G. VENKATA KRISHNA,,VIJAYAWADA vs. THE ITO,, VIJAYAWADA

आदेश /O R D E R PER D.S. SUNDER SINGH, Accountant Member: Delay : There was a delay of 255 days in filing the appeals. The assessees have filed the affidavits and requested for condonation of delay. During the appeal hearing, the Ld.AR explained the reasons for the delay in filing the appeal. Ld AR argued that the delay was caused due to inadvertent and unintended mistake of the tax consultant and the assessees are not aware of the legal consequences. The Ld. AR further submitted that the assessee is having merit in their case and non condonation of delay would cause injustice to the assessee. We have heard both the parties and prima facie there appears to be a case of merit. Therefore, we are of the considered opinion that merely because of technical mistake justice should not suffer, hence, in the interest of justice we condone the delay of 255 days in filing the appeals and admit the appeals.

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together and disposed off in a common order for the sake of convenience as under. ITA No.31 & 33/Viz/2017 3. The assessee is engaged in the retail wedding cards business. For the assessment year 2010-11, the assessee filed return of income admitting total income of Rs.3,50,950/- on 29.02.2011. A survey u/s 133A was conducted in the group cases and found certain discrepancies during the course of survey. Therefore, the assessee’s case was reopened by issue of notice u/s 148 and completed the assessment u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter called as ‘Act’). The assessment was completed by an order passed under section 143(3) r.w.s. 147 dated 18.03.2014, determining the total income at Rs.4,50,000/-. The Assessing Officer(AO) made the addition of Rs.1,00,000/- in the assessment, towards the unexplained source for construction of the building. Subsequently, the Ld.Pr.CIT, Vijayawada has taken up the case for revision and found that the AO has not examined certain issues properly at the time of making the assessment as under: (i) The assessee has purchased a house on 15.12.2006 vide registered document No.15297/2006 admeasuring 255 sq.yards at D.No.11-54-11 & 12, Gudivadavari street, Vijayawada for a consideration of Rs.45,50,000/- including stamp duty as against the

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SRO Value of Rs.59,60,000/- and the assessee has not filed the return of income duly reflecting the above transaction. (ii) The assessee has obtained a loan from REPCO Bank, Seshadri Sastry Street, Governorpet, Vijayawada and the assessee has repaid the entire loan on 06.07.2009 as per break up as under : Amount of Loan Financial Year repaid (in Rs.) 2007-08 4,71,586 2008-09 2,81,972 2009-10 20,79,822 (iii) The Ld.Pr.CIT observed that the property purchased on 15.12.2006 as against the loan sanctioned on 04.01.2007 which was after acquisition of the property and the payment was made by way of pay orders from Tamilnadu Mercantile Bank Ltd. and this aspect was not examined by the AO in detail while finalizing the assessment. (iv) With regard to the source of construction of the building in the above site, the assessee stated to have obtained the loan of Rs.20,00,000/- from Tamilnadu Mercantile Bank Ltd., Rs.7 lakhs from the same bank towards business loan and Rs.10 lakhs as advance from tenants. The construction of the new building was started in the month of January, 2010. From the above information, the Ld.Pr.CIT inferred that the assessee has made unexplained investment in purchase of the property for the reason that the assessee has repaid the entire amount borrowed from the REPCO bank within one year. The assessee’s repayment capacity is commensurating with his annual income. Therefore, the Ld.Pr.CIT was of the view that the assessee has made unexplained investments in purchase of the above property. (v). During the course of survey, it was observed by the AO that the year-wise probable undisclosed income of the assessee for the following assessment years would be as under :

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Asst.Year The Probable Income Income Returned 2007-08 1,06,79,115 No ROI 2008-09 16,60,530 No ROI 2009-10 31,41,045 1,59,880 2010-11 36,53,661 No ROI The AO while completing the assessment has not verified the aspect of probable income. (vi) During the course of survey, printouts of accounts for the calendar years 2008, 2009 and 2010 were taken from the laptop, in which accounts relating to M/s Ghantasala Manikyala Rao Cards were also included, but in the survey final report dated 29.11.2010, there was no mention about the accounts of the assessee concern for the calendar years 2009 and 2010 relevant to the financial year 2009-10 which is relevant to the assessment year 2010-11. The AO has neither reconciled the accounts maintained by the assessee firm in the laptop nor considered for the purpose of assessment. 3.1 Accordingly the Ld.Pr.CIT issued the show cause notice calling for explanation of the assessee and the assessee filed his explanation stating as under: As per show cause notice Para No.3, I request your kind perusal that the assessee is the buyer, not the seller of the property, provisions of Section 50C of the Income Tax Act, 1961 is not applicable and further the assessee filed the return of income for the Asst.Year 2007-08 on 12.01.2009 and during the course of assessment proceedings explained all the sources for purchase of the property for Rs.45,50,000/-, the property purchased on 15-02-2006, relevant to the Asst. Year 2007-08 the scrutiny assessment was completed after thorough verification and the assessee filed the receipts and payments A/c with sources before the Assessing Officer during the course of assessment proceedings and finalized the order.

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There is no un-explained income invested either for purchase ofproperty or for construction of property, for which, the assessee has already filed the receipts and payment A/c relevant to all the assessment years during the course of assessment proceedings, herewith enclosing the receipts and payments A/c for all the years. The receipts and payments which was filed before the assessing officer includes all the sources for constructions, by covering all the bank credits including REPCO Bank, the assessee explained during the course of scrutiny proceedings for the receipts and sources, the assessing officer accepted the same. With regard to repayment of loan mentioned in the table given in paraNo.3.1 of the show cause notice given, the assessee has already proved his payment capacity of each and every amount, during the course of assessment proceedings of Asst. Year 2007-08, A.Y 2008-09 and A Y 2009-10 and also para No-3 of Section 143(3) order passed by the Assessing Officer for the A.Y. 2010-11 includes the bank accounts with the repayments. As stated in para N0.3.2 of the show cat/se notice given, it is not correct that the assessee has probable undisclosed income and it is baseless, it is only a hypothecated figures, as already explained, the laptop belongs to the part time accountant and not the assessee and in the laptop many assessee's information will be available land further the laptop was not seized by the department.” The Ld.Pr.CIT considered the above explanation of the assessee but not convinced with the explanation and held that the assessment order framed by the AO u/s 143(3) was erroneous and prejudicial to the interest of the revenue, accordingly set aside the assessment order and directed the

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AO to redo the assessment afresh after verifying the above issues in accordance with law.

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during the course of survey was not belonging to the assessee and belonged to the part time accountant. The said the laptop was neither impounded by the department nor recorded any statement from the part time accountant who was the owner. Though the department has extracted the printouts from the laptop, the same were not related to the business of the assessee. The assessee has denied the contents of the printouts taken from the laptop. The Ld.AR further submitted that the laptop of the accountant contain the information of other clients of the accountant also. As already stated earlier, the assessee is not maintaining the books of accounts and has offered income on estimation basis as per section 44AF of the Act. Thus argued that the Ld.Pr.CIT did not give any finding how the assessment order was erroneous and prejudicial to the interest of revenue, except making some passing remarks of improper verification which was not true, hence the order passed by the Ld.Pr.CIT required to be quashed.

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Vijayawada for a consideration of Rs.45,50,000/-.The said house was purchased in the assessment year 2007-08 and explained the sources before the AO, for the assessment year 2007-08 and the assessment was completed u/s 143(3), hence there is no relevance for taking up the case for revision u/s 263. (ii) The second issue for taking up the case for revision was the repayment bank loan availed from REPCO bank. The assessee has furnished the complete details before the AO, with regard to the bank loan, sources for repayment of bank loan etc. and the AO has verified the entire information furnished by the assessee at the time of reassessment proceedings and after complete satisfaction regarding the sources for repayment, the assessment was completed. Hence, there is no error in the assessment order framed by the AO. Thus, there is no case for revision u/s 263. (iii) The 3rd issue raised by the Ld.Pr.CIT was with regard to mismatch of dates for payment of consideration for purchase of house at Gudivadavari street, Vijayawada which was explained to the AO in the assessment proceedings for the A.Y.2007-08 and furnished the complete information with regard to dates of payment, sources etc. The issue is not relevant or

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related to the impugned assessment year, therefore, argued that there is no case for revision u/s 263. (iv) The 4th issue was probable undisclosed income for the assessment years. This was neither admitted by the assessee nor any evidence found during the course of survey. This is a pure guess work of the Ld.Pr.CIT and the Ld.Pr.CIT cannot take up the case for revision u/s 263 on guess work. (v) The last issue was the print outs taken from the laptop. The assessee has denied that the printouts belonged to the assessee and stated that the assessee has never maintained the books of accounts and admitted the income on estimation basis as per section 44AF of the Act. The assessee also stated that the assessee’s turnover never exceeded the limit of 44AF. The extracts were taken from the laptop belonging to the part time accountant who has maintained the books of accounts of other customers and argued that the extracts taken from the laptop does not belong to the assessee, hence no evidentiary value. Thus, the Ld.AR argued that the Ld.Pr.CIT has committed blatant error in revising the assessment order and requested to quash the order passed u/s 263 and restore the order of the AO.

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year 2007-08, but not related to the impugned assessment year 2010-11. Hence, the material relied upon by the Ld.Pr.CIT is irrelevant and there is no case for taking up the case for revision u/s 263 on this issue. 7.1. The second issue leading to taking up the case for revision was the mismatch of dates for payment of consideration in respect of purchase of house property in Gudivadavari Street, Vijayawada. According to the Ld.Pr.CIT, the registration took place on 15.12.2006 and the loan was granted by Tamilnadu Mercantile Bank on 04.01.2007. The payment was preceded by the bank loan, therefore, the Ld.Pr.CIT was of the view that the sources for acquiring the house remained unexplained. This issue also related to the assessment year 2007-08, but not related to the assessment year under consideration. Hence, the Ld.Pr.CIT is not permitted to invoke jurisdiction u/s 263 for examination of the issues relating to the earlier assessment years of 2007-08 and 2008-09 in the impugned assessment year of 2010-11. 7.2. The 3rd issue for taking up the case for revision u/s 263 was the repayment of REPCO bank loan and sources for repayment. As evidenced from the assessment order para No.3, assessee furnished the complete details with regard to the bank loans, deposits and sources before the AO

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which was examined by the AO and accepted the sources for repayment of loan as genuine and no addition was made. Therefore, reexamination of same issues which was considered at the time of assessment would amount to difference of opinion and does not make the assessment erroneous. Therefore, the issue raised by the Ld.Pr.CIT with regard to verification of the sources of the repayment of bank loan also cannot be a valid reason for invoking the jurisdiction u/s 263. Hon’ble High court of Karnataka in Commissioner of Income-tax, Bangalore Vs. Kurlon Ltd, [2014] 52 taxmann.com 92 (Karnataka) held that Where assessing authority had already considered all details mentioned in computation statement which was taken from books of account maintained by assessee, revision was not justified. Similar view has been expressed by this Tribunal in G.V.R Associates vs ITO reported in (2017) 49 CCH 0223 Visakapatanam. 7.3. The 4th issue raised by the Ld.Pr.CIT was the probable undisclosed income estimated by the Ld.Pr.CIT at Rs.36,53,661/- for the assessment year 2010-11. Though the assessee has filed the return of income for the impugned assessment year, the Ld.Pr.CIT has stated in his notice, that no return of income was filed by the assessee which shows that the Ld.Pr.CIT has not completely verified the facts and landed in conclusion in haste. In

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this case, the assessee has already filed the return of income for the impugned assessment year on 29.02.2011 much before the issue of notice u/s 263. The AO completed the assessment after verifying the turnover in VAT Returns and Bank account details and accepted turnover and the estimation of income as per Section 44AF of the Act. The Ld.Pr.CIT has not given any basis for the probable undisclosed income. It does not emanate from the assessment order or from the material found during the course of survey. The Ld.Pr.CIT/ the Ld DR could not establish the basis for the probable income of the assessee estimated by the Ld.Pr.CIT. Therefore, it shows the guess work of the Ld.Pr.CIT, hence, the same cannot be a basis for revision u/s 263. This view is supported by the decision of Hon’ble ITAT Delhi (Special Bench) in the case of Babulal Grand Son Family Trust Vs. ITO repeated in 31 ITD 52 Delhi. 7.4. The 5th issue was the printouts taken from the lap top during the course of survey. The Ld.Pr.CIT observed that the printouts of accounts for the calendar years 2008, 2009 and 2010 were taken from the laptop and it was observed from the said extracts, that the accounts relating to Ghantasala Manikyala Rao Cards pertaining to the assessee were also included. The Ld.Pr.CIT found that the AO has neither reconciled the

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accounts nor examined with reference to the books of accounts for the purpose of assessment while completing the assessment. The assessee denied ownership of the extracts taken from the laptop stating that the laptop does not belong to their firm at the time of survey itself. The laptop was neither seized, no statement was recorded from the part time accountant. Having denied the contents of the extracts of the laptop belonging to the assessee, it is for the revenue to establish that the contents do belonged to the assessee. The fact that the laptop does not belong to the assessee was not disputed by the AO. The contention of the assessee that the part time accountant maintained the books of accounts of many other customers was also not disputed. During the assessment proceedings, the assessee stated that the assessee has not maintained books of accounts and admitted the income as per section 44AF of the Act. The AO has not brought on record any material to establish that the turnover recorded in the computer extract belonged to the assessee by comparing the contents of the printouts of the assessee with the entries in the books of accounts or with the information found during the course of survey. The entire survey material was available with the AO at the time of assessment and the case was reopened for verification of the material found during the course of

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survey, and the AO has completed the assessment after examining the entire details available with the AO. Similar issue of extract of print outs has come up before the AO for the A.Y. 2008-09 and 2009-10 and the AO made the addition. On appeal, the Ld.CIT(A) deleted the addition and given a finding that the AO has not brought on record any cogent material to strengthen the department view to hold that the contents of the computer printouts related to the business of the assesses, Vide Ld.CIT(A), Vijayawada Order No. in Appeal No. 428, 421/Vja/CIT(A)/2011-12 dated 22.04.2013. In these facts and circumstances, since the department has failed to bring any evidence to hold that the printouts of computer related to the business of the assessee, we are unable to uphold the order of the Ld.Pr.CIT on this issue. 8. The Ld.Pr.CIT has made a passing remark that the AO has not considered the issues raised in the show cause notice, but no specific finding was given by the Ld.Pr.CIT to hold that the assessment made u/s 143(3) resulted in under assessment. The Pr.CIT did not make out clear case how the assessment order is erroneous and prejudicial to the interest of the revenue. As observed from the assessment order and the materials placed before us the AO has examined all the issues related to the assessment

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year which were raised by the Ld.Pr.CIT in the show cause notice except the probable undisclosed income which was not based on any evidence or any information. Similarly, there is no evidence to establish that the printouts or extracts taken from the laptop belonged to the assessee. The AO has not recorded the statement from the part time accountant or the owner of the laptop and the said laptop was also not impounded. Having impounded the material, the department has not brought on record, to establish that the AO has not examined the information extracted from the laptop. As per the order u/s 263, the Ld.Pr.CIT invoked the jurisdiction u/s 263 for not examining the certain issues properly. Non examination of the issues properly would lead to inadequate enquiry but not lack of enquiry. Lack of inquiry is a good reason for revision u/s 263, but not the inadequate inquiry. This view is supported by the decision of this Tribunal in Vegesina Komala Vs. ITO, Palakol in (2016) 66 taxmann.com 280. In the above facts and circumstances, we hold that the order passed by the AO could not be held to be erroneous and prejudicial to the interest of revenue, accordingly, we set aside the order passed u/s 263 and restore the assessment order. The appeal of the assessee is allowed.

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ITA 33/Viz/2017, A.Y.2011-12 8. For the assessment year 2011-12, the assessee filed return of income on 29.02.2011 admitting total income of Rs.1,41,580/-. The assessment was completed total income of Rs.2,58,280/- by order u/s 143(3) r.w.s 147 by an order dated 18.03.2014.

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Vijayawada on a site admeasuring 255 sq yards after demolishing the old house. It was also noticed that the construction was undertaken during the financial years 2009-10 and 2010-11. In the survey final report it was mentioned that the property was referred to the Valuation Cell for ascertaining the correct value of construction. During the course of assessment proceedings, the assessee admitted the cost of construction at Rs.37,94,000/- and explained the sources thereof. Details of plinth area, basis for arriving the cost of construction at Rs.37,94,000/- etc. was neither ascertained nor verified. 9.2. The third issue for invoking the jurisdiction u/s 263 was the disallowance of an amount of Rs.1,11,096/- being interest on term loan account (A/c No.097700509004310 held with TMB Ltd) for not utilizing the loan for the purpose of construction. The Ld.Pr.CIT observed from the details of construction account furnished by the assessee that a sum of Rs.5,00,000/- was withdrawn from the aforesaid bank account on 05-04-2010 for the purpose of construction. When the AO disallowed the interest on loan on the reason of non-utilization of funds for construction purpose, the AO

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should have made the addition towards unexplained investment in construction. 9.3. The 4th issue was the printouts of accounts for the calendar years 2008, 2009 and 2010 were taken from the laptop. As seen from the said extracts, account relating to M/s. Ghantsala Manikyala Rao Cards are also included. While completing the assessment for the year under consideration, the accounts of the firm maintained in the laptop relating to the period for Financial Year 2010-11 were neither reconciled with reference to the books of account nor considered for the purpose of assessment.

9.4. The Ld.Pr.CIT has issued show cause notice with the above discrepancies and the assessee filed reply as under : As per show cause notice Pars No3, the assessee admitted the turnover and filed the return of income u/s.44AF after duly reconciling the physical stock with VAT returns. As per show cause notice Para No.3.1, the cost of construction admitted by the assessee was actual and reasonable compared to prevailing market rates of the construction and the construction made for shop purpose. An amount of Rs.1,11,096/- was claimed towards interest on building loan u/s 24(1) was disallowed by the assessing officer due to non-production of evidence, mere disallowance of Interest

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does not leads to non-Investment in construction and hence there is no ex-explained investments by the assessee, the term loan was utilized for repayment of earlier loans taken for construction. The laptop belongs to the part time accountant and not the assessee and in the laptop many assessee's information will be available and the laptop was not seized by the department and further the assessee filed the income tax return considering the VAT return.

Not being convinced with the explanation of the assessee, the Ld.Pr.CIT held that the assessment made u/s 143(3) was erroneous and prejudicial to the interest of the revenue. Accordingly set aside the order with a direction to redo the assessment.

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extracts of the laptop, the onus is on the revenue to establish that the contents belonged to the assessee. As discussed earlier, the Ld.CIT(A) also for the assessment year 2008-09 and 2009-10 in appeal order No.31/Viz/2017 had accepted the contention of the assessee that the contents of the laptop does not belong to the assessee. The assessee stated that the he has not maintained the books of accounts and filed the return of income on estimation basis u/s 44AF. The AO has accepted the return of income after verifying the information gathered during the survey. Therefore, issue is covered in favour of the assessee in our order for the A.Y. 2010-11, hence following the rule of consistency, we hold that there is no reason for taking up the case for revision u/s 263 on this issue.

10.2. The second issue raised by the Ld.Pr.CIT was verification of receipts and payment accounts as per Para No.5 of the order. This issue has been discussed by the AO in para No.3 of the assessment order and stated that the assessee has furnished all bank accounts, sources for repayment of bank loan copies of bank account etc. and after verification of the same, the assessment was completed. Therefore, the contention of the Ld.Pr.CIT with regard to the non-verification of the receipts and payments account is

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baseless andwould amount to difference of opinion which cannot make the assessment as erroneous and prejudicial to the interest of the revenue.

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not maintaining the books of accounts and offered the income u/s 44AF of the Act which the AO had accepted and completed the assessment. The AO has not given any finding with regard to excess stock or shortage of stock during the survey proceedings. Once the assessment is completed accepting the contention of the assessee u/s 44AF of the Act, non- reconciliation of the stock taken during the course of survey is irrelevant, and cannot be reason for taking up the case for revision u/s 263.

11.1. The 2nd issue for taking up the case for revision was the cost of construction in respect of the two storied building at Door No.11-52-12, Gudivadavari street, Vijayawada. The assessee during the course of assessment proceedings submitted the details of cost of construction and expenditure, and the sources there of. However, the Ld.Pr.CIT was of the view that the AO has not examined the plinth area and the basis of arriving at the cost of construction at 37.94 lakhs. Such detailed examination of the cost of construction can at best be said to be inadequate inquiry but not lack of inquiry. On this issue also, the Ld.Pr.CIT heavily placed reliance on the survey report of the AO. At the cost of repetition, we are of the view that the survey report of the AO has no relevance and cannot be taken as a

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basis for taking the order as erroneous. From the show cause notice of the Ld.Pr.CIT as well as from the details submitted by the assessee in the paper book, it is established that the AO called for the details and examined the cost of construction and the sources of construction. Therefore, there is no case for revision u/s 263 on the issue of cost of construction of the building located at Gudivadavari street, Vijayawada.

11.3. The 3rd issue for taking up the case for revision u/s 263 was non utilisation of the loan taken from Tamilnadu Mercantile Bank Ltd. The AO had disallowed the interest on bank loan, therefore, the Pr.CIT viewed that the amount of Rs.5,00,000/- taken as loan also should have been disallowed as unexplained investment. From plain reading of the assessment order and the details furnished by the assessee, it is evidenced that the assessee has furnished the details with regard to the sources of construction of the building which was accepted by the AO. There is no finding given by the AO or disputed the sources for the construction of the building. Merely because the assessee has accepted the addition it cannot be inferred against the assessee. The assessee also explained that due to exigencies, usage of funds were inter changed between the business and

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construction. Business funds were used for construction and vice versa the loans. Therefore, once the issue was considered by the AO, the Pr.CIT cannot revisit the same issue and take a different opinion unless a specific evidence was brought on record. Revisiting the same issue which was examined by the AO would amount to difference of opinion, but does not give scope to hold the assessment as erroneous and prejudicial to the interest of the revenue. Therefore, the third issue taken up by the Pr.CIT also cannot survive for revision u/s 263.

11.4 In this case, the assessment was reopened up for the purpose of examining the various issues found during the course of survey. The material was in the possession of the AO . Though the AO did not make the noting in writing, merely because no noting was made it cannot be presumed that the AO failed to examine the issues in the material. The Ld.Pr.CIT in para No.2 of the order stated that due to certain issues were not properly examined by the AO, the case was taken up for revision. Improper verification of the issues will lead to inadequate enquiry but not lack of enquiry. Though the lack of enquiry is a case for revision, inadequate enquiry is not a case for revision u/s 263. ITAT, Visakhapatnam

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in the case of Vegesina Komala Vs. ITO, Ward-1, Palakol (supra) has taken the similar view following the decision of Hon’ble High Court of Delhi in CIT Vs. Sunbeam Auto Ltd. (2010) 189 Taxmann 436 (Delhi). Therefore, we are of the considered opinion that the revenue did not make out a case for revision and there was no error in the order passed by the AO. Hence, the order passed u/s 143(3) r.w.s. 147 is neither erroneous nor prejudicial to the interest of the revenue. Accordingly, we set aside the order of the Ld.Pr.CIT and allow the appeal of the assessee.

ITA No.32/Viz/2017, A.Y.2010-11 12. In this case, the assessee filed return of income declaring total income of Rs.3,15,840/- on 29.02.2012. The assessment was completed u/s 143(3) r.w.s. 147 by order dated 26.12.2013 on total income of Rs.3,80,500/-. A survey was conducted u/s 133A on 21.10.2010 in the business premises of the assessee. During the course of survey, the AO found certain cash deposits in Tamilnadu Mercantile Bank and some other issues. Consequent to the survey conducted u/s 133A, the AO issued notice u/s 148 and completed the reassessment. Subsequently, the Ld.Pr.CIT found that the AO has not examined certain issues properly, hence the assessment passed by the AO was considered to be erroneous and

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prejudicial to the interest of the revenue within the scope of 263 of the Act, hence, show cause notice was issued u/s 263 calling for the objections of the assessee. The Ld.Pr.CIT issued notice u/s 263 on the following issues. "During the course of survey operations, copies of certain loose papers were obtained. As per page No32&33 of survey folder (Loose sheet Nos, 14&15 as mentioned in the statement), certain amounts were paid to different persons totaling to Rs.9,43,500 (Rs.262000+Rs262500+Rs.195000+Rs.224000). When asked for the details of these payments, Sri G.V.Raman, vide his statement recorded u/s.133A stated that he cannot say anything about it. But, while completing the assessment, the source and the nature of the aforesaid payments were neither ascertained from the assessee nor considered for the purpose of assessment. 4. As per page No.29 of the survey folder, details of certain properties were mentioned as noted below: 1. Apartment 2 bed room cost Rs.16,00,000 2. Monthly rent Rs.5,200 3. Advance Rs.50,000 4. Every 3 years, 15% enhancement of Rs.780 rent (agreement for 10 years) at Gollapudi 1. Lanco side Area 90 cents 2. 1 Sq. yard 8000 3. Total 4500 sq.yards 1. RTC Layout Ac.1.98 cents 2. Each Acre Rs.75,00,000

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In this regard, Sri G.V.Raman, vide his statement recorded u/s. 133A on 21-10-2010, has stated that it is estimation of flat received from Lotus and with regard to the other properties, there was no explanation from him. While completing the assessment, the sources nature and details of the properties were neither ascertained nor considered for the purpose of assessment. 5. At page No.20 of the survey folder, there was construction account totaling to Rs.32,72,961 (August, 2009 and September, 2009, It was stated by Sri G. V. Raman, in his statement recorded u/s 133A in response to question No.7 that it relates to construction. But he did not furnish the details of the property to which it relates. While completing the assessment, the sources and details of the property for which construction was undertaken, were neither ascertained nor considered for the purpose of assessment' 13. The assessee filed reply to show cause notice issued by the Ld.Pr.CIT which reads as under : During the course or assessment proceedings the assessee filed the receipts and payments a/c and every information/papers asked by the AO and after thorough examination, the assessment was completed by the AO. During the course of survey operations, the assessee was questioned about certain amounts paid to different persons, resulting a total amount of Rs. 9,43,500/- which is as per lose sheets No. 14&15, these amounts are rough figures/estimates only and not belongs to the assessee and the same was informed to the assessing officer during the course of assessment proceedings and satisfied by the assessing officer. As per show cause notice and as per page No.29 of the survey folder, the assessee was questioned about certain properties, the mentioned properties in the show cause notice not belongs to the assessee and all are rough estimated papers only, so many brokers/marketing people are coming and

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explaining about the layout and further the above assets are no way concerned to the assessee, during the course of assessment proceedings asked he assessing officer and explained the sane. Actually the assessee is having only two properties situated at D.No. 11-1-25, B.R.P. Road, Vijayawada and D.No.11- 25-250, Main Road, Vijayawada and offered rental income by the assessee on the above two properties in the return of income. During the assessment proceedings, the difference in returned income and actual rental income also taken into consideration by the AD on the above two properties. Apart from the above, the assessee has no other properties. The estimation of flat at Lotus is only broucher not the document and never paid any amount. As per construction accounting totaling to Rs.32,72,961, it does not belong to the assessee and it is related to his brother Sri Ghantasala Venkata Krishna situated at D.No.11-52-12, Gudivadavari street, Vjayawada 14. Not being convinced with the explanation of the assessee, the Ld.Pr.CIT held that the assessment made u/s 143(3) r.w.s. 147 was erroneous and prejudicial to the interest of the revenue and accordingly set aside the assessment order and directed the AO to redo the assessment after affording reasonable opportunity to the assessee.

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loose sheets bearing page No.14 & 15. The properties mentioned in page No.29, held by the assessee and the sites noted in the Lanco side area, RTC Lay Out, Guntupalli site was were rough estimations given the marketing people of the developers but they are not the assets belonging to the assessee. The construction account noted in the Page No.20 does not belong to the assessee but belonged to his brother. After examining all the issues, the AO completed the assessment, therefore, there is no case for revision u/s 263. The Ld.Pr.CIT did not give any finding and not made out a case as to how the assessment order passed u/s 143(3) r.w.s. 147 was erroneous and prejudicial to the interest of the revenue. Further, the Ld.Pr.CIT in the preamble of the order stated that the AO has not examined certain issues properly. From the reading of the revision order u/s 263 passed by the Ld.Pr.CIT shows that the Ld.Pr.CIT has taken up the case for revision u/s 263 because of difference of opinion and also because of inadequate enquiry. The Ld.AR argued inadequate enquiry cannot be a basis for revision u/s 263, accordingly requested to quash the order passed by the Ld.Pr.CIT.

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assessee has acquired the above properties. Therefore, there is no case for taking up the case for revision on presumption. 17(2). With regard to noting in page No.20, it was explained that the said construction account was belonged to the brother of the assessee Mr. Ghantasala Venkata Krishna, in D.No.11-52-12, Gudivarivari street, Vijayawada and the same was considered in his individual assessment and discussed in detail in this order. Therefore, there is no case for taking any adverse view in respect of the assessee. 17(3). The only issue left out was notings on loose sheets at page No.32 and33 of survey folder paid to different persons totaling to Rs.9,43,500/-. In this case, survey was conducted u/s 133A on 21.10.2010. Financial year involved is 2010-11, the assessment year involved is 2011- 12 and the impugned assessment year is 2010-11. Survey was conducted subsequent to the completion of the financial year under consideration. The Ld.Pr.CIT in the loose sheets did not furnish the details of dates of payments. In the absence of details of dates of payments, page No.32 and 33 are dumb documents which cannot be inferred against the assessee. The Ld.Pr.CIT should make out a case to establish that the payments were made in the year under consideration to consider the income in the impugned

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assessment year Neither the Ld.Pr.CIT nor the AO made out a case that notings mentioned in the loose sheets were related to the payments made during the previous year related to the assessment year under consideration. In the absence of the complete details, such as, the date of payment, name of the beneficiary and the name of the payer, it cannot be inferred that the payments were related to undisclosed income of the year under consideration. Therefore, we are unable to hold that the assessment made is erroneous and prejudicial to the interest of the revenue. 17(4). Plain reading of the revision order of the Ld.Pr.CIT shows that the Ld.Pr.CIT has taken up the case for revision u/s263 for not properly examining the issues which can be held to be inadequate enquiry, but not lack of enquiry. In this case, survey was conducted in the assessees premises and the assessment is reopened u/s 147 r.w.s. 143(3) to examine the issues found during the course of survey. Therefore, the responsibility cast upon the Ld.Pr.CIT to establish that the issues were not examined by the AO. Mere non mentioning or not recording the findings in the assessment order, does not establish that the AO has not examined the issues especially when the material is available to the AO at the time of assessment. Therefore, we hold that assessment order passed by AO is

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neither erroneous nor prejudicial to the interest of the revenue. Hence, we set aside the order of the Ld.Pr.CIT and allow the appeal of the assessee.

ITA No.34/Viz/2017, A.Y.2010-11 18. In this case, survey u/s 133A was conducted on 21.10.2010. During the course of survey, the AO found that the assessee firm had availed Over draft facility for the previous year relevant to the assessment year 2010-11 to the tune of Rs.27,35,918/- with Account No.0977000050900266 from Tamilnadu Mercantile Bank, Vijayawada and repaid the same during the assessment year. Therefore, the AO has issued notice u/s 148 and reopened the assessment and completed the assessment u/s 143(3) on total income of Rs.26,706/-. Subsequently, the Ld.Pr.CIT held that the AO has not properly examined certain issues, hence considered the order passed by the AO u/s 143(3) was erroneous and prejudicial to the interest of the revenue on the following issues.

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Mart will be around Rs.25 lakhs arid further stated that accounts relating to the firm were included in the accounts maintained in Laptop. Sri Manikyala Rao and Smt. Satyavathi (mother of Manikyala Rao) were the partners with equal shares. The average turnover of the assessee-firm will be around Rs.25 lakhs. The books of account are maintained in computer. On verification of the bank account statements, it is noticed that for the financial year 2009-10 i.e., relevant for the Asst.Year 2010-11, Sri G.Manikyala Rao has availed overdraft facility in Tamilnadu Mercantile Bank, Vinnakotavari street, Vijayawada-1 with A/c No.097700050900266 availed an OD amount of Rs.27,35,918/- and repaid the said OD upto Rs.27,35,764/-. It is noticed that while completing the assessment, the accounts of the firm maintained in the laptop relating to the period of F.Y.2009-I0 were neither reconciled with reference to the books of account nor considered for the purpose of assessment. It clearly shows that the assessee has concealed the true particulars of income by not properly accounting for its day to day business transactions. The assessee has neither substantiated his turnover reported in the return of income nor to offered payment of taxes on the above discrepancies. 3.1. During the course of survey operations conducted, it was concluded that the year-wise probable undisclosed incomes of the assessee for the following asst. Years was arrived at as under;

Asst. Year The Probable Income Income Returned 2008-09 11,72,994 No ROI 2009-10 31,18,982 Nil 2010-11 8,59,004 No ROI

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However, it is observed that while completing the assessment, the AO has not verified this aspect.

The year wise probable undisclosed income as considered in para No.3.1 is not correct, and it is baseless, it is only a hypothicated figure for ascertaining such amounts, during the course of assessment 'proceedings the assessing officer thoroughly verified the aspect.

During the course of assessment proceedings assessee the assessee filed the sources elaborately for deposits made in, the bank. The assessee has given every information/sources for deposits in the bank statement Theassessee is not maintaining any books of accounts and offered income u/s 44AF on the sales as per VAT returns. The assessing officer examined all the aspects and finalized the assessment and it is not correct to say that the assessing officer not examined the issues. Herewith enclosing the statement filed before the assessing officer for the deposits made in the bank. It is stated in para 3 of the show cause notice that the assessee has availed overdraft facility in Tamilnadu Mercantile bank for Rs.27,35,918 is not correct, the assessee has taken a loan of Rs.7,00,000/- as OD in TM8 A/c 097700050900266 and not Rs.27,35,918/-. The figure “Rs. 27,35,918/-" is not just bank loan but it is the total of credits in the bank. For that the assessee has explained before the assessing officer in the course of assessment proceedings."

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23.1. In respect of printouts extracted from the laptop, from the beginning, the assessee submitted that the laptop was neither belonging to the assessee nor the printouts are related to the assessee. The laptop was belonging to the part time accountant. Ld.Pr.CIT did not made out the case

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that the printout extracts taken from the laptop does belong to the assessee and the assessee had suppressed the turnover. The assessee stated that the assessee is not maintaining the books of accounts and filing the return of income u/s 44AF of the Act. Though the AO found that there was suppression of sales to the extent of Rs.3,70,297/-, the AO considered the same and held that it is reasonable to estimate the net profit of excess receipts and accordingly completed the assessment. The assessee admitted the sales as per the VAT returns and the bank account which the AO has examined the same at the time of assessment. Therefore, the assessment order cannot be held to be prejudicial and erroneous to the interest of the revenue on this issue.

23.2. The 3rd issue is the Ld.Pr.CIT’s opinion with regard to the probable income. It is not known how the Pr.CIT has estimated the probable income. Therefore without supporting documents, the same cannot be held to be the income of the assessee. From the order of the Ld.Pr.CIT and plain reading of the order passed u/s 263, the Ld.Pr.CIT has taken up the case for revision for not properly examining certain issues.. In this case, the assessee has filed return of income for the impugned assessment year on

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29.02.2011. The Ld.Pr.CIT has not given any basis for the probable undisclosed income. It does not emanate from the assessment order or from the material found during the course of survey. Therefore, it shows the guess work of the Ld.Pr.CIT and the revision u/s 263 is not permitted on guess work.

ITA No.35/Viz/2017, A.Y.2011-12 24. In this case, survey u/s 133A was conducted on 21.10.2010. During the course of survey, the AO found that the assessee firm had availed OD facility for the previous year relevant to the assessment year 2011-12 to the tune of Rs.8,57,254/- with Account No.0977000050900266 from Tamilnadu Mercantile Bank, Vijayawada and repaid the same during the assessment year. Therefore, the AO has issued notice u/s 148 and reopened the assessment. Subsequently completed the assessment u/s 143(3) on total income of Rs.5,150/-. Subsequently, the Ld.Pr.CIT held that the AO has not properly examined certain issues, hence considered the order passed by the AO u/s 143(3) was erroneous and prejudicial to the interest of the revenue on the following issues.

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physical stock. So, the assessing officer considered each and every aspect and completed the assessment.

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denied the contents of the extracts of the laptop belonging to the assessee, it is for the revenue to establish that the contents do belonged to the assessee. The fact that the laptop does not belong to the assessee was not disputed by the AO. The contention of the assessee that the part time accountant maintained the books of accounts of many other customers was also not disputed. During the assessment proceedings, the assessee stated that the assessee has not maintained books of accounts and admitted the income as per section 44AF of the Act. The AO has not brought on record any material to establish that the turnover recorded in the computer extract belonged to the assessee by comparing the contents of the printouts of the assessee with the entries in the books of accounts or with the information found during the course of survey. The entire survey material was available with the AO at the time of assessment and the case was reopened for verification of the material found during the course of survey, and the AO has completed the assessment after examining the entire details available with the AO. While finalizing the assessment, the AO reconciled with the VAT returns, purchase bills and physical stock, considering each and every aspect and completed the assessment. On identical facts in the group cases in respect of print outs extracted from the lap top and the stock

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found during the survey, we have decided the issue in favour of the assessee and set aside the order of the Ld.Pr.CIT and allowed the appeal of the assessee. Following the rule of consistency, we hold that the order passed by the AO is neither erroneous and nor prejudicial to the interest of revenue and accordingly we set aside the order passed u/s 263 and restore the assessment order. The appeal of the assessee on this ground is allowed.

In the result, appeals of the assessees for the Assessment Years 2010- 11 and 2011-12 are allowed.

The above order was pronounced in the open court on10th Aug, 2018.

Sd/- Sd/- (िी.दुगाा राि) (धड.एस. सुन्दर ससह) (V. DURGA RAO) (D.S. SUNDER SINGH) न्याधयक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER धिशाखापटणम /Visakhapatnam ददिांक /Dated : 10.08.2018 L.Rama, SPS

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आदेश की प्रधिधलधप अग्रेधर्ि/Copy of the order forwarded to:- 1. निर्धाऩिती/ The Assessee– (i) G.Venkata Krishna, Prop.Ghantasala Manikyala Rao Cards, 11- 25-167, Main Road, One Town, Vijayawada (ii) G.Venkata Raman, Partner.Sri Dhanalakshmi Stationery Mart 11-54-225, Jai Hind Market, Main Road, One Town, Vijayawada (iii) M/s Sri Vijayalakshmi Stationery & Fancy Mart, D.No.11-25- 167, Main Road, Vijayawada 2. िधजस्व/ The Revenue –Income Tax Officer, Ward-1, Vijayawada / Income Tax Officer, Ward-1(1), Vijayawada 3. The Pr.Commissioner of Income Tax, Vijayawada 4. धिभागीयप्रधिधिधि, आयकरअपीलीयअधिकरण, धिशाखापटणम /DR, ITAT, Visakhapatnam 5.गाडाफ़ाईल / Guard file आदेशािुसार / BY ORDER // True Copy //

Sr. Private Secretary ITAT, VISAKHAPATNAM