www.tpcc.in

Income Tax Act, 1961, Section 271A

Penalty under section 271A--Leviability--Assessee duly maintained its books of account

Conclusion: Where assessee duly maintained its books of account and uploaded its cash book as was called for by AO, penalty levied under section 271A would not be sustainable.

AO levied penalty under section 271A upon assessee for not maintaining its books of account as required as per mandate of section 44AA. CIT (A) confirmed the penalty. Assessee contended that it duly maintained its books of account and uploaded its cash book as was called for by AO, therefore, AO grossly erred in saddling it with penalty under section 271A. Held: Since assessee uploaded relevant extract of its cash book for year under consideration, as was called for by AO, it was comprehend why and on what basis, it was concluded by AO that assessee was not maintaining its books of account and hence, penalty imposed on assessee under section 271A was deleted.

Decision: In assessee's favour

IN THE ITAT, RAIPUR BENCH

RAVISH SOOD, J.M. & ARUN KHODPIA, A.M.

Kamla Nehru College v. ITO

ITA No. 138/RPR/2023

13 March, 2024

Assessee by: Y.K. Mishra, Advocate

Revenue by: Satya Prakash Sharma, Sr. D.R.

ORDER

Ravish Sood, J.M.

The present appeal filed by the assessee is directed against the order passed by the Commissioner (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 8-2-2023, which in turn arises from the order passed by the assessing officer under section 271A of the Income Tax Act, 1961 (in short 'the IT Act') dated 2-2-2022 for the assessment year 2017-18. The assessee has assailed the impugned order on the following grounds of appeal:

"1. On the facts and circumstances of the case, the penalty confirmed by the learned Commissioner (Appeals) under section 271A is being opposed to facts and law on several grounds. Hence consequential penalty may very kindly be dropped.

2. The appellant craves leave to add, urge, alter, modify or withdraw any ground/s before or at the time of hearing."

2. Shri Y.K Mishra, learned Authorized Representative (for short 'AR') for the assessee at the very threshold submitted that the appeal is time-barred by 14 days. Elaborating on the reasons leading to the delay involved in the filing of the appeal, the learned Authorized Representative had filed an application seeking condo nation of delay along with an affidavit dated 13-10-2023 of Shri A.K Soni. It is, therein, stated that as there was a death of a relative of the deponent, viz. Shri Kanhiya Lal Soni on 28-3-2023, therefore, he had remained out of station to carry out family rituals and thus, could not file the appeal within the prescribed period. It was submitted by the learned Authorized Representative that as the delay involved in filing the appeal had occasioned due to bona fide reasons, therefore, the same be condoned.

3. Per contra, the learned Departmental Representative (for short 'DR') did not seriously object to the seeking of condo nation of delay in filing of the present appeal.

4. We have thoughtfully considered the reason leading to the delay in filing of the appeal and find substance in the contention advanced by the learned Authorized Representative that the same had occasioned due to bona fide reasons. We, thus, considering the totality of the facts leading to the aforesaid delay of 14 days in filing the present appeal, condone the same.

5. Succinctly stated, the assessment in the case of assessee which is an educational institution run by a Managing Society, viz. Kamla Nehru Mahavidyalaya Samithi was framed by the assessing officer vide order under section 144 of the Act dated 11-12-2019. As certain unexplained cash deposits were made in the bank account of the assessee, the same was held by the assessing officer as its unexplained money under section 69A of the Act. The assessing officer while culminating the assessment proceedings, inter alia, initiated penalty proceedings under section 271A of the Act.

6. After the culmination of the assessment proceedings, the assessing officer treating the assessee as being in default for not maintaining books of accounts as required per the mandate of section 44AA of the Act, saddled it with penalty under section 271A of the Act of Rs. 25,000.

7. Aggrieved the assessee carried the matter in appeal before the Commissioner (Appeals) but without success.

8. The assessee being aggrieved with the order of the Commissioner (Appeals) has carried the matter in appeal before us.

9. We have heard the learned Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the learned Authorized Representatives to drive home his contentions.

10. The learned Authorized Representatives for the assessee at the threshold had assailed the order of the lower authorities. Elaborating on his contention, the learned Authorized Representatives submitted that the penalty under section 271A of the Act had been imposed by the assessing officer based on incorrect observations. Carrying his contention further, the learned Authorized Representatives submitted that the assessee during the assessment proceedings, had in compliance to notice issued under section 142(1) of the Act dated 14-8-2019, Page 71 of APB in his reply to Question Nos. 8, 9 & 14 raised by the assessing officer, had vide its Reply dated 12-9-2019, Page 78 & 79 of APB, inter alia, submitted that the assessee college had duly maintained its books of account and had uploaded its cash book for the period 8-11-2016 to 30-12-2016 and 8-11-2015 to 30-12-2015 as was called for by the assessing officer. It was, thus, submitted by the learned Authorized Representatives that now when the assessee society had duly maintained its books of account, therefore, the assessing officer had grossly erred in saddling it with penalty under section 271A of the Act. The learned Authorized Representatives had further drawn our attention to the reply of the assessee dated 12-9-2019 which was uploaded on the e-portal of the department on 12-9-2019, Page 76 to 79 of APB. The learned Authorized Representatives had taken us through the audit report of the Managing Committee of the assessee college, viz. Kamla Nehru College, Korba, Page 86 to 108 of APB. It was, thus, submitted by the learned Authorized Representatives that now when there was no infraction of law on the part of the assessee, the penalty imposed by the assessing officer under section 271A of the Act of Rs. 25,000 could not be sustained and was liable to be vacated.

11. Per contra, the learned Departmental Representative (for short 'DR') relied on the orders of the lower authorities.

12. At the threshold, we may herein observe that the assessee, an educational institution which was being run by Managing Society, viz. Kamla Nehru Mahavidyalaya Samithi, Korba remained under a statutory obligation to separately maintain its books of account. Although, it is observed by the assessing officer that the assessee had not maintained any books of account, we find that on the contrary, the assessee had in compliance to the Question Nos. 9 & 14 of the notice issued by the assessing officer under section 142(1) of the Act dated 14-8-2019, Page 71 to 75 of APB, uploaded his reply dated 12-9-2019, Page 76 to 79 of APB, wherein it was categorically stated at Sr. No. 10 that the college had maintained books of account. Also, at Sr. No. 15 of the reply, the assessee had uploaded its cash book for the period 8-11-2016 to 30-12-2016 and 8-11-2015 to 30-12-2015 in compliance to Question No. 8 raised by the assessing officer vide his notice under section 142(1) of the Act dated 14-8-2019. However, we find that there is no mention of the aforesaid reply dated 12-9-2019 (uploaded by the assessee on the e-portal of the department on 12-9-2019) found in the assessment order.

13. Considering the fact that the assessee had uploaded the relevant extract of his cash book for the year under consideration (as was called for by the assessing officer in the course of the assessment proceedings), we are unable to comprehend why and on what basis it had been concluded by the assessing officer that the assessee was not maintaining its books of accounts. We, thus, in terms of our aforesaid observations, not being able to persuade ourselves to subscribe to the saddling of penalty of Rs. 25,000 imposed on the assessee under section 271A of the Act, vacate the same.

14. In the result, appeal of the assessee is allowed in terms of our aforesaid observations.

Order pronounced in open court on 13-3-2024.