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TMI Blog2023 (10) TMI 1097X X X X Extracts X X X X X X X X Extracts X X X X ..... T. Act, 1961 of Rs. 25,000/- 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 271A of the I.T. Act, 1961 while Ld. Income Tax Appellate Tribunal, A'-Bench, Kolkata has disposed of the case by deleting the addition made u/s 143(3)/l47 of the I.T. Act 1961 in favour of the assessee. ITA No. 87/KOL/2023 (A.Y. 2011-12) (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. 1,36,773/- 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 1,96,350/- on 05.03.2012. The assessment proceedings were carried out by issuance of a notice under section 148 of the Act and the assessment was completed under section 143(3) read with section 147 of the Act. So far as the additions made in the assessment order are concerned, the same are not in dispute before us. However, we notice that in the course of assessment proceedings, the ld. Assessing Officer noticed that there was a cash deposit of Rs. 2,73,54,650/-, which ld. Assessing Officer considered it as a business turnover and computed the income @ 8%. The ld. Assessing Officer came to a conclusion that the assessee is liable to pay penalty under section 271A of the Act for not maintaining the books of account as provided under section 44AA of the Act and also liable to pay penalty under section 271B of the Act for not getting the books of account audited since the gross turnover for the year exceeded the limits of turnover provided under section 44AB of the Act. Accordingly penalty proceeding was initiated and after considering the submissions of the assessee, penalty under section 271A levied at Rs. 25,000/- and penalty under section 271B of the Act levied at Rs. 1,36,7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it as a business turnover and estimated the net profit thereon. So far as the action of the ld. Assessing Officer is concerned, the same has not been disputed by the assessee at any stage. Thus it remains an admitted fact that since assessee has accepted the finding of ld. Assessing Officer treating the cash deposit during the year as business turnover, and the gross turnover from the business for the year under appeal exceeds the prescribed limits as provided under section 44AB of the Act and the assessee is required to get the accounts audited and failure to do so attracts the penalty under section 271B of the Act. Now for the purpose of getting the books of account audited, the assessee should maintain the books of account, but in this case, the assessee has not maintained books of account also. Based on these observations, the ld. Assessing Officer initiated the penalty proceedings under section 271A of the Act for not maintaining the books of account and under section 271B of the Act for not getting the books of account audited. The contentions of the ld. Counsel for the assessee is that since the assessee has not maintained the books of account, it should be charged only wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal reads as under:- "4. We have gone through the order of the ITAT, Ranchi Bench, in the own case of the assessee in respect of quantum appeal for the year under consideration. We find that the assessee has not presented the true and correct facts. A perusal of para 5 of the order of ITAT dated 07.06.2019 (supra) would show that the Tribunal has categorically noted, "The A.O considering the submissions of the assessee and material placed on record, rejected the books of accounts of assessee estimating @10% of the total gross receipts". Therefore, the case of the assessee is not of maintenance of books of account, rather, the case of the assessee was that of rejection of books of account. The decision cited by the ld. counsel in the case of CIT vs. Bisauli Tractors (supra), therefore, is not applicable to the facts and circumstances of the present case. 5. Even otherwise, we find that the provisions of section 44AA and 44AB are separate and distinct provisions. Section 44AA and 44AB are reproduced as under: "44AA. (1) Every person carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay 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.]" "44AB. Every person,-- (a) carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds one crore rupees in any previous year 89[***]: [Provided that in the case of a person whose-- (a) aggregate of all amounts received including amount received for sales, turnover or gross receipts during the previous year, in cash, does not exceed five per cent of the said amount; and (b) aggregate of all payments made including amount incurred for expenditure, in cash, during the previous year does not exceed five per cent of the said payment, this clause shall have effect as if for the words "one crore rupees", the words "five crore rupees" had been substituted; or] (b) carrying on profession shall, if his gross receipts in profession exceed fifty lakh rupees in any previous year; or (c) carrying on the business shall, if the profits and gains from the business are deemed to be the profits and gains of such person under section 44AE or section 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous year relevant to an assessment year, means date one month prior to the due date for furnishing the return of income under sub-section (1) of section 139." 6. As per Section 44AA of the Act, the maintenance of books has been made compulsory in respect of persons carrying out certain profession and as mentioned above and further in cases of persons or business or profession if their turnover crosses the prescribed limit then such persons are required to maintain books of account, whereas, the condition prescribed for compulsory audit of accounts are different as prescribed u/s 44AB of the Act. Under section 44AA(1) the persons carrying on the notified professions irrespective of their annual receipts are required to maintain books of accounts, whereas the condition of carrying on of specified profession as not there u/s 44AB of the Act requiring compulsory auditing of the books of account. Similarly u/s 44AA(2) in case of persons carrying on business or profession other than the specified professions, are required to maintain their books of account if their annual receipt/turnover exceeds the prescribed limit. However u/s 44AB, the auditing of books has been made mandatory only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be explained by an example. Suppose there are two persons namely Ram & Shyam. Both are required to maintain their books of accounts and also get those audited as required u/s 44AA and 44AB. Ram maintains his books of account but did not get those audited, whereas, Shyam did not maintain his book of accounts at all and there was no question of audit of the same as the books did not exist at all. Under these circumstances, if the contention of the ld. Counsel is to be accepted, Ram will be subjected to higher penalty u/s 271B of the Act, whereas, Shyam who has committed double default would escape with lesser penalty. This proposition, in our humble view, is neither legally justified nor it can pass the test of application of principles of justice, equity and good conscience. 7. We may at this stage refer to the decision of the Hon'ble Madhya Pradesh High Court in the case of Bharat Construction Co. v. ITO reported in [1999] 106 Taxman 460 (MP), wherein, the Assessing Officer had earlier levied penalty u/s 271A of the Act for non- maintenance of books, thereafter the Assessing Officer issued another notice for levy of penalty u/s 271B of the Act for not getting the books of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y section 271A and section 271B are separate and distinct. Under the latter provision if the assessee fails to get his accounts audited under section 44AB, he is liable to penalty as laid down in this section. The object is to get a clear picture of the assessee's accounts whose turnover exceeds the prescribed limit. The rates envisaging two types of defaults are also different. Therefore, without dilating on the issue further we find no difficulty in holding that the impugned second notice dated 11-9-1989 cannot be ascribed to the direction of the Assessing Officer for initiation of penalty proceedings in his assessment order dated 30-5-1986. Since it is not covered by that order, it should be treated as initiating penalty proceedings under section 271B from the date it was issued and this was not barred by time under section 275B. This shall not, however, be construed to validate this impugned notice for all purposes, should it be suffering from some other infirmity. But it surely is not barred by time under section 275B." 8. The object of requiring the assessee to get his books of accounts audited u/s 44AB is to get a clear picture of the assessee's accounts so as to en ..... X X X X Extracts X X X X X X X X Extracts X X X X
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