Case Law Details
Vinita Ranka Vs ITO (ITAT Jaipur)
There is no dispute that during the course of assessment proceedings the AO noted that the bank transactions including the deposit in the bank and outward transaction are more than Rs. 4 Crores. The assessee then filed revised computation of income and admitted the turnover of more than Rs. 4 Crores which shows that the assessee is not falling in the exclusion of provisions of maintaining the books of accounts as per provisions of section 44AD of the Income Tax Act. The Assessee has clearly violated the provisions of section 44AA of the Act when the turnover of the assessee is exceeding minimum limit provided under the said provisions. Though the total income of the assessee was assessed by the AO as per the transaction recorded in the bank account however, the bank account of the assessee cannot be accepted or regarded as books of accounts and therefore, the bank account will not substitute the books of accounts to be maintained by the assessee. It is a clear case of non compliance of the provisions of section 44AA of the Act. Therefore, in the absence of bonafide explanation the penalty levied u/s 271A is justified.
FULL TEXT OF THE ITAT JUDGMENT
This appeal by the assessee is directed against the order dated 29.05.2017 of CIT(A), Jaipur arising from the penalty order passed u/s 271A of the Act for the assessment year 2011-12. The Assessee has raised the following grounds:-
“1. That the order is bad in law and on facts
2. That the addition has been made despite of the facts that the assessee filed his return under presumptive scheme due to non maintenance of accounts and discontinuance of old firm and paid tax accordingly.
3. That during the year the additional income was offered on deeming basis hence its interpretation should not be dragged in imposing a penalty u/s 271A.
4. That the appellant reserves the right to add, alter, amend, delete any grounds of appeal before or during the course of appeal.”
2. The assessee filed its return of income and declared income u/s 44AAD. The case was selected for scrutiny under CASS and consequently assessment order u/s 143(3) was passed on 14.03.2014. During the course of assessment proceedings the AO asked the assessee to produce the books of accounts but the assessee could not produce the same as the assessee does not maintained the books of accounts during the year under consideration. The AO noted that the assessee made transactions of more than Rs. 4 Crores including the deposits in the bank accounts and outward transactions from the bank account on which the assessee earned commission but did not maintain the books of accounts. The assessment order was completed on a total income of Rs. 5,58,410/- as against total income declared by the assessee of Rs. 1,88,040/-. The AO initiated the penalty proceedings u/s 271A as well as 271B for failure of maintaining the books of accounts and getting the accounts audited respectively. The AO passed the impugned orders u/s 271A and levy the penalty of Rs. 25,000/- . The assessee challenged the action of the AO before the ld. CIT(A) but could not succeed.
3. Before the Tribunal, the ld. AR of the assessee has submitted that the purpose of maintaining books of account as required u/s 44A is to enable the Assessing Officer to compute the income of the assessee in accordance with the provisions of the Act. The assessee has maintained the books of accounts and other documents which enabled the Assessing Officer to assess the income of the assessee based on the revised computation sheet filed by the assessee and on the basis of the entry appearing in the bank statements. There is no material or evidence on record to show that the assessee has not maintained the books of accounts due to deliberate action and consequently the AO was not able to computing the income. The assessee has maintained such books of accounts and documents which enable the Assessing Officer to compute the total income of the assessee. Hence, the requirements of Section 44A has been complied with by the assessee and there is no default on this account. The ld. AR has thus submitted that when the assessee itself filed a revised computation of income on the basis of the bank account transactions which has been accepted by the AO, then the books of accounts and documents maintained by the assessee has enabled the AO to compute the total income of the assessee. He has relied upon the decision of Chandigarh Bench of this Tribunal in case of ACIT vs. Agarawal Construction Co. 291 ITR (A.T.) 226. He has also relied upon the decision of Hon’ble Supreme Court in case of Hindustan Steel Ltd. Vs. State of Orissa 83 ITR 26 as well as the decision in case of K.C. builders Vs. ACIT 265 ITR 562. The ld. AR has pointed out that the assessee has also filed cash flow statement for the year which duly matched with bank account entries and on the basis of these documents and turnover recorded in these documents the Assessing Officer has computed the total income. Thus the assessee has satisfied requirements of maintaining the books of accounts and therefore, the penalty cannot be imposed.
4. On other hand, the ld. DR has submitted that the assessee is providing accommodation entries which were detected by the Assessing Officer from the bank account of the assessee. Only when the AO has detected this fact, the assessee admitted the turnover of more than Rs. 4 crores, which exceeds limit as provided u/s 44A of the Act. He has relied upon the orders of the authorities below.
5. I have considered the rival submissions as well as relevant material on record. There is no dispute that during the course of assessment proceedings the AO noted that the bank transactions including the deposit in the bank and outward transaction are more than Rs. 4 Crores. The assessee then filed revised computation of income and admitted the turnover of more than Rs. 4 Crores which shows that the assessee is not falling in the exclusion of provisions of maintaining the books of accounts as per provisions of section 44AD of the Income Tax Act. The Assessee has clearly violated the provisions of section 44AA of the Act when the turnover of the assessee is exceeding minimum limit provided under the said provisions. Though the total income of the assessee was assessed by the AO as per the transaction recorded in the bank account however, the bank account of the assessee cannot be accepted or regarded as books of accounts and therefore, the bank account will not substitute the books of accounts to be maintained by the assessee. It is a clear case of non compliance of the provisions of section 44AA of the Act. Therefore, in the absence of bonafide explanation the penalty levied u/s 271A is justified. Accordingly, in the facts and circumstances of the case, I do not find any error or illegality in the orders of the authorities below.
In the result, the appeal of the assessee is dismissed.
Order pronounced in the open court on 11/12/2017.
