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1. These twelve appeals pertain to two different assessees stated to be husband and wife, both aggrieved by levy, of penalty Under Section 271A which was partially confirmed by the learned CIT(A) -I, Aurangabad vide orders dt. 23 & 24/12/2004 pertaining to the years referred in the above nomenclature.

2. The AO has levied penalty Under Section 271A of Rs. 1.00 lakh in respect of both the assessees for A.Ys. 1997-98 to 2001-02 and Rs. 25,000/- for the AY 2002-03. Levy of penalty was challenged before the CIT(A) who has reduced to Rs, 45,000/- for the assessment years 1997-98 to 2001-02 and Rs. 11,250/- for AY 2002-03 identically in both the cases. Being aggrieved of the part relief, now the appellants are before us challenging levy of penalty imposed Under Section 271A of IT Act.

So, the AO has arrived at the conclusion that since the Income Tax rules makes it mandatory to maintain and keep the books of account as prescribed Under Section 44AA, which the assessee has failed to produce, hence, liable for penalty Under Section 271A of the IT Act. With the result, penalties were imposed in respect of the years now in question of the amounts already described in the beginning of this order. Penalties were challenged before the learned CIT(A).

4. The first appellate authority has provided an opportunity of hearing to both the sides. He has also called for a remand report. Before the learned CIT(A), printouts of the computerized books of account have been produced. It was stated before the learned CIT(A) that the printouts have been taken out at the relevant period of the assessment years and the accounts were prepared at that time. It was also stated that at that time Accountant had given the floppy and printouts on the basis of which the copies were obtained and produced. The appellant has also vehemently objected certain observations of the AO and stated that it could be proved with Hard Disk of the Computer that the books were written at the relevant time. Since there were contradicting statements one by the revenue and the other by the appellant, the learned CIT(A) thought has thought it proper to get a report of the AO as well as directed both the sides to affix the signatures on the printouts produced. He has also directed the AO to take possession of those printouts produced before him. There was some mention in the impugned appellate order about the dates of hearing before the AO on which the assessee wanted to produce the printouts but the same were not entertained by the AO. So the learned CIT(A) has asked the explanation of the AO that why the AO had rushed to send the report especially when the appellant wanted to handover the printouts. A find has been recorded by the learned CIT(A) that as per the assessment records, it was found that the appellants have filed profit & loss A/c, balance sheet and other details of expenses for each of the years concerned along with returns of income filed before the date of survey. The learned CIT(A) has also mentioned that the action of levy of penalty Under Section 271A was taken by the AO after lapse of nearly one year from the date of survey. He has also mentioned that the AO had not verified the veracity of the printouts and the balance sheet, etc. which were enclosed with the return and very much available with the Department before the date of survey. So, he has concluded that the appellant has maintained books of account but has not kept them with him to be produced to the AO at the time of survey. So, he has dismissed the AO's argument that the P&L A/c and balance sheet might have been prepared without maintaining books of account and this plea of the revenue was not accepted. So, finally he has summarized that factually the default committed by the appellant was that he had failed to produce the books of account at the time of survey and also admitted at the time of survey of non-maintenance of books of account as per the statement recorded. In his opinion, the books of account have not been maintained in the manner prescribed Under Section 44AA and Rule 6F and the proper compliance was not made at the time of survey and the books were kept at a place beyond the reach of the AO on the date of survey, therefore infringed the provisions of the Act. The learned CIT(A) was also not convinced the manner in which the maximum penalty was imposed, hence he has held that it would be suffice to levy penalty to the extent of Rs. 45,000/- pertaining to the assessment years 1997-98 to 2001-02 and Rs. 11,250/- for the assessment year 2002-03. This part relief of penalties was not acceptable to the appellants, hence they are further in appeal before us.

7. After hearing the submissions of both the sides at length and on careful reading of the impugned orders in respect of both the appellants, we are of the view that the issue is within a narrow compass of the applicability of Rule 6F of IT Rules though the arguments traveled on other directions as well. To arrive at the right conclusion, we deem it proper to extract some of the portions of the order of the AO and the CIT(A), so that the factual findings can be appreciated and also deem it necessary to reproduce the relevant portions of the section involved in these appeals. The Taxation laws (amendment) Act, 1975 has inserted Section 44AA statutorily superseded the effect of few earlier decisions of Hon'ble Courts as it was held that no adverse inference could be drawn against an assessee for not having maintained any accounts of his income as the old IT Act did not cast any obligation on an assessee to maintain any accounts. Later on, some changes have been made in Section 44AA, therefore amendments for the purpose of these appeals, the section as stood at that time states that "every person carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or any other profession as is notified by the Board in the Official Gazette shall keep and maintain such books of account and other documents as may enable the AO to compute his total income in accordance with the provisions of this Act". This section has also empowered the power to prescribe any rules in this regard. We will discuss the implications of concerned rule prescribed in this regard by the Board a little later but first it is worth mentioning at this juncture that penal provisions have simultaneously been introduced with effect from 1stApril, 1976 by insertion of Section 271A. A penalty is leviable Under Section 271A if any person fails to keep and maintain any such books of account and other documents as required by Section 44AA or the rules made there under in respect of any previous year or to retain such books of account and other documents for the period specified in the said rules. The AO has empowered to impose a penalty in case of default. It may be mentioned that with effect from 10.09.86, the provision of Section 273B have come into operation as inserted by Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986 and very appropriately it is provided in the Act that no penalty shall be imposable on the person or the assessee for any failure referred to in the said provision which includes Section 271A, if he proves that there was reasonable cause before imposition of any of penalty listed in Section 273B. We have to examine this aspect while deciding these appeals. Next comes to the application of Rule 6F. This rule prescribes that every person carrying on legal, medical, engineering, etc, profession shall keep and maintain the books of account or other documents specified in Sub-rule (2) of Rule 6F. The rule says that the books of account and other documents to be kept and maintained as mentioned Under Section 44AA(3) and Sub-rule (2) has listed the books of account to be maintained by a taxpayer. As pointed out by the learned AR, we have to examine the applicability of Sub-rule (4) of Rule 6F. For reference Sub-rule(4) is reproduced below:

The books of account and other documents specified in Sub-rule (2) and Sub-rule (3) [other than those relating to a previous year which has come to an end]shall be kept and maintained by the person at the place where he is carrying on the profession or, where the profession is carried on in more places than one, at the principal place of his profession.
emphasis supplied by us.

8. The application of the sections referred to hereinabove has to be in a specific sequence. Section 44AA provides in general that the persons qualified as professionals carrying on the business such as legal, medical, engineering, etc. are expected to keep and maintain such books of account as may enable the AO to compute his total income in accordance with the provisions of IT Act. Sub-section (3) of Section 44AA empowers the Board to prescribe rules for the purpose of maintenance of books of account. Thus, Rule 6F prescribes to form and the manner in which and the place at which such books of account shall be kept and maintained. This rule prescribes that the medical professionals has to maintain Form 3C as a daily case register but the most important part of this Sub-rule(4) is that a taxpayer is required and shall keep and maintain the books at the place where he is carrying on the profession. A taxpayer is not required to keep the books of account relating to a previous year which has come to an end. While reproducing the relevant portion of this sub-rule, we have already emphasized the relevant portion by underlining the same hereinabove. In the statute, reference of Rule 6F is not only in Section 44AA but there was a mention of existence of rule in the penal provision as well i.e. Section 271A. This Section 271A prescribes that the documents as required by Section 44AA or the rules made thereunder in respect of any previous year has to be maintained. So, the applicability of rule has to be kept in mind even at the time of imposition of penalty. In other words, penalty Under Section 271A cannot be imposed in isolation, only with reference to Section 44AA, by ignoring Rule 6F. However, the admitted position is that the penalties have been imposed for the assessment years 1997-98 to 2002-03 i.e. assessment years which has come to an end on the date of survey i.e. 20thMarch, 2003. Another admitted position is that no penalty was imposed for the assessment year 2003-04. The Sub-rule (4) is unambiguous and clearly indicates the intention of the Legislature that a taxpayer is required to keep and maintain the books of account other than those relating to a previous year which has come to an end at the place of profession. In view of this specific and unambiguous wordings, we have to examine whether the AO was legally correct to impose the penalty in respect of past assessment years for non-production or non-maintenance of accounts. From the above discussion and on careful analyzation of the sections involved, the law emerges in clear terms that a taxpayer is required to keep books of account at the place of business or profession of the current year other than those books of account relating to a previous year which has come to an end.