2019 (3) TMI 911 - AT - Income Tax

Penalty u/s 271A - assessee failure to maintain the books u/s 44AB - gross receipts had been arrived at ₹ 1,72,87,696/- and since it exceeded ₹ 1.00 crore - assessment order u/s 143(3) - according to the assessee his gross receipts were less than ₹ 1.00 crore and therefore, he need not have maintained the books of account - HELD THAT - The gross receipts have exceeded ₹ 1.00 crore only because of treating the unexplained cash credits also as turnover of the assessee. The AO has made the addition to the turnover because the assessee could not explain the cash credits but there is no positive evidence that all these deposits are the business receipts of the assessee. Therefore, by virtue of increase in the turnover due to the assessment order, the assessee cannot be expected to have maintained books of account u/s 44AB of the Act. Therefore, satisfied that the penalty u/s 271A is not leviable in this case. - Decided in favour of assessee.

Summary

Issues:
Assessee's appeal against penalty u/s 271A for A.Y 2013-14.

Analysis:
The Appellate Tribunal ITAT Hyderabad heard the appeal of the assessee against the penalty imposed by the AO u/s 271A of the Act for the assessment year 2013-14. The AO initiated the penalty as the gross receipts exceeded ?1.00 crore, requiring the maintenance of books u/s 44AB, which the assessee failed to do. The CIT (A) confirmed the penalty, leading the assessee to appeal before the Tribunal.

The counsel for the assessee argued that the addition to gross receipts was based on unexplained cash credits in the bank account, which cannot be considered as books of account. It was contended that since the gross receipts were below ?1.00 crore, there was no obligation to maintain books of account. Therefore, the assessee sought deletion of the penalty u/s 271A.

On the other hand, the learned DR supported the decisions of the lower authorities. The Tribunal, after considering the facts, noted that the gross receipts exceeded ?1.00 crore due to the unexplained cash credits being treated as turnover. The AO's addition to turnover was based on the inability of the assessee to explain the cash credits, but there was no concrete evidence that all deposits were business receipts. Consequently, the Tribunal concluded that the penalty u/s 271A was unwarranted as the increase in turnover did not necessitate the maintenance of books u/s 44AB. Therefore, the appeal of the assessee was allowed, and the penalty was set aside.

In conclusion, the Tribunal allowed the appeal filed by the assessee, finding that the penalty u/s 271A was not applicable in this case. The order was pronounced in the Open Court on 15th March 2019.