TMI Blog2018 (3) TMI 1523X X X X Extracts X X X X X X X X Extracts X X X X ..... oks of accounts are maintained even in respect of unaccounted sales or business receipts and the penalty can be levied under section 271B of the Act. See Brij Lal Goyal vs. ACIT [2003 (10) TMI 274 - ITAT DELHI-D] as held the record carrying entries from which the appellant admits of additional sales are not the accounts as referred to under s. 44AB of the Act. On that basis it was not open to the AO to hold that the sales of the assessee as referred in s. 44AB of the Act have exceeded to ₹ 40 lakhs and by not getting such accounts audited from an accountant, the appellant has committed a default. - Decided in favour of assessee - ITA No. 73/JP/2018 And ITA No. 74/JP/2018 - - - Dated:- 27-3-2018 - SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SINGH YADAV, AM For The Assessee : Shri Nikhilesh Kataria (CA) For The Revenue : Smt. Poonam Ray (JCIT) ORDER PER: VIKRAM SINGH YADAV, A.M. These are two appeals filed by the respective assessees against the order of the ld CIT(A) in confirming the levy of penalty under section 271B of the Act. Since common issues are involved, both these appeals were heard together and disposed off by this consolidated or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 14.09.2013. Similarly, an amount of ₹ 94,323/- on the balance business receipts of ₹ 7,56,410/- was offered to tax by way of revised return for AY 2009-10. 4. As per the Assessing Officer, the business transactions routed through the bank accounts of Shri Abhishek Kumawat are not entered in the regular books of accounts of the assessee and thus it could not be said that the true profits can be deduced from the books of accounts which were thereafter rejected by the AO invoking the provisions of section 145(3) of the Act. The AO thereafter brought to tax ₹ 3,86,510/- as per income declared in the original return filed u/s 44AD of the Act. Further, the income amounting to ₹ 6,58,344 by applying GP @ 15.19% on undisclosed business receipts of ₹ 43,34,064/- offered for taxation in the revised return of income and confirmed by the assessee during the course of assessment proceedings was brought to tax. Simultaneously, the AO initiated the penalty proceedings u/s 271B of the Act stating that during year under consideration, total business turnover of the assessee comes to ₹ 92,32,333/- (48,98,269 + 43,34,064) which exceeds ₹ 60 lacs as speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee by disclosing further income of ₹ 658,344/- in the revised return during the course of assessment proceedings. Regarding the other plea of the assessee that no books of accounts were maintained by assessee, the same was also not found acceptable as provisions of Income Tax Act makes it mandatory for the assessee to maintain his books of accounts and get them audited. In light of the same, the AO held that the assessee clearly violated provisions of section 44AB of the Act and is liable to be penalized u/s 271B for not getting his accounts audited as required u/s 44AB and penalty of ₹ 46,162/- was levied on the assessee. 6. Being aggrieved, the assessee carried the matter in appeal before the ld. CIT(A) who has confirmed the levy of penalty and his relevant finding are contained at para 4.3 which is reproduced as under:- 4.3 I have gone through the penalty order, statement of facts, grounds of appeal and written submission carefully. It is seen that in the profit loss account, the assessee had shown total sales of ₹ 48,98,269/- and the assessee admittedly had also effected undisclosed sale of ₹ 43,34,064/- through the bank account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n for computing profits and gains of business on presumptive basis 21.1 The existing provisions of the Income-tax Act provide for taxation of income on presumptive basis in the case of construction business, income from goods carriages and business of retail trade. Section 44AD prescribes a method of presumptive taxation for assessee engaged in the business of civil construction or supply of labour for civil construction in which a sum equal to eight percent of the gross receipts is deemed to be the profits and gains from business. Section 44AE provides presumptive provisions for the assessee engaged in the business of plying, hiring or leasing up to ten goods carriages in which a prescribed sum per vehicle is deemed to be the presumptive income of the assessee. Section 44AF prescribes a method of presumptive taxation for retail trade, under which the presumptive income is computed at the rate of a sum equal to five per cent of the total turnover. There has been a substantial increase in small businesses with the growth of transport and communication and general growth of the economy. A large number of businesses and service providers in rural and urban areas who earn substan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was required to maintain any books of accounts u/s 44AA of the Act nor the same were required to be audited u/s 44AB of the Act. Therefore no penalty u/s 271B of the Act could be levied on the assessee. 7.2 No Details or Evidence of Additional Sale Declared by the Assessee No Possibility to Treat Same Books of Accounts and Further Getting Same Audited: It is also submitted that the assessee has declared additional sales only on the basis of cash deposit made in some other person s bank account and the same cannot be treated as books of accounts of the assessee. The additional sales have been declared simply on the basis of statement given by the other person. There are absolutely no other details available with regard to such additional sales like details of parties, details of relevant purchases, details of expenses, actual margins in trading and so on. Even there is no evidence or details with the department and the estimated additional income declared by the assessee has been accepted without making any variation in the same. In support, reliance was placed on the decision of Hon ble Delhi ITAT in the case of Brij Lal Goyal vs. ACIT 88 ITD 413 (Del)(Tri). Thus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the above provision makes it clear that the books of accounts should be kept and maintain by the assessee in such a manner so that the total income could be deduced there from. However, in the present case, the income itself has been declared on estimated basis and even further there are no documents related to the additional turnover declared and there also net profit is declared on estimated basis. Hence the records and books maintained by the assessee were not as required u/s 44AA of the Act and rather there were no books of accounts in relation to the additional turnover. 7.4 Some Records Kept by Assessee Cannot be Treated as Books of Accounts Finding of AO Not Relevant: The ld. AO pointed out that the assessee has maintained books of accounts but not included the entire turnover. In this regard, we may submit that as already submitted that the assessee was not required to keep any books of accounts but still some records or books are kept by the assessee to support figure of its turnover, details of debtors and creditors, advances taken or paid etc. Such books or records cannot be treated as such books of accounts as has been stated u/s 44AA of the Act as these are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 558 : (2008) 8 DTR 0273 : (2008) 299 ITR 0219 : * SURAJMAL PARSURAM TODI vs. COMMISSIONER OF INCOME TAX (1997) 142 CTR 0209 : (1996) 222 ITR 0691 (Gau HC) * COMMISSIONER OF INCOME TAX ANR. vs. S.K. GUPTA CO. (2010) 322 ITR 0086 (All HC) 7.9 Decision of Hon ble Jaipur ITAT: The Hon ble Jaipur ITAT in the matter of Yogendra Singh Shekhawat vs. ITO ITA No. 1001/JP/2016 dt.24-4-2017 has given a similar finding that separate penalty has been provided for violation of section 44AA and section 44AB of the Act and in case of violation of section 44AA of the Act, penalty u/s 271B cannot be fastened. 7.10 Therefore, considering the above facts and circumstances of the case, where no books of accounts were maintained by the assessee u/s 44AA of the Act, penalty u/s 271B cannot be fastened on the assessee and accordingly, the appeal of the assessee may please be allowed. 8. The ld DR is heard who has vehemently argued the matter and took us through the order and the findings of the lower authorities. She submitted that the assessee has maintained the books of accounts however there were unaccounted sales which were later on admitted by the assessee by way of revis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and whereby the prescribed turnover threshold has been breached. Had the Revenue rejected the assessee s claim under section 44AD of the Act and thereafter, taking into consideration the declared turnover of ₹ 48,98,269 and undisclosed business receipts of ₹ 43,34,064, had come to a position that the assessee has failed to get offered his books of accounted, that in a such a scenario, the contention of the Revenue could have been accepted. Further, what has been referred in section 44AB is the books of accounts maintained in the regular course of business and where an admission is made by the assessee based on third party statement during the course of survey that the amount found deposited in the bank account belongs to the assessee, it cannot be said that regular books of accounts are maintained even in respect of unaccounted sales or business receipts and the penalty can be levied under section 271B of the Act. In this regard, we refer to the decision of the Coordinate Bench in case of Brij Lal Goyal vs. ACIT (supra) wherein it has been held as under: ---- 11. It is evident from the aforesaid observation that books of account maintained in regular course only ..... X X X X Extracts X X X X X X X X Extracts X X X X
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