TMI Blog2006 (7) TMI 257X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee is a civil contractor. He filed the return of income for the assessment year 2004-05 on 1-11-2004. It was noticed by the Assessing Officer that as per the income computation statement filed along with the return of income, the assessee had a turnover of Rs. 69,22,579 and he had estimated the income at the rate of 5 per cent of the total contract receipts. Subsequently, there was a survey action against the assessee under section 133A of the Act on 8-2-2005 and some of the files were impounded. It was found by the Assessing Officer that for the earlier year i.e., assessment years 2000-01 and 2001-02, the assessee has declared the income at the rate of 8 per cent on the gross contract receipts. During the course of survey action, swor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the Assessing Officer finalized the levy of penalty under section 271A vide order dated 26-7-2005. It was further submitted by the ld. counsel that the assessee was filing the statement of the net wealth showing the assets as well as liabilities along with the return. Moreover, the assessee was regularly following the same method for declaring his income. It was further submitted that subsequently, there was a survey action against the assessee under section 133A of the Act i.e., on 8-2-2005 and some statement of the assessee was recorded and on the basis of the statement recorded, the Assessing Officer came to the conclusion that there is failure on the part of the assessee to comply with the provisions of section 44AA when, in fact, se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the case for the Assessing Officer to levy the penalty. He further submitted that nothing has been brought on record to show that the conduct of the assessee is in defiance of law because for all the earlier years, the assessee had adopted the same method which was never questioned by the Assessing Officer. It was further submitted that subsequent survey action against the assessee cannot justify the levy of penalty for violation of section 44AA. If at all the Assessing Officer wants to levy penalty presuming for the sake of argument that sub-section (2) of section 44AA is applicable to the assessee, in that case, the Assessing Officer can draw the inference only after completion of the assessment as the words used are "as may enable the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled his return of income for the assessment year 2004-05 on 1-11-2004. It is also not disputed in this case that penalty proceedings for levy of penalty under section 271A were initiated on 10-1-2005 and the assessment for this year has been completed on 23-6-2006. Now, the only issue which emerges for our consideration is whether on the facts of this case, provisions of section 44AA are applicable to the assessee and presuming that the provisions are applicable, then whether the Assessing Officer was justified in levying the penalty under section 271A. Section 44AA reads as under:- "44AA. (1) Every person carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer to compute his total income in accordance with the provisions of this Act. (3) The Board may, having regard to the nature of the business or profession carried on by any class of persons, prescribe, by rules, the books of account and other documents (including inventories, wherever necessary) to be kept and maintained under sub-section (1) or sub-section (2), the particulars to be contained therein and the form and the manner in which and the place at which they shall be kept and maintained. (4) Without prejudice to the provisions of sub-section (3), the Board may prescribe, by rules, the period for which the books of account and other documents to be kept and maintained under sub-section (1) or sub-section (2) shall be retained." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acting the condition, the circumstances may exist that the Assessing Officer was unable to compute the income of the assessee due to the non-maintenance of the accounts. In this case, we find that the Assessing Officer issued the show-cause notice for levy of 'penalty under section 274 read with section 271A dated 10-1-2005 and after more than 17 months, the Assessing Officer completed the assessment. In our opinion, without completing the assessment, the Assessing Officer cannot come to the conclusion that he was unable to compute the income of the assessee due to the non-maintenance of the day book and ledger. Moreover, no specific books of account have been specified or notified by the Board in respect of contract business. If the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
