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TMI Blog2020 (2) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 1,50,000/- each for Assessment Year 2010-11 to 2012-13 and allow all three appeals raised by the assessee. - ITA Nos.718 to 720/Ind/2018 - - - Dated:- 29-1-2020 - Kul Bharat, Judicial Member And Manish Borad, Accountant Member For the Assessee : S/Shri Anil Kamal Garg Arpit Gaur, ARs For the Revenue : Shri Punit Kumar, Sr.DR ORDER PER MANISH BORAD, AM The above captioned appeals filed at the instance of the assessee pertaining to Assessment Year 2010-11 to 2012-13 are directed against the orders of Ld. Commissioner of Income Tax (Appeals)-3 (in short Ld.CIT(A) ], Bhopal dated 05.06.2018 which are arising out of the order u/s 271B of the Income Tax Act 1961(In short the Act ) dated 29.06.2017 framed by DCIT (Central)- 2, Indore. 2. The assessee has raised common grounds of appeal challenging the order of Ld. CIT(A) confirming the action of Ld. A.O levying the penalty u/s 271B of the Act at ₹ 1,50,000/-each for the alleged failure of getting the books of accounts audited u/s 44AB of the Act for Assessment Years 2010-11 to 2012-13 respectively:- 1.That, on the facts and in the circumstances of the case, confirmation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y penalty of ₹ 1,50,000/- u/s 271B of the Act for Assessment Years 2010-11 to 2012-13. 4. Aggrieved assessee preferred appeal before Ld. CIT(A) against the alleged levy of penalty u/s 271B of the Act contending that the assessee firm follows project completed method and the alleged turnover as observed by the Ld. A.O is actually the amount of advance received from customers which was adjusted in the subsequent years when the project was completed and immoveable properties were transferred to the customers. It was also submitted that in case of failure on the part of the assessee to complete the project advance was liable to the refunded. However Ld. CIT(A) was not convinced and he confirmed the penalty observing as follows:- 6. Common written submissions filed by the appellant for all the assessment years have been duly considered in the light of the facts of this case. Appellant has basically raised two grounds 'of appeal which are common in all the appeals pertaining to imposition of penalty of ₹ 1,50,000/- u/s 271 B of the Act in all the years. Ground # 1 of all the appeals is general in nature by which appellant has contended that imposition of penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to A.Y 2013-14 has no bearing on the issue because ultimately assessee has also treated these receipts as business receipts in A.Y 2013-14. In view of. this,assessee was required to get its accounts audited during AY 2010-11 to AY 2012-13 because receipts against sales of units were exceeding the limits prescribed u/s 44AB of the Act. I do not'agree with the contention of the assessee and hold that case of assessee falls under clause (a) of sec 44AB of the Act being gross receipts were exceeding the prescribed limits. This is most important to note that for earlier years i.e. A.Y 2010-11 to A.Y 2012-13, the appellant failed to furnish any return of income though required, as every firm is compulsorily required to file its return of income every year irrespective of amount of taxable income and for this default penalty u/s 271F have been levied and confirmed by the undersigned. So, the theory of following the 'project completion method' seems an afterthought because assessee firm has filed its returns only for A.Y 2013-14'for which time was available [date of search 28.02.2014] after detection of default by the department. Thus, the contention of the appellant tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for not getting the books of accounts audited should not be imposed when penalty levied u/s 271 A for not maintain books of accounts already imposed by the Id AO. To buttress this proposition, Id AR has also placed reliance on several case laws including CIT v/s Bisauli rroctors (2008) 299 ITR 219 (Ail). The contention of the appellant is not acceptable because (a) the assessee himself has claimed that it has maintained books of accounts, this being so, penalty u/s 271 B of the Act cannot be deleted for the reason that 'no books were maintained', so no question of levy of penalty u/s 271 B of the Act (b) the penalty imposed u/s 271 A of the Act has been already deleted by me vide penalty order passed bearing no CIT(A)-3/BPL/IT-12056, 12057, 10154, 12059, 12142 12144/2017- 18 dated 31.05.2018. Hence, case laws relied upon by Id AR are not applicable to facts of instant case. In view of above discussion, I am of considered view that these are the fit cases for imposing of penalty u/s 27J B of the Act because assessee is guilty of not getting its books of accounts audited as required u/s 44AB of the Act without any reasonable cause , hence liable for penalty. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts audited observing that the turnover of the assessee exceeded the prescribed lint of turn over provided u/s 44AB of the Act for the three assessment years in question before us. 9. We observe that the assessee is engaged in real estate business acquired land and started construction of commercial building in the name of Balaji Tower from Assessment Year 2005-06 onwards. The construction was completed during the Financial Year 2012-13 relevant to Assessment Year 2013-14. Assessee firm adopted project completion method and the amount received as advance from the customers were shown as liability and expenses incurred during the period of construction was shown in the trading account as work in progress. In the return of income for Assessment Year 2010-11 to 2012-13 assessee has not disclosed any turnover. However for Assessment Year 2013-14 during which the project was completed the assessee has shown turnover of ₹ 10,61,12,633/- and after claiming the incidental expenses including construction cost and opening work in progress declared net profit at ₹ 59,99,505/-. In the computation of income, taxable income of ₹ 60,02,565/- has been shown a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a in the relevant provision. In fact, but for the same, as where the assessee were to follow percentage completion method, the receipt would give rise to profit (or loss). It is the nature of the receipt, and not the profit element therein, that is relevant. As such, the assessee's contention with regard to its exclusion, i.e., as not bearing a profit element, is without merit both on facts and in law. 4.2 So, however, we are nevertheless unable to agree with the Revenue that the assessee is liable to penalty u/s.271B of the Act. Our reasons for the same are,' as follows. The word 'gross receipt' is liable to be construed in more than one way; the: matter in fact having travelled to the tribunal in the case of B.K. Jhala Associates (supra) and Gopal Krishan Builders:(supra), both at the instance of the Revenue, so that the assessee had succeeded at the first appellate stage. The matter, accordingly, cannot be considered to be without an element of contentiousness associated therewith; so that it is liable to be considered as giving rise to a debatable question, constituting. a reasonable cause within the 'meaning of section 273B of the Act, savin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well. Even following the legal principles on the basis of the legal maxims ejusdem generis and noscitus A Sociis would operate to exclude 'purchases' from forming part of the qualifying criterion. Rather, a provision, for the purpose of levy of penalty, is to be even otherwise strictly construed. It is perhaps for the reason of the same not finding approval of the Id. C!T(A) that she chose not to advert thereto in the impugned order. As explained by the apex court in Hindustan Steel Ltd. vs. State of Orissa [1972] 83 ITR 26 (sq, a penalty, even where the provision stands attracted, may lawfully be not levied where the default is not found to be a result of a conscious disregard by the tax payer of his legal obligations or a conduct contumacious, which is clearly not the case in the instant case. 5 In view of the foregoing, we are of the dear and unambiguous view that the assessee's case, despite a default of s. 44AB of the Act, is not liable in law for penalty ujs.271B in the facts and circumstances of the case. We, accordingly, direct its deletion. 6 In the result, the assessee's appeal is allowed . 13. We therefore respectfully follo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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