By TIOL News Service

JAIPUR, JAN 23, 2018: THE issue is - Whether 'bank account' can be a substitute for the 'books of accounts' to be maintained by the assessee, for purpose of compliance of Section 44AA. NO IS THE ANSWER.

Facts of the case:

The Assessee, an individual, filed her return declaring income u/s 44AAD. Consequently, her case was selected for scrutiny, wherein the AO asked the assessee to produce books of accounts but the assessee could not produce the same as she had not maintained the same. The AO noted that assessee had made transactions of more than Rs. 4 Crores including the deposits in the bank accounts and outward transactions from the bank account on which the assessee earned commission but did not maintain the books of accounts. The assessment was thereafter completed on a total income of Rs. 5,58,410/- as against total income declared by assessee of Rs. 1,88,040/-. The AO also initiated penalty proceedings u/s 271A as well as 271B for failure of maintaining books of accounts and getting the accounts audited respectively.

ITAT held that,

++ there is no dispute that during the course of assessment proceedings, the AO noted that bank transactions including deposit in the bank and outward transaction are more than Rs. 4 Crores. The assessee then filed revised computation of income and admitted the turnover of more than Rs. 4 Crores which shows that the assessee is not falling in the exclusion of provisions of maintaining the books of accounts as per provisions of section 44AD. The Assessee has clearly violated the provisions of section 44AA when the turnover of the assessee is exceeding minimum limit provided under the said provisions. Though the total income of the assessee was assessed by the AO as per the transaction recorded in the bank account however, the bank account of assessee cannot be accepted or regarded as books of accounts and therefore, the bank account will not substitute the books of accounts to be maintained by the assessee. It is a clear case of non compliance of the provisions of section 44AA. Therefore, in the absence of bonafide explanation the penalty levied u/s 271A is justified.

(See 2018-TIOL-136-ITAT-JAIPUR)