSESSMENT YEAR: 2004-05 SHRI YASHPAL SINGH AULAKH, DCIT , CIRCLE 24(1 ), B-XI/8002, GROUND FLOOR, VS NEW DELHI. VASANT KUNJ, NEW DELHI. APPELLANT RESPONDENT APPELLANT BY: SHRI VED JAIN & ASSOCIATES, CA RESPONDENT BY: MS ANUSHA KHURANA, DR ORDER PER C.L. SETHI, JM THESE TWO APPEALS ARE FILED BY THE ASSESSEE AGAINS T TWO SEPARATE ORDERS BOTH DATED 22.12.2009 PASSED BY THE LEARNED CIT(A) IN THE MATTER OF A PENALTY ORDER PASSED BY THE AO U/S 271A AND 271B OF THE INCOME-TAX ACT, 1961 (THE ACT) PERTAINING TO THE ASSTT. YEAR 2004-0 5. 2. WE SHALL FIRST TAKE THE APPEAL, I.E. ITA NO.676/ DEL/2010, RELATING TO THE PENALTY LEVIED U/S 271A OF THE ACT BY THE AO. 3. IN THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE AO THAT ASSESSEE, BEING A CONTRACTOR, HAD A GROSS RECEIPTS FROM CONTRACT WORKS OF RS.2,19,29,767/- WHEREUPON THE ASSESSEE DISCLOSED T HE PROFIT BY APPLYING 2 8% RATE OF NET PROFIT. NO PROFIT AND LOSS ACCOUNT, BALANCE SHEET ETC. WERE FILED ALONG WITH THE RETURN OF INCOME. IT WAS THUS , CLEAR THAT THE ASSESSEE WAS NOT MAINTAINING ANY BOOKS OF ACCOUNT, AND THE ASSES SEE HAS SUBMITTED THE RETURN BY APPLYING THE RATE OF NET PROFIT ON GROSS RECEIPTS RECEIVED DURING THE YEAR. AS THE GROSS RECEIPTS OF THE BUSINESS EXCEED ED AMOUNT OF RS.40 LACS, AND SINCE THE ASSESSEES GROSS RECEIPTS OF THE BUSI NESS EXCEEDED RS.10 LACS IN ONE OF THE THREE YEARS IMMEDIATELY PRECEDING THE PR EVIOUS YEAR, THE AO HAD TAKEN A VIEW THAT THE ASSESSEE WAS REQUIRED TO KEEP AND MAINTAIN SUCH BOOKS OF ACCOUNTS AND OTHER DOCUMENTS AS MAY ENABLE THE A O TO COMPUTE THE TOTAL INCOME IN ACCORDANCE WITH THE PROVISIONS OF THE INC OME-TAX ACT. AS THE ASSESSEE FAILED TO COMPLY WITH THE PROVISIONS OF SE CTION 44AA OF THE ACT BY NOT MAINTAINING THE REGULAR BOOKS OF ACCOUNTS, THE AO HAD TAKEN A VIEW THAT PENALTY U/S 271A OF THE ACT WAS IMPOSABLE UPON THE ASSESSEE. HE, THEREFORE, INITIATED PENALTY PROCEEDINGS U/S 271A AND ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE. NOBODY FOR THE ASSESSEE ATTENDED IN RESP ONSE TO THE SHOW CAUSE NOTICE NOR ANY EXPLANATION WAS FILED. THE AO, THER EFORE, TAKEN A VIEW THAT ASSESSEE HAD NOTHING TO SAY WITH REGARD TO THE SHOW CAUSE NOTICE ISSUED BY HIM. THE AO, THEREFORE, LEVIED A PENALTY OF RS.25,0 00/- U/S 271A OF THE ACT VIDE HIS ORDER DATED 25.6.2007. 3 4. BEING AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BE FORE THE CIT(A), WHO HAD CONFIRMED THE AOS ORDER BY OBSERVING THAT THE ASSESSEES STAND IN NOT MAINTAINING THE BOOKS OF ACCOUNT, CANNOT BE CONSIDE RED TO BE BONAFIDE SO AS TO RELIEVE HIM FROM LEVY OF PENALTY U/S 271A OF THE ACT. 5. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFOR E US. 6. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PER USED THE MATERIAL ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS NOT FILED AN EXPLANATION GIVING ANY REASON FOR NOT MAINTAINING THE BOOKS OF ACCOUNT REQUIRED TO BE MAINTAINED U/S 44AA OF THE ACT, NEITHER THE ASSESSE E HAS GIVEN ANY BONAFIDE EXPLANATION BEFORE US FOR NOT MAINTAINING THE SAME. WE ARE, THEREFORE, OF THE CONSIDERED VIEW THAT THE AO HAS RIGHTLY LEVIED THE PENALTY U/S 271A OF THE ACT, AND, ACCORDINGLY, THE ORDER OF CIT(A) CONF IRMING THE PENALTY IS UPHELD. 7. NOW, WE SHALL TAKE UP APPEAL, I.E. ITA NO.677/DE L/2010, RELATING TO THE PENALTY LEVIED U/S 271B OF THE ACT. 8. IN THIS CASE, BESIDES LEVYING PENALTY U/S 271A O F THE ACT IN NOT MAINTAINING BOOKS OF ACCOUNT REQUIRED U/S 44AA OF T HE ACT, THE AO HAS ALSO LEVIED PENALTY U/S 44AB FOR NOT GETTING THE ACCOUNT S AUDITED, AND FILING THE STATUTORY REPORT AS REQUIRED U/S 44AB OF THE ACT. THE MAXIMUM PENALTY OF RS.1 LAC WAS, THUS, IMPOSED BY THE AO U/S 271B OF T HE ACT FOR NOT 4 COMPLYING WITH THE PROVISIONS OF SECTION 44AB OF TH E ACT. ON AN APPEAL, THE PENALTY HAS BEEN CONFIRMED BY THE LEARNED CIT(A ) BY OBSERVING THAT IT WAS THE STATUTORY DUTY OF THE ASSESSEE TO OBTAIN AN AUDIT REPORT REQUIRED U/S 44AB, AND TO FURNISH THE SAME ALONG WITH THE RETURN OF INCOME, WHICH ASSESSEE HAS NOT DONE. 9. WE HAVE HEARD BOTH THE PARTIES. AFTER HEARING T HE LEARNED REPRESENTATIVES FOR BOTH THE PARTIES, AND CONSIDER ING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSID ERED VIEW THAT PENALTY U/S 271B, IN THE PRESENT CASE, IS NOT AT ALL CALLED FOR INASMUCH AS THERE WERE NO ACCOUNTS MAINTAINED BY THE ASSESSEE THAT COULD BE G ET AUDITED U/S 44AB OF THE ACT. WHEN IT IS THE CASE OF THE AO THAT ASSESS EE WAS NOT MAINTAINING ANY BOOKS OF ACCOUNTS OR DOCUMENTS AS REQUIRED U/S 44AA OF THE ACT OR OTHERWISE, THE QUESTION OF GETTING THE ACCOUNTS AUD ITED AS REQUIRED U/S 44AB DOES NOT ARISE. THE PENALTY U/S 271A FOR NOT MAINT AINING THE BOOKS OF ACCOUNT HAS ALSO BEEN LEVIED BY THE AO, WHICH HAS B EEN CONFIRMED BY THE LEARNED CIT(A), AND FURTHER CONFIRMED BY THIS TRIBU NAL VIDE THIS COMMON ORDER. THEREFORE, WHEN THE ASSESSEE MAINTAINS NO B OOKS OF ACCOUNT, QUESTION OF GETTING THEM AUDITED DOES NOT ARISE, AN D AS SUCH, NO PENALTY U/S 271B IS ATTRACTED. WE, THEREFORE, UPHELD THE PENAL TY LEVIED U/S 271B BY THE AO. IN SUPPORT OF THE VIEW WE HAVE TAKEN ABOVE, A REFERENCE MAY BE MADE 5 TO THE DECISION OF HONBLE GAUHATI HIGH COURT IN TH E CASE OF SURAJMAL PARSHURAM TODI VS CIT (1996) 222 ITR 691(GAU), WHER E IT HAS BEEN HELD THAT WHERE A PERSON COMMITS AN OFFENCE OF NOT MAINT AINING BOOKS OF ACCOUNTS AS CONTEMPLATED BY SECTION 44AA, THE OFFEN CE IS COMPLETE, AND AFTER THAT, THERE CAN BE NO POSSIBILITY OF ANY OFFE NCE CONTEMPLATED BY SECTION 44AB I.E. NOT GETTING ACCOUNTS AUDITED, AND OBTAINI NG AN AUDIT REPORT, AND, THEREFORE, PENALTY CANNOT BE IMPOSED U/S 271B, WHEN AN OFFENCE IS ALREADY MADE U/S 44AA FOR NOT MAINTAINING THE BOOKS OF ACC OUNTS. THUS, THE ORDER LEVYING PENALTY U/S 271B IS CANCELLED. 10. IN THE RESULT, ITA NO.676/DEL/2010 RELATING TO THE LEVY OF PENALTY U/S 271A IS DISMISSED, AND ITA NO.677/DEL/2010 RELATING TO THE LEVY OF PENALTY U/S 271B IS ALLOWED. 11. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT ON 8 TH JULY, 2010 IMMEDIATELY AFTER THE HEARING WAS OVER. (K.D. RANJAN) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 8 TH JULY, 2010 VIJAY 6 COPY TO: 1. APPELLANT. 2. RESPONDENT. 3. CIT 4. CIT(A)-XXIII NEW DELHI. 5. DR ASSISTANT REGISTRAR