AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (10) TMI 1192
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.... appreciate that the sustenance of levy of penalty for the reasons stated from para 5 of the impugned order was not correct while further ought to have appreciated that the relevant facts which would fortify the stand of the Appellant for deleting the penalty imposed by the Assessing Officer were completely overlooked proving perversity in the findings recorded in relation thereto. 4. The CIT (Appeals) failed to appreciate that the stand consistently taken by the Appellant on the non applicability of section 44AB read with section 271B of the Act would constitute reasonable cause within the scope of section 273B of the Act while vitiating the levy of penalty in relation thereto mechanically. 5. The CIT (Appeals) failed to appreciate that the order imposing penalty u/s 271B of the Act was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law." 3. The brief facts of the case are that the assessee is a Civil Contractor, filed his return of income by admitting total income of Rs. 21,01,840/- on estimate basis. The A.O has completed the assessment u/s. 143(3) of the Income Tax Act, 1961 (hereinafter as "the Act") at Rs. 55,80,009/- by....
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....h bank statements. Therefore, the assessee's contention is without any merit and irrelevant to the present facts. Therefore, it is clear that the assessee, without reasonable cause, failed to complete with the provisions of section 44-AB of the Income Tax Act, 1961. Hence, it is a fit case for levy of penalty u/s. 271B of the Income Tax Act, 1961of sum equal to one-half percentage of the gross receipts or one fifty thousand rupees whichever is less (0.5% of 4,76,00,080/- is Rs. 2,38,004/-). Therefore, a penalty of Rs. 1,50,000/- u/s. 271B of the Income Tax Act, 1961 is hereby levied on the assessee for the non compliance of Section 44-AB of the Income Tax Act, 1961." As detailed in the penalty order, there is no reasonable cause maintaining and auditing the hooks of accounts. The assesse has relevant accounts statements to bank through a Chartered Accountant. No reasons -with supporting evidences have been submitted for non-compliance to section 44AB. Claim that he has been penalized under section 271A cannot absolve him for the penal consequence u/s 271B. Penalty is confirmed." 5. On appeal, the Ld. CIT(A) has confirmed the order passed by the A.O. 6. Before us, the ld. Coun....
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....under Section 271B of the Act. According to him non-maintenance of account, as required under Section 44AA of the Act attracts penalty provisions under Section 271A of the Act but that would not take out the jurisdiction of the assessing authority to impose penalty under Section 27IB of the Act. The submission is wholly misconceived. Section 44AB of the Act read as follows: 44AB. Audit of accounts of certain persons carrying on business or profession. Every person (a) carrying on business shall, if his total sales, turnover or gross receipt as the case may be in business exceed or exceeds forty lakh rupees in any previous year, or (b) carrying on profession shall, if his gross receipts in profession exceeds ten lakh rupees in any previous year, get his accounts of such previous year audited by an accountant before the specified date and obtain before that date the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed. The penalty provisions are contained in Sections 271A and 271B of the Act which are reproduced below: 271 A. Failure to keep, maintain or retain books of account, docum....
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....on falls within the four corners of the penal provisions otherwise not. Further in the tax matter interpretation in favour of the assessee has to be adopted. We may mention here that in case where the returns are not being filed, there is unanimous judicial view that no penalty can be imposed for concealment of income and that is why the Parliament had to make suitable amendment in the penalty provision by inserting Explanation 3 to Section 271 of the Act and Explanation 3 to Section 18 of the Wealth Tax Act, 1957. 8. The question as to whether an assessee has concealed the particulars of his turnover where he has not filed the return came up for consideration before the Apex Court in the case of Narain Das SurajBhan v. CST (1968) 21 STC 104 (SC). The Apex Court while considering the provisions regarding the imposition of penalty provided under Clause (b) of Section 15A(1) of the U.P. Sales Tax Act has held as follows: In our opinion, Clause (b) of Section 15A(1) is attracted as soon as it is shown that the assessee has concealed the particulars of its turnover or deliberately furnished inaccurate particulars of such turnover in the return filed under Section 7 of the Act. It i....
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....ecision of the Supreme Court in Narain Das SurajBhan v. CST which supports the view that we are taking. 10. In the case of Thoppil Kutti Eroor v. CIT the Kerala High court while considering the question of imposition of penalty under Section 38(1)(c) of the Cochin Income Tax Act which provides imposition of penalty for concealment or for furnishing inaccurate particulars has held as follows: It is impossible to say that when a person has failed to furnish any return at all what he has done is to conceal the particulars of income or to deliberately furnish inaccurate particulars of such income within the meaning of Clause (c) of Section 38(1) of the Act. We entertain no doubt that the offence in such a case should be considered as one coming under Clause (a) and not under Clause (c) of Sub-section (1) of Section 38. 11. In the case of S. Narayanappa & Bros. v. CIT the Mysore High Court has held as follows: What was urged before us was that in a case where an assessee has furnished no return at all before the Income Tax Officer, it should be presumed for the purposes of Section 28(1)(b) that he has furnished a return of his income intimating the Income Tax Officer that his in....
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....urn has at all been filed; such a case would clearly come within the scope of Section 28(1)(a) alone. 13. This Court in CWT v. Yadu Raj Narain Singh alsotaken the same view. It has held as follows: Thus applying the strict construction of penalty provisions contained inclause (1) of Sub-section (c) of Section 18 of the Act, we find that prior tothe amendment in Explanation 3 by the Direct Tax Laws (Amendment) Act, 1987 with effect from 1-4-1989 in a case where the person who has previously been assessed under the Act does not file any return in response to the notice or even where time for filing the return has expired has not filed any return there cannot be any concealment for which penalty provision can be imposed. In view of the foregoing discussions, we are of the considered opinion that in the present case the respondent assessee has not concealed the particulars of his income for which wealth no penalty under Clause (1) of Sub-section (c) of Section 18 of the Act is exigible. 14. Therefore, Section 27IB of the Act is not attracted in a case where no account has been maintained and instead recourse under Section 271A can be taken. 15. In view of the foregoing discussi....