Nigade Anil Marutirao, v. ACIT,

ITA 240/PUN/2009 | 2004-2005
Pronouncement Date: 07-01-2011 | Result: Allowed

Appeal Details

RSA Number 24024514 RSA 2009
Bench Pune
Appeal Number ITA 240/PUN/2009
Duration Of Justice 1 year(s) 10 month(s) 19 day(s)
Appellant Nigade Anil Marutirao,
Respondent ACIT,
Appeal Type Income Tax Appeal
Pronouncement Date 07-01-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 07-01-2011
Assessment Year 2004-2005
Appeal Filed On 17-02-2009
Judgment Text
!'#!!$!!! %&'()&*+ &++-%%)).!%/&++&0+' )&++*0+1 2!3!)! %!!4!)5) 67&- &8 ) 3!!9!!54 #3!4 /)!:!3!;3 < 4433!) : ! '# ! ! $ %$& ' ( ))* + -.+/ * ) 012 # 1 * ( ) + 3 22405301667-8166964.-!3* !+ )0.) :6 3) : $ / + 9 )** * :6 3) 1667 !3* !+)0 + ITA NOS.238 TO 240/PN/2009 NIGADE ANIL MARUTIRAO.. A.Y.2002-03 PAGE OF 4 2 ) ; 39<4 * 4. WE HAVE HEARD BOTH THE SIDES. THE ADMITTED POSITI ON IS THAT THE APPELLANT IS A CIVIL CONTRACTOR. THE VEHEMENT ARGUMENT BEFORE US WAS THAT IN THE PAST HE HAD NEVER EARNED SUCH INCOME WHICH COULD BE SAI D TO BE HIGHER THAN THE PRESCRIBED LIMIT OF INCOME AS PER SECTION 44 A O F THE I.T.ACT. IT HAS ALSO BEEN CONTESTED THAT THE APPELLANTS TOTAL TURNOVER AS WELL HAD ALSO NEVER EXCEEDED THE PRESCRIBED LIMIT IN THE PAST YEARS. WITH TH IS BRIEF FACTUAL BACKGROUND A RELIANCE WAS PLACED ON A RESPECTED THIRD M EMBER'S DECISION OF CHANDIGARH BENCH IN THE CASE OF ACIT VS. AGARWAL C ONSTRUCTION COMPANY (2007) 106 ITD 129 (CHD)(TM). CERTAIN CATEGORIES OF PROFESSIONALS ARE PRESCRIBED IN SECTION 44A TO MAINTAIN THE BOOKS OF ACCOUNTS AS SUGGESTED THEREIN. THERE IS ANOTHER SECTION PRESCRIBING GUIDELI NES TO COMPUTE THE PROFIT AND LOSS ACCOUNTS OF BUSINESS OF CIVIL CONSTRUCTION VIDE SE CTION 44AD OF I.T ACT. ON CUMULATIVE READING OF BOTH THE SECTIONS A CON CLUSION WAS DRAWN THAT THE APPLICABILITY OF SECTION 44AD IS SUBJECTED TO TH E PERSONS PRESCRIBED IN SECTION 44 AA. THE APPELLANT HAD SHOWN THE GROSS RECEIP T STATED TO BE LESS THAN THE PRESCRIBED LIMIT OF RS. 40 LACS IN THE PAST. L IKEWISE INCOME OF THE APPELLANT ALWAYS REMAINED BELOW THE SAID LIMIT. FOR THIS PREPOSITION THE APPELLANT HAS PLACED A RELIANCE ON THE DECISION IN THE CASE OF ACIT VS. AGARWAL CONSTRUCTION COMPANY (SUPRA) WHEREIN IT WAS HE LD AS UNDER. THE FINDING RECORDED BY THE ASSESSING OFFICER IN TH E PENALTY ORDER THAT NO BOOKS OF ACCOUNT WERE MAINTAI NED BY THE ASSESSEE WAS BASELESS. IT WAS NOT RECORDED IN THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER WAS UN ABLE TO COMPUTE THE INCOME OF THE ASSESSEE FROM LEDGER T YPE OF BOOK MAINTAINED BY THE ASSESSEE. THE ASSESSING OF FICER HAD ADMITTED THAT INCOME AND EXPENDITURE WERE AVAIL ABLE IN THE BOOK. THE REQUIREMENT OF SUB-SECTION(2) OF SE CTION 44AA IS NOT THAT THE BOOKS OF ACCOUNT OF THE ASSESS EE SHOULD BE TRUE AND CORRECT. IT IS A MATTER OF COMM ON EXPERIENCE THAT ALL VOUCHERS AND SUPPORTING EVIDENC ES ARE NOT AVAILABLE EVEN IN CASES OF MULTI-NATIONAL COMPA NIES AND OTHER CASES WHERE THERE IS A SPECIAL SECTION TO MAI NTAIN REGULAR BOOKS OF ACCOUNT. EXPENSES ARE FOUND TO B E UNVOUCHED AND CLAIM INADMISSIBLE. ENTRIES MADE AR E ALSO REJECTED. BUT FROM THE SAME IT CANNOT FOLLOW THA T NO BOOKS ARE MAINTAINED AND IN SUCH CASES THE ASSESSING OFF ICER IS UNABLE TO COMPUTE THE TOTAL INCOME. IT IS NOT P OSSIBLE TO ARGUE THAT IN ALL SUCH CASES PROVISIONS OF SECTION 44AA ARE VIOLATED. THERE ARE SEPARATE PROVISIONS IN SECTION 271 TO DEAL WITH THE SAID WRONG AND FALSE ACCOUNTS. THER EFORE FAILURES WHICH ARE DEALT IN OTHER PROVISIONS CANNO T BE READ IN SECTION 271A. THERE IS AMPLE POWER UNDER SECTI ON ITA NOS.238 TO 240/PN/2009 NIGADE ANIL MARUTIRAO.. A.Y.2002-03 PAGE OF 4 3 144/145 TO DEAL WITH RELIABLE ACCOUNTS. THE ASSES SING OFFICER CAN DISALLOW AND ADD BACK UNVOUCHED AND INADMISSIBLE EXPENSES. THE ASSESSEE HAS TO SUFFER . THE ASSESSING OFFICER FACES NO INABILITY IN SUCH A SITU ATION. THEREFORE NO PENALTY CAN LEVIED UNDER SECTION 271A IF THE BOOKS OF ACCOUNT ARE FOUND TO BE UNRELIABLE BY REVE NUE AUTHORITIES AND ARE REJECTED. IN THE INSTANT CASE THE ASSESSING OFFICER HAD APPLIED FLAT OF 12 PER CENT A S REASONABLE RATE AGAINST 8 PER CENT STATUTORILY PR OVIDED IN CASES OF CIVIL CONTRACTORS. IT COULD NOT BE ARGUE D THAT STATUTE HAS PROVIDED A RATE WHICH IS NOT REASONABLE . FURTHER HAVING REGARD TO PROVISIONS OF SECTION 44A D WHICH IS OVERRIDING IT IS NOT POSSIBLE FOR REVENUE TO AR GUE THAT PROFIT COMPUTED AS PER THE SECTION IS NOT PROFIT CO MPUTED IN ACCORDANCE WITH PROVISIONS OF THIS ACT OR THAT THE LEGISLATURE WAS UNAWARE OF PROVISIONS OF SECTIONS 68 69 269SS 269T 140(3) ETC. IN THE ENACTMENT OF SECTION 44AD. THUS AFTER READING ENTIRE SCHEME OF THE ACT ONE HAS TO HOLD THAT PROFIT COMPUTED AS PER SECTION 44A D BY APPLICATION OF FLAT RATE IS ONE RECOGNIZED METHOD OF COMPUTATION OF TOTAL INCOME OR PART OF TOTAL INCOM E. THE FACT THAT THE SAID PROVISIONS ARE APPLICABLE ONLY T O CASES WHERE GROSS CONTRACT RECEIPTS ARE BELOW RS.40 LAKHS DOES NOT MAKE ANY DIFFERENCE TO THE NATURE OF BUSINESS C ARRIED BY THE ASSESSEE OR METHOD OF COMPUTATION. HAVING APPLIED SUCH HIGH RATE OF 12 PER CENT THE ASSESSIN G OFFICER COULD NOT CONTEND THAT HE WAS UNABLE TO MAKE ASSESS MENT. THEREFORE IN THE PECULIAR CIRCUMSTANCES OF THE CAS E THE COMMISSIONER (APPEALS) WAS RIGHT IN HOLDING THAT TH ERE WAS NO FAILURE ON THE PART OF THE ASSESSEE UNDER SE CTION 44AA AND PENALTY IMPOSED UNDER SECTION 271A WAS NOT JUSTIFIED.[PARA 15] 5. IN THAT DECISION NUMBER OF OTHER CASE LAWS HAVE BEE N CITED AND THEREUPON GIST WAS DRAWN THAT THERE WAS NO JUSTIFICATION FOR UPHOLDING LEVY OF PENALTY IN THE SAID CASE. MOREOVER WE HAVE ALSO NOTICED T HAT THE APPELLANT HAD A REASONABLE CAUSE TO HOLD THIS BELIEF THAT THERE W AS NO INFRINGEMENT ON HIS PART; SINCE IN THE PAST HE HAD NEVER EARNED THE INCOM E EXCEEDED THE PRESCRIBED LIMIT; AS PER THE APPLICABLE PROVISIONS; SO CONSE QUENTLY NO PENALTY COULD ALSO BE ATTRACTED. FOLLOWING THIS DECISION WE AR E OF THE VIEW; IN THE TOTALITY OF THE CIRCUMSTANCES; THAT THE ISSUE OF LEVY OF PE NALTY WAS COVERED UNDER THE EXCEPTION PRESCRIBED U/S. 273 B OF THE I.T. ACT . THEREFORE PENALTY DESERVES TO BE DELETED. 4 = +* % ' ) 012 * > + ITA NOS.238 TO 240/PN/2009 NIGADE ANIL MARUTIRAO.. A.Y.2002-03 PAGE OF 4 4 2 ? 16 !0 0 -$@3%. %@33'&'A& -!@$B. ?@$ '&'A& 5 2 ? 16 @! + 1 : C0 0- .5 9 -. 4 $DEA 5 > ( ; A * 5