DCIT, CENTRAL CIRCLE,, VIJAYAWADA vs. ATREYAPURAM SWARNA LAKSHMI,, VISAKHAPATNAM

ITA Nos.557 & 558/Vizag/2017 Smt. Atreyapurapu Swarnalakshmi, VSKP आयकर अपीऱीय अधिकरण, विशाखापटणम पीठ, विशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM श्री बी आर बासकारन, ऱेखा सदस्य एिं श्री िुिुरू आर. एऱ. रेड्डी, न्याययक सदस्य के समक्ष BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER & SHRI DUVVURU R.L. REDDY, JUDICIAL MEMBER आयकर अऩीऱ सं./I.T.A.Nos.557&558/Vizag/2017 (ननधधारण वषा / Assessment Years: 2006-07 & 2007-08) DCIT, Central Circle Smt. Atreyapurapu Vijayawada Swarnalakshmi Visakhapatnam [PAN No.ADBPA3951TG] (अपीऱार्थी / Appellant) (प्रत्यार्थी / Respondent) अऩीऱधथी की ओर से / Appellant by : Shri R.S. Aravindakshan, DR प्रत्यधथी की ओर से / Respondent by : Shri I. Kamasastry, AR सुनवधई की तधरीख / Date of hearing : 19.03.2018 घोषणध की तधरीख / Date of Pronouncement : 22.03.2018 आदेश / O R D E R PER Shri Duvvur R.L. Reddy, Judicial Member:

These appeals filed by the revenue are directed against orders of the CIT(A)-3, Visakhapatnam vide ITA Nos.532&533/2015-16/CIT(A)- 3/VSP/2017-18 dated 27.9.2017 for the assessment years 2006-07 & 2007-08. Since, the facts are identical and issues are common, they are

ITA Nos.557 & 558/Vizag/2017 Smt. Atreyapurapu Swarnalakshmi, VSKP clubbed, heard together and disposed-off by way of this common order for the sake of convenience. 2. The revenue has raised the following common grounds of appeals in both the asst. years i.e. Assessment Years 2006-07 & 2007-08:-

“1. On the facts of circumstances, the Ld CIT(Appeals) erred in allowing the assessee's appeal as the assessee contested for the first time before the Hon'ble ITAT, Visakhapatnam that the assessment u/s. 143(3) r.w.s.153A of the Income Tax Act,1961 is invalid and bad in law, after the assessee withdrew the appeal filed before the CIT(A) and gave up the right to contest and after it had attained finality? 2. On facts and circumstances, Ld.CIT(Appeals) erred in allowing the assessee's appeals as the assessee challenged for the first time before the Hon'ble ITAT, Visakhapatnam the validity of the assessment u/s.143(3) r.w.s. 153A of the Income Tax Act, 1961 when it reached finality, in an appeal challenging the proceedings initiated an order passed u/s.263 of the Income Tax Act, 1961? 3. On facts circumstances, Ld.CIT(Appeals) erred in allowing the assessee's appeal as it is permissible to revise u/s. 263 of the income Tax Act the assessment order u/s. 153A of the Income Tax Act, 1961 in the case of search assessments without referring to the incriminating material in the case of completed assessments as held by the Hon'ble High Court of Kerala in the case of E.N.GOPAKUMAR V COMMISSIONER OF INCOME TAX ( 390 ITR 131) (Ker) (2017) and under facts where Revenue proposes to challenge the order of ITAT relied upon by CIT(A)?

ITA Nos.557 & 558/Vizag/2017 Smt. Atreyapurapu Swarnalakshmi, VSKP Act, 1961 (hereinafter called as 'the Act') are not valid under the eyes of law. 4. For the sake of convenience, facts are taken from ITA No. 557/VIZ/2017. The brief facts of the case are that the assessee is an individual and she is engaged in the business activity of hiring trucks, cranes, pork lifts and cargo handling works. She had filed her original return of Income Tax for the assessment year 2006-07 on 31.10.2006 declaring total income of Rs. 2,72,790/-. There was a search & seizure operation conducted in the group of Maha Maruthi Logistics Pvt. Ltd., Visakhapatnam on 04.02.2010. As the case was covered by search operation, it was taken up for scrutiny and the assessment proceedings were completed u/s 143(3) r.w.s. 153A of the Act on 29.12.2011, determining the total income of Rs. 16,46,490/-. While doing so, additions were made to the extent of Rs. 12,22,257/- towards short disclosure of gross receipts and an addition of Rs. 1,51,439/-, which represented the addition made as per earlier order u/s 143(3) of the Act dated 31.01.2008. Subsequently, proceedings u/s. 263 of the Act were initiated in her case by the Ld. CIT (Central), Hyderabad by issuing show cause notice dated 11.03.2014 on the prima facie observation that the assessee claimed some expenses towards repairs as revenue expenditure and that she also claimed some inadmissible expenses, such 3

ITA Nos.557 & 558/Vizag/2017 Smt. Atreyapurapu Swarnalakshmi, VSKP as, self assessment tax payment, which are not admissible as per the mandatory provisions contained in the law. The assessee claimed an amount of Rs. 2,78,800/- towards 5. purchase of oil engine etc. as revenue expenditure, while the same could be identified as a capital expenditure. This was pointed out by the ld. CIT while passing the order under section 263 of the Act. The ld. CIT has issued a notice to the assessee. In response to the same, the assessee has filed a detailed explanatory reply dated 20/03/2014 stating that these claims were not liable to be disallowed as per the statutory provisions and also in the light of various judicial precedents existing on the issue. On consideration of the written submissions contended in her reply, the ld. CIT, Hyderabad, had passed an order under section 263 of the Act dated 25/03/2014 setting aside the order passed under section 143(3) read with sec. 153A of the Act dated 29/12/2011. The ld. CIT has given a direction to the Assessing Officer to redo the assessment after making detailed enquiry and investigation. In consequent thereto, the assessee was offered an opportunity of hearing and after considering the written submissions filed by the assessee dated 27/03/2015, the Assessing Officer has completed the assessment vide order dated 31/03/2015 under section 143(3) r.w.s. 153A r.w.s. 263 of the Act. The total income was assessed at Rs. 7,42,554/- by making an 4

ITA Nos.557 & 558/Vizag/2017 Smt. Atreyapurapu Swarnalakshmi, VSKP addition of Rs. 2,75,050/- after allowing depreciation @15% towards disallowance of claim made under the head repairs etc. treating the same as capital expenditure. The Assessing Officer also disallowed an amount of Rs.41,554/- towards self-assessment tax payments by rejecting the plea of the assessee that the same may not be disallowed in consequence to the order under section 263 of the Act. 6. Being aggrieved, the assessee preferred an appeal before the ld.CIT(A). After considering the submissions of the assessee and by relying on the order of the ITAT, Visakhapatnam passed in ITA No. 207 to 211/Vizag/2014, dated 09/08/2017, the ld. CIT(A) has allowed the appeals of the assessee. 7. On being aggrieved, the revenue filed these appeals before us. 8. Ld. Departmental Representative strongly supported the grounds of appeal and the orders passed by the Assessing Officer under section 143(3) r.w.s. 153A r.w.s. 263 of the Act be confirmed. 9. On the other hand, ld. Authorised Representative of the assessee submitted that the order passed under section 263 of the Act was quashed by the Hon'ble ITAT in 207 to 211/Vizag/2014, dated 09/08/2017. Therefore, the orders passed under section 143(3) r.w.s. 153A r.w.s. 263 of the Act, have no legs to stand. Hence, the appeals filed by the Revenue are liable to be dismissed. 5

ITA Nos.557 & 558/Vizag/2017 Smt. Atreyapurapu Swarnalakshmi, VSKP 10. We have heard both the parties, perused the material available on record and gone through orders of the authorities below. 11. In these cases, the assessment orders passed under section 143(3) r.w.s. 153A of the Act were quashed by the ld. CIT by passing an order under section 263 of the Act by holding that the assessments are erroneous and prejudicial to the interest of the Revenue. However, subsequently the orders passed under section 263 of the Act were quashed by the ITAT in ITA Nos. 207 to 211/Vizag/2014, dated 09/08/2014. Based on the above said orders, the ld. CIT(A) passed the following order:- “I have perused the order of the Hon’ble Tribunal wherein the Hon’ble ITAT Vizag Bench, in its order for the assessment year 2006-07, has held as under. “Therefore we hold that it is not permissible to revise the assessment order in the case of search assessments without referring to the incriminating material in the case of completed assessments. In the instant case the assessments were unabated and there is no incriminating material. Hence we set aside the orders of the LD. CIT and allow the appeal of the assessee for the A.Y. 2006-07 and 2007-08”. It is clear from the order of the Tribunal that the very foundation of the order of the Assessing Officer is on the directions of CIT u/s 263 of the Act. Since the order of the CIT u/s 263 of the Act is held as invalid, the order appealed against has no legs to stand. Accordingly, the order passed by the Assessing Officer is held as invalid.”

ITA Nos.557 & 558/Vizag/2017 Smt. Atreyapurapu Swarnalakshmi, VSKP assessee against the orders under section 143(3) r.w.s. 153A r.w.s. 263 of the Act. Therefore, we restore the assessment orders passed under section 143 read with section 153A of the Act. 13. In the result, both the appeals filed by the Revenue are dismissed. The above order was pronounced in the open court on 22nd Mar’2018.

Sd/- sd/- (बी आर बासकारन) (िुिुरू आर. एऱ. रेड्डी) (B.R. BASKARAN) (DUVVURU R.L. REDDY) ऱेखा सदस्य/ACCOUNTANT MEMBER न्याययक सदस्य/JUDICIAL MEMBER ववशधखधऩटणम /Visakhapatnam: ददनधंक /Dated : 22/03/2018 VG/vr आदेश की प्रनतलऱवऩ अग्रेवषत/Copy of the order forwarded to:- 1. अऩीऱधथी / The Appellant – The DCIT, Central Circle, Vijayawada 2. प्रत्यधथी / The Respondent – Smt. Atreyapurapu Swarna Lakshmi, Prop: S.L. Trnas, Flat No.6, Mukund Suvasa Apartments, Dwarakanagar, 3rd Lane, Visakhapatnam 3. आयकर आयुक्त / The Pr. CIT (Central), Visakhapatnam 4. आयकर आयुक्त (अऩीऱ) / The CIT (A)-3, Visakhapatnam 5. ववभधगीय प्रनतननधध, आय कर अऩीऱीय अधधकरण, ववशधखधऩटणम / DR, ITAT, Visakhapatnam 6. गधर्ा फ़धईऱ / Guard file आदेशधनुसधर / BY ORDER // True Copy // Sr. Private Secretary ITAT, VISAKHAPATNAM