GOPU NEELIMA, Nndigam V. INCOME TAX OFFICER, WARD-1(2), Vijayawada

ITA 173/VIZ/2022

AI Insights

Gopu Neelima, the appellant, contested the penalty and the assessment of her income for the assessment year 2017-18. Initially, she filed her return under Section 44AD of the Income Tax Act, declaring a turnover of Rs. 58,22,000 and an income of Rs. 3,76,650. However, during scrutiny, it was found that her actual VAT turnover was Rs. 1,73,88,702, leading to a revised income assessment and a penalty under Section 270A for misreporting. The Commissioner of Income Tax (Appeals) upheld the Assessing Officer's decision, which was later challenged at the Tribunal level. The Tribunal dismissed her appeal, agreeing with the assessment and penalty.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 113026 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 20-02-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 08-09-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Presumptive income
• Section: 44AD; 142(1); 143(2)

Judgement Text

1 आयकर अपीलȣयअͬधकरण, ͪवशाखापटणम पीठ, ͪवशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM Įी दुåवूǽ आर एल रेɬडी, ÛयाǓयक सदèय एवं Įी एस बालाकृçणन, लेखा सदèय के सम¢ BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER & SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER आयकर अपील सं./ I.T.A. No.173/Viz/2022 (Ǔनधा[रण वष[ / Assessment Year :2017-18) Gopu Neelima, Nandigama. PAN: AUFPG 3781 R Vs. Income Tax Officer, Ward-1(2), Vijayawada. (अपीलाथȸ/ Appellant) (Ĥ×यथȸ/ Respondent) अपीलाथȸ कȧ ओर से/ Appellant by : Sri G.V.N. Hari, Advocate Ĥ×याथȸ कȧ ओर से / Respondent by : Sri ON Hari Prasada Rao, Sr. AR सुनवाई कȧ तारȣख / Date of Hearing : 21/02/2023 घोषणा कȧ तारȣख/Date of Pronouncement : 06/03/2023 O R D E R PER S. BALAKRISHNAN, Accountant Member : This appeal is filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi vide DIN & Order No. ITBA/NFAC/S/250/2022- 23/1043829396(1), dated 13/7/2022 arising out of the order passed U/s. 270A of the Income Tax Act, 1961 [the Act] for the AY 2017-18. 2 2. Briefly stated the facts are that the assessee is an individual filed her return of income on 7/11/2017 admitting a total income of Rs. 3,76,650/- for the AY 2017-18. Subsequently, the case was selected for scrutiny under CASS for the issue of “cash deposits during the year”. 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 3 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.” 4 4. At the outset, the Ld. AR submitted before us the same argument as it is a mistake done by the assessee’s Accountant by wrongly declaring the turnover at Rs. 58,22,000/- while admitting the income U/s. 44AD of the Act. However, the Ld. AR submitted before us the Profit & Loss Account showing admitted profit as disclosed in the return of income. 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 5 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. 5. We have heard the rival contentions and perused the material available on record and the orders of the Authorities below. Admittedly, there is a suppression of turnover by the assessee while filing her return of income by declaring the income of Rs. 3,76,650/- U/s. 44AD of the Act. Section 44AD is a presumptive taxation where 8% of the turnover is taxed as income. It is not acceptable by us that the assessee’s Accountant has mis-reported the turnover by reverse working. Further, we are also unable to understand when the profits are declared under presumptive basis, why the Profit & Loss Account was prepared showing the same profit as filed under the return of income. Further, the assessee has also not disputed the VAT turnover and the estimation of income on the VAT turnover by the Ld. AO. In the light of the above circumstances, the Ld. CIT(A)-NFAC has rightly determined that the assessee has mis- reported the turnover attracting the penal provisions u/s. 270A of the Act and hence confirmed the penalty of Rs. 4,44,130/- u/s. 270A of the 6 Act levied by the Ld. AO. We therefore find no infirmity in the order of the Ld. CIT(A)-NFAC and hence no interference is required. Accordingly, the grounds raised by the assessee in this regard are dismissed. 6. In the result, appeal filed by the assessee is dismissed. Pronounced in the open Court on the 06 th March, 2023. Sd/- Sd/- (दुåवूǽ आर.एल रेɬडी) (एस बालाकृçणन) (DUVVURU RL REDDY) (S.BALAKRISHNAN) ÛयाǓयकसदèय/JUDICIAL MEMBER लेखा सदèय/ACCOUNTANT MEMBER Dated : 06.03.2023 OKK - SPS आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy of the order forwarded to:- 1. Ǔनधा[ǐरती/ The Assessee – Gopu Neelima, D.No.3-43, Opp. CI Office, Raitupeta, Nandigama, Krishna District, Andhra Pradesh. 2. राजèव/The Revenue – Income Tax Officer, Ward-1(2), CR Bu8ilding, 1 St Floor Annex, MG Road, Vijayawada. 3. The Principal Commissioner of Income Tax, 4. आयकर आयुÈत (अपील)/ The Commissioner of Income Tax 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, ͪवशाखापटणम/ DR, ITAT, Visakhapatnam 6. गाड[ फ़ाईल / Guard file आदेशानुसार / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam