Sri Sripalli Suresh, Visakhapatnam V. The ITO, Visakhapatnam

ITA 265/VIZ/2016

• Counselvise Citation: [2016] 130 COUNSELVISE.COM (IT) 9607 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 13-10-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 03-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T SATYANDHAM
• Keywords: Bonafide belief

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM SMC BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER ITA NO S . 265 & 266 / VIZ /201 6 (ASST. YEAR : 20 10 - 1 1 ) SHRI SARIPALLI SURESH , D.NO. 31 - 33 - 9, DABA G ARDENS, VISAKHAPATNAM . V . ITO, WARD - 1(2), VISAKHAPATNAM. PAN NO. BBGPS 2295 K (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE . DEPARTMENT BY : SHRI T. SATYANDHAM - DR DATE OF HEARING : 2 6 / 1 2 /201 6 . DATE OF PRONOUNCEMENT : 28 / 1 2 /201 6 . O R D E R THESE ARE THE APPEAL S FILED BY THE ASSESSEE AGAINST THE SEPARATE ORDER S OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 1 , VISAKHAPATNAM , EACH DATED 23 /03 /2016 FOR THE ASSESSMENT YEAR 2010 - 11 . 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL FILED HIS RETURN OF INCOME BY DECLARING TOTAL INCOME OF RS. 1,98,000/ - FROM SALE OF MOBILE RECHARGE COUPONS . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCR UTINY. DURING THE COURSE OF ASSE SSMENT PROCEEDINGS , THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO EXPLAIN THE CASH DEPOSITS AMOUNTING TO RS. 55,56,862/ - IN THE BANK ACCOUNT MAINTAINED WITH INDUS IND BANK . THE ASSESSEE EXPLAINED BEFORE THE ASSESSING OFFICER THAT THE SAID DEPOSITS RELATE TO TURNOVER OF SALE OF MOBILE RECHARGE 2 ITA NO S . 265 & 266 / VIZ /201 6 COUPONS FOR RS. 18,69,895/ - AND THE BALANCE AMOUNT OF RS.36,86,9 67/ - FROM MILK DISTRIBUTION BUSINESS . IN THE ASSESSMENT ORDER , THE ASSESSING OFFICER NOTED TH A T SINCE THE ASSESSEE HAD ADMITTED THE INCOME ONLY FROM MOBILE RECHARGE COUPONS, HE ESTIMATED THE INCOME FROM MILK BUSINESS AT 10% O N GROSS RECEIPTS OF RS. 3,68,696/ - . ACCORDINGLY , THE ASSESSMENT WAS COMPLETED . THEREAFTER, THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS UNDER SECTION 271 B OF THE ACT FOR VIOLATION OF SECTION 44AB. THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THAT HE HAS ONLY BEEN RECEIVING COMMISSION ON MOBILE RECHARGE COUPONS AS WELL AS ON MILK DISTRIBUTION . HE WAS UNDER THE BONAFIDE BELIEF THAT THE ACCOUNTS OF THE ASSESSEE ARE NOT REQUIRED TO BE AUDITED UNDER SECTION 44AB OF THE ACT. HOWEVER, THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION MADE BY THE ASSESSEE AND IMPOSED PENALTY UNDER SECTION 271B OF THE ACT. 3. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 4 . NONE APPEARED ON BEHALF OF THE ASSESSEE. LD. D.R. STRONGLY SUPPORTED THE ORDER S PASSED BY THE AUTHORITIES BELOW. 5 . I HAVE HEARD THE SUBMISSIONS OF LEARNED DEPARTMENTAL REPRESENTATIVE, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW . 6 . THE ASSESSEE DECLARED TOTAL INCOME OF RS. 1,98,000/ - FROM THE SALE OF MOBILE RECHARGE COUPONS . THE INCOME FROM MILK DISTRIBUTION AS 3 ITA NO S . 265 & 266 / VIZ /201 6 ESTIMATED BY THE ASSESSING OFFICER WAS AT RS. 3,68,696/ - . THE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT HIS ACCOUNTS ARE NOT REQUIRED TO BE AUDITED UNDER SECTION 44AB OF THE ACT . H OWEVER, THE ASSESSING OFFICER REJECTED THE EXPLANATION OF THE ASSESSEE AND IMPOSED PENALTY UNDER SECTION 271B, WHICH WAS CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS). WE FIND THAT NEITHER ASSESSING OFFICER NOR COMMISSIONER OF INCOME TAX (APPEALS) HAVE NOT RE CORDED ANY REASON FOR NOT BELIEVING THE EXPLANATION GIVEN BY THE ASSESSEE. FURTHER, NEITHER ASSESSING OFFICER NOR COMMISSIONER OF INCOME TAX (APPEALS) HAS RECORDED THAT THE EXPLANATION GIVEN BY THE ASSESSEE IS NOT BONAFIDE ONE. HENCE, I AM OF THE OPINION THAT IT IS NOT A FIT CASE TO IMPOSE PENALTY UNDER SECTION 271B OF THE ACT. 7 . SO FAR AS PENALTY UNDER SECTION 271(1)(C) IS CONCERNED, THE ASSESSING OFFICER INITIATED THE PENALTY ON THE GROUND THAT THE ASSESSEE H A S NOT DISCLOSED INCOME FROM DISTRIBUTION OF MILK BUSINESS. THEREFORE, THE ASSESSING OFFICER ESTIMATED THE INCOME OF THE ASSESSEE FROM MILK BUSINESS AT 10% OF GROSS RECEIPTS , AMOUNTING TO RS. 3,68,696/ - . SUBSEQUENTLY , THE ASSESSING OFFICER HAS INITIATED PENALTY PROCEEDIN GS UNDER SECTION 271(1)(C) OF THE ACT. IT WAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE ASSESSEE HAS NOT INTENTIONALLY CONCEALED THE INCOME. ONCE ASSESSING OFFICER IS PROPOSED TO ESTIMAT E THE INCOME , THE SAME IS ACCEPTED AND TAX PAID BY THE ASSESSEE , NO PENALTY WOULD BE LEVIABLE. HOWEVER, THE ASSESSING OFFICER HAS NOT CONSIDERED THE 4 ITA NO S . 265 & 266 / VIZ /201 6 SUBMISSIONS AND IMPOSED PENALTY UNDER SECTION 271(1)(C) OF THE ACT, WHICH WAS CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS). 8 . I HAVE HEARD THE S UBMISSIONS OF LEARNED DEPARTMENTAL REPRESENTATIVE, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW . 9 . IN THIS CASE, THE ASSESSEE IS INTO RECHARGE COUPON BUSINESS AND ALSO DISTRIBUTION OF MILK . THE ASSESSEE WAS OF THE OPINION THAT HE HAS ONLY DOING THE RECHARGE COUPON BUSINESS AND THE SAME IS DISCLOSED IN THE RETURN OF INCOME. SO FAR AS DISTRIBUTION OF MILK IS CONCERNED, THE ASSESSEE HAS NOT DISCLOSED THE SAME IN THE RETURN OF INCOME . WHEN IT WAS BROUGHT TO HIS NOTICE , HE IMMEDIATELY ACCEPTED THE PROPOSAL MADE BY THE ASSESSING OFFICER TO ESTIMATE THE INCOME ON MILK BUSINESS AND PAID TAXES . IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE , IN MY OPINION, IT IS NOT A FIT CASE TO LEVY PENALTY UNDER SEC TION 271(1)(C) OF THE ACT. THUS, PENALTY LEVIED BY THE ASSESSING OFFICER AND CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS) IS DELETED . 10 . IN THE RESULT, BOTH THE APPEAL S FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF DEC , 201 6 . SD/ - ( V. DURGA RAO ) JUDICIAL MEMBER DATED : 28 TH DECEMBER, 201 6 . VR/ - 5 ITA NO S . 265 & 266 / VIZ /201 6 COPY TO: 1 . THE ASSESSEE - SHRI SARIPALLI SURESH, D.NO. 31 - 33 - 9, DABA GARDENS, VISAKHAPATNAM. 2 . THE REVENUE - ITO, WARD - 1(2), VISAKHAPATNAM. 3 . THE PR. CIT - 1, VISAKHAPATNAM. 4 . THE CIT(A) - 1, VISAKHAPATNAM . 5 . THE D.R . 6 . GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY, I.T.A.T., VISAKHAPATNAM