TMI Blog2013 (2) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... nd any alternate except to estimate the income u/s. 44AF. Therefore, the provisions of section 44AA(2)(iii) and 44AF(5) would clearly apply in the case of the assessee - as the assessee did not file return of income as per provisions of section 44AF and claimed lower profit in the return of income, therefore, penalty is attracted in the case of the assessee. No justification to interfere with the orders of penalty as the assessee has not explained any reasonable cause which prevented the assessee from maintaining the books of account in accordance with law - against assessee. - IT APPEAL NO. 160 (AGRA) OF 2009 - - - Dated:- 7-9-2012 - BHAVNESH SAINI AND A.L. GEHLOT, JJ. Anurag Sinhna for the Appellant. K.K. Mishra for the Respondent. ORDER Bhavnesh Saini, Judicial Member - This appeal by the assessee is directed against the order of the ld. CIT(A), Ghaziabad dated 05.12.2008 for the assessment year 2005-06 confirming levy of penalty u/s. 271-A of the IT Act. 2. The assessee in column No. 9 of the appeal papers stated 30th January, 2009 as the date of communication of the order appealed against. However, the appeal is filed in the office of the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 44AF to ascertain the net profit from business. The AO, after finding credit entries etc. computed the total transactions in both the accounts at Rs. 30,66,153/- (Rs. 30,05,153 + Rs. 61,000/-) and by applying profit of 5% as per section 44AF, the net profit was determined at Rs. 1,53,308/-. The penalty proceedings u/s. 271-A was initiated for non-maintenance of books of account. The assessee submitted in response to the penalty notice that the assessee accepted the application of provisions of section 44AF during the course of assessment proceedings, as he had not maintained any books of account and tax levied thereon has been paid. The assessee co-operated with the department and has no bad intention and income was declared in good faith. Therefore, the notice of penalty should be vacated. The AO, accordingly, found that the assessee had not maintained any books of account or other documents for his business activities to arrive at the correct figure of income. The assessee admitted that no books of account have been maintained for the business. Therefore, 5% profit was applied as per section 44AF. Since the assessee failed to keep and maintain any books of account and documents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was that the assessee has failed to comply with certain requisition as per accounting standard "AS-7". (iii) CIT v. Babu Reddy [2010] 38 DTR (Ker) 147, in which it was held that in the absence of prescribed format for civil contractors, no books of account have been prescribed under Rules for business of Civil Contractor and the AO accepted the return on the basis of books of account produced by him. Therefore, no penalty has to be levied. (iv) Sant Construction Co. v. ITO, in which the assessee was a civil contractor and no difficulty was felt by the AO in making assessment for lack of complete records. (v) Mehta Parvesh v. ITO [1998] 60 TTJ (Delhi) 278, in which, it was held that CBDT has not yet prescribed any rule for maintenance of specific books as far as persons deriving income from business are concerned. Therefore, penalty is not leviable because the assessee furnished adequate information so as to enable the AO to compute his total income in accordance with the provisions of section 44AF. 5. On the other hand, the ld. DR relied upon the orders of the authorities below and submitted that the assessee claimed lower profit as against the provisions of section 44AF i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee under section 44AD or section 44AE or section 44AF 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; 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. (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." The provisions of section 44AF of the IT provide as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n any previous year, penalty is leviable. Section 44AA(2)(i) and (ii) provides that every person carrying on business shall keep and maintain such books of account and other documents as may enable the AO to compute his total income in accordance with the provisions of this Act. If his income from business exceeds Rs. 1,20,000/- or his total sales, turnover or gross receipts, as the case may be in any business exceed or exceeds Rs. 10,00,000/- in one of the three years immediately preceding the previous year. According to section 44AA(2)(iii), noted above, the assessee shall have to maintain such books of accounts and other documents where the profit and gains from business is deemed to be the profits and gains of the business under sections 44AD or 44AE or 44AF or 44BB or 44BBB, as the case may be, and assessee claimed his income to be lower than the profits and gains so deemed to be profit gains of his business during such previous year. The provisions of section 44AF(5) also specify that the assessee may claim lower profits and gains than the profits and gains specified in sub-section (1), if he keeps and maintains such books of account and other documents as required under su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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