The Kolkata bench of ITAT in the case of DCIT, CC-2(2), Kolkata versus Subhas Chandra Agarwala & Sons (HUF) ruled that a salaried Person is not required to maintain books of accounts unless he is engaged in Business or Profession.
In the instant case, the AO has levied the penalty u/s. 271AAB on the ground that the income from commodity profit has been found during search u/s. 132 of the Act which is not reflected in the regular books of account and admitted a fact that Assessee earning income from speculative trading.
Assessee preferred an appeal before the CITA, who deleted the penalty by observing the fact that incidence of not making entries in the regular books of accounts on day to day basis is a bonafide mistake on the part of the accountant for which assessee could not be penalized and also added the reason of enough time late in the FY to make entries of such income in the regular books of accounts.
Aggrieved with the action of first Appellate authority, the Revenue carried the matter to this ITAT, where bench comprising judicial member S.S.Viswanethra Ravi and Accountant member M.Balaganesh heard the contention of Assessee that the respondent-Assessee is an individual deriving income from salary So, according to him, he need not maintain any books of account as per the Act and also added that Assessee is engaged for the first time in trading commodities which is very unsystematic manner and offered the income for tax.
The counsel for Assessee argued that such activities not required to maintain books of account as stipulated in Sec. 44AA or Sec. 44AA(2)(ii) of the Act because, these provisions are only for assessees who are earning income under the head “Business or profession”.
The Assessee also pressed the relevance of definition of ‘undisclosed income’ given under section 271AAB.
By accepting the contention and the definition which had been given by Assessee, the tribunal bench observed that “Rs. 2 cr. which was commodity profit recorded in the other document maintained by the assessee which was retrieved during search cannot be termed as “undisclosed Income” in the definition given u/s. 271AAB of the Act. Since Rs. 2 cr. cannot be termed as “Undisclosed Income” as per sec. 271AAB of the Act, no penalty can be levied against the assessee”.
