Mahesh Sharma Dorbala , Medak V. Income Tax Officer, Ward-1, Siddipet

ITA 1319/Hyd/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4010 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2014-2015
• Appeal Filed On: 23-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S RAMA RAO
• Keywords: Set aside
• Section: 271(1)(c); 143(3)

Judgement Text

ITA NO 1319 OF 2019 MAHESH SHARMA DORBALA MEDAK. PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B SMC BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO.1319/HYD/2019 ASSESSMENT YEAR: 2014-15 SHRI MAHESH SHARMA DORBALA, MEDAK PAN:AIHPD8150H VS. INCOME TAX OFFICER WARD 1 SIDDIPET (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI S. RAMA RAO REVENUE BY : SRI MATTA PADMA, DR DATE OF HEARING: 04/11/2019 DATE OF PRONOUNCEMENT: 11/11/2019 ORDER THIS IS ASSESSEES APPEAL FOR THE A.Y 2014-15 AGAIN ST THE ORDER OF THE CIT (A)-7, HYDERABAD, DATED 18.6.2 019 CONFIRMING THE PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE A CT. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME -TAX (APPEALS) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER IN LEVYING PENALTY U/ S 271 (L)(C) OF THE LT ACT. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE CONSIDERED THE FACT THAT IN THE NOTIC E ISSUED U/S 271(1)(C) OF THE LT. ACT, THE INAPPROPRIATE POR TION IS NOT DELETED AND THAT, THEREFORE, THE ORDER OF PENALTY I S NOT LEGALLY VALID. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE SEEN THAT THERE IS NEITHER CONCEALMEN T OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND, THEREFORE, NO PENALTY IS LEVIABLE. ITA NO 1319 OF 2019 MAHESH SHARMA DORBALA MEDAK. PAGE 2 OF 4 5. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME O F HEARING. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL, CARRYING ON BUSINESS OF SALES OF MOBILE HANDSETS UNDER THE NAME AND STYLE OF HITECH MOBILES, E-FILED HIS RETURN OF INCOME FOR THE A.Y 2014-15 ON 23.09.2014 ADMITTING A TOTAL INCOME OF RS.4,99,110/-. DURING THE ASSESSMENT PRO CEEDINGS U/S 143(3) OF THE ACT, THE AO OBSERVED THAT IN THE ASSE SSEES BANK A/C, THERE ARE TOTAL DEPOSITS OF RS.12,32,64,037/- WHEREAS THE ASSESSEE HAS REPORTED TURNOVER OF ONLY RS.7,35,24,9 36/- LEAVING THE BALANCE OF RS.4,97,39,101/-. WHEN INQUIRED ABOU T THE DIFFERENCE, THE ASSESSEE ADMITTED THAT THE DEPOSITS MADE INTO THE BANK A/C ARE HIS TURNOVER FROM THE BUSINESS OF SALE OF RECHARGE CARDS AND EASY RECHARGE (MOBILE TO MOBILE TRANSFER) WHICH DO NOT HAVE ANY INCOME ELEMENT THERE. HE ALSO SUBMITTED TH AT HE EARNS ONLY 1% OF THE NET INCOME FROM THE TURNOVER OF RECH ARGE CARDS. IT WAS ALSO SUBMITTED THAT THERE ARE NO PHYSICAL BILLS FOR THE SAID TURNOVER AND THE PROOF IS ONLY THE BANK DEPOSITS. T HE AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND TREATED T HE SUM OF RS.4,97,39,101/- AS TURNOVER AND ESTIMATED THE INCO ME @ 2.5% OF THE SAME. THE ASSESSEE HAS ACCEPTED THE ASSESSMENT ORDER BY NOT FILING ANY APPEAL. THEREAFTER, THE AO INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT BY ISSUANCE OF A NOTICE DATED 30.01.2017. THE ASSESSEE DID NOT APPEAR NOR DID SHE FILE ANY EXPLANATION BEFORE THE AO. THEREFORE, THE AO IMPOSE D THE MINIMUM PENALTY U/S 271(1)(C) OF THE ACT. AGAINST T HE SAME, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) WHO CONFIRMED THE ORDER OF THE AO AND THE ASSESSEE IS IN SECOND APPEA L BEFORE US. 3. AS REGARDS THE GROUND OF APPEAL NO.3, AGAINST T HE VALIDITY OF THE NOTICE, WE FIND THAT COPY OF THE NO TICE IS FILED IN THE ITA NO 1319 OF 2019 MAHESH SHARMA DORBALA MEDAK. PAGE 3 OF 4 PAPER BOOK FILED BY THE ASSESSEE AND IT IS SEEN THA T THE AO HAS NOT STRUCK OF THE IRRELEVANT PARAS FROM THE PROFORM A NOTICE AND IT IS NOT KNOWN AS TO WHETHER THE PENALTY IS INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR FOR CONCEALMENT OF INCOME OR FOR BOTH. THEREFORE, FOLLOWING THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (2013 ) 359 ITR 565 (KAR.) WHICH HAS BEEN CONFIRMED BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. SSA'S EMERALD MEADOWS - (2016) 73 TAXMANN.COM 248 (SC), I HOLD THAT THE NOTICE IS BAD IN LAW AND THEREFORE, THE ENTIRE PENALTY HAS TO BE SET ASIDE. 4. EVEN OTHERWISE ON MERITS ALSO, I FIND THAT THE A SSESSEE THOUGH HAS NOT DECLARED THE DEPOSITS INTO HIS BANK A/C AS HIS TURNOVER FROM THE SALE OF RE-CHARGE CARDS, BUT THE RELEVANT MATERIAL WAS AVAILABLE ON RECORD I.E. BANK STATEMEN TS. THEREFORE, IT CANNOT BE A CASE OF CONCEALMENT OF INFORMATION O R FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN VIEW OF THE SA ME, I AM INCLINED TO DELETE THE PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE ACT AND CONFIRMED BY THE CIT (A). 5. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH NOVEMBER, 2019. SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 11 TH NOVEMBER, 2019. VINODAN/SPS ITA NO 1319 OF 2019 MAHESH SHARMA DORBALA MEDAK. PAGE 4 OF 4 COPY TO: 1 SHRI MAHESH SHARMA DORBALA, PROP: M/S. HITECH MOB ILES, H.NO.1-9-15/3 OLD BUS STAND, MEDAK 502110 2 ITO WARD -1 SIDDIPET 3 CIT (A)-7 HYDERABAD 4 PR. CIT 7 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER