Case Law Details
ITAT COCHIN BENCH
K.V. Ramachandran
versus
Deputy Commissioner of Income-tax
IT Appeal No. 208 (Coch.) of 2012
ASSESSMENT YEAR 2008-09
Date of Pronouncement – 28.03.2013
T.M. Sreedharanfor the Appellant. Smt. Susan George Varghese for the Respondent.
ORDER
N.R.S. Ganesan, Judicial Member
This appeal of the taxpayer is directed against the order of the CIT(A) dated 10-04-2012 confirming the levy of penalty u/s 271B of the Act for the assessment year 2008-09.
2.Shri T.M. Sreedharan, the ld.senior counsel for the taxpayer submitted that the taxpayer is a civil contractor mainly engaged in government contract. According to the ld.senior counsel, the taxpayer is not maintaining any books of account. According to the ld.senior counsel, no books of account were prescribed by the CBDT in respect of civil contractor. Therefore, the taxpayer can not be blamed for not maintaining the books of account. Referring to the order of the CIT(A) dated 10-04-2012, the ld.senior counsel submitted that the penalty levied u/s 271A of the Act by the assessing officer was deleted by the CIT(A). According to the ld.senior counsel, once the books of account were not maintained, there is no question of any levy of penalty for not auditing the books of account. According to the ld.senior counsel, the question of audit would come into consideration only if at all the taxpayer was maintaining the books of account. Therefore, according to the ld.representative, penalty levied for not getting the books of account audited is not justified. The ld.representative placed his reliance on the judgment of the Karnataka High Court in CIT v. Babu Reddy [2010] 38 DTR (Kar) 147, copy of which is available on record. The ld.senior counsel has also filed copy of the order of the CIT(A) dated 10-04-2012 deleting the penalty levied by the assessing officer u/s 271A of the Act. The ld.senior counsel has also placed reliance on the decision of the Chandigarh Bench of this Tribunal in A.C.I.T. v. Aggarwal Construction Co. [2007] 106 ITD 129 (Chd)(TM). The ld.senior counsel further relied upon the decision of the Pune Bench of this Tribunal in the case of Shri Ramchandra D Keluskar in ITA No.668/PN/10, copy of which is also placed on record.
3. We have also heard Smt. Susan George Verghese, the ld.DR. The ld.DR submitted that since total receipts of the taxpayer during the year under consideration exceeded the limits prescribed u/s 44AB of the Act, the taxpayer was required to obtain the audit report. The contention of the taxpayer that since no books of account was maintained, the question of getting the audit report does not arise, is not acceptable. The ld.DR relied upon the orders of the lower authorities.
4. We have considered the rival submissions on either side and also perused the material available on record. We have also carefully gone through the provisions of section 44AA of the Act. Sub clause (2) of section 44AA clearly says that every person carrying on business or profession [not being the profession referred to in sub clause (1)] shall keep and maintain the 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 in case the 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 exceeded or exceeds ten lakh rupees in any one of the three years immediately preceding the previous year. Therefore, in our opinion, the legislature expects even a civil contractor to maintain the books of account.
5. In exercise of the executive powers and while framing rule 6F of Income-tax Rules, the executive authorities prescribed the books of account in respect of professionals in Rule 6F(1) of the Act. We find that there is an obvious omission in respect of civil contractor in Rule 6F(1) of the I.T. Rules. This Tribunal is of the considered opinion that it is an unintented omission on the part of the executive authorities in not including the business of civil contract and other business in Rule 6F(1). When the Parliament in its wisdom expects every person carrying on business including civil contract, this Tribunal is of the considered opinion that the excecutive authorities (CBDT) ought to have prescribed minimum required books of account. The Karnataka High Court in the case of Babu Reddy (supra) and the co-ordinate benches of this Tribunal at Chandigarh in Aggarwal Construction Co. (supra) found that although books of account had to be prescribed, such books had not been prescribed under the Income-tax Rules in respect of business of civil contract. Accordingly, the Karnataka High Court in the case of Babu Reddy (supra) and the Chandigarh Bench of this Tribunal in the case of Aggarwal Construction Co. (supra) deleted the penalty levied u/s 271A of the Act for not maintaining the books of account.
6. Even in the present case, the very same CIT(A) deleted the penalty u/s 271A after placing reliance on the decision of the Chandigarh Bench of this Tribunal in the case of Aggarwal Construction Co. (supra). Therefore, once the penalty for not maintaining the books of account was deleted, it is not known how the very same CIT(A) confirmed the penalty levied u/s 271B of the Act for not getting the books of account audited.
7. In yet another case of ShriRamchandra D Keluskar in ITA No.668/PN/10, the Pune Bench of this Tribunal found that when there are no books of account, the question of its audit does not arise. Therefore, this Tribunal is of the considered opinion that when the books of account was not maintained and the penalty levied u/s 271A was deleted, this Tribunal is of the considered opinion that there is no justification for levying penalty u/s 271B of the Act for not getting the books of account audited.
8. After analyzing the provisions of section 44AA of the Act and Rule 6F of I.T. Rules, this Tribunal find that the omission to include civil contract and other business in Rule 6F is only an unintended omission. Therefore, it is open to the department to bring it to the notice of the concerned executive authority (CBDT) about the lacunae / omission in Rule 6F if the department is so advised.
9. With the above observations, the orders of lower authorities are set aside and the penalty levied u/s 271B is deleted.
10. In the result, the appeal of the taxpayer stands allowed.
