IT : Assessees carrying on business can't be penalized under section 271A for not maintaining accounts since CBDT hasn't prescribed minimum books of account in case of businesses of civil contract and has done so only for professionals. Further, if no books of account maintained by businesses, no question of audit arises and hence section 271B can't be invoked for not complying with section 44AB (compulsory tax audit)
• Section 44AA(2) clearly says that every person carrying on business or profession [not being the profession referred to in sub clause (1)] shall keep and maintain the books of account and other documents as may enable the Assessing Officer to compute his total income in accordance with the provisions of this Act in case the income from business or profession exceeds one lakh twenty thousand rupees or his total sales, turnover or gross receipts, as the case may be, in business or profession exceeded or exceeds ten lakh rupees in any one of the three years immediately preceding the previous year. Therefore, the legislature expects even a civil contractor to maintain the books of account.
• In exercise of the executive powers and while framing Rule 6F of Income-tax Rules, the executive authorities prescribed the books of account in respect of professionals in Rule 6F(1) of the Act. There is an obvious omission in respect of civil contractor in Rule 6F(1) of the I.T. Rules. This is an unintented omission on the part of the executive authorities in not including the business of civil contract and other business in Rule 6F(1).
• When the Parliament in its wisdom expects every person carrying on business including civil contract, this Tribunal is of the considered opinion that the excecutive authorities (CBDT) ought to have prescribed minimum required books of account like they have done for professionals.
• The Karnataka High Court and the co-ordinate benches of Tribunal found that although books of account had to be prescribed, such books had not been prescribed under the Income-tax Rules in respect of business of civil contract. Accordingly, the Karnataka High Court and the Chandigarh Bench of this Tribunal deleted the penalty levied under section 271A of the Act for not maintaining the books of account.
• In yet another case of Shri Ramchandra D Keluskar in ITA No.668/PN/10, the Pune Bench of this Tribunal found that when there are no books of account, the question of its audit does not arise. Therefore, when the books of account was not maintained and the penalty levied under section 271A was deleted, there is no justification for levying penalty under section 271B of the Act for not getting the books of account audit
Related case
SJ Agarwal & Co. v. ITO [2008] 114 ITD 27 (Pune) (SMC).
Regards
Prarthana Jalan
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