9911796707
TMI Blog2005 (5) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... -2003. During the course of survey, the appellants were asked to produce the books of account. As per the Assessing Officer, it was admitted by the appellant at the time of survey that no books of account had been kept or maintained. An apprehension has been expressed by the Assessing Officer that in the absence of books of account, how they have computed the correct income in the past. Though there was mention of investment in the construction of a hospital building in the impugned penalty order but the same is not relevant to mention in the present context of levy of penalty. The Assessing Officer has elaborately discussed the provisions of section 44AA and also discussed rule 6F(3) of Income-tax Rules. The Assessing Officer has also reproduced Form-C prescribed in the Rules to be provided by practitioners of any systems of medicine etc. It is pertinent to mention that both the husband and wife are doctors engaged in the medical profession. During the course of survey action, certain books as available at that time and other documents were impounded by the Assessing Officer vide an order dated 20-3-2003 under section 131(3) of Income-tax Act. Though on the date of survey, the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee was not able to produce the books and other documents. According to the Assessing Officer, several statements made by the assessee were simply misleading and false. The Assessing Officer has also reproduced the list and description of books which were prepared and impounded by the revenue authorities. Rest of the order of the Assessing Officer, speaks about several provisions of Income-tax Act and the terminology used such as "Accounts", dictionary meaning and the power given to revenue authorities under section 133A for the purpose of survey. Few more facts have also been referred to by the Assessing Officer such as that the books of account viz., cash book and ledgers have been later on produced and according to the Assessing Officer the preparation of such books was an afterthought which according to him were freshly prepared on computer. The Assessing Officer also mentioned that those books of account have been prepared after the survey action. In this regard, the Assessing Officer has specifically mentioned that a logical conclusion can be drawn that the assessee had failed to produce the books of account kept and maintained by him at the time of survey and it was an o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Assessing Officer 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) has thought it proper to get a report of the Assessing Officer as well as directed both the sides to affix the signatures on the printouts produced. He has als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 5. Before us, the learned AR has argued at length and vehemently opposed the manner in which the survey was conducted and later on the penalties were imposed. As far as the first statement of the appellant made on 20-3-2003 at the time of survey, the learned AR has categorically stated that the said statement was made under extreme pressure as the same was written by the survey party at mid-night at 11.30 p.m. He has mentioned that the revenue department came for survey at the business premises at 10.00 a.m. and during that period insisted upon a payment of tax of Rs. 10 lakhs and most of the time enquired about the investment in construction of the hospital. Since they could not succeed in that direction, a confessional statement was forcefully obtained wherein the appellant has admitted out of frustration the non-maintenance of books of account. Due to this reason, immediately thereafter a retraction was made on 25-3-2003 and as per the said statement recorded under section 131, the appellant has categorica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fringement of rule 6F of Income-tax Rules and the assessment years for which penalties were imposed were not the subject-matter, hence the entire penalty deserves to be quashed. 6. On behalf of the revenue, the learned counsel has supported the action of the Assessing Officer and argued that there was a clear default of section 44AA on the part of the appellant as no proper books of account have been maintained as prescribed. The assessee has not demonstrated that he has maintained the books of account such as cash book, ledger, patient register, etc. hence committed the default for which penalty under section 271A was rightly imposed. He has emphasized that the entire books of account of the years under consideration was prepared only after the survey action and the same was mentioned by the Assessing Officer on a number of occasions, hence the assessee' has tried to mislead the revenue authorities, therefore, deserved for a penal action. As far as the documents and books seized at the time of survey were concerned, the same were not reflecting the true and correct picture of income earned by the assessee in the regular course of profession and from those books of account, curre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther documents for the period specified in the said rules. The Assessing Officer has empowered to impose a penalty in case of default. It may be mentioned that with effect from 10-9-1986, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat 'no' penalty was imposed for the assessment year 2003-04. The sub-rule(4) is unambiguous and dearly 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 Assessing Officer 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. 9. After ascertaining the legal position, now we have to examine the factual aspect so as to ascertain whether the assessee has committed any default for the assessment years for which penalties were imposed. Certain factual findings are worth mentioning such as referred by the learned CIT(A) that: "As per the assessment records produce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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