Income Tax Appellate Tribunal - Chennai
S.Rajendran, Coimbatore vs Assessee on 16 January, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
'A' BENCH, CHENNAI
BEFORE Dr. O.K. NARAYANAN,VICE-PRESIDENT AND
SHRI VIKAS AWASTHY, JUDICIAL MEMBER
ITA No.1928/Mds/2012
(Assessment Year: 2008-09)
Mr. S.Rajendran, Vs. Assistant Commissioner of Income
D-3, 1st Street, Lakshmi Nagar, Tax, Company Circle-IV(2)
Opp.Anna Nagar, Edayarpalayam, Coimbatore.
Coimbatore-641 025.
PAN: AKEPR2394G
(Appellant) (Respondent)
Appellant by : Mr. V.Naresh Kumar, CA
Respondent by : Mr. Shaji P.Jacob, Addl. CIT
Date of Hearing : 16th January, 2013
Date of Pronouncement : 16th January, 2013
ORDER
Per Vikas Awasthy, JM:
The appeal has been filed by the assessee impugning the order dated 5.7.2012 passed by the CIT(A)-I, Coimbatore relevant to the assessment year 2008-09.
2. The brief facts of the case are that the assessee is engaged in the business of purchase and sale of water meters. The assessee has filed his return of income for the assessment year 2008-09 on 25.11.2008 declaring his income as ` 1,17,100/-. The case of the assessee was 2 ITA No.1928/Mds/2012 selected for scrutiny. The Assessing Officer vide assessment order dated 30.12.2010 determined the income of the assessee at ` 3,51,120/-. At the time of assessment addition was made after taking into consideration peak credit (`2,34,017/-). Consequent to the addition made in the income returned, penalty proceedings under section 271A was also initiated by the Assessing Officer. The Assistant Commissioner of Income Tax while levying the penalty of `25,000/- observed that the A.R. of the assessee failed to produce cash flow statement as well as books of account in support of the income returned. The assessee failed to maintain any books of account to arrive at the turnover from which the income under section 44AF was arrived at. The ACIT further observed that failure to keep, maintain books of account as required under the provisions of section 44AA of the Act, the assessee has made himself liable for levy of penalty under section 271A.
Aggrieved against the order dated 24.6.2011 passed under section 271A, the assessee preferred an appeal before the CIT(A). The CIT(A) vide order dated 5.7.2012 dismissed 3 ITA No.1928/Mds/2012 the appeal of the assessee holding that the assessee was required to maintain books of account and in the absence of the same, the basis of return filed by the assessee under section 44AF could not be verified. Now, the assessee has come in second appeal before the Tribunal impugning the order of the CIT(A).
3. Shri V.Naresh Kumar appearing on behalf of the assessee submitted that the assessee had filed return admitting income of ` 1,17,100/- under section 44AF of the Act. The Assessing Officer erred in taking into consideration the peak credit in the savings bank account thereby making addition of ` 2,34,017/-. The A.R. contended that once the return has been filed under the provisions of section 44AF, the assessee is not required to maintain books of accounts He submitted that the provisions of section 44AA are not applicable for the return filed under section 44AF, therefore, the levy of penalty is illegal, unjustified and arbitrary.
4. On the other hand, Mr. Shaji P.Jacob appearing on behalf of the Revenue strongly supported the order of the 4 ITA No.1928/Mds/2012 CIT(A) and prayed for the dismissal of appeal of the assessee.
5. We have heard the submissions made by both the parties and have perused the orders of the authorities below. Before adverting to the issue, it is necessary to examine the provisions of section 44AF. The relevant extract of the provisions are reproduced herein below:-
"44AF. (1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an assessee engaged in retail trade in any goods or merchandise, a sum equal to five per cent of the total turnover in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid sum as declared by the assessee in his return of income shall be deemed to be the profits and gains of such business chargeable to tax under the head "Profits and gains of business or profession" :
xxxxxxxxx xxxxxxxxx (4) The provisions of sections 44AA and 44AB shall not apply in so far as they relate to the business 5 ITA No.1928/Mds/2012 referred to in sub-section (1) and in computing the monetary limits under those sections, the total turnover or, as the case may be, the income from the said business shall be excluded.]"
A perusal of the provisions of section 44AF(1) clearly shows that retail traders trading in any goods may file their return of income declaring a sum equivalent to five percent of the total turnover in the previous year of such business, provided the total turnover does not exceed `40.00 lakhs in the previous year. If the return is filed under section 44AF, the provisions contained under section 28 to 43C shall not apply. As per the provisions of sub-section (4) of section 44AF, if the return is filed under the provisions of section (1) of section 44AF, the provisions of section 44AA and 44AB shall not apply. It has been provided in an unambiguous manner that where the return has been filed by a small time assessee under section 44AF, the assessee is not required to maintain books of account as required under section 44AA. In the present case, the assessee is a small time trader in water meters. He has filed return under section 44AF. Under the said provisions, he 6 ITA No.1928/Mds/2012 is not required to maintain books of account and for that matter the same cannot be audited. In our considered opinion, the CIT(A) was not justified in holding that the penalty under section 271A is leviable on the assessee for not maintaining books of accounts. Therefore, the findings of the CIT(A) that since the assessee has failed to maintain books of accounts and the return filed under section 44AF could not be verified is not tenable. We, therefore, set aside the impugned order of the CIT(A) and allow the appeal of the assessee.
6. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on Wednesday the 16th day of January, 2013 at Chennai.
Sd/- Sd/-
( Dr. O.K.Narayanan ) (Vikas Awasthy)
Vice-President Judicial Member
Chennai,
Dated the 16th January, 2013.
somu
Copy to: (1) Appellant (4) CIT(A)
(2) Respondent (5) D.R.
(3) CIT (6) G.F.