Mr Bipin K Baby, Muvattupuzha V. Income Tax Officer, Thodupuzha

ITA 7/COCH/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52347 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-11-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 08-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POLY VARGHESE MS VIJAYAPRABHA
• Section: 44AD

Judgement Text

1 ITAS NO.6 TO 9/COCH/2009 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S.GANESAN (JM) & SHRI SANJAY ARORA (AM) I.T . A.NO. 06 TO 09 /COCH/200 9 (ASSESSMENT YEARS 2002-03, 2003-04, 2004-05 & 2005- 06) SHRI BIPIN K BABY KAITHAPILLIL HOUSE RAMAMANGALAM POST MUVATTUPUZHA VS. ITO, WD.1, THODUPUZHA (APPELLANT) (RESPONDENT) REVENUE BY SHRI POLY VARGHESE ASSESSEE BY MS VIJAYAPRABHA DATE OF HEARING 2 1 - 11 - 2011 DATE OF PRONOUNCEMENT 30 - 12 - 2011 O R D E R PER N.R.S. GANESAN (JM) THESE APPEALS OF THE REVENUE ARE DIRECTED AGAINST THE COMMON ORDER OF COMMISSIONER OF INCOME-TAX(A)-II, KOCHI DA TED 31-10-2008 AND PERTAIN TO ASSESSMENT YEARS 2002-03, 2003-04, 2 004-05 & 2005- 06 CONFIRMING THE LEVY OF PENALTY U/S 271A R.W.S. 2 74 OF THE I.T. ACT, 1961 FOR NON MAINTENANCE OF THE BOOKS OF ACCOUNT. 2 ITAS NO.6 TO 9/COCH/2009 2. SHRI POLY VARGHESE, THE LD.REPRESENTATIVE FOR TH E ASSESSEE SUBMITTED THAT U/S 44AA(2)(I) OF THE ACT, THE ASSES SEE WAS REQUIRED TO MAINTAIN THE BOOKS OF ACCOUNT IN CASE THE INCOME FR OM BUSINESS EXCEEDS ONE LAKH TWENTY THOUSAND RUPEES OR THE TOTA L TURNOVER EXCEEDS RS.10 LAKHS IN ANYONE OF THE THREE YEARS IM MEDIATELY PRECEDING THE PREVIOUS YEAR. ACCORDING TO THE LD.R EPRESENTATIVE, FOR THE ASSESSMENT YEARS 2002-03, 2003-04 & 2004-05, TH E INCOME RETURNED BY THE ASSESSEE AND ACCEPTED BY THE DEPART MENT IS LESS THAN RS.1,20,000. THEREFORE, ACCORDING TO THE LD.REPRES ENTATIVE, THE ASSESSEE IS NOT REQUIRED TO MAINTAIN ANY BOOKS OF A CCOUNT. FOR THE ASSESSMENT YEAR 2005-06, EVEN THOUGH THE INCOME WAS RS.1,25,000 THE ASSESSEES TOTAL TURNOVER OR GROSS RECEIPT DID NOT EXCEED RS.10 LAKHS. THEREFORE, FOR THE ASSESSMENT YEAR 2005-06 IT IS NOT COMPULSORY FOR THE ASSESSEE TO MAINTAIN THE BOOKS O F ACCOUNT AS REQUIRED U/S 44AA(2)(I) OF THE ACT. HENCE, THE PENA LTY LEVIED BY THE ASSESSING OFFICER U/S 272A AS CONFIRMED BY THE COMM ISSIONER OF INCOME-TAX(A) IS NOT JUSTIFIED AT ALL. 3. ON THE CONTRARY, MS. VIJAYAPRABHA, THE LD.DR SUB MITTED THAT NO DOUBT IT IS MANDATORY FOR THE ASSESSEE TO MAINTAIN THE BOOKS OF ACCOUNT WHENEVER THE INCOME FROM BUSINESS EXCEED RS .1,20,000 OR THE TURNOVER EXCEED RS.10 LAKHS. HOWEVER, WHEN THE ASSESSEE IS IN THE BUSINESS OF MONEY LENDING IT IS FOR THE ASSESSE E TO MAINTAIN THE BOOKS OF ACCOUNT. IF THE ASSESSEE FAILS TO MAINTAI N THE BOOKS OF 3 ITAS NO.6 TO 9/COCH/2009 ACCOUNT, THE PROVISIONS OF SECTION 271A COME INTO O PERATION AND THE ASSESSEE HAS TO NECESSARILY PAY THE PENALTY. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND HAVE ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. SECTION 44AA OF THE ACT MANDATES EVERY PERSON TO MAINTAIN SUCH BOOK S OF ACCOUNT AND OTHER DOCUMENTS AS MAY ENABLE THE ASSESSING OFFICER TO COMPUTE THE TOTAL INCOME IN CASE THE INCOME FROM BUSINESS EXCEE DS RS.1,20,000 OR THE TURNOVER EXCEED RS.10 LAKHS. IN VIEW OF SECTIO N 44AA(2)(I) OF THE ACT, THE ASSESSEE HAS TO MAINTAIN THE BOOKS OF ACCO UNT ONLY IN CASE THE PROFIT EXCEED RS.1,20,000 FROM BUSINESS OR THE TOTAL TURNOVER EXCEED RS.10 LAKHS. IT IS ALSO NECESSARY TO MAINTA IN BOOKS OF ACCOUNT IN CASE THE ASSESSEE CLAIMS THE INCOME TO BE LOWER THAN THE PROFIT AND GAIN AS ESTIMATED U/S 44AD OR 44AE OF THE ACT. THE REFORE, IT IS ALSO MANDATORY FOR THE ASSESSEE TO MAINTAIN THE BOOKS OF ACCOUNT WHENEVER THE ASSESSEE CLAIMS LOWER PROFITS THAN THE ONE PRESCRIBED U/S 44AD OR 44AE. IN THE CASE BEFORE US, IT IS NOT ANYBODYS CASE THAT THE ASSESSEE IS CLAIMING ANY LOWER PROFIT. THEREFO RE, THE ASSESSEE HAS TO MAINTAIN THE BOOKS OF ACCOUNT, THE INCOME FROM B USINESS EXCEED RS.1,20,000 OR THE TOTAL TURNOVER EXCEED RS.10 LAKH S. WITH THIS BACK GROUND LET US EXAMINE THE ASSESSEES CASE. 5 FOR THE ASSESSMENT YEAR 2002-03, THE INCOME COMPU TED FROM BUSINESS IS RS.87,476. THEREFORE, ADMITTEDLY, THE INCOME IS LESS THAN 4 ITAS NO.6 TO 9/COCH/2009 RS.1,20,000. THEREFORE, FOR THE ASSESSMENT YEAR 20 02-03 THE ASSESSEE IS NOT REQUIRED TO MAINTAIN THE BOOKS OF A CCOUNT. AS SUCH, THIS TRIBUNAL IS OF THE OPINION THAT THERE IS NO JU STIFICATION FOR LEVY OF PENALTY U/S 271A OF THE ACT. 6. NOW COMING TO ASSESSMENT YEAR 2003-04 THE TOTAL INCOME AS COMPUTED BY THE ASSESSING OFFICER IS RS.1,09,742 FR OM BUSINESS. THEREFORE, FOR THE ASSESSMENT YEAR 2003-04 ALSO THE ASSESSEE IS NOT REQUIRED TO MAINTAIN ANY BOOKS OF ACCOUNT. ACCORDI NGLY THERE IS NO JUSTIFICATION FOR LEVY OF PENALTY FOR THIS ASSESSME NT YEAR. 7. NOW COMING TO ASSESSMENT YEAR 2004-05, THE ASSES SEES INCOME FROM BUSINESS AS SEEN FROM THE ASSESSMENT OR DER IS RS.1,38,060. THEREFORE, IT EXCEEDED RS.1,20,000. SECTION 44AA(2)(I) CLEARLY SHOWS THAT WHEN THE INCOME FROM BUSINESS EX CEED RS. 1,20,0000 OR THE TOTAL TURNOVER EXCEED RS.10 LAKHS THE ASSESSEE HAS TO NECESSARILY MAINTAIN THE BOOKS. SINCE THE INCOM E EXCEED RS.1,20,000 THE ASSESSEE HAS TO NECESSARILY MAINTAI N THE BOOKS OF ACCOUNT FOR ASSESSMENT YEAR 2004-05. THEREFORE, TH IS TRIBUNAL IS OF THE OPINION THAT THE ASSESSING OFFICER HAS RIGHTLY LEVIED PENALTY FOR NON MAINTENANCE OF BOOKS OF ACCOUNT WHICH WAS RIGHTLY C ONFIRMED BY COMMISSIONER OF INCOME-TAX(A). 5 ITAS NO.6 TO 9/COCH/2009 8. LIKEWISE, FOR THE ASSESSMENT YEAR 2005-06 THE IN COME COMPUTED BY THE ASSESSING OFFICER FROM BUSINESS IS RS. 1,63,030. THEREFORE, FOR THE ASSESSMENT YEAR 2005-06 THE INCO ME EXCEEDED RS.1,25,000. HENCE, THE ASSESSEE HAS TO NECESSARILY MAINTAIN THE BOOKS OF ACCOUNT. THEREFORE, THE NON MAINTENANCE O F BOOKS OF ACCOUNT HAS BEEN RIGHTLY TAKEN NOTE OF BY THE LOWER AUTHORI TIES AND PENALTY LEVIED. 9. IN THE RESULT, ORDERS OF LOWER AUTHORITIES FOR A SSESSMENT YEARS 2002-03 AND 2003-04 IN ITA NOS 6 & 7/COCH/2009 ARE SET ASIDE AND PENALTY IS DELETED. HOWEVER, FOR THE ASSESSMENT YEA RS 2004-05 AND 2005-06 IN ITA NOS 08 & 09/COCH/2009 THE ORDERS OF THE LOWER AUTHORITIES ARE CONFIRMED. 10. IN THE RESULT, ITA NOS.6 & 7/COCH/2009 ARE ALLO WED AND ITA NOS 8 & 9/COCH/2009 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH DECEMBER, 2011 SD/- SD/- (SANJAY ARORA) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER ERNAKULAM, DT : 30 TH DECEMBER, 2011 PK/- 6 ITAS NO.6 TO 9/COCH/2009 COPY FORWARDED TO: 1. SHRI BIPIN K BABY, KAITHAPILLIL HOUSE, RAMAMANGALAM POST, MUVATTUPUZHA 2. ITO, WD.1, THODUPUZHA 3. THE COMMISSIONER OF INCOME-TAX(A)-II, KOCHI 4. THE COMMISSIONER OF INCOME-TAX, COCHIN-5 5. THE DR (TRUE COPY) BY ORDER ASSTT.REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL , COCHIN