Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI V. DURGA RAO& SHRI D.S. SUNDER SINGH
आदेश /O R D E R PER D.S. SUNDER SINGH, Accountant Member: This appeal is filed by the revenue against the order of the Commissioner of Income-Tax (Appeals)[CIT(A)]-2, Guntur vide ITA No.155/2014-15 dated 12.01.2016for the assessment year 2010-11.
2 ITA No.137/Viz/2016 Shri Kantheti Visweswara Surya Prakasa Rao, Kakinada
The assesssee filed return of income on 14.03.2011 admitting total income of Rs.40,10,970/-. The assessment was completed u/s 143(3) r.w.s. 147 on 26.03.2014 on total income of Rs.40,32,520/-. A survey u/s 133A was conducted on 29.08.2010 in the case of M/s Meenakshi Constructions in which the assessee is a partner. During the course of survey, the AO found certain incriminating material and after going through the material the assessee has admitted the additional income of Rs.154.94 lakhs in the hands of the firm and the partners. Out of 154.94 lacs a sum of Rs.35,81,000/- was admitted as additional income in the hands of the assessee as under : Add : Lump sum additions as per disclosure 5,00,000.00 in Survey Proceedings Lump sum additions as per disclosure 27,81,000.00 in Survey Proceedings under short term capital gains credited to capital account Lump sum addition as agreed in Survey 3,00,000.00 Proceedings ---------------- 35,81,000.00 2.1 As per the assessment order, the AO has issued notice u/s 148 and in response to the notice issued u/s 148, the assessee had filed return of income on 14.03.2011 admitting total income of Rs.40,10,970/-. Since the AO has issued the notice u/s 148 subsequently after filing the return of
3 ITA No.137/Viz/2016 Shri Kantheti Visweswara Surya Prakasa Rao, Kakinada
income it is filed voluntarily, but not in response to the notice issued u/s 148. The AO completed the assessment accepting the income returned and initiated penalty proceedings u/s 271(1)(c) of I.T.Act.
2.2 Subsequently, the AO called for explanation from the assessee as to why penalty should not be imposed for concealment of income. In the assessment proceedings, the AO simply noted that the penalty proceedings u/s 271(1)(c) are initiated separately. The AO did not mention whether the penalty was initiated for concealment of income or for furnishing inaccurate particulars. In response to the notice issued u/s 271(1)(c), the assessee filed reply stating that during the course of survey in the partnership firm M/s Meenakshi Constructions, the assessee has admitted additional income voluntarily with a request not to initiate penalty proceedings hence requested the AO to drop the penalty proceedings. The AO not being convinced with the explanation of the assessee levied penalty u/s 271(1)(c) stating that the assessee had concealed income of Rs.35,81,000/- and accordingly levied penalty of Rs.10,07,945/-. The AO observed that admission of additional income was not voluntary, but for survey conducted u/s 133A in the case of Meenakshi Constructions.
4 ITA No.137/Viz/2016 Shri Kantheti Visweswara Surya Prakasa Rao, Kakinada
Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) cancelled the penalty holding that there was no concealment of income since there was no addition made by the AO in the assessment. The Ld.CIT(A) observed that the AO simply accepted the additional income admitted by the assessee without giving particulars of income or nature, modus operandi of the assessee. In the penalty proceedings also the AO failed to establish the nature of alleged concealment and reproduced the statement given in survey which forms part of the assessment. The Ld.CIT(A) further observed that even during the course of survey, additional income was made on estimation basis and no attempts were made by the AO to arrive the item-wise and nature of the additional income etc. The CIT(A) relied on the decision 20 taxmann.com 133(Hyd.) in the case of Sunil Kumar Singhania, 45 taxmann.com 175 (Visakhapatnam-Trib.) in the case of Godavari Townships (P.) Ltd. and deleted the penalty.
Aggrieved by the order of the Ld.CIT(A) the revenue is in appeal before us. During the appeal hearing, the Ld.DR relied on the grounds of appeal and strongly supported the order of the AO. Whereas, the Ld.AR relied on the orders of the Ld.CIT(A).
5 ITA No.137/Viz/2016 Shri Kantheti Visweswara Surya Prakasa Rao, Kakinada
We have heard both the parties, perused the material on record and gone through the orders of the lower authorities. In this case, a survey u/s 133A was conducted on 29.08.2010 in the case of M/s Meenakshi Constructions. During the course of survey, the AO found certain incriminating material and after going through the material the assessee had admitted the additional income of Rs.154.94 lakhs in the hands of the firm and the partners. Out of 154.94 lacs a sum of Rs.35,81,000/- was admitted as additional income in the hands of the assessee and accordingly filed the return of declaring the total income of Rs.40,10,970/- on 14.03.2011 and in the return of income the assessee admitted the additional income declared by the assessee during the survey. The assessment was completed on total income of Rs.40,32,520/- and the addition made by the AO was only Rs.21,543/-. The assessee has filed the return of income much earlier than the notice issued by the AO u/s 148 of I.T.Act. Therefore, it is evident that the assessee has filed the return of income voluntarily but not in response to the notice issued u/s 148. In the return of income filed, the assessee has admitted the additional income agreed during the course of survey i.e. lump sum addition of Rs.35,81,000/- . Though the assessee has disclosed additional income in survey towards
6 ITA No.137/Viz/2016 Shri Kantheti Visweswara Surya Prakasa Rao, Kakinada
short term capital gains, the details of assets owned by the assessee, the sale value, date of sale, date of purchase, the amount recorded in the books of accounts, the amount not recorded in the books of accounts etc. were not furnished by the AO in the assessment order. As discussed earlier, it is pertinent to note that the survey was conducted in the case of Meenakshi Constructions and a statement was recorded from the assessee in connection with the survey proceedings of Meenakshi Constructions. The AO basically relied on question No.5 of the statement recorded which reads as under : “Q.No.5 I am showing you page Nos. 63 to 65 of Annexure MC/8/KKD impounded on 29.08.2010 from the office of Meenakshi Constructions. Please go through them and explain? A. I have gone through the pages and understood that they represent the assets purchased by us and investments. The values representing are the market values of the assets at present rates. However, some of the assets were not reflected from books of account. They are as follows : (i) They are 63 page lands purchased at Mandapeta, VLC Nagar value as per registration is at Rs.25.70 lakhs (FY 2007-08) (ii) Sites purchased at Morampudi at Rs.5.69 lakhs (FY 2006-07) (iii) Apartment at Vijayawada at Rs.5.75 lakhs (FY 2009-10) (iv) Two sites at Anandapuram at Rs.8.12 lakhs (FY 2009-10) (v) Plot at Janachaitanya, Kakinada at Rs.5.50 lakhs (FY 2008-09) total value is at Rs.50.76 lakhs.(the total disclosure in the hands of Shri KVS PrakasaRao was at Rs.50.78 lakh + Rs.26.00 lakh = Rs.76.76 lakh)” The above answer given by the assessee does not indicate any details of capital gains in the hands of the assessee. It was also not clear whether the lands were purchased in the name of the assessee or in the name of the
7 ITA No.137/Viz/2016 Shri Kantheti Visweswara Surya Prakasa Rao, Kakinada
partnership firm M/s Meenakshi Constructions. It is only in the knowledge of the AO and the assessee for what reasons the additional income was admitted by the assessee. From the penalty order, as well as the assessment order it was not clear what was the incriminating material, what was the quantum of additional income, how the same was arrived at etc..are not made available by the AO. At the time of survey what were the entries made and what were the transactions not recorded in the books of accounts was not specified either in the assessment order or in the penalty order. Further assessment was completed accepting the income returned and no addition was made, therefore as rightly held by the Ld.CIT(A) and as decided by the Coordinate Bench in the case of Godavari Townships (P.) Ltd. (Supra) and Sunil Kumar Singhania (Supra), there was no case for levying penalty u/s 271(1)(c) and the AO has not established that the assessee has either concealed the income or furnished inaccurate particulars. Therefore, we do not find any infirmity in the order of the Ld.CIT(A) and the same is upheld.
In the result, appeal of the revenue is dismissed.
8 ITA No.137/Viz/2016 Shri Kantheti Visweswara Surya Prakasa Rao, Kakinada
The above order was pronounced in the open court on 4th May, 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 ददनांक /Dated : 04.05.2018 L.Rama, SPS आदेश की प्रधतधलधप अग्रेधर्त/Copy of the order forwarded to:- 1. अपीलाथी / The Appellant- The ACIT, Circle-1, Kakinada 2. प्रत्याथी / Shri Kantheti Visweswara Surya Prakasa Rao, D.No.65-6-29A, Janaki Nilayam Mehar Nagar, Opp.GPT Gate, Kakinada, East Godavari 3. The Pr.Commissioner of Income Tax-2 Visakhapatnam 4. The Commissioner of Income-Tax(Appeals)-2, Guntur, Camp : Visakhapatnam 5. धिभागीयप्रधतधनधध, आयकरअपीलीयअधधकरण, धिशाखापटणम /DR, ITAT, Visakhapatnam 6.गाडाफ़ाईल / Guard file आदेशानुसार / BY ORDER // True Copy //
Sr. Private Secretary ITAT, VISAKHAPATNAM