Civil Contractor can’t be penalized u/s 271A of Income Tax Act: ITAT [Read Order]

Civil Contractor - Income Tax

Lucknow bench of ITAT recently held that Penalty u/s 271A of the Income Tax Act cannot be sustained against a Civil Contractor as he is not a person carrying on a specified profession. The bench comprising Partha Sarathi Chaudhury, judicial member and T.S. Kapoor, accountant member were held so while hearing the case between Mohd Imtiyaz Khan and Income Tax Officer.

In the instant case, the assessee before the tribunal is a Civil Contractor. A show cause notice under section 271A was issued specifically asking the assessee to show cause why penalty under section 271A may not be imposed in the case of the assessee, since the authority believed that the income chargeable to tax has escaped assessment.

Against imposition of penalty under section 271A of the Act, assessee preferred an appeal before the CIT (A) where it has been upheld the imposition of penalty under section 271A to the tune of Rs.25,000/- by relying on the decision of High Court in the case of CIT vs. Bisauli Tractors.

Further aggrieved Assessee carried the matter to this tribunal and the counsel for Assessee argued that the case relied by CIT (A) was entirely different to the fact of present case and endorsed the decision of Chennai Bench of the Tribunal in the case ACIT vs. Aggarwal Construction Co.

The Tribunal also had the same opinion that the case relied by lower authority wherein Assessee is a tractor dealer and here is a Civil Contractor and the parameters of both the business are different and couldn’t match up.

The bench also relied on a decision in Unicon Builders & Contractors vs. ACIT wherein the Chennai Tribunal held that the provisions of Section 44AA(1) are not applicable to the case, as the assessee is a civil contractor and not a person carrying on a specified profession. Section 44AA(2) requires the assessee to keep and maintain such books of account and other documents as may enable the Assessing Officer to compute his total income in accordance with the provisions of the Act.

Subscribe Taxscan Premium to view the Judgment
taxscan-loader