Devki Nandan Bindal, New Delhi V. ITO, Ward- 46(3), New Delhi

ITA 7072/DEL/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 0276 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-10-2022
• Assessment Year: 2010-2011
• Appeal Filed On: 25-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 271B; 44AB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B” DELHI BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER I.T.A. No.7072 & 7073/DEL/2019 Assessment Year 2010-11 Devki Nandan Bindal, C/o Kapil Goel Adv, F-26/124 Sector 7, Rohini, Delhi. Vs. ITO, Ward-46(3), New Delhi. TAN/PAN: AHEPB8698Q (Appellant) (Respondent) Appellant by: None Respondent by: Shri R.S. Yadav, Sr.DR Date of hearing: 19 10 2022 Date of pronouncement: 19 10 2022 O R D E R PER PRADIP KUMAR KEDIA, A.M.: The captioned appeals have been filed by the Assessee against the order of the Co mmissioner of Inco me Tax (Appeals)- XVI , Ne w Delhi (‘CIT(A) ’ in short) of even date 14.06.2019 arising from respective penalty orders passed by the Assessing Officer under Sec tion 271A and 271B of the Income Tax Act, 1961 (the Act) concerning AYs 2010-11. 2. Both the appeals have been heard together and are being disposed of by wa y of this consolidated order. 3. As per its Grounds of Appeal, the Assessee, in these appeals, I.T.A. No.7072 & 7073/Del/2019 2 has essentially ch allenged (i) the imposition of penalty of Rs. 25000/ under section 271A for non maintenance of books in infringement of S. 44AA of the Act and (ii) i mp osition of penalty of Rs. 1 ,50,000/- under section 271B for not furnishing tax audit report enjoined by S . 44AB of the Act. 4. When the matter was called for hearing, none appeared for the assessee. Acco rdingly, the matter was proceeded e x -parte. 5. The Assessing Officer while passing the assessment order relevant to Assess ment Yea r 2005-06 in question, inter alia alleged that the gross turnover of the assessee stands at Rs.53,06,51,396/- which apparently exce eds the threshold provided by S . 44AA of the Act and therefore, the assessee was under obligation to keep and maintain proper books of account. Owing to such alleged default in maintaining books and 44AA and getting such accounts audited under 44AB of the Act, the AO i mposed penalty of Rs.25,000/- by invoking Section 271A of the Act and Rs. 1 ,50,000/- by invoking Section 271B of the Act. In the first appeal, the CIT(A) confir med the aforesaid action of the Assessing Officer. 6. Aggrieved, the assessee preferred appeal before the Tribunal. 7. We have perused the respective penalty orders and the first appellate orders thereon passed under Section 271A & 271B of the Act. We have also taken into account the contentions on behalf of the Reve nue. 8. To begin with, it is observed that the expression turnover, I.T.A. No.7072 & 7073/Del/2019 3 gross receipt and sales for m the qualifying criteria to deter mine whether the tax pa yer is liable to maintain books and subject such records to tax audit. Contextually, a question arises as to whether the sales by a co mmission agent or by a person on consignment basis for m part of the turnover of the commission agent/consignee for the purposes of maintenance of books and tax audit thereof. 9. It is noticed from the record that the assessee claims to have been a smal l tax payer and was engaged in cheque/ draft discounting activity on a co mmission basis for which the income has also been declared on commission basis yea r afte r year and has been accepted by deptt. and assessed as such. The assessee clai ms to have re ndered these services and gets a co mmission thereon. The assessee has contended before the lower authorities that according to Negotiable Instru ment Act, 1881, exchange and endorse ment of negotiable instru ment is per missible and any person who is the pa yee of the dr aft can endorse the draft in favour of the other person and such endorsement c a n be made any nu mb er of ti mes during the valid period of the draft and the endorsee can collect the payment of such draft. Moving further, the assessee has also contended that it has always mai ntained its books of account on the basis of co mmission received and pointed out that he has earned a mi niscule commission income of Rs.50/- to Rs.100/- per lakh on gross basis and the IT Depart ment has assessed his commission income at Rs.70/- per lakh in the previous assessment years on gross basis. The assessee also contended that the property in goods or significant risks & reward of ownership of goods continue to belong to the I.T.A. No.7072 & 7073/Del/2019 4 constituent on whose behalf the assessee has acted upon and he was merel y conc erned with his co mmission income for the services rendered. 10. In the factual context, we straightawa y take notice of Circular No.452 dated 17 t h March, 1986 issued by the CBDT wherein the question of applicability of Section 44AB in the case of co mmission agents/arhatias was addressed. The Board has clarified that the turnover does not include the sales affected on behalf of the principals and only the gross commis sion has to be considered for the purposes of section 44AB where the agents act only as an agent of his constituent and never acts as a principal. In the instant case also, it is an admitted position that the assessee is only acting as a commission agent on behalf of the constituent. In view of s uch clarification, only the co mmission income is required to be reckoned for the purposes of deter mination of his obligation under Section 44AA of the Act as well as Sec tion 44AB of the Act. 11. The co mmission being turnover/receipt for the purposes of 44AA and 44AB , which is far below the threshold limit prescribed for the relevant assessme nt year, the assessee can not treated as assessee in default in terms of S. 271A and S. 271B of the Act. The asse ssee thus has demonstrated reasonable cause for failure to mai ntain books of account as well as co mpliance of Section 44AB of the Act in ter m o f Section 271B of the Act. 12. Hence, the pe nalty i mposed under Section 271A and Section 271B of the Act is quashed. I.T.A. No.7072 & 7073/Del/2019 5 13. In the result, both the appeals of the assessee are all owed ex-parte. Order was pronounced in the open Court on 19/10/2022. Sd/- Sd/- [DIVA SINGH] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /10/2022 prabhat