Sec. 271A of Income Tax Act, 1961— Penalty — Section 44AA(2) mandates every person 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 provision ",therefore, there exists cogent reason for imposition of penalty u/s 271A

Facts: This appeal is filed by the assessee against the order passed by learned CIT(A) and raised the ground that the penalty levied u/s. 271A by the Assessing Officer and confirmed by the 1st Appellate Authority is illegal, uncalled for and against the facts on record and mens rea is an essential ingredient of an offence has not been considered by the authorities below, therefore penalty levied is not sustainable in law and since the assessee has maintained such books of account which was duly audited and submitted before the AO as may enable the AO to compute his total income in accordance with the provision of law, therefore no offence was committed by the assessee so that he could be visited with penalty.

Held, that It is clear from the penalty order , the AO has observed that the assessee derives her income from sale of Indian made foreign liquor and is covered under section 44AA(2)(i). Although the assessee is not supposed to maintain specified books of account as mentioned in Rule 6F, Section 44AA(2) mandates every person 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 provision of this Act". Therefore, there exists cogent reason for imposition of penalty u/s 271A. Accordingly, by virtue of section 271A , penalty of Rs. 25,000/- imposed by the AO on the assessee for failure to keep or retain books of accounts. A conjoint reading of Section 44AA and 271A of the Act, it is clear that the assessee failed to maintain books of accounts, therefore, as per Section 44AA of the Act, the assessee is liable for penalty u/s.271A of Rs. 25000/-. The AO gave opportunity to the assessee for production of books of accounts many times but the assessee did not produce the said books of accounts. Further the assessee submitted that books of accounts have been damaged by white ants and hard disk of the computer in which books of accounts were prepared also got damaged. The AO did not accept the book results shown by the assessee for computing the taxable income and he rejected the profits shown by the assessee in the return of income and he applied Section 145(3) and computed the profit after applying 4% of the turnover shown by the assessee. Therefore, there was a cogent reason before the AO for imposing the penalty. It is the duty of the assessee to maintain books of accounts as per Section 44AA . If the income of the taxpayer falls above the prescribed limit, then he should have to maintain books of accounts u/s.44AA and he should produce the same as and when required by the AO enabling him to calculate correct taxable income of the assessee, which is lack in this case. We also noted from the assessment order and submissions of the assessee that there is no any specific date or nearby date when the books of accounts were got damaged by the white ant which came to the notice of the assessee that on a particular date the books of accounts have been damaged by the white ant and there is also no date as to when the hard disks were corrupted. Therefore, the AO was justified in imposing the penalty u/s.271A for non-maintenance of the books of accounts. Accordingly, we do not see any reason to interfere in the order of the CIT(A) in upholding the penalty levied by the AO u/s.271A . - SANGHAMITRA PATTNAIK V/s ITO - [2020] 26 ITCD Online 071 (ITAT-CUTTACK)