1984 (12) TMI 96

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..... sions of the learned departmental representative. 2. Section 271 A, so far as it is relevant for the purpose of the present appeal reads, inter alia, as follows : "...if any person, without reasonable cause, fails to keep and maintain any such books of account and other documents as required by section 44AA or the rules made thereunder, in respect of any previous year ... the Income-tax Officer . . . may direct that such person shall pay, by way of penalty, a sum which shall not be less than 10 per cent but which shall not exceed fifty per cent of the amount of the tax, if any, which would have been avoided if the income returned by such person had been accepted as the correct income." 3. In the present case, the assessee, who is a c .....

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..... t is required by that section is to keep such books of account or other documents from which the ITO can be able to compute the total income of the assessee. In the present case, since the assessee has maintained a bank account, which enabled the ITO to compute the income of the assessee, I direct the ITO to delete the penalty imposed in this case." 7. The aforesaid order of the learned AAC is assailed by the department as unsustainable in law and on fact. According to the learned departmental representative, the maintenance of a bank account was not enough for ascertaining the profit of the assessee and, therefore, it could not be said that the assessee had maintained the books of account in terms of section 44AA. The requirement of sub- .....

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..... der because the ITO, who has imposed the penalty, has not been able to grasp the essential ingredients of this section, viz., 271A, in terms of which alone penalty can be imposed by the ITO on the assessee. From the wordings of the section, extracted by us above in extenso, it would be clear that the penalty in question can be imposed on the assessee with reference to tax ' which would have been avoided if the income returned by such person has been accepted as the correct income '. It is, therefore, clear that for the purpose of coming to a conclusion that penalty is imposable on the assessee in terms of section 271A, the ITO must apply his mind to the returned income and to the assessed income and then to satisfy himself that there is dif .....

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