Kokku Surekha, Vijayawada V. THE ITO, Vijayawada

CO 47/VIZ/2014

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 2724 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 27 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-01-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 30-12-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M NARAYANA RAO
• Keywords: Agreed addition
• Section: 44AD; 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM SMC BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER ITA NO. 444 / VIZ /201 4 (ASST. YEAR : 20 10 - 1 1 ) ITO, WARD - 1(1) , VIJAYAWADA. V. SMT. KOKKU SUREKHA, D.NO. 54 - 18 - 35/B, SUNNAPU BATTILA CENTER, RADIO COLONY, 2 ND LANE, USHA SRI BUILDING, VIJAYAWADA . PAN NO. BAZPK 4135 Q (APPELLANT) (RESPONDENT) C.O.NO. 47/VIZ/2014 ( ITA NO. 444 / VIZ /201 4) (ASST. YEAR : 20 10 - 1 1 ) SMT. KOKKU SUREKHA, D.NO. 54 - 18 - 35/B, SUNNAPU BATTILA CENTER, RADIO COLONY, 2 ND LANE, USHA SRI BUILDING, VIJAYAWADA. V. ITO, WARD - 1(1), VIJAYAWADA. PAN NO. BAZPK 4135 Q (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADV OCATE . DEPARTMENT BY : SHRI M. NARAYANA RAO - JCIT DATE OF HEARING : 07 / 1 2 /201 6 . DATE OF PRONOUNCEMENT : 27 / 01 /201 7 . O R D E R THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), VIJAYAWADA , DATED 04/04 /201 4 FOR THE ASSESSMENT YEAR 20 10 - 11 . 2 ITA NO. 444/VIZ/2014 & C.O.NO. 47/VIZ/2014 2. FACTS , IN BRIEF ARE THAT THE ASSESSEE IS AN INDIVIDUAL , DERIVING INCOME FROM CONSTRUCTION OF RESIDENTIAL HOUSES AND REAL ESTATE BROKERAGE BUSINESS, HAS FILED HER RETURN OF INCOME ADMITTING TOTAL INCOME OF 2,92,120/ - . THE RETURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) AND SUBSEQUENTLY SELECTED FOR SCRUTINY , N OTICE S UNDER SECTION 143(2) & 142(1) WERE ISSUED TO THE ASSESSEE CALLING INFORMATION IN RESPECT OF DETAILS OF BANK ACCOUNTS AND ALSO SOURCE OF CASH DEPOSITS. THE ASSESSING OFFICER DURING THE SCRUTINY PROCEEDINGS, ON PERUSAL OF THE BANK ACCOUNT COPIES OF T HE ASSESSEE FOUND THAT THERE ARE CERTAIN DEPOSITS ON DIFFERENT DATES TO THE TUNE OF 59,76,030/ - WITH AXIS BANK AND 5,56,000/ - WITH PUNJAB AND NATIONAL BANK (PNB) . THE ASSESSING OFFICER ASKED THE SOURCE OF THE SAID DEPOSITS. THE ASSESSEE REPLIED BEFORE THE ASSESSING OFFICER THAT THE ASSESSEE IS DOING CIVIL CONTRACT WORKS RELATING TO CONSTRUCTION OF HOUSES AND ALSO REAL ESTATE BROKERAGE BUSINESS . FURTHER IT WAS STATED TH A T SHE HAS INCURRED LOSS IN REAL ESTATE BROKERAGE BUSINESS, BUT DID NO T SET OFF OF HER INCOME FROM CIVIL WORK AGAINST THE LOSS FROM THE REAL ESTATE BROKERAGE BUSINESS, SO AS TO NOT TO RE F LECT LOSS IN THE RETURN OF INCOME. THE GROSS RECEIPTS FROM THE CIVIL CONSTRUCTION BUSINESS WERE CIRCULATED IN THE BANK ACCOUNT. THE ASSESSING OFFICER NOTED T H A T THE ASSESSEE HAS NOT OFFERED ANY INCOME OUT OF THE ABOVE REAL ESTATE BROKERAGE ACTIVITIES , SO ALSO THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT IN RESPECT OF REAL ESTATE BROKERAGE BUSINESS. BEFORE THE ASSESSING OFFICER , THE ASSESSEE AGREED 3 ITA NO. 444/VIZ/2014 & C.O.NO. 47/VIZ/2014 TO OFFER THE CASH DEPOSITS OF 34,69,030/ - AS HER INCOME AFTER NETTING OFF OF SELF CASH WITHDRAWALS FROM HER BANK ACCOUNTS AMOUNTING TO 2 6 ,43,000/ - ( 10,68,000/ - WITH PNB AND 15,75,000/ - WITH AXIS BANK) . THE ASSESSING OFFICER AGREED FOR OFFER MADE BY THE ASSESSEE AND A CCORDINGLY , ASSESSMENT WAS COMPLETED. SUBSEQUENTLY, THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT FOR CONCEALMENT OF INCOME AND ALSO UNDER SECTION 271A FOR NON - MAINTENANCE OF BOOKS OF ACCOUNT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS , B EFORE THE ASSESSING OFFICER, THE ASSESSEE FILED A DETAILED EXPLANATION ON 25/07/2013 REQUESTING HIM TO DROP THE PENALTY PROCEEDINGS, HOWEVER, THE ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 3. ON BEING AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). B EFORE HIM, THE ASSESSEE SUBMITTED A DETAILED SUBMISSION WHICH IS EXTRACTED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AT PAGE NOS. 3 TO 12. THE SUBSTANCE OF THE EXPLANATION GIVEN BY THE ASSESSEE IS ON THE BASIS OF ESTIMATION OF INCOME AND ALSO ON THE BASIS OF AGREED ADDITIONS , NO PENALTY CAN BE LEVIED. THE COMMISS IONER OF INCOME TAX (APPEALS) AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, DELETED PENALTY LEVIED BY THE ASSESSING OFFICER. 4 . ON BEING AGGRIEVED, ASSESSEE CARRIED MATTER IN APPEAL BEFORE THE TRIBUNAL. 4 ITA NO. 444/VIZ/2014 & C.O.NO. 47/VIZ/2014 5 . LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SU PPORTED THE ORDER PASSED BY THE ASSESSING OFFICER WHEREAS LEARNED CO U NSEL FOR THE ASSESSEE SUPPORTED THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AND ALSO RELIED ON THE JUDGMENT OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT V . S.I. PARIPUSHPAM REPORTED IN 249 ITR 550 . 6 . I HAVE HEARD BOTH THE PARTIES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 7 . THE ASSESSEE HAS FILED HER RETURN OF INCOME BY DECLARING TOTAL INCOME OF 2,92,120/ - . DURING THE COURSE OF SCRUTINY PROCEEDINGS, THE ASSESSING OFFICER NOTICED TH A T THE ASSESSEE HAS DEPOSITED AN AMOUNT OF 59,76,030/ - WITH AXIS BANK AND 5,56,000/ - WITH PNB . THE ASSESSING OFFICER CALLED THE ASSESSEE TO EXPLAIN THE SOURCE OF TH E ABOVE DEPOSITS . THE ASSESSEE HAS SUBMITTED A DETAILED EXPLANATION DATED NIL , WHEREIN IT IS STATED THAT THE ASSESSEE IS ASSOCIATED TO THE CIVIL ENGINEERING AND CONSTRUCTION OF HOU S ES. THE ASSESSEE SHOWN THE GROSS RECEIPTS OF 37,50,000/ - AND OFFERED INCOME UNDER SECTION 44AD AT 8% FOR THE FINANCIAL YEAR 2009 - 10. APART FROM THE CIVIL WORKS, ASSESSEE CARRIED OUT REAL ESTATE BROKERAGE BUSINESS FOR A SHORT PERIOD IN THE FINANCIAL YEAR 2009 - 10 . SHE HAD INCURRED HUGE LOSS ES DUE TO HEAVY EXPENDITURE FOR TH E MAINTENANCE OF OFFICE, TRAVELLING AND GIVING HIGH COMMISSION TO OTHER MEDIATORS ETC. THAT IS THE REASON , SHE WAS NOT OFFERED THE AMOUNT RE F LECTED IN THE BANK ACCOUNTS . HOWEVER, THE ASSESSEE OFFERED 5 ITA NO. 444/VIZ/2014 & C.O.NO. 47/VIZ/2014 34,69,030/ - AFTER NETTING OFF OF SELF CASH WITHDRAWALS . IF THE LOSSES INCURRED BY THE ASSESSEE IN REAL ESTATE BROKERAGE BUSINESS IS CONSIDERED , THEN THERE IS A LOSS, THEREFORE ASSESSEE SUBMITTED THAT WITHOUT PROLONGING THE LITIGATION, SHE OFFERED , ON ESTIMATION BASIS , AN AMOUNT OF 34,69,030/ - AS INCOME AND THE SAME IS ACCEPTED BY THE ASSESSING OFFICER, NO PENALTY CAN BE LEVIED . THE COMMISSIONER OF INCOME TAX (APPEALS) BY CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, DELETED THE PENALTY LEVIED BY THE ASSESSING OFFICER, WHICH IS EXTRACTED AS UNDER: - 5. I HAVE GONE THROUGH THE FACTS OF THE CASE, ORDER PASSED BY THE ASSESSING OFFICER AND THE GROUNDS OF APPEAL AND WRITTEN SUBMISSIONS MADE BY THE APPELLANT APART FROM THE VARIOUS CASE LAWS RELIED UPON. 5.1. IT IS A FACT THAT THERE ARE VARIOUS DEPOSITS IN THE BANK ACCOUNTS OF THE APPELLANT. THE APPELLANT HAS OFFERED THE SAME AS HER INCOME ON ESTIMATE BASIS DURING THE ASSESSMENT PROCEEDINGS AFTER NETTING OFF THE SELF WITHDRAWALS IN THE BANK ACCOUNT S. FURTHER , IT IS OBSERVED THAT THE APPELLANT HAS PAID THE TAXES ON THE INCOME OFFERED. THE APPELLANT HAS NO GRIEVANCE WHATSOEVER IN TAKING THE SAID DEPOSITS AS HER INCOME. THE DISPUTE IS WITH REGARD TO LEVY OF PENALTY BY THE ASSESSING OFFICER. ON A PERU SAL OF MATERIAL, THERE IS FORCE IN THE ARGUMENTS PUT - FORTH BY THE APPELLANT. I FIND THAT THE ASSESSING OFFICER HAS NOT BROUGHT INTO RECORD ANY FURTHER EVIDENCE EXCEPT THE APPELLANT'S REVISED COMPUTATION OF INCOME FILED DURING THE ASSESSMENT PROCEEDINGS. HE NCE, IT CAN BE CONSTRUED THAT THE APPELLANT HAS NO MALAFIDE INTENTION TO CONCEAL THE PARTICULARS OF INCOME IN VIEW OF THE FACT THAT THE APPELLANT ITSELF HAS REVISED ITS INCOME AND ALSO THE ASSESSING OFFICER HAS NOT BROUGHT ANY FRESH EVIDENCE DISPROVING THE APPELLANT'S CONTENTIONS. THE APPELLANT'S CASE FINDS SUPPORT FROM THE DECISION OF THE JURISDICTIONAL HON'BLE HIGH COURT OF ANDHRA PRADESH IN THE CASE OF COMMISSION E R OF INCOME TAX - II , HYDERABAD_ VS. N.LAXMAN RAO AND OTHERS [ITTA NO.565 OF 2013], WHEREIN IT WAS HELD THAT 'WHEN INCOME IS ESTIMATED BY THE REVENUE OFFICIALS, THERE IS NO SCOPE FOR CONCEALMENT OF INCOME OR FURNISHING OF ANY INACCURATE PARTICULARS, FOR WHATEVER PARTICULARS FURNISHED, ARE DEEMED TO HAVE BEEN ACCEPTED BY THE REVENUE OFFICIALS AND THE REAFTER ESTIMATE HAS BEEN MADE, AND IN SUCH CIRCUMSTANCES WHERE IS THE SCOPE FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS? 6 ITA NO. 444/VIZ/2014 & C.O.NO. 47/VIZ/2014 5.2. IN VIEW OF THE FOREGOING DISCUSSION AND RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE HIGH COURT OF A NDHRA PRADESH AS ABOVE, I AM OF THE OPINION THAT THERE IS NO CONCEALMENT OF PARTICULARS OF INCOME AS OPINED BY THE ASSESSING OFFICER. HENCE, THE ASSESSING OFFICER IS NOT JUSTIFIED IN LEVYING PENALTY U/S.271(1)(C) OF THE ACT. ACCORDINGLY, THE ASSESSING OFFI CER IS DIRECTED TO CANCEL THE PENALTY LEVIED. 8 . THE HON'BLE MADRAS HIGH COURT IN THE CASE OF S.I. PARIPUSHPAM (SUPRA) HAS CONSIDERED THE PENALTY IN THE CASE OF AGREED ADDITION AND HELD THAT NO PENALTY CAN BE LEVIED UNDER SECTION 271(1)(C) WHEN THE ADDITION IS MERELY ON THE BASIS OF AGREED ADDITION . THE RELEVANT PORTION OF THE ORDER IS EXTRACTED HEREUNDER: - 1. THE T RIBUN AL HELD THAT LEVY OF PENALT Y UNDER SECTION 271(1)(C) OF THE INCOME - TAX ACT, 1961, WAS WHOLLY UNWARRANTED AS THERE HAD BEEN NO FRAUD AND WIL L FUL NEGLECT AND THE ASSESSEE HAD, ONLY WITH A VIEW TO CO - OPERATE WITH THE DEPARTMENT, AGREED TO THE ADDITION OF THE SUM OF RS. 24,000 IN THE ASSESSMENT OF HIS INCOME FOR THE ASSESSMENT YEAR 1974 - 75. THE ASSESSING AUTHORITIES HAD NO MATERIAL, APART FROM THE FACT THAT THE ASSESSEE HAD AGREED TO THE ADDITION OF THAT SUM TO HIS INCOME FOR THE PURPOSE OF ASSESSMENT, TO HOLD THAT THERE HAD BEEN ANY WI L LFUL NEGLECT ON THE PART OF THE ASSESSEE IN NOT HAVING INCLUDED SUCH SUM IN HIS INCOME EARLIER. 2. THE SUPREME COURT IN THE CASE OF SIR SHADILAL SUGAR AND GENERAL MILLS LTD. V. CIT [1987] 168 ITR 705 POINTED OUT THAT EVERY ADDITION TO THE INCOME OF THE ASSESSEE DOES NOT WARRANT SUCH ADDITION BEING TREATED AS CONCEALMENT OF INCOME. TO QUOTE TH E WORDS OF THE JUDGMENT: 'THERE MAY BE A HUNDRED AND ONE REASONS FOR SUCH ADMISSION, I.E., WHEN THE ASSESSEE REALISES THE TRUE POSITION, IT DOES NOT DISPUTE CERTAIN DISALLOWANCES, BUT THAT DOES NOT ABSOLVE THE REVENUE FROM PROVING THE MENS REA OF A QUASI - CRIMINAL OFFENC E'. THIS COURT IN THE CASE OF CI T V. INDEN BISLERS [1999] 240 ITR 943 HELD THAT A FINDING OF FRAUD IS A SERIOUS MATTER IN ANY CONTEXT AGAINST ANY PERSON AND SHOULD NOT BE LIGHTLY RECORDED IN THE ABSENCE OF PROPER EVIDENCE IN SUPPORT OF THAT FINDING. THE COURT FURTHER OBSERVED THAT THE FACT THAT THE EXPLANATION TO SECTION 271(1)(C) OF THE ACT REQUIRED THE ASSESSEE TO SHOW THAT THERE WAS NO FRAUD OR WILLFU L NEGLECT DOES NOT ANY WAY ENABLE THE REVENUE 7 ITA NO. 444/VIZ/2014 & C.O.NO. 47/VIZ/2014 TO CONTEND THAT THERE IS A PRESUMPTION OF FRAUD OR NEGLECT WITHOUT ADDUCING ANY EVIDENCE, WHATEVER TO SUBSTANTIATE SUCH ASSERTION. 3. IN THIS CASE, EVIDENTLY THERE IS NO EVIDENCE AT ALL ON THE BASIS OF WHICH THE REVENUE CAN CONTEND THAT THE A SSESSEE HAD FRAUDULENTLY OR WIL L FULLY OR NEGLIGENTLY CONCEALED THE INCOME. HIS AGREEMENT TO THE ADDITION OF THE AMOUNT, BY ITSELF DOES NOT ESTABLISH FRAUD OR WI L LFUL NEGLECT WITHOUT SOMETHING MORE. THE TRIBUNAL HAS FOUND THAT THE APPELLATE ASSISTANT COMMIS SIONER WAS RIGHT IN HOLDING THAT THE AMOUNT, ADDITION OF WHICH WAS AGREED TO BY THE ASSESSEE, WAS AN AMOUNT WHICH HAD BEEN SET OUT IN AN ENCLOSURE FILED ALONG WITH THE ASSESSEE'S RETURN OF INCOME. THERE WAS, THEREFORE, NO QUESTION REGARDING THAT AMOUNT WHI CH HAS BEEN FRAUDULENTLY CONCEALED. 9 . WE, THEREFORE, BY CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO FOLLOWING THE JUDGMENT OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF S.I. PARIPUSHPAM (SUPRA) , THIS IS NOT A FIT CASE TO IMPOSE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 10 . THE CROSS OBJECTION FILED BY THE ASSESSEE IS IN SUPPORT OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). IN VIEW OF OUR ORDER IN QUANTUM APPEAL, THE C.O. HAS BECOME INFRUCTUOUS AND IS DISMISSED. 1 1 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE AND THE CR OSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 2 7 T H DAY OF JANUARY , 201 7 . S D / - ( V. DURGA RAO ) JUDICIAL MEMBER DATED : 2 7 T H JANUARY , 201 7 . 8 ITA NO. 444/VIZ/2014 & C.O.NO. 47/VIZ/2014 VR/ - COPY TO: 1 . THE ASSESSEE - SMT. KOKKU SUREKHA, D.NO. 54 - 18 - 35/B, SUNNAPU BATTILA CENTER, RADIO COLONY, 2 ND LANE, USHA SRI BUILDING, VIJAYAWADA. 2 . THE REVENUE - ITO, WARD - 1(1), VIJAYAWADA. 3 . THE CIT, VIJAYAWADA . 4 . THE CIT(A) , VIJAYAWADA . 5 . THE D.R . 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR , I.T.A.T., VISAKHAPATNAM