Y. Indrasena Reddy, Warangal, Hyderabad V. ITO, Ward-3, Warangal, Warangal

ITA 1007/HYD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6208 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 13-07-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Period of limitation; Revised return; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 271(1)(c); 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 133A; 251; 139(4); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1007/HYD/2016 ASSESSMENT YEAR: 2009-10 Y. INDRASENA REDDY, WARANGAL PAN AACPY 8591 L VS. INCOME-TAX OFFICEER, WARD 3, WARANGAL. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SAMUEL NAGADESI REVENUE BY : SHRI A. SITARAMA RAO DATE OF HEARING : 17-01-2017 DATE OF PRONOUNCEMENT : 10 -02-2017 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A) - 3, HYDERABAD, DATED 06/05/2016 FOR AY 2 009-10. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS A DOCTOR RUNNING NURSING HOME UNDER THE NAME AND STYLE, M/S LAXMI NURSING HOME AT MAHABUBABAD, WARANGAL. THERE WAS A SURVEY U /S 133A ON 17/11/2009. IN-PATIENT, OUT-PATIENT, ULTRASOUND REG ISTERS AND OP SLIPS, BOOKS WERE FOUND IN M/S LAXMI NURSING HOME. ON VERIFICATION, IT WAS FOUND THAT BOOKS WERE NOT MAINTAINED PROPERL Y AND CERTAIN IN- PATIENT AND OUT-PATIENT RECEIPTS WERE NOT ACCOUNTED FOR. THE TOTAL RECEIPTS RECEIVED IN FY 2008-09 WERE RS. 17,00,000/ - AS UNDER: FINANCIAL YEAR 2008-09: 1. IN-PATIENTS RECEIPTS RS. 9,00,000/- 2. OUT-PATIENTS RECEIPTS RS. 4,00,000/- 3. ULTRASOUND RECEIPTS RS. 2,00,000/- 4. PATHOLOGY RS. 1,00,000/- 2 ITA NO. 1007/H/16 Y. INDRASENA REDDY, WARANGAL 5. MEDICAL SHOP RS. 1,00,000/- TOTAL RS. 17,00,000 ON FURTHER ENQUIRY, THE ASSESSEE ACCEPTED RS. 15,00 ,000/- IN HIS NAME FOR AY 2009-10 AND RS. 2,00,000/- IN THE NAME OF HIS WIFE SMT. ANILA, WHO WAS PROPRIETRIX OF MEDICAL SHOP AND PAT HOLOGY UNIT. 2.1 SUBSEQUENTLY ON 26/03/2010, THE ASSESSEE FILED RETURN OF INCOME OF RS. 15,95,462/- WHICH WAS ACCEPTED BY THE AO IN HIS SCRUTINY ASSESSMENT U/S 143(3) DATED 30/12/2011. 3. THEREAFTER, PENALTY PROCEEDINGS WERE INITIATED B Y THE AO U/S 271(1)(C) OF THE ACT ON THE GROUND OF CONCEALING OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME AND ACCORDINGLY NOTICE U/S 271(1)(C) ISSUED ON 22/05/2012. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE, VIDE HIS LETTER DATED 01/06/2012 STAT ED THAT IN THE SURVEY PROCEEDINGS CONDUCTED ON 17/11/2009, AS PER THE STATEMENT RECORDED BY THE DEPARTMENT, NO MATERIAL OTHER THAN THE REGULAR RECORDS MAINTAINED WERE TRACED. BUT THE ASSESSEE HA S DECLARED THE ADDITIONAL INCOME OF RS. 15,00,000/- TO HAVE PEACE WITH THE DEPARTMENT AND PAID THE TAXES IMMEDIATELY. 4. AT THIS STAGE, IT IS WORTH TO NOTE THAT THE SURV EY WAS CONDUCTED IN THE PREMISES OF ASSESSEE ON 17/11/2009. THE ASSE SSEE HAS FILED THE RETURN OF INCOME ON 26/03/2010 WITHIN A PERIOD OF LIMITATION U/S 139(4). THE SAME WAS ACCEPTED AND ASSESSMENT U/S 14 3(3) OF THE ACT WAS COMPLETED ON THE INCOME DECLARED BY THE ASSESSE E DURING THE SURVEY PROCEEDINGS. 5. AFTER REJECTING THE ASSESSEES EXPLANATION, THE AO OBSERVED THAT DURING THE COURSE OF SURVEY PROCEEDINGS, OP, I P & ULTRA SOUND REGISTERS AND OP SLIPS, BOOKS WERE FOUND IN THE BUS INESS PREMISES OF M/S LAXMI NURSING HOME AND ON VERIFICATION OF THE S AME, IT WAS FOUND THAT THE BOOKS WERE NOT MAINTAINED PROPERLY AND FUR THER IT WAS ALSO FOUND THAT CERTAIN IP AND OP RECEIPTS WERE NOT ACCO UNTED. THUS, ON 3 ITA NO. 1007/H/16 Y. INDRASENA REDDY, WARANGAL QUESTIONING THE SAME, THE ASSESSEE HAD VOLUNTARILY ADMITTED FOR THE DISCREPANCIES AND THEREBY OFFERED ADDITIONAL INCOME TOWARDS SUCH VARIATION WHICH IS TOTALING TO RS. 15,00,000/-. IN VIEW OF THE ABOVE OBSERVATIONS, THE AO HELD THAT IT IS AMPLY EVIDENT THAT THE ASSESSEE HAS NOT FULLY AND TRULY FURNISHED THE INFORMATION A ND IT IS CLEAR THAT THE ASSESSEE HAD CONCEALED THE INCOME AND FURNISHED INA CCURATE PARTICULARS OF INCOME. ACCORDINGLY, HE LEVIED MINI MUM PENALTY OF RS. 4,01,150/- U/S 271(1)(C) ON THE INCOME OF RS. 15,00 ,000/-, ON WHICH TAX SOUGHT TO BE EVADED. 6. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE C ARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) AND SUBMITTED TH AT THE ASSESSEE ADMITTED INCOME VOLUNTARILY AND PAID TAXES, THEREFO RE, NO PENALTY U/S 271(1)(C) CAN BE LEVIED. HE SUBMITTED THAT NO INCRI MINATING MATERIAL WAS FOUND TO SHOW THAT THE ASSESSEE HAS INCOME. HE RELIED ON THE DECISION OF ACIT VS. GS ARORA IN ITA NO. 1789/HYD/2 013, ORDER DATED 21/08/2015. 7. THE CIT(A) CONFIRMED THE PENALTY LEVIED BY THE A O BY HOLDING THAT THE INCOME DECLARED BY THE ASSESSEE SUBSEQUENT TO THE SURVEY CANNOT BE CONSIDERED AS A VOLUNTARY DISCLOSURE. HE RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F MAC DATA (P) LTD. VS. CIT, [2013] 358 ITR 573. 8. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFOR E US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RONEOUS IN LAW AND FACTS OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED COMMISSIONER (APPEALS) IS ERRED IN LAW AND FACTS OF THE CASE IN UPHOLDING THE ORDER OF THE ASSESSING OFFICER LEVYIN G PENALTY UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 . 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED COMMISSIONER (APPEALS) OUGHT TO HAVE HELD THAT THE ASSESSING OFFICER ADMITTED THE RETURNED INCOME OUGHT NOT TO H AVE ALLEGED 4 ITA NO. 1007/H/16 Y. INDRASENA REDDY, WARANGAL CONCEALMENT AS THE INCOME OFFERED IS AS ESTIMATED A ND DEMANDED BY SURVEY PARTY AND NOT BASED ON ANY INCRI MINATING MATERIAL FOUND DURING THE OPERATION UNDER SECTION 1 33A OF THE ACT,1961. 4. THE APPELLANT CRAVE LEAVE TO ADD TO, DELETE, MOD IFY, ALTER, AMEND, SUBSTITUTE ALL OR ANY OF THE ABOVE GROUNDS. 9. THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE AS SESSEE HAS FILED RETURN OF INCOME ON 26/03/2010 AS PER THE PRO VISIONS OF SECTION 139(4) I.E. RETURN FILED VOLUNTARILY, BUT, WITHIN O NE YEAR FROM THE DATE OF THE END OF AY. FURTHER, HE SUBMITTED THAT THERE WAS A SURVEY CONDUCTED ON 17/11/2009 IN THE PREMISES OF THE NURS ING HOME M/S LAXMI NURSING HOME AT MAHABUBABAD, WARANGAL, WHICH IS RUN BY THE ASSESSEE. IT IS SUBMITTED THAT DURING THE SURVEY A STATEMENT WAS RECORDED FROM ASSESSEE, WHICH IS PLACED ON RECORD I N THE FORM OF PAPER BOOK BY THE ASSESSEE. HE BROUGHT TO OUR NOTI CE QUESTION NO. 13 AS PER WHICH THE INCOME OF THE ASSESSEE WAS ESTI MATED BY THE DEPARTMENT FOR TWO AYS I.E. 2009-10 AND 2010-11 AT RS. 23.00 LAKHS. IT IS SUBMITTED THAT THE ASSESSEE HAS NOT ACCEPTED THE ESTIMATION MADE BY THE DEPARTMENT AND ACCEPTED A SUM OF RS. 15 LAKHS FOR THE CURRENT AY AND RS. 5 LAKHS FOR THE SUBSEQUENT AY 20 10-11. HE SUBMITTED THAT ASSESSEE HAS VOLUNTARILY ACCEPTED TH E ESTIMATED INCOME AND FILED THE RETURN OF INCOME ACCORDINGLY A ND PAID THE RELEVANT TAXES. HE VEHEMENTLY ARGUED THAT ASSESSEE HAS VOLUNTARILY SUBMITTED THE RETURN OF INCOME AND COMPLIED WITH TH E RULES AND, THEREFORE, PENALTY CANNOT BE LEVIED. ALTERNATIVELY, HE SUBMITTED THAT A STATEMENT WAS RECORDED U/S 133A CANNOT BE USED AGAI NST THE ASSESSEE, FOR WHICH HE RELIED ON THE FOLLOWING CASE LAWS: 1. CIT VS. KHADER KHAN SON, 300 ITR 157 (MAD.) 2. CIT VS. KHADER KHAN SON,352 ITR 480 (SC) 3. GODAVARI TOWNSHIP PVT. LTD. VS. CIT, 148 ITD 46 3 (VIZ.) 4. CIT VS. SURESH CHANDRA MITTAL, 251 ITR 9 (SC) 10. LD. DR, ON THE OTHER HAND, SUBMITTED THAT IT IS ESTABLISHED THAT THERE WAS A SUPPRESSION OF INCOME DURING THE SURVE Y OPERATION IN THE 5 ITA NO. 1007/H/16 Y. INDRASENA REDDY, WARANGAL PREMISES OF THE ASSESSEE. HE SUBMITTED THAT ASSESSE E HAS NO OPTION, BUT, TO ACCEPT CONCEALED INCOME AND FILED THE RETU RN OF INCOME SUBSEQUENTLY, THEREFORE, IT CANNOT BE CONSTRUED AS VOLUNTARY DISCLOSURE OF INCOME ON THE PART OF THE ASSESSEE. H E SUBMITTED THAT THE CASES REFERRED TO BY THE ASSESSEE ARE NOT APPLI CABLE TO THE FACTS OF THE CASE OF THE ASSESSEE AS THEY ARE DISTINGUISH ABLE ON FACTS. HE, HOWEVER, RELIED ON THE DECISION OF THE HONBLE SUPR EME COURT IN THE CASE OF MAC DATA (P) LTD. VS. CIT (SUPRA). 11. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL FACTS ON RECORD AS WELL AS THE DECISIONS CITED. IT IS AN ADMITTED FACT THAT THE INCOME DECLARED BY THE ASSESSEE ONLY AFTER SURVEY, THEREFORE, IT CANNOT BE CONSIDERED AS VOLUNTARY DISCLOSURE BY THE ASSESSEE. THE REVENUES CONTENTION IS THAT, IN CASE, THE SURVEY W OULD HAVE NOT BEEN CARRIED OUT AT THE PREMISES OF THE ASSESSEE, HE MIG HT HAVE NOT MADE THE VOLUNTARY DISCLOSURE OF RS. 15,00,000/-. HOWEV ER, WHEN THE ASSESSEE FILED RETURN OF INCOME OF RS. 15,95,462/- AFTER THE SURVEY PROCEEDINGS, THE AO ACCEPTED THE RETURN U/S 143(3) OF THE ACT. IN THIS CONNECTION, WE EXAMINE THE CASE LAW RELIED UPON BY THE LD. AR OF THE ASSESSEE AS UNDER: 11.1 IN THE CASE OF GODAVARI TOWNSHIP PVT. LTD. (S UPRA), THE COORDINATE BENCH OF ITAT, VIZAG OBSERVED AS UNDER: 16.4. THERE IS ONE MORE ASPECT TO THE ISSUE. UNLIK E IN A SEARCH CASE THERE IS NO PRESUMPTION THAT THE AMOUNT UNEART HED DURING THE COURSE OF SURVEY WILL AUTOMATICALLY BE CONSIDER ED AS CONCEALED INCOME. NO PROVISION/EXPLANATION SIMILA R TO EXPLANATION-5 WAS PROVIDED IN THE SECTION TO COVER SURVEY CASES. SINCE, THE INCOME DETECTED/OFFERED IN SURVEY CANNOT BE DEEMED TO BE CONCEALED INCOME, TREATING THE SAME AS CON CEALED INCOME AS WAS DONE BY A.O. DOES NOT ARISE. A.O. HA S TO ESTABLISH THE NATURE OF INCOME AS CONCEALED INCOME BEFORE LEVY OF PENALTY. AS DISCUSSED EARLIER, NOTHING WAS DONE BY A.O. EXCEPT ACCEPTING THE REVISED INCOME RETURNED IN THE ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE ACT. 6 ITA NO. 1007/H/16 Y. INDRASENA REDDY, WARANGAL 11.2 IN THE CASE OF SURESH CHANDRA MITTAL (SUPRA), THE HONBLE SUPREME COURT HELD THAT THOUGH THE ASSESSEE SURREND ERED ADDITIONAL INCOME BY WAY OF REVISED RETURNS AFTER PERSISTENT Q UERIES BY AO ONCE THE REVISED RETURNS HAVE BEEN REGULARISED BY REVENU E THE EXPLANATION OF THE ASSESSEE THAT HE HAS DECLARED AD DITIONAL INCOME TO BUY PEACE AND TO COME OUT OF VEXED LITIGATION COULD BE TREATED AS BONA FIDE AND PENALTY UNDER S. 271(1)(C) WAS NOT LE VIABLE. 11.3 AS PER PROVISIONS OF SECTION 271(L)(C) OF THE INCOME-TAX ACT, PENALTY CAN BE IMPOSED IF THE ASSESSEE HAS CONCEALE D THE PARTICULARS OF INCOME OR FURNISHING THE INACCURATE PARTICULARS OF SUCH INCOME. IN THE CASE UNDER CONSIDERATION, THERE IS NO DISPUTE W ITH REGARD TO THE FACT THAT THE PARTICULARS OF INCOME ARE REFLECTED I N THE RETURN OF INCOME AND IT IS NOT THE CASE OF THE REVENUE THAT T HE RETURN OF INCOME FILED WAS INVALID, IT WAS ACCEPTED BY THE AO. EVEN THE ASSESSEE HAS ACCEPTED AND DISCLOSED THE METHOD OF EARNING SUCH I NCOME AND PAID THE TAX ACCORDINGLY. HENCE, IT CANNOT BE HELD THAT ASSESSEE HAD CONCEALED THE INCOME OR FILED INACCURATE PARTICULAR S BEFORE THE AO. THEREFORE, FOLLOWING THE RATIOS LAID DOWN IN THE AF ORESAID CASES, WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOW ED. PRONOUNCED IN THE OPEN COURT ON 10 TH FEBRUARY, 2017. SD/- SD/- (D. MANMOHAN) (S. RIFAUR RAHM AN) VICE PRESIDENT A CCOUNTANT MEMBER HYDERABAD, DATED: 10 TH FEBRUARY, 2017 KV 7 ITA NO. 1007/H/16 Y. INDRASENA REDDY, WARANGAL COPY TO:- 1) DR. Y. INDRASENA REDDY, C/O SAMUEL NAGADESI, C A, 408, SRI RAMAKRISHNA TOWERS, BESIDES IMAGE HOSPITA LS, AMEERPET, HYDERABAD 500 073. 2) ITO, WARD 3, HYD. 3) CIT(A) 3, HYDERABAD. 4) PR. CIT 3, HYD. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE