SHRI KRISHANA PAL SHARMA, JAIPUR V. INCOME TAX OFFICER, WARD-7-3, JAIPUR

ITA 765/JPR/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2163 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 11-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K L MOOKCHANDANI
• Keywords: Business income; Reasonable cause
• Section: 44AD; 273B; 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 765/JP/2017 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2010-11 SHRI KRISHANA PAL SHARMA, S/O SHRI SHRAWAN LAL SHARMA, VILLAGE- LABANA, TEHSIL, AMER, JAIPUR. CUKE VS. THE ITO, WARD 7(3), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: CEZPS8235L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI K.L. MOOKCHANDANI (ADV.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI AJAY MALIK (ADDL. CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 24/01/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 29/01/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 02.08.2017 OF LD. CIT (A), JAIPUR ARISING FROM THE PENALTY ORDER PASSED U/S 271A OF THE INCOME TAX ACT FOR THE ASSESSMENT Y EAR 2010-11. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED CIT(A) HAS FACTUALLY AND LEGALLY ERRED IN CONFIRMIN G THE PENALTY OF RS. 25,000/- LEVIED BY THE LD. AO U/S 271A OF THE A CT WITHOUT APPRECIATING THE FACTS OF THE CASE IN RIGHT PERSPEC TIVE AND ALSO ITA NO. 765/JP/2017 SHRI KRISHANA PAL SHARMA VS. ITO, JAIPUR 2 IGNORING THE FACTS DISCUSSED IN DETAIL IN THE WRITT EN SUBMISSION SUBMITTED DURING THE COURSE OF APPEAL PROCEEDINGS. THUS, THE PENALTY SO LEVIED AND CONFIRMED IS BAD IN LAW AND D ESERVES TO BE DELETED SUMMARILY. 2. THE APPELLANT CRAVES TO ADD, AMEND OR WITHDRAW A NY OF THE GROUND OF APPEAL EITHER BEFORE OR AT THE TIME OF HE ARING OF APPEAL. 2. THE ASSESSEE FILED HIS RETURN OF INCOME ON 29.03 .2011 DECLARING TOTAL INCOME OF RS. 1,53,110/-. THE ASSESSEE IN HIS COMPUTING OF INCOME STATED TO HAVE HIS OWN DAIRY BUSINESS AND EARNED IN COME OF RS. 1,88,100/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 22.11.2012. THE ASSESSEE HAS NOT MAINTAINED ANY BOO KS OF ACCOUNTS AND FILED HIS RETURN OF INCOME BY DECLARING THE INC OME U/S 44AD OF THE ACT. SINCE, THE ASSESSEE HAS NOT MAINTAINED ANY BOO KS OF ACCOUNT, THEREFORE, THE AO INITIATED THE PENALTY PROCEEDING U/S 271A AND LEVY PENALTY OF RS.25,000/- VIDE ORDER DATED 16.01.2013. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT( A) BUT COULD NOT SUCCEED. 3. BEFORE US, THE LD. AR OF THE ASSESSEE HAS REITER ATED HIS CONTENTIONS AS RAISED BEFORE THE LD. CIT(A) IN PARA 4.2 AS UNDER:- 4.2 DURING THE APPELLATE PROCEEDING THE APPELLANT HAS FILED WRITTEN SUBMISSION AS UNDER AND ALSO ARGUED THE CAS E ON THE SAME BASIS. THE APPELLANT IS A VILLAGER AND IS AN AGRICULTURIS T. HIS MAIN ITA NO. 765/JP/2017 SHRI KRISHANA PAL SHARMA VS. ITO, JAIPUR 3 SOURCE OF INCOME IS FROM THE AGRICULTURAL LAND ONLY . WITH A VIEW TO SUPPLEMENT HIS LIVELIHOOD, HE HAD STARTED SELLIN G MILK OF HIS PET COWS AND BUFFALOS ON RETAIL AND MONTHLY BASIS T O SOME OF HIS ACQUAINT PARTIES. FOR THE PURPOSE, THE APPELLANT ST ARTED SELLING I THE SURPLUS MILK AFTER MEETING OUT HIS PERSONAL REQUIREMENT OF MILK. THE APPELLANT HAD ABOUT 2-3 BUFFALOS AND 2-3 COWS AT HIS AGRICULTURAL LAND AT VILLAGE LABANA. THUS THE RECEI PTS FROM SUCH MILK SELLING WP'-E VERY NOMINAL AND CASUAL. HE USED TO SUPPLY MILK TO 10-12 KNOWN FAMILIES ON MONTHLY BASIS FOR R S.L, 000/- TO RS.1500/- P.M. BESIDES, HE HAD ALSO RANDOM RECEIPTS FROM THE SALE OF THE LEFTOVER MILK ON THE SPOT. HAVING CONSI DERED SUCH NOMINAL VOLUME AND CASUAL RECEIPTS , THE TOTAL SALES OF THE MILK WERE ESTIMATED AT RS.2,65,000/- APPROXIMATELY I.E. ABOUT RS.2,00,000/- FROM MONTHLY CUSTOMERS AND RS. 65,000/- FROM SALES MADE ON THE SPOT IN CASUAL MANNER. AS THE APPELLANT IS BASICALLY A VILLAGER AND AN AGRICULTURIST SO HE WAS TOTALLY IGNORANT ABOUT THE PROCEDURE AND IMPLICATIONS OF MAINTAINING RECORDS IN RESPECT OF SUCH MEASER AND CASUAL RECEIPTS. ACCORDINGLY HE DID NOT KEEP RECORD OF HIS INCOME AND ESTIMATED THE SAME ON THE BASIS OF MONTHLY SALES TO FEW PARTIES AND CASUAL SA LES MADE ON THE SPOT. FROM THESE FIGURES IT WOULD BE NOTED THAT THE APPELLANT WAS A VERY SMALL TIMER AND HAD HARDLY TURN-OVER OF SUCH MILK IN THE VICINITY OF RS. 2,65,000/- PER ANNUM. AFTER MEE TING OUT THE FEEDING CHARGES OF THE ANIMALS PROPORTIONATELY, THE NET INCOME FROM THIS SOURCE WAS RS. 1,80,000/- APPROXIMATELY. THE TOTAL RECEIPTS FROM SUCH SELLS WERE FAR BELOW RS.10,00,000/- AS PRESCRIBED U/S 44AA OF THE ACT. IN THE ASSESSMENT P ROCEEDINGS, THE LEARNED AO WAS NOT WILLING TO APPRECIATE THESE FACTS. ACCORDINGLY, HE HAD PROCEEDED TO ESTIMATE SUCH INCO ME AT RS. 3,00,000/- AS AGAINST RS. 1,80,000/- SHOWN BY THE A PPELLANT WITHOUT ANY BASIS AND WITHOUT BRINGING ANY MATERIAL ON RECORD TO SUBSTANTIATE HIS ESTIMATE OF RS.3,00.000/-. FOR SUCH QUANTUM ADDITION, SEPARATE APPEAL HAD BEEN FILED WH ICH IS PENDING BEFORE THE HONORABLE CTT (A)-III, JAIPUR WH ICH IS PENDING AS ON DATE. ITA NO. 765/JP/2017 SHRI KRISHANA PAL SHARMA VS. ITO, JAIPUR 4 2. COMING TO THE ALLEGED DEFAULT U/S 44AA OF THE AC T AS POINTED OUT VIDE PARA 2.2 OF THE ASSESSMENT ORDER, IT MAY B E POINTED OUT THAT THE APPELLANT IS AN AGRICULTURIST AND A VILLAG ER, HAVING HIS INCOME MAINLY FROM AGRICULTURAL OPERATIONS AS MENTIONED IN THE FORE-GONE PARA. SELLING OF SURPLUS MILK WAS HIS PART TIME JOB JUST TO SUPPLEMENT HIS INCOME ON CASUAL BASIS. AS THE APPELLANT IS A VILLAGER AND AN AGRICULTURIST SO HE IS TOTALLY IGNORANT ABOUT THE LEGAL OBLIGATION OF MAINTAINING BOOKS OF ACCOUNTS AS REQUIRED U/S 44AA OF THE ACT. MORE-OVER HE DID NOT DO ANY REGULAR BUSINESS OF MILK SELLING. IN THE CIRCUMSTANCES, HE WAS TOTALLY UNAWARE OF ANY LEGAL OBLIGATION OF MAINTAINING THE PRESCRIBED BOOKS U/S 44AA OF THE ACT. IGNORING SUCH BONA-FIDE FAILURE ON THE PART OF THE APPELLANT, THE ID. AO HAD INITIATED THE PENALTY PROCEEDINGS U/ S 271A OF THE ACT AND IMPOSED A PENALTY OR RS.25,000/- VIDE ORDER DATED 16.1.2013. THE PENALTY SO IMPOSED IS ASSAILED ON TH E FOLLOWING COUNTS: (I) THE APPELLANT IS AN AGRICULTURIST AND A VILLAGER. H E DID NOT DO ANY REGULAR BUSINESS (II) SELLING OF MILK WAS HIS PART TIME JOB DONE ON CA SUAL BASIS WITH A VIEW TO SUPPLEMENT HIS INCOME B\ SELLING THE SURPLUS MILK OF HIS ANIMALS. THUS IT IS WAS NOT HIS REGULAR BUSINESS ACTIVITY. (HI) AS THE APPELLANT IS NOT A * REGULAR BUSINESSMAN SO HE IS TOTALLY UNAWARE OF THE LEGAL OBLIGATIONS OF M AINTAINING THE PRESCRIBED BOOKS OR RECORD U/S 44AA OF THE ACT IN RESPECT OF SUCH CASUAL INCOME. (IV) BECAUSE OF HIS BONA-FIDE IGNORANCE . THE REQUIRED BOOKS COULD NOT BE MAINTAINED BY THE APPELLANT. (V) NO PENALTY IS EXIGIBLE ON ACCOUNT OF SUCH BONA-FID E DEFAULT AS HELD BY HONORABLE SUPREME COURT IN THE CASE OF M /S HINDUSTRAN STEEL LTD. (1972) 83 ITR 26 (SC) HOLDING THEREIN AS UNDER: ITA NO. 765/JP/2017 SHRI KRISHANA PAL SHARMA VS. ITO, JAIPUR 5 THAT AN ORDER IMPOSING PENALTY FOR FAILURE TO CAR RY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMI NAL PROCEEDINGS, AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS T HE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LA W OR GUILTY OF CONDUCT, CONTUMACIOUS OR DISHONEST, OR ACTED IN CON SCIOUS DISREGARD TO ITS OBLIGATION. PENALTY WILL ALSO NOT BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENAL TY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATI ON IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE CONSIDER TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRI BED, THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE J USTIFIED IN REFUSING TO IMPOSE PENALTY WHEN THERE IS A TECHNICA L OR VENIAL BREACH OF THE PROVISION OF THE ACT OR WHERE THE BRE ACH FLOWS FROM A BONAFIFE BELIEF THAT THE OFFENDER IS NOT LIA BLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. IN VIEW OF THE ABOVE DISCUSSIONS, THE PENALTY OF RS . 25,000/- AS IMPOSED U/S 271A OF THE ACT IS FACTUALLY AND LEGALL Y INCORRECT AND DESERVES TO BE DELETED SUMMARILY. 4. ON THE OTHER HAND, LD. DR HAS RELIED UPON THE OR DERS OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. WE FIND THAT THE ASSESSEE IS EA RNING THE INCOME BY SELLING OF MILK THOUGH BASICALLY THE ASSESSEE IS AN AGRICULTURIST HAVING AGRICULTURAL LAND. THE ASSESSEE IS HAVING ITS OWN C OWS AND BUFFALOS AND THEREAFTER, THE SALE OF MILK IS NOT A REGULAR BUSIN ESS IN TRUE. THE ASSESSEE HAS EXPLAINED THE REASONS FOR NOT MAINTAIN ING THE BOOKS OF ACCOUNTS AS ASSESSEE IS BASICALLY AN AGRICULTURIST AND CARRYING OUT ITA NO. 765/JP/2017 SHRI KRISHANA PAL SHARMA VS. ITO, JAIPUR 6 AGRICULTURAL OPERATIONS APART FROM THE SELLING MILK FROM THE ANIMAL KEPT BY THE ASSESSEE. WE FIND THAT THE EXPLANATION OF TH E ASSESSEE THOUGH MAY NOT BE ACCEPTED AS PER THE STRICT PROVISIONS OF LAW HOWEVER, THE AO HAS NOT FOUND THE EXPLANATION OF THE ASSESSEE AS UN TRUE OR MALAFIDE. THEREFORE, THE EXPLANATION FURNISHED BY THE ASSESSE E CLEARLY PROVES THAT THERE WAS A REASONABLE CAUSE FOR NOT MAINTAINING TH E BOOKS OF ACCOUNTS. HAVING CONSIDERED THE BACK GROUND AND NAT URE OF THE ACTIVITY CARRIED OUT BY THE ASSESSEE AND IN VIEW OF THE PROV ISIONS OF SECTION 273B OF THE ACT WE FIND THAT THE ASSESSEE HAS EXPL AINED A REASONABLE CAUSE AND CONSEQUENTLY NO PENALTY CAN BE IMPOSED. I N VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE WE DELETE THE PENALTY OF LEVY U/S 271A OF THE ACT. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 29/01/2018 SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 29/01/2018. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI KRISHANA PAL SHARMA, JAIPUR. ITA NO. 765/JP/2017 SHRI KRISHANA PAL SHARMA VS. ITO, JAIPUR 7 2. IZR;FKHZ@ THE RESPONDENT- ITO WARD 7(3), JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 765/JP/2017} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR