Income Tax Officer, Ward-2, Ongole V. Gonugunta Susheela , Kandukur

ITA 1639/Hyd/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1996 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-A
• Next Hearing Date: 13-08-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 07-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T MADHAN
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Reassessment proceedings; Set aside
• Section: 147; 148; 263; 40A(3); 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD SMC BENCH : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO. 163 9/HYD./201 8 ASSESSMENT YEAR: 200 9 - 10 ITO, WARD 2 VS. SMT. GONGUNT L A SUSHEELA ONGOLE D.NO.17 - 1 - 11/1, NEAR TOBACCO BOARD PAMUR ROAD KANDUKUR 523 105 PAN: AOYPG6547A (APPELLANT) (RESPONDENT) FOR A PPELLANT : SH. T.MADHAN, D.R. FOR RE SPONDENT : SH. K.A.SAI PRA SAD , A.R. DATE OF HEARING : 13 /08/19 DATE OF PRONOUNCEMENT : 05 /0 9 /19 O R D E R THIS IS REVENUE S APPEAL FOR A.Y. 200 9 - 10 AGAINST ORDER OF LD.CIT(A) - 1, GUNTUR DATED 15.6.2018. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL, DERIVE D INCOME FROM REAL ESTATE BUSINESS AND FILED H ER RETURN OF INCOME FOR THE A.Y. 200 9 - 10 ON 0 9.06.2009 DECLARING INCOME OF RS. 5,34,630/ - . THERE W AS A SURVEY ACTION U/S 133 A OF THE INCOME TAX ACT, 1961 (THE ACT FOR SHORT) ON 25. 0 3.2009 ON 5 PERSONS, INCLUDING THE ASSESSEE. MEANWHILE , THE ASSESSEES CASE WAS SELECTED FOR COMPULSORY SCRUTINY AND THE SCRUTINY ASSESSMENT U/S 143(3) WAS COMPLETED ON 06.12.2010 ACCEPTING RETURNED INCOME AT RS.5,34,630/ - . SUBSEQUENTLY , THE PR.CIT PASSED AN ORDER U/S 263 ITA NO. 1639/HYD./18 AY 2009 - 10 ITO, WARD 2, ONGOLE VS. SMT.GONUGUNT L A SUSHEELA 2 OF THE ACT ON 15.03.2013 DIRECTING THE AO TO MODIFY THE ASSESSMENT FOR VIOLATION OF PROVISIONS U/S 40A (3) AS CASH PAYMENT S AMOUNTING TO RS.16 ,00,000/ - W ERE MADE. CON SEQUENTLY , THE ASSESSMENT U/S 143(3) R.W.S. 263 OF THE ACT WAS COMPLETED ON 26.07.2013 MAKING AN ADDITION OF RS.16,00,000/ - AND FINAL ASSESSED INCOME WAS RS.21,34,630/ - . 2.1. SUBSEQUENTLY, IT WAS NOTICED BY THE AO THAT THE ASSESSEE HAS MADE PAYMENTS OF RS. 7, 11 ,540/ - IN VIOLATION OF PROVISION U/S 40A(3) OF THE ACT , AND THE ASSESSMENT WAS REOPENED U/S 147 OF THE A CT. DURING RE - ASSESSMENT PROCEEDINGS , THE AO NOTICED THAT ASSESSEE HAS MADE CA SH PAYMENTS EXCEEDING RS.20,000/ - TOTALLING TO RS. 7,11, 540/ - . HE, THEREFORE, OUGHT TO BRING IT TO TAX U/S 40A(3) OF THE ACT. MEANWHILE , THE ITAT HAD CANCELLED THE REVISION ORDER PASSED U/S 263 OF THE ACT. AO HAS TAKEN NOTE OF THE SAME AND OBSERVED TH AT THIS ADDITION OF RS.7,11,540/ - WAS NOT SUBJECT MATTER OF EARLIER ASSESSMENT PROCEEDINGS U/S 143(3) AND HELD THAT THIS ADDITION IS SUSTAINABLE BECAUSE IT WAS NOT TAKEN NOTE OF IN THE PROCEEDINGS U/S 263 OF THE ACT. THEREAFTER , ON VERIFICATION HE ALSO OBSERVED THAT TOTAL CASH PURCHASES WERE ONLY TO THE TUNE OF RS.4,61,540/ - . THEREFORE HE DISALLOWED ONLY RS.4,61,540/ - U/S 40A(3) OF THE ACT AND BROUGHT IT TO TAX. 3. AGGRIEVED , ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) CHALL ENGING THE VALIDITY OF PROCEEDINGS U/S 147 AND ALSO THE ADDITION MADE BY THE AO. THE CIT(A) OBSERVED THAT ORIGINALLY, THE ASSESSMENT WAS COMPLETED U/S 143(3) AND THE ASSESSMENT WAS REOPENED U/S 147 OF THE ACT BEYOND 04 YEARS FROM THE END OF THE RELEVANT A.Y. AND ALSO THAT THE AO HAS NOT RECORDED IN THE REASONS FOR REOPENING , THAT THERE IS ANY FAILURE ON THE PART OF THE ASSESSEE ITA NO. 1639/HYD./18 AY 2009 - 10 ITO, WARD 2, ONGOLE VS. SMT.GONUGUNT L A SUSHEELA 3 TO DISCLOSE MATERIAL FACTS FULLY AND TRULY . THEREFORE HE SET ASIDE THE REASSESSMENT PROCEEDINGS HOLDING IT TO BE INVALID. 4. AGGRIEVED , REVENUE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS. 1. THE LD.CIT(A) IS ERRED IN LAW AS WELL AS FACTS OF THE CASE. 2. THE LD.CIT(A) OUGHT TO HAVE CONSIDERED THE EXPANATION - 1 TO SEC.147 WHICH CLEARLY STATES THAT PRODUCTION BEFORE THE AO OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD WITH DUE DILIGENCE HAVE BEEN DISCOVER ED BY AO WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE FOREGOING PROVISO. 3. THE LD.CIT(A) FAILED TO CONSIDER THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF AMINS PATHOLOGY LABORATORY VS. PN PRASAD, JCIT REPORTED IN 25 2 ITR 673 WHILE DECIDING THE APPLICABILITY OF 1 ST PROVISO TO SEC.147 OF THE ACT IN THE PRESENT CASE. 4. THE LD.CIT(A) ERRED IN SEEKING RECORDED ALLEGATION OF THE AO THAT THE APPELLANT FAILED IN DISCLOSING MATERIAL FACTS FULLY AND TRULY, SINCE THE LAW HAS NOWHERE MADE IT MANDATORY TO RECORD SUCH ALLEGATION. 5. THE LD.CIT(A) ERRED IN NOT ADJUDICATING THE THIRD GROUND OF APPEAL TREATING THE SAME AS ACADEMICAL. 6. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 5. THE LD.DR SUPPORTED THE ASSESSMENT ORDER AND IN SUPPORT OF HIS ARGUMENTS, HE PLACED RELIANCE UPON THE HONBLE BOMBAY HIGH COURT DECISION , IN THE CASE OF AMINS PATHOLOGY LABORATORY VS. PN PRASAD, JCIT REPORTED IN 252 ITR 673 WHICH WAS ALSO CITED IN THE GROUNDS. 6. THE LD.COUNSEL FOR THE ASSESSEE , ON T HE OTHER HAND , SUPPORTED THE ORDER OF THE CIT(A) AND SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY RELYING ON THE FOLLOWING CASE LAW . I. TECUMSEH PRODUCTS INDIA P LTD. VS. ACIT REPORTED IN 361 ITR 429 (AP) II. CIT VS. ARVIND REMEDIES LTD. 378 ITR 547 (MAD.) III. ACIT VS. M/S TNS INDIA P LTD. ITAT HYD. IV. GLAND PHARMA LTD. VS. DCIT ITAT HYD. V. KUSHAL KUMAR KANKARI VS. DCIT ITAT HYD. VI. ASHOKA DISTILLERS & CHEMICALS P LTD. VS. DCIT ITA NO. 1639/HYD./18 AY 2009 - 10 ITO, WARD 2, ONGOLE VS. SMT.GONUGUNT L A SUSHEELA 4 VII. OHM STOCK BROKERS (P) LTD. VS. CIT 35 ITR 443 BOMBAY VIII. VIP INDUSTAN LTD. VS. IAC 187 ITR 639 BOM. 7 . HAVING REGARD TO RIVAL CONTENTIONS AND MATERIAL PLACED ON RECORD, I FIND THAT THE FIRST ASSESSMENT ORDER PASSED U/S 143(3) WAS REVISED U/S 263 BUT THE REVISION ORDER U/S 263 HAS BEEN SET ASIDE BY THE ITAT AND CONSEQUENTLY THE ASSESSMENT ORDER U/S 143(3) R.W.S. 263 HAS ALSO BEEN SET ASIDE. IT IS T HEREAFTER , THAT THE AO HAS NOTICED THAT THERE ARE FURTHER CASH PAYMENTS WHICH ARE TO BE DISALLOWED U/S 40A(3) . IT IS FOR THIS REASON THAT THE AO ISSUED NOTICES U/S 148 FOR REOPENING ASSESSMENT . I FIND THAT REOPENING IS BEYOND THE PERIOD OF 4 YEARS AND SINCE THE ASSESSMENT WAS COMPLETED U/S 143(3) , THE PROVISO TO S.147 WOULD APPLY . AS PER THE SAID PROVISO, THE AO , WHILE RECORDING REASONS FOR REOPENING , HAS TO RECORD THAT THERE IS FAILURE ON TH E PART OF ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT OF HIS INCOME , OTHERWISE THE REOPENING IS NOT VALID . 7.1 . THE RELIANCE OF LD.DR ON EXPLANATION 1 TO S.147 IS NOT SUSTAINABLE BECAUSE THE ISSUE BEFORE US IS NOT WHET HER AO IS SATISFIED WITH TH E BOOKS OF ACCOUNTS AND OTHER MATERIALS PRODUCED BEFORE HIM, BUT IT IS WHETHER THE AO HAS PROPERLY RECORDED THE REASONS FOR REOPENING AS PER THE PROVISIONS OF THE ACT. THEREFORE THE DECISION OF HONBLE BOMBAY HIGH COURT RELIED UPON BY LD.DR IS NOT APPLICABLE TO THE CASE ON HAND AND IN THE CASES RELIED UPON BY LD.COUNSEL FOR THE ASSESSEE , IT IS CLEARLY HELD THAT THE AO HAS TO RECORD THAT THE INCOME OF ASSESSEE ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE ON THE PART OF ASSESSEE HAS TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT OF INCOME , IF AO ITA NO. 1639/HYD./18 AY 2009 - 10 ITO, WARD 2, ONGOLE VS. SMT.GONUGUNT L A SUSHEELA 5 WANTS TO REOPEN THE ASSESSMENT BEYOND A PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT A.Y. 7.2. RESPECTFULLY FOLLOWI NG THE SAME, WE DISMISS REVENUES APPEAL. 8 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN OPEN COURT ON 05 TH SEPTEMBER , 2019. SD/ - (P MADHAVI DEVI) JUDICIAL MEMBER DATED: 05 TH SEPT, 2019. *GMV COPY FORWARDED TO: 1. ITO, WARD - 2, ONGOLE 2. SMT.GONUGUNT L A SUSHEELA, D.NO.17 - 1 - 11/1, NEAR TOBACCO BOARD, PAMU R ROAD, KANDUKUR 523 104 (AP) 3. CIT(A) - 1, GUNTUR 4. D.R. ITAT HYDERABAD 5. GUARD FILE // C O P Y // ITA NO. 1639/HYD./18 AY 2009 - 10 ITO, WARD 2, ONGOLE VS. SMT.GONUGUNT L A SUSHEELA 6 1. DRAFT DICTATED ON 13 /08/19 2. DRAFT PLACED BEFORE THE AUTHOR 16/08/19 22/08/19 27/8/19 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT APPROVED BY SECOND MEMBER 5. APPROVED DRAFT COMES TO SRPS 6. KEPT FOR PRONOUNCEMENT 05/09/19 7. FILE SENT TO BENCH CLERK