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Issues Involved:
1. Justification of the penalty imposed u/s 271A for non-maintenance of books of account as required u/s 44AA. Summary: Issue 1: Justification of the penalty imposed u/s 271A for non-maintenance of books of account as required u/s 44AA The only effective issue raised in this appeal is that the learned Commissioner of Income-tax (Appeals) was not justified in sustaining the penalty of Rs. 25,000 imposed by the Assessing Officer under section 271A of the Income-tax Act, 1961 (in short "the Act"). The facts of the case are that during the course of assessment proceedings, the Assessing Officer called for the books of account and observed that the assessee had not maintained a quantitative stock register and sale bills were also not produced. Being aggrieved, the assessee filed an appeal before the Commissioner of Income-tax (Appeals). It was submitted before the Commissioner of Income-tax (Appeals) that the assessee was a senior citizen running a poultry farm. The sales of the assessee were more than Rs. 40 lakhs. The assessee got its accounts audited under section 44AB and filed the return, declaring therein income of Rs. 1,16,680. It was submitted that the assessee had maintained complete books of account including purchase and sale bills. In the purchase bills, the number of birds purchased was given and in the sale bills the number as well as the weight of the birds sold were given. The Assessing Officer had wrongly observed that no sale bills were maintained. It was also submitted that at the end of the year, the assessee prepared the stock inventory by physically counting the birds. It was also argued that on the basis of purchase and sale bills, the quantity of stock in hand could easily be ascertained. Thus, it was argued that on the basis of these records, the Assessing Officer was in a position to compute the income of the assessee. However, these submissions did not find favour with the Commissioner of Income-tax (Appeals), who upheld the penalty imposed by the Assessing Officer by recording following findings in the impugned order: "I have carefully considered the written submissions filed by learned counsel and the arguments of the Assessing Officer in the penalty order. The findings are as under: 1. The appellant has relied upon the decision of the hon'ble Income-tax Appellate Tribunal, Nagpur Bench decision, in the case of ITO v. Dinesh Paper Mart [1999] 70 ITD 274. The hon'ble Income-tax Appellate Tribunal held that since rule 6F provides only in maintenance and retention of books of account by person carrying on a specified profession, the assessee carrying on business other than specified profession could not be penalized under section 271A for not retaining books of account. 2. With due respect I differ with this decision for the simple reason that section 271A contemplates imposition of penalty for the specified failure in two situations: (a) When the provisions of section 44AA have not been complied or (b) When the provisions of rules (rule 6F) have not been complied. Either of the two situations attract penalty. It is very difficult for me to agree that the Act would penalize a set of the professions and would leave the others scot-free for the same offence. Even if the specific set of books is not directed to be maintained for the businessman as per rule 6F, still as per the Income-tax Act section 44AA, it is still a specified requirement on the part of the assessee to keep and maintain such books of account and other documents as may enable the Assessing Officer to compute his total income and still get away with it. I fail to understand as to how the Assessing Officer can determine or confirm or compute the total income in the absence of the sale bills, stock register and above all the inventory details of the closing stock. Even the hon'ble Supreme Court in the case of Chainrup Sampatram v. CIT [1953] 24 ITR 481 has held that the income cannot be computed in the absence of the details of the closing stock. 3. I understand that the provisions of rule 6F provide only an additional burden on the specified professional to keep the books of account and other documents in stricter terms. But this does not imply that for other categories, namely, business class, the Legislature intends to put zero priority or low priority on maintenance of the specified books etc. If such attitude is permitted to be given than the whole scheme of computation/confirmation of the taxable income
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