GOPU NEELIMA,NNDIGAM vs. INCOME TAX OFFICER, WARD-1(2), VIJAYAWADA

PER S. BALAKRISHNAN, Accountant Member :

Subsequently notice U/s. 143(2) of the Act dated 24/9/2018 was issued and served on the assessee. Subsequently, the notice U/s. 142(1) dated 23/7/2019 and 9/10/2019 were issued and served on the assessee electronically. Due to change in the incumbent another notice U/s. 142(1) dated 21/10/2019 was issued and served on the assessee. Since the assessee did not comply with the notices, the Ld. AO initiated proceedings U/s. 272A(1)(d) dated 19/11/2019 and levied the penalty vide order dated 22/11/2019. Further, notice dated 31/10/2019 and 30/11/2019 and 6/12/2019 were issued and served on the assessee. In response, the assessee furnished copy of bank account statement and justified that she sold and purchased the goods as shown in the VAT return. The Ld. AO noticed that the assessee filed return of income U/s. 44AD of the Act by declaring income @ 8% on a turnover of Rs. 58,22,000/-. The Ld. AO on scrutinizing the VAT returns found that the assessee declared turnover of Rs.1,73,88,702/- and has paid VAT tax accordingly. The Ld. AO found that the sources for cash deposits is nothing but the turnover, which was also accepted by the assessee, and estimated the income @ 8% on the turnover of Rs. 1,73,88,702/- as declared in VAT returns and framed the assessment by making an addition of Rs. 13,91,096/-. Subsequently, the Ld. AO also initiated the penalty proceedings U/s. 270A of the Act. Aggrieved by the order of the Ld. AO, the assessee filed an appeal before the Ld. CIT(A)-NFAC. On appeal before the Ld. CIT(A)-NFAC the Authorized Representative argued that it was the mistake of the Accountant by wrongly declaring the turnover at Rs. 58,22,000/- while filing the return of income. The Ld. CIT(A)-NFAC on perusal of the submissions of the assessee found the explanation offered by the assessee is not bonafide and confirmed the order of the Ld. AO. The Ld. CIT(A)-NFAC also dismissed the appeal of the assessee on the ground of penalty U/s. 270A raised by the assessee for Rs. 4,44,130/-. Aggrieved by the order of the Ld. CIT(A)-NFAC, the assessee is in appeal before the Tribunal.

3. The assessee has raised the following grounds in her appeal:

“1. The order of the Ld. CIT (A) is contrary to the facts and also the law applicable to the facts of the case. 2. The Ld. CIT(A) is not justified in sustaining the penalty of Rs. 4,44,130/- levied by the assessing officer u/s. 270A of the Act. 3. Any other grounds may be urged at the time of hearing.”

The Ld. AR further submitted that the turnover as per the VAT return has been considered in the P & L Account and hence there is no change in the profit as admitted but it is only a clerical mistake by the Accountant of the assessee while showing the turnover at Rs. 58,22,000/- in the return of income filed by the assessee. The Ld. AR further submitted that the Accountant has estimated the turnover on reverse basis without considering the VAT turnover. The Ld. AR further submitted that the assessee has accepted the estimated profit of 8% on the VAT turnover @ 13,91,000/- and pleaded that there is no misreporting in the return of income and hence the penalty levied U/s. 270A of the Act be quashed.

Per contra, the Ld. Sr. AR [Departmental Representative] submitted that the assessee has willfully underreported the turnover and has produced the Profit & Loss Account showing the same as profit as filed in in her return of income. The Ld. DR further submitted that the Profit & Loss Account is an afterthought by the assessee and the income is declared under presumptive basis U/s. 44AD of the Act, where Turnover is the basis for estimating income on presumptive basis. Countering the arguments of the Ld. DR, the Ld. AR submitted that the assessee is an illiterate lady not having any knowledge in the accounting and heavily depended on the local Accountant at Nandigama. The Ld. AR also submitted that the Ld. CIT(A)-NFAC has not considered the above fact.

Pronounced in the open Court on the 06th March, 2023.

Sd/- Sd/- (दु�वू� आर.एल रे�डी) (एस बालाकृ�णन) (DUVVURU RL REDDY) (S.BALAKRISHNAN) �या�यकसद�य/JUDICIAL MEMBER लेखा सद�य/ACCOUNTANT MEMBER Dated : 06.03.2023 OKK - SPS आदेश क� ��त�ल�प अ�े�षत/Copy of the order forwarded to:- �नधा�रती/ The Assessee – Gopu Neelima, D.No.3-43, Opp. CI Office, 1. Raitupeta, Nandigama, Krishna District, Andhra Pradesh. राज�व/The Revenue – Income Tax Officer, Ward-1(2), CR Bu8ilding, 2. 1St Floor Annex, MG Road, Vijayawada.

Sr. Private Secretary ITAT, Visakhapatnam