Penalty u/s 271B for sales disclosed during survey can not be levied for failure to get accounts audited u/s 44AB when such sales not entered in the regular books of accounts-ITAT
ABCAUS Case Law Citation:
ABCAUS 2273 (2018) (04) ITAT
The appellant assessee had challenged the order of the CIT(A) in confirming the levy of penalty under section 271B of the Income Tax Act, 1961 (the Act).
The assessee was engaged in the business of marble trading through his proprietorship concern. The assessee had filed his original return of income declaring presumptive income in terms of section 44AD of the Act.
A survey u/s 133A was conducted by the Investigation wing which revealed huge cash deposits in the bank account of a third party who in the statement recorded stated that the amount credited in these bank accounts did not belong to him. He stated that many marble traders were affecting sales without recording the same in their books of accounts and the sales consideration for such sales was received in cash through his bank account.
On the basis of diaries and other incriminating documents impounded during the survey, it was found that the appellant assessee had received cash in different years through the said bank account used for receiving undisclosed sales. During the course of assessment proceedings, the appellant assessee offered undeclared business receipts to tax
Regarding the business transactions routed through the bank accounts of third person, the Assessing Officer (AO) opined that since those were not entered in the regular books of accounts of the assessee, true profits could not be deduced from the books of accounts. Accordingly the AO rejected the books by invoking the provisions of section 145(3) of the Act.
The AO apart from the income declared in the original return filed u/s 44AD of the Act added the income by applying GP @ 15.19% on undisclosed business receipts as offered for taxation in the revised return of income.