Sri Dhanekula Venkateswara Rao, Vijayawada V. The ITO, Vijayawada

ITA 276/VIZ/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6567 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 12-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M K SETHI
• Keywords: Revision of order; Income from undisclosed sources
• Section: 133A; 148; 263; 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 2 7 6 /VIZ/ 201 6 ( / ASSESSMENT YEAR: 20 06 - 07 ) SRI DHANEKULA VENKATESWARA RAO D.NO.6 - 67, DEVINENIVARI STREET NEAR POST OFFICE GOLLAPUDI, VIJAYAWADA (RURAL) [ PAN : A LQPB8657D ] THE INCOME TAX OFFICER WARD - 1 (2) VI JAYAWADA ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI C SUBRA H MANYAM, AR / RESPONDENT BY : SHRI M.K.SETHI , DR / DATE OF HEARING : 05 . 10 .2017 / DATE OF PRONOUNCEMENT : 27 . 10 .2017 / O R D E R P ER BENCH : 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE PR.COMMISSIONER OF INCOME TAX (PR.CIT) , VIJAYAWADA VIDE ORDER DATED 10.03.2016 FOR THE ASSESSMENT YEAR 2006 - 07. 2 ITA NO S . 27 6 /VIZ/2017 SRI DHANEKULA VENKATESWARA RAO , V IJAYAWADA 2. ALL THE GROUNDS OF APPEAL ARE RELATED TO THE ORDER PASSED U/S 263 OF THE I.T.ACT. SURVEY U/S 133A WAS CONDUCTED IN THE CASE OF M/S V ASUDHA SHELTERS, LIC COLONY, GOLLAPUDI, VIJAYAWADA ON 23.02.2010 AND DURING THE COURSE OF SURVEY, THE ASSESSING OFFICER FOUND CERTAIN EVIDENCES WITH THE ASSESSEE WITH REGARD TO THE AGREEMENT FOR CONSTRUCTION OF APARTMENTS . CONSEQUENTLY , THE ASSESSING OFFIC ER HAD REOPENED THE ASSESSMENT AND ISSUED NOTICE U/S 148 ON 15.06.2012 AND TAKEN UP THE CASE FOR SCRUTINY. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT THERE WAS OPENING CASH BALANCE OF RS. 8,43,000/ - FOR WHICH THE ASSESSEE COULD NOT EXPLAIN WITH PROPER EVIDENCES , HENCE , THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT OBSERVED THAT THE ASSESSEE DID NOT PROVE THE SOURCES FOR OPENING CAPITAL OF RS.8,43,000/ - AND THE CLAIM DESERVES TO BE REJECTED. HOWEVER, WHILE COMPLETING THE ASS ESSMENT, THE ASSESSING OFFICER DID NOT MAKE THE ADDITION RELATING TO THE OPENING CASH BALANCE WHICH WAS NOT PROVED BY THE ASSESSEE. THEREFORE THE PR.CIT HAS TAKEN UP THE CASE FOR REVISION U/S 263 AND SET ASIDE THE ASSESSMENT ORDER AND DIRECTED THE ASSESSI NG OFFICER TO EXAMINE THE SOURCES FOR OPENING BALANCE AND ALLOW THE CLAIM OF THE ASSESSEE IF IT IS IN ACCORDANCE WITH LAW BY AN ORDER U/S 263 DATED 10.03.2016. THE ASSESSEE FILED THE APPEAL AGAINST THE ORDER OF THE PR.CIT PASSED U/S 263. 3 ITA NO S . 27 6 /VIZ/2017 SRI DHANEKULA VENKATESWARA RAO , V IJAYAWADA 3. APPEARING FOR THE ASSESSEE, LD.AR ARGUED THAT THERE WAS OPENING CASH BALANCE OF RS.8,43,000/ - FOR WHICH THE ASSESSEE COULD NOT SUBSTANTIATE THE SOURCES AND THE ASSESSING OFFICER REJECTED THE SOURCES EXPLAINED BY THE ASSESSEE AS NOT PROVED. THEREFORE THE ASSESSING OFFICER SHOULD HAVE MADE THE ADDITION IN THE ASSESSMENT ORDE R. HAVING NOT MADE THE ADDITION SINCE IT IS A MISTAKE APPARENT FROM THE RECORD, THE ASSESSING OFFICER SHOULD HAVE RESORTED FOR ACTION U/S 154 OF I.T.ACT. INSTEAD , THE PR.CIT HAS TAKEN UP THE CASE FOR REVISION U/S 263 WHICH IS NOT PERMISSIBLE AS PER LAW. LD.AR RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. RALSON INDUSTRIES LTD. [288 ITR 0322], WHEREIN THE HONBLE APEX COURT HELD THAT THE ORDER OF RECTIFICATION IS TO BE PASSED , WHEN THERE IS AN ERROR APPARENT FROM RECORD AND I T DOE S NOT CONFER A POWER OF REVIEW. T HE HONBLE APEX COURT FURTHER HELD THAT AN ORDER UNDER REVISIONAL JURISDICTION CAN BE PASSED IF IT IS FOUND THAT THE ORDER OF ASSESSMENT IS PREJUDICIAL TO THE REVENUE WHEN DIFFERENT JURISDICTIONS ARE CONFERRED UPON DIFFERE NT AUTHORITIES TO BE EXERCISED ON DIFFERENT CONDITIONS, BOTH MAY NOT BE HELD TO BE OVERLAPPING WITH EACH OTHER. THEREFORE REVISIONAL AUTHORITY IS NOT DENUDED OF ITS REVISIONAL JURISDICTION UNDER SECTION 263 MERELY BECAUSE AN ORDER OF ASSESSMENT HAS UNDERG ONE RECTIFICATION AT THE HANDS OF THE ASSESSING OFFICER. DOCTRINE OF MERGER HAS NO APPLICATION IN SUCH A CASE. HOWEVER, IF A 4 ITA NO S . 27 6 /VIZ/2017 SRI DHANEKULA VENKATESWARA RAO , V IJAYAWADA PROCEEDING FOR RECTIFICATION WAS INITIATED, THE PARTIES CAN BRING THE SAME TO THE NOTICE OF THE CIT SO AS TO ENABLE HIM TO TAKE IN TO CONSIDERATION THE SUBSEQUENT EVENTS ALSO. 4. ON THE OTHER HAND, LD.DR ARGUED THAT PLAIN READING OF THE ASSESSMENT ORDER CLEARLY INDICATE THAT THERE IS OPENING CASH BALANCE OF RS.8,43,000/ - FOR WHICH THE ASSESSEE EXPLAINED THE SOURCES OF AGRICULTURAL INCOME AS WELL AS THE INCOME FROM SALE OF MILK. THOUGH THE ASSESSING OFFICER HAS GIVEN A FINDING THAT THE SOURCES FOR OPENING BALANCE IS NOT PROVED, THE ASSESSING OFFICER HAS NOT QUANTIFIED THE INCOME REQUIRED TO BE ADDED. THEREFORE, THERE IS A CLEAR CASE OF ERROR COMMITTED BY THE ASSESSING OFFICER BY NOT MAKING THE ADDITION WHICH IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THE ABSENCE OF QUANTIFICATION OF INCO ME, IT CANNOT BE HELD THAT IT WAS A MISTAKE APPARENT FROM RECORD WHICH CAN BE RECTIFIED U/ S 154. THEREFORE, LD.DR ARGUED THAT THE CASE LAW ON HAND OF HONBLE APEX COURT IS CLEARLY DISTINGUISHABLE AND THE ASSESSEES CASE IS FIT FIR TAKING UP FOR REVISION U/S 263 AND ARGUED THAT THE ORDER OF THE CIT REQUIRED TO BE UPHELD. 5 ITA NO S . 27 6 /VIZ/2017 SRI DHANEKULA VENKATESWARA RAO , V IJAYAWADA 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS EXAMINED THE ISSUE WITH REGARD TO THE OPENING CASH BALANCE AND HELD THAT THE ASSESSEE HAS NOT PROVED THE SOURCES FOR OPENING CASH BALANCE AND THE CL AIM REQUIRED TO BE REJECTED. THE ASSESSEE HAS EXPLAINED THE SOURCES FOR OPENING BALANCE AS INCOME OF THE EARLIER YEARS OUT OF AGRICULTURAL INCOME AND SALE OF MILK. THOUGH THE ASSESSING OFFICER STATED THAT YEARLY EXPENDITURE WOULD BE SUFFICIENT TO MEET TH E FAMILY EXPENDITURE, THE ASSESSING OFFICER HAS NOT QUANTIFIED THE TOTAL INCOME OF THE ASSESSEE, YEARLY EXPENDITURE , SAVINGS AND THE QUANTUM OF SURPLUS AVAILABLE TO QUANTIFY THE UNACCOUNTED INCOME UNDER THE HEAD OPENING CASH BALANCE. THE ASSESSING OFFICE R DID NOT QUANTIFY THE INCOME AND THE ADDITION IN THE ASSESSMENT ORDER THOUGH HE HAS DISCUSSED THE ISSUE . THEREFORE, WE AGREE WITH THE LD.CIT THAT THE ASSESSMENT IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND LD.CIT HAS RIGHTLY TAKEN UP THE CASE FOR REVISION AND THE SAME IS UPHELD. IN THE RESULT APPEAL OF THE ASSESSEE IS DISMISSED. 6 ITA NO S . 27 6 /VIZ/2017 SRI DHANEKULA VENKATESWARA RAO , V IJAYAWADA T HE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 27 TH OCT 20 17 . SD/ - SD/ - ( . . ) ( . ) ( D.S. SUNDER SINGH ) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER /VISAKHAPATNAM /DATED : 27 . 10 .2017 L. RAMA, SPS / COPY OF THE ORDER FORWARDED TO: - 1. / THE APPELLANT S - SRI DHANEKULA VENKATESWARA RAO, D.NO.6 - 67, DEVINENIVARI STREET, NEAR PO ST OFFICE, GOLLAPUDI, VIJAYAWADA (RURAL) 2 . / THE RESPONDENT THE INCOME TAX OFFICER , WARD - 1 (2) , VI JAYAWADA 3 . THE PR. COMMISSIONER OF INCOME TAX, VI JAYAWADA 4 . , , / DR, ITAT, VISAKHAPATNAM 5 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM