TMI Blog2007 (1) TMI 203X X X X Extracts X X X X X X X X Extracts X X X X ..... n the decision of the Tribunal ('SMC' Bench) in the case of Amarjit Singla. The ld Judicial Member in the proposed order accordingly set aside the impugned order of CIT(A) and restored order of the Assessing Officer. The learned Accountant Member did not agree with this view of the ld Judicial Member. He considered the decisions of the Tribunal followed by the ld CIT(A) in the impugned order cancelling the penalty. He noted that the assessee was not required to maintain any specified books. Rule 6F of Income-tax Rules was not applicable in this case. After considering decisions of the Tribunal in the case of Unicon Builders Contractors, as also of Vinod Kumar Bhim Sain's case and several other decisions of Division Bench noted in his proposed order, he held that there were no good reasons for making a departure and upholding the penalty. In fact, it is noted that he and his brother, the ld Judicial Member here were party to a decision where on similar facts in the case of a contractor, penalty levied u/s 271A, was cancelled. Third Member Order - Expenses are found to be unvouched and claim inadmissible. Entries made are also rejected. But from the order of A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) that similar penalties imposed on the assessee for assessment years 1996-97, 1997-98 and 1998-99 were cancelled on appeal by the Commissioner of Income- tax (Appeals). This fact is also noted by both the ld Members in their proposed orders. The learned counsel for the assessee informed me that the revenue did not challenge the above orders of CIT(A) in further appeal before the Appellate Tribunal and these orders have attained finality. There is nothing on record to contradict the assessee. If on identical facts, penalty levied on the assessee was cancelled u/s 271A, there is no justification to levy penalty this year under consideration. No distinguishing features have been brought on record. The state of statutory provision as discussed is far from clear and, therefore, even if it is assumed that the assessee had an obligation to maintain regular books of account, which he failed to do, the failure is definitely due to a reasonable cause and the case is covered under provisions of section 273B of the Income-tax Act. Having regard to the treatment meted out in earlier years, the assessee could reasonably believe that he is fully complying with the provisions of section 44 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,55,72,788 as the assessee is a civil contractor. As per the revenue, the assessee did not furnish the audit report and other relevant record to enable the Assessing Officer to complete the assessment. It was strongly contended that the assessee is having history of not maintaining the books of account. Accordingly, penalty proceedings were initiated. The Assessing Officer relied upon the decision from the Hon'ble Apex Court in the case of CIT v. Bhan Singh Buta Singh 120 ITR 1(sic) and, levied penalty of Rs. 1 lakh under section 271A of the Act. On the other hand, the conclusion of the ld. CIT(A) is that the Assessing Officer was having sufficient information for making the assessment and the receipts against work done were entered in the bank account and placed reliance upon the decision of the Tribunal in the case of Vinod Kumar Bhim Sain v. Asstt. CIT [IT Appeal No. 377 (Chd.) of 1997 dated 20-4-1998] and deleted the penalty. Before coming to any conclusion, we are supposed to see the requirement of the law and also whether the assessee has committed any default in not maintaining such books of account in the absence of which the Assessing Officer could not complete the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts to be kept and maintained under sub-section (1) or sub-section (2) shall be retained. If the aforesaid section is analysed, it clearly says that the assessee is supposed to 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 of this Act. In the present appeal, the finding of the ld. Assessing Officer is as under: The assessee is declaring income @ 10 per cent of total receipts. Although the assessee's case is covered under the provisions of section 44AB, yet the assessee has not furnished the audit report along with return of income. The assessee is having history, of not maintaining books of account. Keeping in view these facts, penalty proceedings under section 271A were initiated by this office on 16-8-2002. The case was fixed for 20-8-2002. In response to this, the assessee did not attend the office on the said date. However, the assessee attended the office on 11-9-2002 and sought adjoumment and accordingly the case was fixed for 13-9-2002. The assessee was asked by the Assessing Officer to furnish certain informations as contained at Pages 1 2 of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having necessary information for completing assessment. We are not agree with it because 'books of account' refers to those books maintained for income-tax purpose and not other private record. The term 'books of account' referred to in sub-clause (1) of Explanation 5 to section 271(1)(c) means books of account which have been maintained for determining any source of income. The term source of income as understood in the Income-tax Act is to identify or classify income so as to determine under which head, out of the various heads of income referred to in section 14 of the Act it would fall for the purpose of computation of the total income for charging income-tax thereon. Thus, the term 'books of account' referred to in this relevant sub-clause of Explanation 5 would mean those books of account whose main object is to provide credible data and information to file the tax return. A credible accounting record provides the best foundation for filing return of both direct and indirect taxes. At the same time, it is not the case that assessee is new and is not aware about the income-tax laws. Rather the assessee is trying to deliberately disobey the provisions. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not verifiable without the books of account and also the daily cash position. In view of these facts, the decision from the Hon'ble Apex Court in the case of Bhan Singh, Buta Singh clearly comes to the rescue of the revenue. No useful purpose will be served to restore this case back to the file of the ld. Assessing Officer for fresh examination because already so many opportunities have been afforded to the assessee which were deliberately avoided. At the same time, it is not the case of the assessee that no opportunity was extended to the assessee-company. On identical facts, the Tribunal in the case of Amarjit Singla has deliberated upon the issue and also the fact that the assessee did not produce the books of account, dismissed the appeal of the assessee. Undisputedly, from the record, it is established that assessee has not prepared the balance sheet and other documents as per the requirement of the provisions of law, clearly indicating the contravention of various provisions of the Act like sections 269SS, 269T, section 40(A)(3) and other provisions of the Act. Therefore, net accretion to the asset of the business could not be determined by the Assessing Officer on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating that the provisions which existed as on 1-3-2001 were applicable. 4. The assessee carried the matter to the Ld. CIT(A) and submitted that the proceedings were not covered under section 44AA(1) of Income-tax Act and the penally levied in similar circumstances for assessment years 1996-97 and 1998-99 was deleted by the ld. CIT(A), Ludhiana. Reliance was placed on the following judgments of the Tribunal: Unicon Builders Contractors v. Asstt. CIT [IT Appeal No. 377 (Chd.) of 1997, assessment year 1994-95 order dated 10-10-2002]. Vinod Kumar Bhim Sain's case. It was further stated that if the following conditions of section 44AB(2) were not fulfilled then no books of account were required to be maintained. (i) If his income from business or profession exceeds Rs. 1,70,000 or his total sales, turn over or gross receipts as the case may be in business or profession exceed or Rs. 10,00,000 in anyone of the three years immediately preceding the previous year; or (ii) Where the business or profession is newly set up in any previous year, if his income from business or profession is likely to exceed Rs. 1,20,000 or his total sales, turn over or gross receipts as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, therefore, initiation of penally proceedings were un-called for, un-warranted and illegal which deserved to be dropped. 5. Ld. CIT(A) after considering the submissions of the assessee, observed that, the Assessing Officer was having sufficient information for making the assessment. He observed that the assessee was maintaining bank account and capital account of the partners and that the receipts against work done were entered in the bank account. He further observed that while framing assessment the Assessing Officer had applied the flat rate of profit on total receipts. According to him, the cases decided by the ITAT which were relied on by the assessee were similar to the assessee's case in the said cases it had been held that in the absence of any books having been prescribed by the Board, the Assessing Officer had sufficient information to make the assessment, the penalty was not leviable. The ld. CIT(A), therefore, deleted the penalty levied by the Assessing Officer. 6. Ld. Counsel for the assessee, during the course of hearing, reiterated the submissions made before the authorities below and it was stated that this issue was covered by the decisions cite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l No. 827 (Chd.) of 2004] for assessment year 2001-02. In the said case, the penalty levied in similar circumstances by the Assessing Officer had been deleted by the ld. CIT(A), thereafter the appeal of the department was dismissed by this Bench of the ITAT by following the order of the Tribunal adjudicated by Chandigarh Bench (SMC) in Hind Super Construction's case. In the said case earlier orders of the Tribunal were followed which are following: Aar Kay Construction's case. Unicon Builders Contractors' case. VinodKumar Bhim Sain v. Asstt. CIT[IT Appeal No. 1981/Chd./91] for the assessment year 1987-88, order dated 20-4-1998. 7.2 It is relevant to point out that in similar circumstances, the penalty levied under section 271A was deleted by the ld. CIT(A) and thereafter this Bench of the ITAT in the case of Aar Kay Construction confirmed the order of the Ld. CIT(A). The said order has been authored by my ld. Brother and in that case also, reliance has been placed on the case of Unicon Builders Contractors. 7.3 From the above discussion it would be clear that the majority of the cases decided by the Division Bench of ITAT Chandigarh and also by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gard the decision of another Bench of the same Tribunal on an identical question. This is particularly true when the earlier decision is rendered by a larger Bench. The rationale of this rule is the need for continuity, certainty and predictability in the administration of justice. Persons affected by decisions of Tribunals or Courts have a right to expect that those exercising judicial functions will follow the reason or ground of the judicial decision in the earlier cases on identical matters. Classification of particular goods adopted in earlier decisions must not be lightly disregarded in subsequent decisions, lest such judicial inconsistency should shake public confidence in the administration of justice. In view of the ratio laid down by the Hon'ble Supreme Court in the aforesaid referred to cases and considering the fact that in similar circumstances, the penalty had been deleted by the Tribunal in majority of the similar cases, in few of the cases, the undersigned is the author or the co-author, therefore, to maintain the well-established principle of consistency, judicial decorum and legal propriety, I am constrained to agree with my ld. Brother. In my opinion, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an income of Rs. 8,62,910. The Assessing Officer rejected the books of account and applied flat rate of 12 per cent to the contract receipts and computed assessee's income at Rs. 18,68,735. On appeal, some relief was allowed to the assessee. Further appeals before the Income-tax Appellate Tribunal were dismissed. 4. The Assessing Officer also initiated penalty proceedings under section 271A of Income-tax Act and after hearing the assessee, he held I, therefore, hold that the assessee had failed to comply with the provisions of section 44AA read with rule 6F and thus is liable to be penalized under section 271A of the Income-tax Act, 1961 . He imposed penalty of Rs. 1 lakh on the assessee vide his order dated 15-11-2002. 5. The assessee impugned above levy in appeal before the Commissioner of Income-tax (Appeals), who after considering the relevant circumstances including the fact that similar penalty levied was deleted on appeal by the Commissioner of Income- tax (Appeals) in earlier years in this case and also by following decisions of ITAT in the case of (i) Unicon Builders Contractors for assessment year 1994-95 and in the case of (ii) Vinod Kumar Bhim Sain deleted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uired to maintain any specified books. Rule 6F of Income-tax Rules was not applicable in this case. After considering decisions of the Tribunal in the case of Unicon Builders Contractors, as also of Vinod Kumar Bhim Sain's case and several other decisions of Division Bench noted in his proposed order, he held that there were no good reasons for making a departure and upholding the penalty. In fact, it is noted that he and his brother, the learned Judicial Member here were party to a decision where on similar facts in the case of a contractor, penalty levied under section 271A, was cancelled. In support of his consistent approach the learned Accountant Member noted the following two decisions of Hon'ble Supreme Court:- (i) Sundarjas Kanyalal Bhatija's case. (ii) Paras Laminates (P.) Ltd.'s case. 7.1 In the proposed order, the learned Accountant Member has concluded as under :- In view of the ratio laid down by the Hon'ble Supreme Court in the aforesaid referred to cases and considering the fact that in similar circumstances, the penalty had been deleted by the Tribunal in majority of the similar case, in few of the cases, the undersigned is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposed order of the learned Judicial Member is based upon above decision. In the case of Unicon Builders Contractors to which I was a party, the Bench after considering the relevant provisions of section 44AA deleted the penalty with the following observations :- 3. We have heard the rival submissions, perused the orders of tax authorities and gone through the material on record as well as the relevant provisions of law. We find that penalty under section 271A may be levied, if the assessee fails to keep and maintain any such books of account and other documents as required by section 44AA or under rule 6F. We find that the provisions of section 44AA(1) are not applicable to the case, as the assessee is a civil contractor and not a person carrying on a specified profession. Section 44AA(2) requires the assessee to 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 of the Act. There is no dispute that the assessee has kept the books and other documents which enabled the Assessing Officer to determine total contract receipt of the assessee during the year under conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and decorum. The Hon'ble Members of Income-tax Appellate Tribunal would do well to abide by this basic principle to maintain good image of Institution. 11. Even independent of above circumstances, I see no justification for upholding levy of penalty in this case. The provisions which the Revenue can rely upon is sub-section (2) of section 44AA of the Act which enjoins upon the assessee to 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 of this Act. No specific books have been prescribed for business of a civil contractor admittedly carried on by the assessee. 12. A reference to the assessment order dated 23-3-2004 in this case would show that the Assessing Officer noted that the assessee was maintaining 'Cash System' as 'method of accounts' in column 5 of title of the assessment order. The Assessing Officer further noted as under :- 5. Vide its replied filed during the course of assessment proceedings, the assessee admitted that it did not maintain regular books of account but only a ledger type book. From the perusal of the said ledger typ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee were rejected and the Hon'ble ITAT has found it reasonable to work out the assessee's income by applying flat rate of 12 per cent to the contract receipts. Following the ratio of learned ITAT in the above-mentioned case, I hereby apply net profit rate of 12 per cent on contract receipts shown in the return of income for working out the taxable income of the assessee which works out to Rs. 18,68,735 (being 12 per cent of 1,55,72,788). 14. On further appeal, the Commissioner of Income-tax (Appeals) upheld the application of flat rate of 12 per cent but allowed interest and salary paid to the partners as a deduction. The Tribunal appears to have upheld the order of Commissioner of Income-tax (Appeals). 15. I have reproduced the above extract from the assessment order to reject the finding recorded by the Assessing Officer in the penalty order, that no books of account were maintained by the assessee as baseless. It is not recorded in the assessment order that the Assessing Officer was 'unable' to compute the income of the assessee from ledger type of book maintained by the assessee. The Assessing Officer has admitted that income and expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied such high rate of 12 per cent Assessing Officer cannot contend that he was unable to make assessment. Therefore, in the above peculiar circumstances of the case, the Commissioner of Income- tax (Appeals) was right in holding that there was no failure on the part of the assessee under section 44AA of the Income-tax Act and penalty imposed under section 271A was not justified. 16. There is another good but independent reason for not upholding levy of penalty in this case. It has been observed by the learned Commissioner of Income-tax (Appeals) that similar penalties imposed on the assessee for assessment years 1996-97, 1997-98 and 1998-99 were cancelled on appeal by the Commissioner of Income- tax (Appeals). This fact is also noted by both the learned Members in their proposed orders. The learned counsel for the assessee informed me that the revenue did not challenge the above orders of Commissioner of Income-tax (Appeals) in further appeal before the Appellate Tribunal and these orders have attained finality. There is nothing on record to contradict the assessee. If on identical facts, penalty levied on the assessee was cancelled under section 271A, there is no justification ..... X X X X Extracts X X X X X X X X Extracts X X X X
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