Case Law Details
Mohd. Imtiyaz Khan Prop Vs ITO (ITAT Lucknow)
Whether penalty under section 271B of the Act could be levied in a case where the books of account were maintained by the assessee. The Hon’ble jurisdictional High Court in that case held that where no account has been maintained, section 271B does not get attracted and instead recourse under section 271A can be taken. It is an undisputed fact that this decision pertains to an assessee who was a Tractor Dealer. However, we find that in the instant case, the assessee before us is a Civil Contractor. The parameters of business are thus substantially different of a Tractor dealer and that of a Contractor.
Penalty Under Section 271A may be levied, if the assessee fails to keep and maintain any such books of account and other documents as required by Section 44AA or u/r 6F. We find that the provisions of Section 44AA(1) are not applicable to the case, as the assessee is a civil contractor and not a person carrying on a specified profession.
Section 44AA(2) requires the assessee to keep and maintain such books of account and other documents as may enable the Assessing Officer to compute his total income in accordance with the provisions of the Act.
There is no dispute that the assessee has kept the books and other documents which enabled the Assessing Officer to determine total contract receipt of the assessee during the year under consideration on the basis of which the income of the assessee has been computed by the Assessing Officer by applying a rate of 10%. Thee is no material or evidence on record to establish that the assessee has not maintained books due to which Assessing Officer could not be able to compute the income. The assessee has maintained such books of account an documents which enabled the Assessing Officer to compute the total income. Therefore, in our opinion, the assessee has not made any default Under Section 44A. In the absence of any default being made Under Section 44AA, no penalty Under Section 271A can be imposed. We, therefore, set aside the order of learned Commissioner of Income-tax (A) and delete the impugned penalty.
FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-
This appeal preferred by the assessee emanates from the order of the ld. CIT(A), Faizabad dated 28/7/20 16.
2. The assessee has taken multiple and elaborate grounds of appeal, however, we find that the only grievance of the assessee is against the imposition of penalty under section 271A of the Act, which was upheld by the ld. CIT(A).
3. The facts as appearing from record are that the assessee is a contractor and notice dated 23/5/2012 under section 148 of the Act was issued by recording reasons to believe that the income to the tune of Rs.71,88,562/- chargeable to tax has escaped assessment. The assessee did not file any return of income in compliance to the said notice and the assessment order was passed under section 147/144 of the Act assessing the income of the assessee at Rs.10,78,290/-. While passing the order, penalty proceedings under section 271A were also initiated. A show cause notice under section 271A was issued on 14/7/2014 specifically asking the assessee to show cause why penalty under section 271A may not be imposed in the case of the assessee by giving an opportunity to put forth his submission and date of compliance was fixed for 24/7/2014 and this notice was sent through registered post on the address given in the assessment order, which was returned back unserved and is placed on record. A reminder show cause notice was issued on the new address available and the date of compliance was fixed for 14/8/2014. On this said date also no submission was furnished by the assessee nor there was any appearance on behalf of the assessee. In view of these circumstances, penalty proceedings under section 271A were initiated on the basis of material available on record. Th e Assessing Officer , as per the reasons enumerated in his order, imposed a penalty of Rs.25,000/ – under section 271A of the Act.
4. Against imposition of penalty under section 271A of the Act, assessee preferred an appeal before the ld. CIT(A). The ld. CIT(A) after considering the submissions of the assessee and assessment order, relying upon the decision of the Hon’ble jurisdictional High Court in the case of CIT vs. Bisauli Tractors reported in [2008] 299 ITR 219 (Alld) upheld the imposition of penalty under section 271A to the tune of 25,000/-.
5. Being further aggrieved, assessee preferred an appeal before this Tribunal. At the time of hearing, the ld. A.R. of the assessee vehemently argued that the case law relied upon by the ld. CIT(A) in the case of CIT vs. Bisauli Tractors (supra) was substantially different in facts as compared to the case of the assessee and is not at all applicable. The ld. A.R. of the assessee strongly placed reliance upon the Third Member decision of Chennai Bench of the Tribunal in the case ACIT vs. Aggarwal Construction Co. reported in [2007] 106 ITD 129 (TM).
6. The ld. D.R., on the other hand, relied upon the orders of the authorities below.
7. We have perused the case records and we find that the issue before the Hon’ble jurisdictional High Court in the case of CIT vs. Bisauli Tractors (supra) was that whether penalty under section 271B of the Act could be levied in a case where the books of account were maintained by the assessee. The Hon’ble jurisdictional High Court in that case held that where no account has been maintained, section 271B does not get attracted and instead recourse under section 271A can be taken. It is an undisputed fact that this decision pertains to an assessee who was a Tractor Dealer. However, we find that in the instant case, the assessee before us is a Civil Contractor. The parameters of business are thus substantially different of a Tractor dealer and that of a Contractor. We further find that the Third Member Bench of the Chennai Tribunal following the decision of the Chandigarh Bench of the Tribunal in the case of Unicon Builders & Contractors vs. ACIT, Circle 2(II), Ludhiana in ITA No.377/Chd/1997 and after considering the relevant provisions of section 44AA of the Act, deleted the penalty with the following observations: –
“10. On careful consideration of rival submissions and relevant material on record, I find that it has been the consistent view of Benches that no penalty Under Section 271A is exigible in the cases of contractors. However, a contrary view was taken by SMC Bench of the Tribunal in the case of Amarjit Singh (supra) and levy of penalty was upheld. The proposed order of the learned Judicial Member is based upon above decision. In the case of Unicon Builders & Contractors (supra) to which I was a party, the Bench after considering the relevant provisions of Section 44AA deleted the penalty with the following observations:
3. We have heard the rival submissions, perused the orders of tax authorities and gone through the material on record as well as the relevant provisions of law. We find that penalty Under Section 271A may be levied, if the assessee fails to keep and maintain any such books of account and other documents as required by Section 44AA or u/r 6F. We find that the provisions of Section 44AA(1) are not applicable to the case, as the assessee is a civil contractor and not a person carrying on a specified profession. Section 44AA(2) requires the assessee to keep and maintain such books of account and other documents as may enable the Assessing Officer to compute his total income in accordance with the provisions of the Act. There is no dispute that the assessee has kept the books and other documents which enabled the Assessing Officer to determine total contract receipt of the assessee during the year under consideration on the basis of which the income of the assessee has been computed by the Assessing Officer by applying a rate of 10%. Thee is no material or evidence on record to establish that the assessee has not maintained books due to which Assessing Officer could not be able to compute the income. The assessee has maintained such books of account an documents which enabled the Assessing Officer to compute the total income. Therefore, in our opinion, the assessee has not made any default Under Section 44A. In the absence of any default being made Under Section 44AA, no penalty Under Section 271A can be imposed. We, therefore, set aside the order of learned Commissioner of Income-tax (A) and delete the impugned penalty. ”
8. We also find that the aforesaid decision was followed by different Benches of the Tribunal at Chandigarh. The overall judicial perception in this aspect is that so far as the case of Contractor is concerned, there is no scope for imposing penalty under section 271A of the Act. We, therefore, respectfully following the Third Member decision of Chennai Bench of the Tribunal in the case ACIT vs. Aggarwal Construction Co. (supra), order deletion of penalty levied under section 271A of the Act.
9. In the result, appeal of the assessee is allowed.
Order pronounced in the open Court on 20/02/2018.
