Validity of penalty levied for non maintenance of books of accounts on the basis of statements given during survey if the audit report was furnished at the time of filing income tax return

Validity of penalty levied for non maintenance of books of accounts on the basis of statements given during survey if the audit report was furnished at the time of filing income tax return

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Validity of penalty levied  for non maintenance of books of accounts on the basis of statements given during survey if the audit report was furnished at the time of filing income tax return

Short Overview Where AO levied penalty under section 271A for non-maintenance of books of account, however, it was found that assessee furnished Audit Report and Audited Statement of Accounts; it could be presumed that the assessee must have maintained proper books of account, which enabled the auditors to furnish the Audit Report, and accordingly, the issue was remanded to the AO to decide the same afresh and assessee was directed to satisfy the AO that proper books of account were maintained, which were basis of the Audit Report and the Audited Statement of Accounts.
A survey operation was conducted at business premises of assessee. During course of survey operation, it was found that the assessee did not maintain books of account. Further, the partners, in their statements, accepted that the books of account were not maintained. Accordingly, the AO invoking the provisions of section 271A levied penalty. CIT (A) confirmed the said penalty.
It is held that  It was found that assessee furnished Audit Report and Audited Statement of Accounts for the relevant assessment year. Further, Audit Report and Audited Statement of Accounts are outcome of books of account maintained by an assessee. When the Audit Report and the Audited Statement of Accounts were available, then it could be safely presumed that the assessee must have maintained proper books of account, which enabled the auditors to furnish the Audit Report. With such conflicting facts, the matter was remanded to the AO and the assessee was directed to satisfy the AO that proper books of account were maintained, which were basis of the Audit Report and the Audited Statement of Accounts. Further, the AO was directed to examine the same and decide the issue afresh.
Decision: Matter remanded
IN THE ITAT, DELHI ‘A’ NEW DELHI BENCH
N.K. BILLAIYA, A.M. & SUDHANSHU SRIVASTAVA, J.M.
Aum Jewels v. ITO
ITA Nos. 5465, 5466, 5467, 5468, 5469, 5470/DEL/2018
A.Ys. 2011-12, 2012-13, 2013-14, 2014-15, 2015-16, 2016-17
21 September, 2021
Assessee by: Manoj Garg, C.A.
Revenue by: Bhopal Singh, Sr. Departmental Representative

ORDER

N.K. Billaiya, A.M.
The above captioned six separate appeals by the assessee are preferred against six separate orders of the Commissioner (Appeals)–10, New Delhi, dated 18-6-2018 pertaining to assessment years 2011-12 to 2016-17.
2. Since in the captioned appeals before us the grievance of the assessee is common, therefore, all these appeals were heard together and are disposed off by this common order for the sake of convenience and brevity.
3. The common grievance in all the six captioned appeals relates to the levy of penalty under section 271A of the Income Tax Act, 1961 (hereinafter referred to as ‘The Act’ for short).
4. Briefly stated, the facts of the case are that survey operation was conducted at the business premises of the appellant on 18-8-2017. During the course of survey operation, survey party found that the books of account were not maintained by the assessee and the partners, in their statements accepted that the books of account were not maintained. The assessing officer, accordingly, proceeded by invoking the provisions of section 271A of the Act and levied penalty of Rs. 25,000 for each assessment year under consideration.
5. The assessee carried the matter before the learned Commissioner (Appeals) but without any success.
6. A perusal of the documents furnished before us shows that there are conflicting facts emanating from the orders of the authorities below qua the documentary evidences in the paper book. In the paper book, we find that the assessee has furnished Audited Statement of Accounts for the captioned assessment years and the auditor’s report at Clause (b) states “In our opinion, the Head Office and Branches of the assessee have kept proper books of account so far, as appears from examination of the books”.
7. We find Tax Audit Report in Form No. 3CD in all the assessment years under consideration. In our considered opinion, Audit Report and Audited Statement of Accounts are the outcome of books of account maintained by an assessee. If these documents are available, then it can be safely presumed that the assessee must have maintained proper books of account, which would enable the auditors to furnish audit report.
8. With these conflicting facts, it would be proper and just to restore the quarrel to the files of the assessing officer. The assessee is directed to satisfy the assessing officer that proper books of account were maintained, which were basis of Audit Report and Audited Statement of Account. The assessing officer is directed to examine the same and decide the issue afresh after giving reasonable and sufficient opportunity of being heard to the assessee.
9. In the result, all the six captioned appeals of the assessee in ITA Nos. 5465 to 5470/DEL/2018 are allowed for statistical purposes.

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