The ITO, Anakapalle V. Sri Kota Subba Reddy, Anakapalle

ITA 197/VIZ/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8700 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 10-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BANGARI
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 197 / VIZ /201 7 (ASST. YEAR : 20 12 - 13 ) ITO, WARD - 1, ANAKAPALLE. V S . KOTA SUBBA REDDY, D.NO. 3 - 65, KONDA KOPPAKA , BATLAPUDI POST, ANAKAPALLE. PAN NO. APHPK 6138 B (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY : SHRI M.R. BANGARI SR. DR DATE OF HEARING : 27 / 02 /201 8 . DATE OF PRONOUNCEMENT : / 03 /201 8 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER TH IS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 2 , VISAKHAPATNAM , DATED 02 /0 1 /201 7 FOR THE ASSESSMENT YEARS 20 12 - 13 . 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE CONTRACT BUSINESS AND ALSO HAVING PROFESSIONAL INCOME. THE ASSESSEE HAS FILED HIS RETURN OF INCOME BY ADMITTING TOTAL INCOME OF RS. 10,58,900/ - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. THE ASSESSING OFFICER WAS 2 ITA NO. 197/VIZ/2017 ( KOTA SUBBA REDDY ) ISSUED NOTICE UNDER SECTION 143(2) /142(1) ON VARIOUS OCCASIONS, BUT ASSESSEE DID NOT RESPOND TO THE NOTICE ISSUED. ACCORDINGLY, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 144 OF THE ACT BY MAKING THE FOLLOWING ADDITIONS: - 1 ) CAPITAL INCREASE RS. 12,29,628/ - 2) SECURED LOANS RS. 19,56,283/ - 3) ESTIMATION OF INCOME FROM CONTRACTS RS. 2,25,430/ - 4) ESTIMATION OF PROFESSIONAL INCOME RS. 26,93,405/ - THE ASSESSING OFFICER, THUS, DETERMINED THE TOTAL INCOME AT RS. 63,73,820/ - . SUBSEQUENTLY ASSESSING OFFICER HAS INITIATED PE NALTY PROCEEDINGS AND ISSUED SHOW - CAUSE NOTICE AS TO WHY PENALTY UNDER SECTION 271(1)(C) SHOULD NOT BE LEVIED. IN RESPONSE TO THE NOTICE , ASSESSEE HAS CONTENDED DURING THE PENALTY PROCEEDINGS THAT ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT WITHOUT GIVING SUFFICIENT OPPORTUNITY AND MADE THE IMPUG N ED ADDITIONS ON ESTIMATE BASIS . THE ASSESSEE FURTHER CONTENDED THAT THE IMPUGNED PENALTY WAS LEVIED ON THE ADDITIONS MADE ON AD HOC AND ESTIMATE BASIS A ND THAT THERE IS NO ELEMENT OF CONCEALMENT OF INCOME AND , HENCE , REQUESTED TO DROP THE PENALTY PROCEEDINGS . THE ASSESSING OFFICER WAS NOT CONVINCED WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND LEVIED THE PENALTY OF RS. 15,94,480/ - UNDER SECTION 271(1)(C) OF THE ACT. 3 ITA NO. 197/VIZ/2017 ( KOTA SUBBA REDDY ) 3 . ON APPEAL BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT A SHOW - CAUSE NOTICE WAS ISSUED ON 14/09/2015 AND WITHOUT GIVING SUFFICIENT OPPORTUNITY, PENALTY WAS LEVIED AND PRAYED THAT SAME MAY BE DELETED. THE LD. CIT(A) BY CONSIDERING T HE SUBMISSIONS MADE BY THE ASSESSEE AND ALSO THE ADDITIONS MADE BY THE ASSESSING OFFICER, DELETED THE PENALTY BY OBSERVING AS UNDER: - 6. I FIND THAT THE ASSESSMENT WAS COMPLETED' EXPARTE ON THE BASIS OF SOME AD HOC ESTIMATE WITHOUT REFERENCE TO ANY MATERIAL EVIDENCE OR COMPARABLE MATERIAL INFORMATION. IT IS SEEN THAT THE ASSESSEE DID NOT FILE APPEAL AGAINST THE ASSESSMENT. SUBSEQUENTLY, THE AO PROCEEDED WITH THE PENALTY PROCEEDINGS, AND IT IS NOTED THAT ONLY A SHOW CAUSE NOTICE W AS ISSUED ON 14.09.20 .15 FIXING THE HEARING ON 22.09.2015 AND SUBSEQUENTLY THE IMPUGNED' PENALTY WAS LEVIED ON 24.09.2015. I FIND THAT THE ASSESSEE WAS NOT AFFORDED ADEQUATE OPPORTUNI TY TO PROVE ITS CASE, NOR THE AO GATHERED EVIDENCE TO PROVE CONCEALMENT. THOUGH NON - APPEA RANCE, AND NON - COMPLIANCE IN FURNISHING INFORMATION COULD BE A VALID BASIS TO ESTIMATE INCOME AND MAKE ADDITIONS IN THE ASSESSMENT, THE SAME ALONE COULD NOT BE THE BASIS TO LEVY PENALTY UNLESS THE ASSESSEE FAILED TO' PROVE ITS CASE DURING THE PENALTY PROCE EDINGS ALSO. I FIND THAT THE AO DID NOT OFFER ADEQUATE OPPORTUNITY TO THE ASSESSEE AND ALSO THERE IS NO MATERIAL ON RECORD TO INDICATE THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED PARTICULARS OF INCOME. IN THESE FACTUAL SCE NARIO, I AM OF THE VIEW THAT THIS IS NOT A FIT CASE FOR LEVY OF PENALTY U/S.271(1)(C). AC CORDINGLY THE AO IS DIRECTED TO DELETE THE IMPUGNED PENALTY. 4 . ON BEING AGGRIEVED, REVENUE CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL. 5. LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER PASSED BY THE ASSESSING OFFICER. 6 . WE HAVE HEARD THE LD. DR AND ALSO GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 4 ITA NO. 197/VIZ/2017 ( KOTA SUBBA REDDY ) 7 . IN THIS CASE, ASSESSING OFFICER HAS INITIATED PENALTY PROCEEDINGS ON THE BASIS OF ADDITIONS MADE BY HIM DURING THE ASSESSMENT PROCEEDINGS , IN RESPECT OF CAPITAL INCREASE, SECURED LOANS, ESTIMATION OF INCOME FROM CONTRACTS AND ESTIMATION OF PROFESSIONAL INC OME. OUT OF THESE FOUR ADDITIONS, TWO OF THEM ARE ON ESTIMATE BASIS. THE ASSESSING OFFICER HAS ISSUED A NOTICE FIXING THE CASE FOR HEARING ON 22/09/2014. ON 2 2/09/2014 , ASSESSEE FILED A LETTER AND REQUESTED THE ASSESSING OFFICER TO GRANT SOME MORE TIME TO EXPLAIN HIS CASE. THE ASSESSING OFFICER WITHOUT GIVING PROPER OPPORTUNITY TO SUBSTANTIATE THE ASSESSEES CASE, PENALTY IS LEVIED ON 24/09/2015. THE LD. CIT(A) GAVE A CATEGORICAL FINDING, IN HIS ORDER, THAT ASSESSING OFFICER DID NOT OFFER ADEQUATE OPPO RTUNITY TO THE ASSESSEE AND ALSO THERE IS NO MATERIAL ON RECORD TO INDICATE THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME . WE HAVE ALSO GONE THROUGH THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER AND FIND THAT NOWHERE ASSESSING OFFICER HAS STATED THAT ASSESSEE H A D FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED THE INCOME . THUS, IT IS CLEAR THAT ASSESSING O FFICER IS NOT CLEAR IN IMPOSING PENALTY , ON WHICH BASIS PENALTY WAS LEVIED . PENALTY CANNOT BE LEVIED SIMPLY BECAUSE OF NON - FILING OF APPEAL BY THE ASSESSEE AGAINST THE ASSESSMENT ORDER , IS NOT AN AUTOMATIC. 5 ITA NO. 197/VIZ/2017 ( KOTA SUBBA REDDY ) PENALTY PROCEEDINGS ARE DIFFERENT FROM THE ASSESSMENT PROCEEDINGS . THE ASSESSING OFFICER WHILE IMPOSING PENALTY UNDER SECTION 271(1)(C), HE HAS TO ESTABLISH THAT THE ASSESSEE EITHER CONCEALED THE INCOME OR FILED INACCURATE PARTICULARS. IN THIS CASE, NO SUCH FINDING IS GIVEN . IN VIEW OF THE ABOVE, WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A). THUS, THIS APPEAL FILED BY THE REVENUE IS DISMISSED. 8 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON TH IS 0 7 T H DAY OF MARCH , 201 8 . S D / - S D / - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 0 7 T H MARCH , 201 8 . VR/ - COPY TO: 1. THE ASSESSEE - KOTA SUBBA REDDY, D.NO. 3 - 65, KONDA KOPPAKA, BATLAPUDI POST, ANAKAPALLE. 2. THE REVENUE ITO, WARD - 1, ANAKAPALLE. 3. THE CIT - 2, VISAKHAPATNAM. 4. THE CIT(A) - 2, VISAKHAPATNAM. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.