Income Tax Appellate Tribunal - Pune
Bora Sandeep Sugandhilal , Ahmednagar vs Assessee on 26 March, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "A", PUNE
Before Shri Shailendra Kumar Yadav, Judicial Member
and Shri R.K. Panda, Accountant Member
ITA Nos. 1433/PN/2011
(Assessment Years 2004-05)
Bora Sandeep Sungandhilal,
A/p. Mirajgaon, Tal : Karjat,
Ahmednagar. .. Appellant
PAN No.ABQPB 4652C
Vs.
Income Tax Officer,
Ward-4, Ahmednagar .. Respondent
ITA Nos. 1434/PN/2011
(Assessment Years 2004-05)
Bora Sarang Sungandhilal,
A/p. Mirajgaon, Tal : Karjat,
Ahmednagar. .. Appellant
PAN No.AGRPB 1593J
Vs.
Income Tax Officer,
Ward-4, Ahmednagar .. Respondent
ITA Nos. 1435/PN/2011
(Assessment Years 2004-05)
Bora Suhas Sungandhilal,
A/p. Mirajgaon, Tal : Karjat,
Ahmednagar. .. Appellant
PAN No.AHYPB 5398M
Vs.
Income Tax Officer,
Ward-4, Ahmednagar .. Respondent
Appellant by : Shri Kishore Phadke
Respondent by : Ms. Ann Kapthuama
Date of Hearing : 26-03-2013
Date of Pronouncement : 28-03-2013
ORDER
PER BENCH :
The above 3 appeals filed by the respective assessees are directed against the separate orders dated 09-06-2011 of the CIT(A)- I, Pune relating to Assessment Year 2004-05. Levy of penalty of Rs.25,000/- each u/s.271A by the Assessing Officer and confirmed by 2 the learned CIT(A) is the only issue raised by the respective assessees in the grounds of appeal.
2. First we take up the case of Mr. Bora Sandeep Sungandhilal vide ITA No.1433/PN/2011. Facts of the case in brief, are that the assessee is an individual and is carrying on business of retail trade in Machinery, Electric Motors and pumps etc. The assessee filed his return of income for A.Y. 2004-05 on 20-07-2004 declaring total income of Rs.12,99,658/-. The return was enclosed with the statement of computation of income and copy of advanced tax challan.
2.1 In this group of cases a survey action u/s.133A was conducted on 02-12-2003 at the business premises of M/s. Sarang Machinery Stores, the proprietor of which is Shri Sarang Sugandhilal Bora. During the course of survey it was noticed that there is another business conducted under the name and style of M/s. Sandeep Automobiles, proprietor Shri Sarang Sugandhilal Bora. The Assessing Officer completed the assessment. On being questioned by the Assessing Officer it was submitted that the assessee is not maintaining any books of account and the income is shown under the provisions of section 44AF. The Assessing Officer therefore initiated penalty proceedings u/s.271A of the Act for non-maintenance of accounts and issued show cause notice asking the assessee to explain as to why penalty u/s.271A should not be levied. There was no compliance to the above notice of the Assessing Officer by the assessee. The Assessing Officer noted that during the course of scrutiny assessment the assessee could not produce the books of accounts and produced only statement of affairs. The assessee also denied to have maintained regular books of accounts. The Assessing Officer therefore held that the assessee has violated the provisions of 3 section 44AA. According to the Assessing Officer since the assessee is doing trading business and his total income/turnover has exceeded Rs. 10 lakhs he should have maintained the accounts. Since the assessee denied to have maintained books of accounts, therefore, the Assessing Officer held that the assessee has violated the provisions of section 44AA and thereby attracting the provisions of section 271A. He accordingly levied penalty of Rs.25,000/-.
3. Before the CIT(A) it was submitted that the assessee is a retailer and has offered his income for tax u/s.44AA of the Act and therefore is not required to maintain any books of accounts since he is offering income which is more than the prescribed rate of 5%. It was further argued that no particular books of accounts have been prescribed in the Act as well as in the rules in respect of persons carrying on business other than prescribed professions. It was further submitted that the Assessing Officer has completed the assessment u/s.143(3) accepting the same income as disclosed by the assessee from retail business. Therefore, it is not a situation that the Assessing Officer was unable to compute the income of the assessee. Various decisions were also brought to the notice of the CIT(A) to the proposition that no penalty u/s.271A is leviable for non- maintenance of books of accounts in case of assessees carrying on business other than specified professions and if the Assessing Officer is able to compute the income of the assessee.
4. However, the learned CIT(A) was also not convinced with the arguments advanced by the assessee and upheld the penalty levied by the Assessing Officer. While doing so, he noted that the assessee did not make any submission before the Assessing Officer in response to the opportunities given during penalty proceedings. The assessee filed return of income subsequent to the survey and it was admitted 4 during the course of assessment proceedings that assessee is not maintaining regular books of account and the assessee had disclosed additional income over and above regular income determined on estimate basis.
5. The learned CIT(A) accepted the contention of the assessee that penalty u/s.271A cannot be levied in cases where the income declared is more than 5% of the turnover and the turnover is not exceeding Rs. 40 lakhs provided the persons carrying on business keep and maintain such books of accounts and documents which can enable the Assessing Officer to compute the total income in accordance with the provisions of this Act. The provision further allows the assessee to claim the income at lower than 5% if the accounts are regularly maintained and audited and such audit report is furnished with the return of income. He, however, was of the opinion that even if the income is declared on presumptive basis u/s.44AA the responsibility of maintaining such books, which can enable the Assessing Officer to apply the provision of the Act, remains. Since the assessee in the instant case has not maintained books of accounts in a manner which can enable the Assessing Officer even to verify the basic details like turnover etc. and since the assessee could not produce any other material before him during the course of penalty proceedings despite adequate opportunities granted he held that the penalty levied by the Assessing Officer is justified. 5.1 Aggrieved with such order of the CIT(A) the assessee is in appeal before us.
6. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. There is no dispute to 5 the fact that the assessee, in the instant case, has filed his return of income disclosing the income from business u/s.44AF of the Income Tax Act declaring profit of Rs.1,48,345/- which is @ 6.32% on a turnover of Rs.23,47,227/-. Although the Assessing Officer in the body of the assessment order has made various additions on account of unexplained investment and on account of excess stock on the basis of survey conducted u/s.133A, we find there is no addition on account of profit from business over and above what has been declared by the assessee.
7. As per sub section (4) of section 44AF the provisions of section 44AA and 44AB shall not apply in so far as they relate to the business referred to in sub-section (1) of section 44AF.
8. From the above, it is crystal clear that once the assessee opts for provisions of section 44AF he is not required to maintain books of accounts prescribed u/s.44AA. We also find merit in the submission of the learned counsel for the assessee that since the assessee does not fall under the category of persons falling u/s. 44AA where maintenance of specified books of accounts have been prescribed and since the assessment has been completed u/s.143(3) accepting the business income declared u/s. 44AF, therefore, penalty u/s.271A is not leviable in the instant case. We, therefore, are of the considered opinion that under the facts and circumstances of the instant case no penalty u/s.271A is leviable. We therefore set-side the order of the CIT(A) and direct the Assessing Officer to cancel the penalty. ITA No. 1434/PN/2011 and ITA No.1435/PN/2011 :
9. Since the facts of the above 2 appeals are identical to the facts in the case of Bora Sandeep Sugandhilal, therefore, following the 6 same ratio we hold that no penalty u/s.271A is leviable in these two appeals.
10. In the result, all the 3 appeals filed by the respective assessees are allowed.
Pronounced in the Open court on this the 28th day of March 2013.
Sd/- Sd/-
(SHAILENDRA KUMAR YADAV) (R.K. PANDA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Pune, dated the 28th March 2013
satish
Copy of the order is forwarded to :
1. The assessee
2. The Department
3. The CIT(A)-I, Pune
4. The CIT-I, Pune
5. D.R. "A" Bench, Pune
6. Guard File
By order
// True Copy //
Senior Private Secretary,
Income Tax Appellate Tribunal, Pune