TMI Blog2023 (10) TMI 1097X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee holding that in case of not maintaining books of account by a person, whose gross business turnover exceeds the prescribed limit under section 44AB of the Act, then both the penalties i.e. u/s 271A and 271B are leviable After going through the decision of the Coordinate Bench, Ranchi, we are of the view that the same is squarely applicable on the facts of the present case and respectfully following the same, we confirm the finding of the ld. CIT(Appeals) and accordingly penalties for A.Y. 2011-12 and 2012-13 levied under section 271A for not maintaining books of account and penalty under section 271B of the Act for not getting the books of account audited stand confirmed. Decided against assessee. - DR. MANISH BORAD, ACCOUNTANT MEMBER SHRI SONJOY SARMA, JUDICIAL MEMBER Appearances by: For the Assessee : Shri Chirag Desai, Office staff on behalf of Shri Miraj D. Shah,A.R., Appeared For the Revenue Shri Prabhakar Prakash Ranjan, JCIT, Sr. D.R., Appeared ORDER PER DR. MANISH BORAD, ACCOUNTANT MEMBER:- These appeals at the instance of assessee for assessment year 2011-12 and 2012-13 are directed against the order of ld. Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A), NFAC, Delhi has erred in law as well as on facts of the case by passing order u/s 250 of the I.T. Act, 1961 dated 16/12/2022 confirming the penalty imposed u/s 271A of the I.T. Act, 1961 while Ld. Income Tax Appellate Tribunal, Kolkata C(SMC) Bench, has disposed of the case by partially allowing in favour of the assessee. ITA No. 89/KOL/2023 (A.Y. 2012-13) (1) For that the Ld. CIT(A), NFAC, Delhi has erred in law as well as on facts of the case by passing order u/s 250 dated 16/12/2022 confirming the penalty imposed by the Assessing Officer u/s 271B of the I.T. Act, 1961 of Rs. 1,19,650/- without giving your appellant the chance of being heard and thereby ignoring the rules of natural justice on the grounds which are not correct. (2) For that the Ld. CIT(A), NFAC, Delhi has erred in law as well as on facts of the case by passing order u/s 250 of the I.T. Act, 1961 dated 16/12/2022 confirming the penalty imposed u/s 271B of the I.T. Act, 1961 while Ld. Income Tax Appellate Tribunal. Kolkata 'C(SMC) Bench, has disposed of the case by partially allowing in favour of the assessee. 3. From perusal of the grounds, we notice that effectively two issues ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2011-12 and 2012-13 challenging the levy of penalties under section 271A and 271B of the Act. 8. Ld. Counsel for the assessee on the strength of plethora of judgments placed in the paper book has stated that it is an admitted fact that assessee has not maintained books of account and therefore, penalty under section 271A of the Act is leviable. However, since there were no books of account maintained by the assessee, then, the question of getting the books of account audited does not arise. Therefore, penalty under section 271B of the Act levied for not getting the books of account audited deserves to be deleted. Further, ld. Counsel for the assessee stated that since the reason for not maintaining the books of account for A.Y. 2011-12 is similar to those to maintain books of account for A.Y. 2012-13, the same should be constituted as reasonable cause under the provision of section 273B of the Act and the assessee should not be visited by penalty under sections 271A and 271B of the Act. 9. On the other hand, ld. D.R. vehemently supported the order of authorities below. 10. We have heard the rival contentions and gone through the record placed before us. We notice that for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act is leviable in a case when the assessee does not maintain the books of account as provided under section 44AA of the Act i.e. for noncompliance of section 44AA of the Act. Whereas penalty under section 271B of the Act is leviable for not getting the books of account audited. Now the contention of the assessee is that the assessee intends to get benefit for its own wrong doing. On one hand, since the turnover of the assessee exceeds the limit prescribed under section 44AB of the Act and to get the books of account needs to be audited but since she has not maintained the books of account, it is pleaded that only penalty for not maintaining the books of account should be leviable and no penalty should be levied for not getting the books of account audited. If such plea is considered, then in case of a person, who is required to maintain the books of account but does not maintain the books of account and even not filed the return of income and thereafter when the ld. Assessing Officer wants to examine credit entries in the bank account, which assessee is unable to explain, then it cannot be pleaded by the assessee that since it has not maintained books of account, therefore, prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rupees in any one 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not chargeable to income-tax in any previous year; or (e) carrying on the business shall, if the provisions of subsection (4) of section 44AD are applicable in his case and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year, get his accounts of such previous year audited by an accountant before the specified date and furnish by that date the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed : Provided that this section shall not apply to the person, who declares profits and gains for the previous year in accordance with the provisions of sub-section (1) of section 44AD and his total sales, turnover or gross receipts, as the case may be, in business does not exceed two crore rupees in such previous year: Provided further that this section shall not apply to the person, who derives income of the nature referred to in section 44B or section 44BBA, on and from the 1st day of April, 1985 or, as the case may be, the date on which the relevant section came into force, whichever is later : Provided also that in a case where such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44AA of the Act, whereas, the penalty u/s 271B is levied for non-compliance of the provisions of section 44AB of the Act. Neither section 44AA and 44AB are in substitution of each other and nor the penalty levied u/s 271A and 271AB are in alternate or in substitution to each other. The separate and distinct provisions of section 44AA and 44AB of the Act not only apply on different class of persons but also on the different threshold of income/sales turnover. It is to be further noted here that the rate of penalty u/s 271A for non-maintenance of books of account u/s 44AA are lesser than that is prescribed u/s 271B for non-auditing of the books of account. Allowing a person who is required to get his books of audited to escape with lesser penalty or for no penalty for committing his wrongful act of even not maintaining his books of account will amount to allowing a person to take the benefit of his own wrong. The person, who have different class being their turnover very high has been assigned double responsibility i.e. firstly, maintaining their books of account and secondly get their books of account audited. Whereas the persons with lesser receipts or turnover have been given sing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isaging two types of defaults are also different. The Hon'ble High Court also took notice the fact that earlier penalty levied by the Assessing Officer only for non-maintenance of accounts by the assessee and not for its failure to have its accounts audited u/s 44AB of the Act. Therefore, the Hon'ble High Court held that the earlier penalty levied by the Assessing Officer u/s 271A of the Act was only for non-maintenance of books of account and the same did not cover the penalty for not getting the books audited u/s 271B of the Act and that the second notice issued by the Assessing Officer for levy of penalty u/s 271B of the Act was not barred by limitation by reckoning the limitation period from the date of issue of earlier notice for levy of penalty u/s 271A of the Act. The relevant part of the order of the Madhya Pradesh High Court is reproduced as under: 7. Applying all this to the present case, it emerges that the Assessing Officer had initiated penalty proceedings in his assessment order dated 30-5-1986 only for non-maintenance of account books by the assessee and not for its failure to have its accounts audited under section 44AB. That is why he firstly issued no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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