Income Tax Appellate Tribunal - Delhi
Mehta Parvesh vs Income-Tax Officer on 21 November, 1996
ORDER
B. M. Kothari, A.M.
1. These two appeals, by the assessee, are directed against the common order passed by the Dy. CIT(A) on 24th September, 1993 confirming the penalty of Rs. 4000 levied under s. 271A for asst. yrs. 1991-92 and 1992-93.
2. The learned counsel for the assessee submitted that the assessee has qualified only upto middle class and was not conversant with the work of writing of books of accounts. He could not engage any accountant in spite of all efforts. The assessee has, however, kept the details of bank account, various investments made by him, his drawings, payment of taxes, contract receipts, credits outstanding on the basis of which he has even drawn his balance sheet from year to year. All these records, maintained by the assessee, enabled the AO to compute the taxable profits. Moreover, the Board has not prescribed any specified type of books of accounts required to be maintained by persons deriving income from business. He, therefore, urged that penalty levied in both the years should be cancelled.
3. The learned Departmental Representative supported the order of the Dy. CIT(A) and relied upon the elaborate reasons mentioned in the penalty order passed by the AO.
4. I have carefully considered the submissions made by the learned representatives of the parties. The assessee submitted the computation of income for both the years under consideration at an income of Rs. 40,000 and Rs. 42,000 respectively. The assessee also enclosed with the returns of income a statement of affairs giving the details of assets and liabilities as at the beginning of the year as well as on the close of the year. The declared income was estimated by taking into consideration the net increase in assets along with the tradings made by the assessee-firm and the household expenses. The details so furnished by the assessee could enable determination of taxable income in a reasonable manner. The provisions of s. 44AA was required to keep and maintain such books of accounts and documents, as may enable the AO to compute his total income in accordance with the provisions of the IT Act. Sub-s. (3) of s. 44AA authorises the Board to prescribe by rules the books of accounts and other documents to be kept and maintained and the particulars to be contained therein and the form and the manner in which and the place at which such books of accounts shall be kept and maintained. The Board has not yet prescribed any rule so far as persons deriving income from business are concerned. It has only prescribed r. 6F requiring the persons deriving income from profession to maintain the specified books of accounts. Since the Board has not prescribed the necessary rules relating to maintenance of accounts by the persons carrying on business, and as the assessee has furnished adequate information, so as to enable the ITO to compute his total income in accordance with the provisions of this Act, the penalty levied under s. 271A cannot be sustained on the facts and circumstances of the present case. I, therefore, cancel the said penalties for both the years under consideration.
5. In the result, both the appeals are allowed.