Diary also books of accounts us 44AA. Section does not prescribe books for business but only talks of accounts-documents which may enable AO to adduce true income, penalty u/s 271A deleted by ITAT
ABCAUS Case Law Citation:
1028 (2016) (10) ITAT
Assessment Year: 2009-10 and 2010-11
Brief Facts of the Case:
A search u/s 132 of the Income Tax Act, 1961 was carried out in case of the individual assessee. During the course of search, a note book was seized. The assessee had filed his return of income for both the AY 2009-10 on 30.1.2011. However, the Assessing Officer passed assessment orders for both the years determining the taxable income of the assessee by more than Rs. 12 lakhs. The AO was of the opinion that since turnover of the assessee exceeded Rs. 10 lakhs, he was required to maintain books of accounts u/s 44AA which in his opinion, were not being maintained by the assessee, therefore, he initiated penalty proceedings under section 271Aand ultimately imposed a penalty of Rs.25,000/- in each assessment years.
The assessee contested the penalty by filing an appeal before the CIT(A) which did not bring any relief to him.
Aggrieved by the order of CIT(A) upholding the penalty, the assessee was in appeal before the Tribunal.
Contentions of the Assessee:
The assessee contended that there was no dispute with regard to the proposition that if an assessee failed to maintain books of accounts, and other documents as required under section 44AA, then penalty under section 271A can be imposed upon the assessee.
However, it was submitted that no specific type of books of accounts is being provided either under section 44AA or under the relevant rules, which was required to be maintained by an assessee.
He submitted that It is not the case that the assessee was not maintaining any books. He was maintaining a diary which disclosed the turnover, and the basis of turnover mentioned in the diary. The AO had also made addition to the total income of the assessee in both the years. Therefore, the assessee cannot be visited with penalty.
In support of his contentions, the assessee relied upon the two judgments of the ITAT (i.e. in the case of Dinesh Paper Mart and Sant Construction Co)
Observations made by the Tribunal:
The ITAT observed that in the case of Dinesh Paper Mart the assessee was a partnership firm and was maintaining books of accounts, which was audited as per section 44AB of the Act, but those books could not be produced before the AO in spite of several opportunities. The AO harboured a belief that the assessee was not maintaining books of accounts, and therefore, visited the assessee with penalty. In this background, the Tribunal got occasion to examine the nature of books of accounts required to be maintained under section 44AA of the Income Tax Act. It has been held that section does not provide any specific type of books of accounts. It only talks about the accounts and documents, which can enable the AO to adduce the true income of the assessee.
The Tribunal noted that in the present case also, the assessee was maintaining a diary, which had helped the AO to work out the alleged unaccounted sales, therefore the AO was not justified to impose the penalty under section 271A of the Act
The appeal by the assessee was allowed and the and penalty u/s 271A was delete for both the year