2020 (4) TMI 258 - AT - Income Tax

Penalty u/s 271A - Non maintaining the books of account and other documents - HELD THAT - In this case the AO noted that the assessee has not maintained any books of accounts and as such he has committed a default within the meaning of provisions of sec 44AA of the Act which made the assessee liable for penalty u/s 271A - AO thus imposed the penalty u/s 271A which was confirmed by the ld. CIT(A). During the course of hearing, the Bench noted that the assessee did not maintain the books of account as provided u/s 44AA as the gross receipts of the assessee from business was more than ₹ 10 lacs - assessee did not advance any controverting arguments against the findings of the lower authorities. We find no reason to interfere with the order of the ld. CIT(A). Thus the solitary ground of the assessee as to confirming of penalty u/s 271A of the Act by the ld. CIT(A) is sustained. Penalty u/s 271B - non-audit of books of accounts - HELD THAT - We have upheld the levy of penalty under section 271A for non-maintenance of books of accounts. Once the penalty has been levied for non-maintenance of books of accounts, there cannot be penalty again for non-audit of books of accounts which were not kept at first place. It is clearly a case of impossibility of performance where it is expected that the assessee should get her books of accounts audited when it is a known and admitted fact that there are no regular books of accounts which have been maintained at first place. Our view is fortified by the decision of Rajmal Parsuram Todi 1996 (8) TMI 102 - GAUHATI HIGH COURT wherein it was held that when a person commits an offence by not maintaining the books of accounts as contemplated under section 44AA, the offence is complete and after that, there can be no possibility of any offence as contemplated under section 44AB and therefore, the imposition of penalty is erroneous.

Summary

Issues:
1. Confirmation of penalty u/s 271A for Assessment Year 2011-12.
2. Confirmation of penalty u/s 271B for Assessment Year 2011-12.

Issue 1: Confirmation of Penalty u/s 271A for Assessment Year 2011-12:

The Appellate Tribunal ITAT Jaipur dealt with the appeal filed by the assessee against the order of the ld. CIT(A) confirming the penalty u/s 271A of the I.T. Act, 1961. The AO imposed a penalty of ?25,000 under section 271A, stating that the assessee willfully avoided maintaining books of account necessary for income computation. The ld. CIT(A) upheld this penalty, emphasizing that the gross receipts exceeded ?10 lakhs, mandating book maintenance under Section 44A. The assessee failed to provide a reasonable cause for non-compliance. The Tribunal noted the absence of maintained books of account for gross receipts over ?10 lakhs, leading to the confirmation of the penalty by the ld. CIT(A). The Tribunal found no grounds to interfere with the ld. CIT(A)'s decision, thus sustaining the penalty of ?25,000 under section 271A.

Issue 2: Confirmation of Penalty u/s 271B for Assessment Year 2011-12:

Regarding the penalty u/s 271B for the same assessment year, the ld. CIT(A) confirmed a penalty of ?1,50,000 imposed by the AO. The AO determined the turnover in trading of shares at ?3,13,27,893, with the appellant claiming only ?59,61,001 as turnover. The appellant failed to provide evidence supporting the claim that a significant portion of the turnover was non-delivery based. As the appellant did not get the accounts audited under section 44AB and failed to show a reasonable cause for not doing so, the penalty of ?1,50,000 under section 271B was upheld. The Tribunal considered a similar case decided by the ITAT Coordinate Bench, where the penalty under section 271B was deleted due to non-maintenance of books of accounts. Following the precedent, the Tribunal directed the AO to delete the penalty of ?1,50,000. Consequently, the penalty under section 271B was allowed, overturning the ld. CIT(A)'s decision.

In conclusion, the Appellate Tribunal ITAT Jaipur dismissed the appeal against the penalty u/s 271A but allowed the appeal against the penalty u/s 271B for Assessment Year 2011-12. The judgment was pronounced on 23/01/2020.