TMI Blog2018 (5) TMI 1602X X X X Extracts X X X X X X X X Extracts X X X X ..... M. Balaganesh, AM For The Appellant : Shri R. P. Nag, Addl. CIT For The Respondent : Shri Miraj D. Shah, AR ORDER Per Shri A.T.Varkey, JM Both these appeal filed by the revenue are against the separate orders of Ld. CIT(A)- 20, Kolkata both dated 14.09.2015 for AY 2013-14. Since grounds are identical and facts are common, we dispose of both these appeals by this consolidated order for the sake of convenience by taking the ITA No. 1474/Kol/2015 as the lead case. 2. The sole ground of revenue s appeals is against the orders of Ld. CIT(A) in deleting the penalty imposed u/s. 271AAB of the Income-tax Act, 1961 (hereinafter referred to as the Act ). 2. Briefly stated facts are that there was a search and seizure operation in respect of Nezone Group of cases on 01.08.2012 and on subsequent dates; and the assessee before us is Shri Subhas Chandra Agarwala is one of the key persons of this group. In the penalty order, the AO notes that during the course of post search operation, the assessee admitted an undisclosed income of ₹ 5,55,00,000/- for the AY under consideration in the form of commodity profit vide a consolidated disclosure petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the accountant for which assessee could not be penalized. I think, there is no doubt that not making entries in the regular books of accounts of the income earned by the assessee, is a mistake on the part of the accountant . But for this, imposition of the penalty u/s. 271AAB of the I. T. Act, 1961, (in a situation when there was enough time late in the FY to make entries of such income in the regular books of accounts) is not justified. It is so, because it does not prove the guilty mind and intention to conceal the income on the part of the assessee. It also does not prove that had there been no search operation, the assessee would not have declared such income in the return of income. Accordingly, assessee s appeal on grounds no. 1 and 2 are allowed. Aggrieved, the revenue is in appeal before us. 3. We have heard rival submissions and gone through the facts and circumstances of the case. At the outset, it has been brought to our notice by the Ld. AR that similar penalty u/s. 271AAB of the Act was levied by the AO against Shri Manish Agarwala and Subhas Chandra Agarwala Sons, HUF which was also deleted by the Ld. CIT(A), which decision of the Ld. CIT(A) was assaile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld. AR also pointed out that the contentions which he is going to raise has been taken up before the AO also, however, according to Ld. Counsel, those legal arguments were not considered by the AO in the right perspective. The first contention of the Ld. AR is that since Sec. 271AAB of the Act is a penalty section it should be construed strictly, which we agree being it is a trite law that penalty provisions have to be strictly interpreted. Next contention of Ld. AR is that sec. 271AAB of the Act is not mandatory because Parliament in its wisdom has used the word may and not shall . So, according to him, it is the discretion bestowed upon the AO whether to initiate and impose penalty u/s. 271AAB of the Act. We agree with the said contention of Ld. AR because when a similar issue was adjudicated by ITAT Lucknow (the author of this order was a member of the Bench) in Sandeep Chandak Ors. Vs. CIT (2017) 55 ITR (Trib) 209 and 2017 (5) TMI 675-ITAT-Lucknow in ITA No. 416, 417 and 418/LKW/2016 dated 30.01.2017 while adjudicating a case where penalty was levied under section 271AAB of the Act it was held that the provisions of Sec. 271AAB of the Act are not mandatory, which means ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... head income from other sources. We also find that the Ld. AO had also specifically stated in the body of the assessment order vide column no. 10 that the assessee is having only salary income and income from other sources. We find that due to the absence of the assessee at the time of hearing this particular fact had escaped the attention of the Tribunal. On perusal of the fact available on record, we find that the finding recorded by this Tribunal in para 9 of its order dated 10.11.2017 that the assessee is mandated to maintain books of accounts u/s 44AA of the Act is factually incorrect and deserves to be rectified. This mistake of primary fact had lead to a conclusion of upholding the levy of penalty u/s 271AAB of the Act. Hence, in these facts and circumstances and in view of the aforesaid mistake of primary fact rightly pointed out by the ld. AR , we deem it fit to recall the orders of this Tribunal dated 10.11.2017 in the case of aforesaid assessees. In the aforesaid scenario, the legal position is that an order which has been recalled for de novo adjudication, is no order in the eyes of law and so it cannot be treated as a precedent. Hence, the reliance placed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce with the provisions of this Act. (2) Every person carrying on business or profession [not being a profession referred to in sub-section (1)] shall,- ( i) if his income from business or profession exceeds [one lakh twenty] thousand rupees or his total sales, turnover or gross receipts, as the case may be, in business or profession exceed or exceeds [ten lakh] 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zure operation, Shri Manoj Beswal had made a consolidated disclosure of ₹ 32 crore vide his disclosure petition. Out of this consolidated disclosure, the assessee owned up ₹ 3 cr. In the disclosure petition Shri Manoj Beswal it was stated that the source of such undisclosed income was out of commodity profit. It has been submitted that the amount has already been disclosed in his Income Expenditure account for the AY 2013-14 under the head Income out of Speculative Business from sale of commodities . Verification of accounts confirms his claim. This observation is flawed because, we note that AO got carried away by perusal of the Income Expenditure Account for AY 2013-14 submitted by the assessee before him, wherein it was shown in the income side that is right hand column as Income from Speculative Business from sale of commodities and left hand side column reflects the expenditure; and AO came to the conclusion that assessee has disclosed under the heading income out of Speculative Business from sale of commodities. The character of a receipt and the head under which it has to be taxed is not based on the nomenclature of receipt of income shown in Income E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return wherein the assessee has shown the income from commodities under the head Income from Other Sources cannot now after perusal of Income Expenditure Account determine the character of transaction in the penalty proceedings as Income from Business or Profession which approach/action is erroneous. We note that the assessee in his statement of total income along with return has classified his income under two heads (i) Salary and (ii) from other sources and the income of ₹ 3 cr. as income from other sources, which we find the AO has not contested in the assessment order, has thus crystallized and the necessary inference drawn is that assessee an individual who was admittedly a salaried person engaged in the previous year relevant to the assessment year under consideration (that too for the first time) in an activity from which he derived Income from Other Sources are not required to maintain books of account which are applicable only if the assessee was engaged in Business or Profession. However, we further note that the transactions which yielded income, the assessee had in fact maintained records from which the AO was able to deduce the true income and expenditu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e article or thing or any entry in the books of account or other documents or transactions found in the course of a search under section 132, which has- ( A ) not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous year; or ( B ) otherwise not been disclosed to the [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner before the date of search; or ( ii ) any income of the specified previous year represented, either wholly or partly, by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course relating to the specified previous year which is found to be false and would not have been found to be so had the search not been conducted. According to the Ld. AR, from the facts and circumstances described above, since the assessee is not engaged in business or profession, he does not require to maintain the books of account as per sec. 44AA or sec. 44AA(2) of the Act, therefore, the assessee s case falls in the second limb i.e. or other documents as stipulated u/s. 271AAB Explan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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