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TMI Blog2018 (3) TMI 943X X X X Extracts X X X X X X X X Extracts X X X X ..... ol/2015, I.T.A No. 1476/Kol/2015 - - - Dated:- 14-3-2018 - Hon ble Shri Aby. T. Varkey, JM And Shri M.Balaganesh, AM For the Appellant : Shri A.K.Tiwari, CIT For the Respondent : Shri M.D.Shah, AR ORDER Per Bench 1. These appeals are filed by the revenue against the orders of Ld. CIT(A)-20, Kolkata dated 14.09.2015 for AY 2013-14 in the case of Shri Amit Agarwal, Shri Madan Lal Beswal and Shri Manoj Beswal, by which he deleted the penalty imposed u/s. 271AAB of the Income-tax Act, 1961 (hereinafter referred to as the Act ). 2. Briefly stated facts are that there was a search and seizure operation in respect of Nezone Group of cases on 01.08.2012 and on subsequent dates; and the assessees before us are Shri Amit Agarwal, Shri Madan Lal Beswal and Shri Manoj Beswal who are one of the key persons of this group. In the penalty order, the ld AO notes that during the course of post search operation, the assessees admitted an undisclosed income of ₹ 3,00,00,000/- for the AY under consideration in the form of commodity profit vide a consolidated disclosure petition filed by Shri Manoj Beswal, Chairman of Nezone Group. The details of returns filed by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see had no intention to conceal his income. The incidence of not making entries in the regular books of accounts on day to day basis is a bonafide mistake on the part of the accountant for which assessee could not be penalized. I think, there is no doubt that not making entries in the regular books of accounts of the income earned by the assessee, is a mistake on the part of the accountant . But for this, imposition of the penalty u/s. 271AAB of the I. T. Act, 1961, (in a situation when there was enough time late in the FY to make entries of such income in the regular books of accounts) is not justified. It is so, because it does not prove the guilty mind and intention to conceal the income on the part of the assessee. It also does not prove that had there been no search operation, the assessee would not have declared such income in the return of income. Accordingly, assessee s appeal on grounds no. 1 and 2 are allowed. Aggrieved, the revenue is in appeal before us. 3. We have heard rival submissions and gone through the facts and circumstances of the case. We find that the issue involved herein is squarely covered in favour of the assessee in the case of DCIT vs Manish Aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act is not mandatory because Parliament in its wisdom has used the word may and not shall . So, according to him, it is the discretion bestowed upon the AO whether to initiate and impose penalty u/s. 271AAB of the Act. We agree with the said contention of Ld. AR because when a similar issue was adjudicated by ITAT Lucknow (the author of this order was a member of the Bench) in Sandeep Chandak Ors. Vs. CIT (2017) 55 ITR (Trib) 209 and 2017 (5) TMI 675- ITAT-Lucknow in ITA No. 416, 417 and 418/LKW/2016 dated 30.01.2017 while adjudicating a case where penalty was levied under section 271AAB of the Act it was held that the provisions of Sec. 271AAB of the Act are not mandatory, which means that penalty need not be levied in each and every case wherever the assessee has made default as stated in clauses (a), (b) and (c) of the Act. Sub-section (1) of Sec. 271AAB of the Act uses the word may not shall . May cannot be equated with shall especially in penalty proceeding. Using the word may in our opinion, gives a discretion to the AO to levy the penalty or not to levy, even if the assessee has made the default under the said provision. Therefore, the 2nd ground of Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessee is mandated to maintain books of accounts u/s 44AA of the Act is factually incorrect and deserves to be rectified. This mistake of primary fact had lead to a conclusion of upholding the levy of penalty u/s 271AAB of the Act. Hence, in these facts and circumstances and in view of the aforesaid mistake of primary fact rightly pointed out by the ld. AR , we deem it fit to recall the orders of this Tribunal dated 10.11.2017 in the case of aforesaid assessees. In the aforesaid scenario, the legal position is that an order which has been recalled for de novo adjudication, is no order in the eyes of law and so it cannot be treated as a precedent. Hence, the reliance placed by the Ld. DR in respect of assessee s in the same group concern cases as decided by the Tribunal no longer survives and cannot be treated as covered against the assessee. 5. The third contention of the Ld. AR is that the assessee is an individual, who was drawing salary income. So, according to him, he need not maintain any books of account as per the Act. According to Ld. AR, undisputedly the assessee was engaged for the first time this AY only in trading of commodities, that too which was c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set up in any previous year, if his income from business or profession is likely to exceed [one lakh twenty] thousand rupees or his total sales, turnover or gross receipts, as the case may be, in business or profession are or is likely to exceed [ten lakh] rupees, [during such previous year; or (iii) where the profits and gains from the business are deemed to be the profits and gains of the assessee under [section 44AE] [or section 44BB or section 44BBB], as the case may be, and the assessee has claimed his income to be lower than the profits or gains so deemed to be the profits and gains of his business, as the case may be, during such [previous year; or]] (iv) where the profits and gains from the business are deemed to be the profits and gains of the assessee under section 44AD and he has claimed such income to be lower than the profits and gains so deemed to be the profits and gains of his business and his income exceeds the maximum amount which is not chargeable to income-tax during such previous year,] keep and maintain such books of account and other documents as may enable the [Assessing] Officer to compute his total income in accordance with the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities . Verification of accounts confirms his claim. This observation is flawed because, we note that AO got carried away by perusal of the Income Expenditure Account for AY 2013-14 submitted by the assessee before him, wherein it was shown in the income side that is right hand column as Income from Speculative Business from sale of commodities and left hand side column reflects the expenditure; and AO came to the conclusion that assessee has disclosed under the heading income out of Speculative Business from sale of commodities. The character of a receipt and the head under which it has to be taxed is not based on the nomenclature of receipt of income shown in Income Expenditure Account. All the incomes of revenue nature will be posted in the right hand side column of income in the Income Expenditure Account and the description given therein cannot determine the head of income prescribed under chapter IV of the Act. Therefore, the observation of the AO in assessment order in the light of his action of accepting the statement of total income filed by the assessee along with return which without being contested, is erroneous, unless the AO was able to negate the claim o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m other sources, which we find the AO has not contested in the assessment order, has thus crystallized and the necessary inference drawn is that assessee an individual who was admittedly a salaried person engaged in the previous year relevant to the assessment year under consideration (that too for the first time) in an activity from which he derived Income from Other Sources are not required to maintain books of account which are applicable only if the assessee was engaged in Business or Profession. However, we further note that the transactions which yielded income, the assessee had in fact maintained records from which the AO was able to deduce the true income and expenditure of the assessee. We note the AO in the assessment order has accepted the returned income comprising of income from salary and income from other sources by observing as under : Total income assessed as per return ₹ 3,44,65,120/- . And further we note that the AO had specifically stated in the body of the assessment order vide column no. 10 that the assessee is having only salary income and income from other sources. Thus from a perusal of the assessment order, it is not in dispute that ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied previous year represented, either wholly or partly, by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course relating to the specified previous year which is found to be false and would not have been found to be so had the search not been conducted. According to the Ld. AR, from the facts and circumstances described above, since the assessee is not engaged in business or profession, he does not require to maintain the books of account as per sec. 44AA or sec. 44AA(2) of the Act, therefore, the assessee s case falls in the second limb i.e. or other documents as stipulated u/s. 271AAB Explanation (c) (supra) which describes undisclosed income for the purposes of this section which is very important to adjudicate this issue. Therefore, the question is when the search took place, the assessee s transactions (in this case, the speculative transaction) has been found to be recorded in the other documents which is (retrieved from the assessee s accountant s drawer) and based on that the assessee declared ₹ 3 cr. during search and later returned income of ₹ 3 cr. as income under the head Income from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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