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TMI Blog2023 (4) TMI 523X X X X Extracts X X X X X X X X Extracts X X X X ..... P/2021 - - - Dated:- 15-2-2023 - Hon ble Shri Sandeep Gosain, Judicial Member For the Assessee : Shri Vishal Gupta, C.A. For the Revenue : Ms. Monisha Choudhary, JCIT ORDER PER: SANDEEP GOSAIN, J.M. This appeal by the assessee is directed against the order of ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi dated 14.09.2021 for the assessment year 2010-11. The assessee has raised the following grounds of appeal :- 1. On the facts and circumstances of the case, the CIT (A) has erred in law and facts by approving action of ld. AO of levying penalty u/s 271B for not getting the books of accounts audited when no books of accounts have been maintained by the assessee. The action of ld. AO was thus unjust and hence we hereby pray for deleting the said penalty. 2. On the facts and circumstances of the case, the CIT (A) has erred in approving action of ld. AO where he has disregarded and misinterpreted the basic accounting principles for calculation of turnover. Further, the ld. CIT (A) has dismissed the appeal without considering the reply by the assessee. This, it is hereby prayed to allow the relief to the assessee by calculating turnover as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration. The assessee suffered loss from such activities and did not file any return of income. The AO reopened the case of assessee under section 148 and concluded the assessment proceedings under section 147 read with section 144 of the IT Act, 1961 vide order dated 28.11.2017 (PB pages 1-5) in which loss was assessed at Rs. 43,658/-. The AO also issued show cause notice for imposing penalty under section 271B (PB page 6) and eventually imposed penalty under section 271B of Rs. 53,609/- vide order dated 24.05.2018 (PB Pages 7-10) alleging that the assessee s turnover has exceeded the limit prescribed under section 44AB. Aggrieved by the said order of penalty under section 271B of the IT Act, the assessee preferred an appeal before the ld. CIT (A). The assessee made various submissions before the ld. CIT (A) but the assessee could not succeed and the ld. CIT (A) confirmed the order of the AO by passing the impugned order. Aggrieved by the order of the ld. CIT (A), now the assessee has come up before the Tribunal raising the above mentioned additional ground in addition to other grounds raised hereinabove. 4. First, I deal with the additional ground as the same goes to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out the fault/charge for which the assessee is put on notice, so that he can defend the charge properly. The issue of bad/vague penalty notice was adjudicated by the Hon'ble Karnataka High Court [though in a different context i.e notice issued u/s.274 read with section 271(1)(c) of the Act] in the case of CIT vs. SSA's Emerald Meadows in ITA No.380 of 2015 dated 23.11.2015 wherein the Hon'ble High Court following its own decision in the case of CIT vs Manjunatha Cotton and Ginning factory (2013) 359 ITR 565 has held that if the penalty notice is vague, then the penalty order is also bad in the eyes of law. This decision of Karnataka High Court was challenged by the Revenue before the Hon'ble Apex Court, and the Hon'ble Supreme Court has dismissed the SLP. Therefore, applying the ratio-dicedenti in SSA's Emerald Meadows M/s. Parkinson (supra), we are of the view that the notice issued by AO before levying penalty u/s. 271B of the Act is bad in law . We further reply upon the decision of Hon ble Apex Court in case of CIT vs. SSA s Emerald Meadows (2016) 73 com248 (SC) where dismissing the SLP filed by the Revenue quashing the penalty by the Tribunal a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and furnishing inaccurate particulars of income. These facts and circumstances make it abundantly clear that in the case of assessee, penalty notice is completely vague and ambiguous. The AO simply issued a preprinted notice without striking off the unnecessary charge and not mentioning the precise charge. The above act of the AO clearly shows that the entire exercise of initiation of penalty proceedings has been done without application of mind which resulted into issuing a completely vague jurisdictional notice u/s 274 and the jurisdictional notice being vague, the consequent levy of penalty is illegal and deserves to be deleted in full. 8. In view of above facts and circumstances, the initiation of penalty proceeding is void ab initio. For this purpose, reliance may be placed on the decision of Jaipur Bench of ITAT in the case of Shri Subhash Sharma Vs DCIT in ITA No.205/JP/2020 vide order dated 21.07.2020, wherein it was held as under: 5 ..the notice issued by the Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961 is bad in law in as much as it did not specify in which limb of section 271(1)(c) of the Income Tax Act, 1961 the penalty proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Constructions vs. The ITO, ITA 184/Gau/2019 the Bench had observed that the notice was issued by mentioning both the defaults of the assessee u/s 271B viz. not getting the books audited or not filing the audit report to the AO as prescribed u/s 44AB of the Income Tax Act, 1961. It is important to note that the ld. AO in this cited case did not tick relevant default as to whether the assessee failed to get the books audited u/s 44AB or whether he failed to submit the audit report u/s 44AB to the AO and has used the word or between both the defaults and under such circumstances the Bench held the notice to be vague and deleted the penalty. However, in the present case the ld. AO has very clearly mentioned in his show cause notice that the assessee failed to get the books audited u/s 44AB and failed to submit audit report before AO. From this language used by the ld. AO in the show cause notice it is clearly apparent that the ld. AO was of clear mind about the default of the assessee and, therefore, the reliance placed by the ld. A/R on this cited judgment is distinguishable. Therefore, I do not find any force in the contention of the ld. A/R. Thus the additional ground raised by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maintained any books of accounts, the question of invoking penal provisions under section 271B does not arise. The ld. A/R further submitted in his written submissions as under :- We draw the attention of Ld. Appellate authority to definition of books of accounts (Section 2(12A) as per the act which clearly stipulates as follows: books or books of account includes ledgers, day-books, cash books, account-books and other books, whether kept in the written form or as print-outs of data stored in a floppy, disc, tape or any other form of electro-magnetic data storage device; In the present case, the assessee was maintaining neither of these documents. The only information which the Ld. A.O was having for assessment was the statement of share broker i.e a third party which he has obtained directly from the broker. Thus, the Ld. A.O erred in treating the statement received by him from share broker as books of accounts of the assessee. A statement from a third party can never be books of accounts by any stretch of mind. We have inspected the assessment record and verified this fact that no other document was with the Ld. A.O on records except the said statement. If requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27IB of the Act is not attracted in a case where no account has been maintained and instead recourse under Section 271A can be taken. 15. In view of the foregoing discussions we answer the question referred to us in the affirmative, i.e., in favour of the assessee and against the revenue. There will be no order as to costs . We also rely upon the judgement of Hon ble Gauhati High Court in case of SurajmalParsuramTodi vs. CIT 222 ITR 691 where it was held by the court that We have gone through the provisions of sections 44AA, 44AB, 271A and 271B of the Act. Maintenance of accounts is envisaged under section 44AA and on failure to do so the assessee shall be guilty and liable to be penalised under section 271A. Even after maintenance of books of account the obligation of the assessee does not come to an end. He is required to do something more, i.e., by getting the books of account audited by an accountant. But when a person commits an offence by not maintaining the books of account as contemplated by section 44AA the offence is complete. After that there can be no possibility of any offence as contemplated by section 44AB and, therefore, in our opinion, the imposition of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e parties, perused the material available on record and gone through the orders of the Revenue authorities. The matter for consideration before me is against the levy of penalty under section 271B for non audit of accounts. I have considered the rival submissions as well as relevant material on record and note that the assessee has committed the default for not maintaining the regular books of accounts as required under section 44AA of the Act. The Assessing Officer has imposed penalty under section 271B for not getting the books of accounts audited. It is pertinent to note that when the assessee did not maintain the regular books of account then the question of getting the books of accounts audited does not arise. In this regard, I find that the Coordinate Bench of the Jaipur Tribunal has dealt with the similar issue in the in the case of Shahnaz Khanam vs. ITO in ITA No. 38/JP/2018 wherein considering the various judgments of the Hon ble High Courts decided the issue in its order in paras 6 to 7 as under :- 6. Having considered the rival submissions as well as relevant material on record we note that the assessee has committed the default for not maintaining the regular books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 28(1)(b), the interpretation we should place upon it must accord with reason and justice and must be in accordance with the plain ordinary and rational meaning of the words contained in those provisions. So interpreted, I would not, in my opinion, be right in placing on section 28(1)(b) the construction for which the learned Government Pleader contends. (p. 133) 12. The Madras High Court in the case S. Santhosa Nadar v. First Addl. ITO [1962] 46 ITR 411 has gone to the extent that a voluntary return filed after the period of four years from the close of the assessment year is not a valid return and such a case should be regarded as if no return has been filed at all and it cannot be said in such a case that there has been a concealment of the particulars of income or deliberate furnishing of inaccurate particulars and section 28(1)(c) of the Income-tax Act, 1922 would not be applicable. The Madras High Court has held as follows : When we come to section 28(1)(c ), it deals specifically with the concealment of particulars of income or the deliberate furnishing of inaccurate particulars of income. In the setting in which this subsection finds place it is impossible to cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty under section 271B is erroneous. The Tribunal has overlooked this aspect of the matter. Of course, it is apparent from the records that the assessee failed to maintain the books of account as required under section 44AA and for that penalty is prescribed under section 271A. It is for the Tribunal to take action in accordance with law. The Delhi Benches of the Tribunal in case of Nirmal Kumar Jain vs. ITO (supra) has held in paras 3 4 as under:- 3. In so far as the penalty u/s 271B is concerned, it is noticed that the AO has recorded a categorical finding on page 2 of the assessment order that no books of account were maintained by the assessee. Under such circumstances, a question arises as to whether any penalty can be imposed u/s 271B for not getting the books of account audited. The Hon'ble Gauhati High Court in Surai Mal Parasuram Todi vs. CIT (1996) 222 ITR 691 (Gau.), has held that where no books of account are maintained, penalty should be imposed for non- maintenance of books of account u/s 271A and no penalty can be imposed u/s 271B for violation of section 44AB requiring ITA Nos.6696 6645/Del/2014 audit of accounts. Similar view has been taken by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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