PENUGONDA VENKATESWARA RAO,TENALI vs. INCOME TAX OFFICER, WARD-1, TENALI

आदेश /O R D E R

PER SHRI S BALAKRISHNAN, ACCOUNTANT MEMBER:

I.T.A.No.222/VIZ/2024 Penugonda Venkateswara Rao 2. Briefly stated the facts of the case are, assessee filed its return of income on 31.10.2019 for the A.Y. 2019-20 declaring a total income of Rs. 94,43,270/- including additional income of Rs. 75,49,261/-. The case was selected for scrutiny, due to the fact that the assessee retracted from his own disclosure made during the survey in the statement recorded from him. Further the assessee also retracted from his admission of payment of taxes under section 115BBE of the Act. Accordingly, statutory notices under section 143(2) and 142(1) of the Act were issued and served on the assessee from time to time. In response, assessee submitted the details. The survey operations under section 133A of the Act was conducted on 25.02.2019 in the business premises at Shanmuka Jewelleries, Tenali. During the survey operation excess gold ornaments weighing 2700 grams was found. While recording statement during survey operations assessee offered to disclose additional income amounting to Rs. 85 Lakhs but whereas while filing the regular return of income additional income was disclosed only to the extent of Rs.75,49,261/- [2395.070 grams @ Rs.3,152/- per gram]. The assessee also submitted that the value of stock difference is taxable under the “Profits / Gains of the business or profession” and hence provisions of section 115BBE of the Act are not applicable. Assessee also submitted reconciliation statements for the difference in stock quantities of gold. Considering all the submissions made by the assessee, Ld. Assessing Officer [hereinafter in short “Ld. AO"] accepted the return of income filed by the assessee.

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I.T.A.No.222/VIZ/2024 Penugonda Venkateswara Rao 3. Ld.Pr.CIT by invoking powers vested on him under section 263 of the Act, considered the order of the Ld. AO as erroneous and prejudicial to the interest of the revenue, since the assessee has not declared the income as admitted as per statement recorded during the survey operations and has also not paid taxes as per section 115BBE of the Act. Thereafter, he proceeded to issue a detailed show-cause notice on 12.01.2024 calling for objections from the assessee. In response, assessee filed written submissions. After carefully considering the written submissions with reference to the material available in the assessment records, Ld.Pr.CIT considered the order of the Ld. AO as erroneous and prejudicial to the interest of the revenue as it has been passed without making enquires or verification. Therefore, by invoking the revisionary powers under section 263 of the Act, Ld.Pr.CIT set-aside the assessment order and directed the Ld. AO to redo the assessment in accordance with law after affording a reasonable opportunity of being heard to the assessee.

1. The order of the learned Principal Commissioner of Income Tax is contrary to the facts and also the law applicable to the facts of the case.

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I.T.A.No.222/VIZ/2024 Penugonda Venkateswara Rao 4. The learned Principal Commissioner of Income Tax ought to have appreciated that the assessing officer verified the above issues and passed the assessment order and as such it is not a case of lack of inquiry' to enable the learned Principal Commissioner of Income Tax to invoke the provisions of S.263 of the Act. 5. Any other ground that may be urged at the time of appeal hearing.”

I.T.A.No.222/VIZ/2024 Penugonda Venkateswara Rao provided purchase bills for 304.930 grams and payment made through banking channels before the survey date and submitted that these are already included in the excess stock. The assessee therefore computed the value for the balance quantity 2395.070 grams @ 3152/- per gram while filing the return of income for the impugned assessment year. Ld.AO has also issued show-cause notice calling for explanation from the assessee for considering the excess stock under section 69 of the Act. Detailed reply was also provided by the assessee before Ld. AO substantiating the difference in stock. Considering these, the Ld. AO after verification of the return of income and submissions made by the assessee duly considered and accepted the additional income as business income and taxed as per normal provisions. Since the Ld. AO has applied his mind while framing the assessment it cannot be said there is inadequate enquiry on the part of the Ld. AO.

“20. No contrary view either of any High Court or the Apex Court has been placed before us to demonstrate that the explanations offered by the assessees in the course of assessment were either perverse or contrary to law. In view of such matter, we are constrained to hold no case of perversity or lack of enquiry on the part of the Assessing Officer is made out so as to render his decision erroneous under Explanation 2 of Section 263 of the Act. Thus, the revisional powers under the said provision were illegally invoked by the Principal Commissioner and his order was rightly set aside by the Tribunal.”

I.T.A.No.222/VIZ/2024 Penugonda Venkateswara Rao the considered view that the order of the Ld.Pr.CIT cannot be sustained and therefore being set-aside. Accordingly, grounds raised by the assessee are allowed.

Order pronounced in the open court on 28th January, 2025.