TaxTMI 
TaxTMI 
2016 (8) TMI 1618
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....n 5-11-2007 declaring total income of Rs. 1,81,430/-. The case of the assessee was selected for scrutiny and notice u/s 143(2) was issued alongwith notice u/s 142(1) of the Act. The assessee did not respond to the notices. After giving ample opportunities to the assessee, the AO issued a show cause notice u/s 142(1) on 19-11-2009 as a final opportunity before finalization of the assessment. The assessee did not respond to it. The case was completed u/s 144 of the Act at an income of Rs. 16,68,557/- by making trading addition of Rs. 5,43,233/-, disallowance of expenses of Rs. 2,16,894/- and addition u/s 68 of Rs. 6,27,000/-. The assessee preferred first appeal before the ld. CIT (A) who vide her order dated 30-01-2012 decided the appeal partly in favour of the assessee. However, the ld. CIT (A) while deciding the appeal of the assessee at para 7 of her order observed as under:- "On perusal of the details filed by the appellant, it is seen that even by his own admission, he had earned brokerage income of more than Rs. 1,25,000/- and has not maintained any books of accounts in contravention of section 44AA(2), penalty proceedings are to be initia....
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.... thus AO levied a penalty of Rs. 25,000/- u/s 271A of the Act. Even otherwise, the assessee was required to maintain books of accounts for its accommodation entries business wherein it was earning commission income of more than Rs. 1,25,000/- as required by the provisions of sec. 44AA of the Act. However, the said books of accounts were neither prepared nor maintained by the assessee. The case of Mehta Parvesh Vs. ITO relied upon by the assessee is of no help to it as in that case, the assessee submitted sufficient information to the AO to determine its income, however, in the instant case under consideration, the assessment was completed u/s 144 of the Act as assessee neither filed any information nor produced any books of accounts before the AO for determination of its income. The assessee was not able to show any reasonable cause neither during the penalty proceedings nor during the appellate proceedings for non-maintenance of books of accounts and thus is not entitled for any relief u/s 273B of the Act and therefore, the penalty of Rs. 25,000/- imposed by the AO u/s 271A of the Act is confirmed. 2.3 Now the assessee is in appeal before me against conf....
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....rect the AO to initiate the penalty proceedings and levy the same. Though this decision is with reference the penalty leviable u/s 271(1)(c) but the principal laid down in this decision equally applies to the penalty leviable u/s 271A as both the penalties falls in Chapter XXI and are similarly worded. The relevant Para 54 to 57 of this decision is reproduced as under:- "WHO INITIATES PENALTY PROCEEDINGS 54. As is clear from the words in Section 271, if the Assessing Officer or the Commissioner of Appeals or the Commissioner in the course of any proceedings under this Act is satisfied that any person has concealed particulars of his income or furnished inaccurate particulars of his income, he may direct that such person shall pay by way of penalty the amount mentioned therein. Therefore, the penalty proceedings have to be initiated by the person who is satisfied about the concealment of income or furnishing of inaccurate particulars of income in the course of any proceedings under this Act. In a given case if the Assessing Officer has not. recorded any satisfaction or has not issued any direction to initiate penalty proceedings, in appeal or in revision, the autho....
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....urate particulars of it. 57. The question of their recording satisfaction and then calling upon the Assessing Officer to initiate penalty proceedings would not arise. Penalty proceedings has to be initiated by the authority which is satisfied about the concealment of the particulars of the income or furnishing of inaccurate particulars of income." In view of above, the penalty imposed u/s 271A by the AO on direction of the CIT (A) is illegal and bad in law and the same be deleted. 3. On merits also, penalty is not leviable as the assessee has maintained the books of accounts in as much as the audited accounts were filed before the AO on the basis of which only the AO considered the turnover in assessment proceedings. Only because these books were misplaced and could not be produced does not mean that there is a failure in maintaining books of accounts. Further, the income is assessed as business income from trading of precious and semi-precious stones or as commission income makes no difference so far as the maintenance of books of accounts are concerned. Thus, there is a reasonable cause u/s 273B in not producing the books of accounts and once the AO com....