Laveti Chinasimhachalam, Rajahmundry V. THE ITO, WARD - 3, Rajahmundry

ITA 323/VIZ/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1172 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 09-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K RAVI
• Keywords: Unexplained investment; Gift; Business income
• Section: 143(3); 133A; 27

Judgement Text

ITA NOS.323,324&325/VIZAG/2013 L. CHINASIMHACHALAM & L. VENKATESWARA RAO, RAJAHMUN DRY 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NOS.323&324/VIZAG/2013 ( / ASSESSMENT YEARS: 2008-09) L AVETI CHINASIMHACHALAM RAJAHMUNDRY VS. ITO, WARD - 3, VISAKHAPATNAM [PAN: ACOPL9658F ] ( / APPELLANT) ( / RESPONDENT) ./I.T.A.NO.325/VIZAG/2013 ( / ASSESSMENT YEARS: 2008-09) LAVETI VENKATESWARA RAO RAJAHMUNDRY VS. ITO, WARD - 3, VISAKHAPATNAM [PAN: AAVPL 3759J ] ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI K. RAVI, DR / DATE OF HEARING : 06.04.2016 / DATE OF PRONOUNCEMENT : 29.04.2016 ITA NOS.323,324&325/VIZAG/2013 L. CHINASIMHACHALAM & L. VENKATESWARA RAO, RAJAHMUN DRY 2 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THESE APPEALS FILED BY THE DIFFERENT ASSESSEES AR E DIRECTED AGAINST THE SEPARATE, BUT IDENTICAL ORDERS OF CIT(A)-11, MU MBAI, CAMP OFFICE AT VISAKHAPATNAM, DATED 22.2.2013 AND 15.3.2013 AND PE RTAINS TO THE ASSESSMENT YEAR 2008-09. SINCE, THE FACTS ARE IDEN TICAL AND ISSUES ARE COMMON, THEY ARE CLUBBED, HEARD TOGETHER AND DISPOS ED OFF, BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.323/VIZAG/2013: 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF TRADING IN TEXTILES. A SURVEY OPERATION U/S 133A OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLE D AS 'THE ACT') WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE ON 9.1.2008. DURING THE COURSE OF SURVEY, IT WAS NOTICED THAT TH E ASSESSEE IS NOT DISCLOSING HIS TRUE SALE IN THE BOOKS OF ACCOUNTS. IT WAS FURTHER NOTICED THAT THE TOTAL SALES AS ON THE DATE OF SURVEY, IS A T ` 41,77,097/-, AS AGAINST THIS, HE HAD DISCLOSED LESS TURNOVER IN THE BOOKS OF ACCOUNTS. THEREFORE, THE ASSESSEE HAS BEEN ASKED TO EXPLAIN T HE REASONS FOR UNDER ADMISSION OF SALES AND ALSO ASKED TO FURNISH THE PA RTICULARS OF TOTAL SALES ITA NOS.323,324&325/VIZAG/2013 L. CHINASIMHACHALAM & L. VENKATESWARA RAO, RAJAHMUN DRY 3 FOR THE PERIOD FROM 10.1.2008 TO 31.3.2008. IN RES PONSE TO THE SAME, THE ASSESSEE VIDE LETTER DATED 11.11.2010 HAS CONFI RMED THAT THE TOTAL SALES FOR THE PERIOD FROM 1.4.2007 TO 9.1.2008 WAS AT ` 41,77,097/- AND FURTHER STATED THAT THE TOTAL SALES FOR THE PERIOD FROM 10.1.2008 TO 31.3.2008 WAS AT ` 3,93,301/-. THUS, THE TOTAL SALES MADE FOR THE ASSESSMENT YEAR COMES TO ` 45,70,398/-. THE ASSESSEE HAS FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 DE CLARING TOTAL SALES OF RS. 35,94,342/- WITH A NET LOSS OF RS. 5,53,643/ -. THE ASSESSMENT FOR THE YEAR HAS BEEN COMPLETED UNDER SECTION 143(3) AN D DETERMINED TOTAL INCOME OF RS. 4,34,364/-. 3. THE ASSESSING OFFICER ISSUED A SHOW CAUSE NOTICE U/S 271B OF THE ACT AND PROPOSED TO LEVY PENALTY FOR FAILURE TO GET ACCOUNTS AUDITED U/S 44AB OF THE ACT. THE A.O. ISSUED A SHOW CAUSE NOTIC E FOR THE REASON THAT THE ASSESSEE HAS FAILED TO GET HIS ACCOUNTS AU DITED U/S 44AB OF THE ACT, THOUGH HIS TURNOVER EXCEEDS ` 40 LAKHS. THEREFORE, ASKED TO EXPLAIN WHY PENALTY U/S 271B OF THE ACT SHALL NOT B E LEVIED FOR FAILURE TO GET ACCOUNTS AUDITED. IN RESPONSE TO THE SHOW CAUS E NOTICE, THE ASSESSEE FILED HIS WRITTEN SUBMISSION ON 5.5.2011 A ND STATED THAT AS PER THE BOOKS OF ACCOUNTS MAINTAINED BY HIM, THE TOTAL TURNOVER FOR THE PERIOD IS AT ` 35,94,342/-. SINCE, THE TURNOVER AS PER THE BOOKS OF ITA NOS.323,324&325/VIZAG/2013 L. CHINASIMHACHALAM & L. VENKATESWARA RAO, RAJAHMUN DRY 4 ACCOUNTS IS LESS THAN ` 40 LAKHS, THE REQUIREMENT OF AUDIT U/S 44AB OF THE ACT DOES NOT ARISE. THE A.O. AFTER CONSIDERING THE EXPLANATION FURNISHED BY THE ASSESSEE, LEVIED THE PENALTY U/S 2 71B OF THE ACT. THE A.O. FURTHER HELD THAT THE ASSESSEE TURNOVER FOR TH E YEAR UNDER CONSIDERATION IS ABOVE ` 40 LAKHS, WHICH WAS CONFIRMED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THEREF ORE, THE CONTENTION OF THE ASSESSEE THAT THE TURNOVER FOR THE YEAR UNDE R CONSIDERATION IS LESS THAN ` 40 LAKHS HAS NOT BEEN ACCEPTED. SINCE, THE ASSESS EE FAILED TO GET IS ACCOUNTS AUDITED U/S 44AB OF THE ACT, INVOKED TH E PROVISIONS OF SECTION 271B OF THE ACT AND LEVIED PENALTY OF ` 22,851/- BEING HALF PERCENTAGE OF THE GROSS TURNOVER. 4. AGGRIEVED BY THE PENALTY ORDER, THE ASSESSEE PRE FERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE A.O. THE ASSESSEE FURT HER SUBMITTED THAT AS PER THE BOOKS OF ACCOUNTS, THE TOTAL TURNOVER FO R THE PERIOD IS LESS THAN ` 40 LAKHS. THOUGH THERE IS AN UNREPORTED TURNOVER OF ` 9,76,076/- WHICH WAS NOT REPORTED IN THE BOOKS OF ACCOUNTS IN THE ABSENCE OF NECESSARY SALES BILLS. WHEN THE TURNOVER AS PER THE BOOKS OF ACCOUNTS IS LESS THAN ` 40 LAKHS, THE REQUIREMENT OF AUDIT U/S 44AB OF THE ACT DOES NOT ARISE. THE CIT(A) AFTER CONSIDERING THE EXPLAN ATIONS FURNISHED BY ITA NOS.323,324&325/VIZAG/2013 L. CHINASIMHACHALAM & L. VENKATESWARA RAO, RAJAHMUN DRY 5 THE ASSESSEE CONFIRMED THE PENALTY LEVIED BY THE A. O. THE CIT(A) HELD THAT ADMITTEDLY, THE TURNOVER OF THE ASSESSEE EXCEE DS ` 40 LAKHS AND HENCE, PROVISIONS OF SECTION 44AB OF THE ACT ATTRAC TED. SINCE THE ASSESSEE HAS NOT FILED THE AUDIT REPORT AS PER LAW, PENALTY U/S 44AB OF THE ACT ATTRACTED. AGGRIEVED BY THE CIT(A) ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 5. LD. A.R. SUBMITTED THAT THE TURNOVER FOR THE PER IOD UNDER CONSIDERATION AS PER THE BOOKS OF ACCOUNTS IS LESS THAN ` 40 LAKHS, HENCE, THE REQUIREMENT OF AUDIT U/S 44AB OF THE ACT DOES NOT ARISE. THE LD. A.R. FURTHER SUBMITTED THAT THOUGH THE ASSESSEE HAS ADMITTED UNACCOUNTED TURNOVER WHICH RESULTED IN TOTAL TURNOV ER EXCEEDS ` 40 LAKHS AS PER THE BOOKS OF ACCOUNTS, THE REQUIREMENT OF AUDIT IS ONLY WHEN THE TURNOVER EXCEEDS RS. 40 LACS AS PER BOOKS OF ACCOUNTS. SINCE, THE TURNOVER IS LESS THAN RS. 40 LACS AS PER BOOKS, AUDIT REPORT IS NOT OBTAINED FROM AN ACCOUNTANT. THEREFORE, THE A.O. WA S NOT CORRECT IN LEVYING PENALTY U/S 271B OF THE ACT. ON THE OTHER HAND, THE LD. D.R. STRONGLY SUPPORTED THE ORDER OF THE CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MA TERIALS AVAILABLE ON RECORD. THE A.O. LEVIED PENALTY U/S 2 71B OF THE ACT FOR FAILURE TO GET ACCOUNTS AUDITED U/S 44AB OF THE ACT . THE A.O. WAS OF THE ITA NOS.323,324&325/VIZAG/2013 L. CHINASIMHACHALAM & L. VENKATESWARA RAO, RAJAHMUN DRY 6 OPINION THAT THE TURNOVER OF THE ASSESSEE FOR THE Y EAR EXCEEDS ` 40 LAKHS. DESPITE THE TURNOVER EXCEEDS ` 40 LAKHS, THE ASSESSEE HAS NOT SUBMITTED HIS AUDIT REPORT AS REQUIRED BY THE LAW. THEREFORE, IT IS A FIT CASE FOR LEVY OF PENALTY U/S 271B OF THE ACT. IT IS THE CONTENTION OF THE ASSESSEE THAT THE TOTAL TURNOVER FOR THE PERIOD UND ER CONSIDERATION IS LESS THAN RS.40 LAKHS AS PER THE BOOKS OF ACCOUNTS. THOUGH HE ADMITTED UNACCOUNTED TURNOVER WHICH RESULTED INTO TOTAL TURN OVER EXCEEDS RS.40 LAKHS, THE SAME HAS NOT BEEN RECORDED IN THE BOOKS OF ACCOUNTS IN THE ABSENCE OF NECESSARY SALES BILLS AND HENCE THE QUES TION OF AUDIT U/S 44AB OF THE ACT DOES NOT ARISE. WE FIND FORCE IN THE ARGUMENTS OF THE ASSESSEE FOR THE REASON THAT THE REQUIREMENT OF AUD IT U/S 44AB OF THE ACT APPLIES, WHEN THE TURNOVER AS PER THE BOOKS OF ACCOUNTS EXCEEDS ` 40 LAKHS. IN THE PRESENT CASE ON HAND, ON PERUSAL OF THE FACTS AVAILABLE ON RECORD, WE FIND THAT THE TOTAL TURNOVER AS PER B OOKS OF ACCOUNTS OF THE ASSESSEE IS LESS THAN ` 40 LAKHS. THEREFORE THE A.O. WAS NOT CORRECT IN LEVYING THE PENALTY U/S 271B OF THE ACT. THE CIT (A) WITHOUT APPRECIATING THE FACTS PROPERLY, CONFIRMED THE PENA LTY LEVIED BY THE A.O. THEREFORE, WE SET ASIDE THE ORDER PASSED BY THE CIT (A) AND DIRECT THE A.O. TO DELETE THE PENALTY LEVIED U/S 271B OF THE A CT. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ITA NOS.323,324&325/VIZAG/2013 L. CHINASIMHACHALAM & L. VENKATESWARA RAO, RAJAHMUN DRY 7 ITA NO.324/VIZAG/2013: 8. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E SRI L. CHINASIMHACHALAM IS ENGAGED IN THE BUSINESS OF TRAD ING IN TEXTILES. THE ASSESSEE HAS FILED HIS RETURN OF INCOME FOR THE ASS ESSMENT YEAR 2008-09 ON 7.9.2009 DECLARING TOTAL INCOME OF ` 93,890/-. A SURVEY OPERATION U/S 133A OF THE ACT WAS CONDUCTED IN THE BUSINESS P REMISES OF THE ASSESSEE ON 9.1.2008. DURING THE COURSE OF SURVEY O PERATION, THE ASSESSEE HAS ADMITTED UNACCOUNTED TURNOVER OF ` 9,76,056/- AND ALSO ADMITTED ADDITIONAL INCOME OF 12.5% ON SUCH UNACCOU NTED TURNOVER. FURTHER, DURING THE COURSE OF SURVEY, IT WAS NOTICE D THAT THE ASSESSEE ALONG WITH HIS 2 BROTHERS HAVE CONSTRUCTED A COMMER CIAL PROPERTY WITH AN INVESTMENT OF RS.40 LAKHS. WHEREAS, THE ASSESSE E AND HIS 2 BROTHERS HAVE ADMITTED THE COST OF CONSTRUCTION OF ` 22,75,000/-. THUS, THERE WAS AN UNEXPLAINED INVESTMENT OF ` 17,25,000/- IN THE HANDS OF THE ASSESSEE AND HIS TWO BROTHERS. ON BEING QUESTIONED DURING THE COURSE OF SURVEY OPERATION, THE ASSESSEE AGREED TO OFFER A DDITIONAL INCOME OF ` 6,66,000/- TOWARDS UNEXPLAINED INVESTMENT TOWARDS C OST OF CONSTRUCTION. SUBSEQUENTLY, THE CASE HAS BEEN SELEC TED FOR SCRUTINY ASSESSMENT. AFTER DUE CONSIDERATION OF EXPLANATION FILED BY THE ASSESSEE, THE A.O. HAS COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT ITA NOS.323,324&325/VIZAG/2013 L. CHINASIMHACHALAM & L. VENKATESWARA RAO, RAJAHMUN DRY 8 AND MADE ADDITIONS OF RS. 1,22,007/- TOWARDS 12.5% GROSS PROFIT ON UNACCOUNTED TURNOVER, UNEXPLAINED INVESTMENTS OF ` 6,66,000/- AND CASH GIFT OF RS.2 LAKHS. 9. THE A.O. INITIATED PENALTY PROCEEDINGS U/S 271(1 )(C) OF THE ACT R.W.S. 274 OF THE ACT AND ISSUED A SHOW CAUSE NOTIC E AND ASKED TO EXPLAIN WHY PENALTY SHALL NOT BE LEVIED FOR CONCEAL MENT OF PARTICULARS OF INCOME AND ALSO FURNISHING INACCURATE PARTICULARS O F INCOME. IN RESPONSE TO SHOW CAUSE NOTICE, THE ASSESSEE SUBMITTED THAT H E HAD ADMITTED THE ADDITIONAL INCOME DURING THE COURSE OF SURVEY OPERA TIONS, THEREFORE, NO PENALTY CAN BE LEVIED U/S 271(1)(C) OF THE ACT. THE A.O. AFTER CONSIDERING THE EXPLANATIONS FURNISHED BY THE ASSES SEE LEVIED THE PENALTY U/S 271(1)(C) OF THE ACT TOWARDS ADDITIONS MADE ON ACCOUNT OF UNACCOUNTED SALES AND CASH GIFT, HOWEVER NOT LEVIED ANY PENALTY TOWARDS UNEXPLAINED INVESTMENTS IN CONSTRUCTION OF BUILDING. 10. AGGRIEVED BY THE PENALTY ORDER, THE ASSESSEE PR EFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT AT THE TIME OF SURVEY, THERE WAS A DEFICIT STOCK OF RS .7 LAKHS AND HE HAS AGREED TO OFFER INCOME OF 7% ON THE DEFICIT STOCK. HOWEVER, THE A.O. HAS ARRIVED AT UNACCOUNTED TURNOVER OF ` 9,76,076/- AND WORKED OUT GROSS PROFIT OF 12.5%. THE SAME HAS BEEN ADMITTED W ITH A REQUEST NOT ITA NOS.323,324&325/VIZAG/2013 L. CHINASIMHACHALAM & L. VENKATESWARA RAO, RAJAHMUN DRY 9 TO LEVY PENALTY U/S 271(1)(C) OF THE ACT. THE ASSES SEE FURTHER SUBMITTED THAT IN RESPECT OF UNEXPLAINED INVESTMENT IN CONSTR UCTION OF BUILDING AND CASH GIFT, HE HAD SOURCE FROM UNACCOUNTED SALES WHI CH WAS INVESTED IN THE CONSTRUCTION OF BUILDING AND CASH GIFT OF RS.2 LAKHS TO HIS BROTHER. THEREFORE, REQUESTED TO TELESCOPE THE SOURCE AVAILA BLE FOR INVESTMENT IN CONSTRUCTION OF BUILDING AND TOWARDS CASH GIFT. TH E ASSESSEE FURTHER SUBMITTED THAT THE ADDITIONS MADE ON ACCOUNT OF EST IMATION OF TURNOVER AND ESTIMATED COST OF CONSTRUCTION DOES NOT AMOUNTS TO CONCEALMENT OF INCOME. THOUGH HE HAD ADMITTED THE LAPSES DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE SAME HAS BEEN ACCEPTED WITH A REQUEST TO NOT TO LEVY PENALTY FOR CONCEALMENT OF INCOME. THE REFORE, REQUESTED TO DELETE THE PENALTY LEVIED BY THE ASSESSING OFFICER. 11. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE CIT(A) NOTICED THAT THE A.O. HAS INITIATED PENALTY PROCEEDINGS IN RESPECT OF ALL THE 3 ADDITIONS MADE DURING THE COURSE OF ASSESSMENT PROC EEDINGS. HOWEVER, THE A.O. HAS LEVIED PENALTY IN RESPECT OF CONCEALME NT OF INCOME ON ACCOUNT OF UNACCOUNTED TURNOVER AND CASH GIFT AND F AILED TO LEVY PENALTY IN RESPECT OF UNEXPLAINED INVESTMENTS IN CONSTRUCTI ON OF BUILDING. THEREFORE, ISSUED A NOTICE FOR ENHANCEMENT OF PENAL TY U/S 271(1)(C) OF THE ACT. IN RESPONSE TO ENHANCEMENT NOTICE, THE AS SESSEE FILED HIS ITA NOS.323,324&325/VIZAG/2013 L. CHINASIMHACHALAM & L. VENKATESWARA RAO, RAJAHMUN DRY 10 WRITTEN SUBMISSION AND CONTENDED THAT HE HAS ADMITT ED ADDITIONAL INCOME OF ` 6,66,000/- TOWARDS UNEXPLAINED INVESTMENT IN CONSTR UCTION OF BUILDING AND THE SOURCE FOR THE INVESTMENT IS EX PLAINED BEFORE THE A.O. THE ASSESSEE FURTHER SUBMITTED THAT HE HAS AD MITTED ADDITIONAL INCOME DURING THE COURSE OF SURVEY, WITH AN HONEST UNDERSTANDING THAT NO PENALTY WILL BE LEVIED. THE ASSESSMENT WAS MADE ON COMPROMISED BASIS. HE HAD ACCEPTED ALL THE ADDITIONS MADE BY TH E A.O. TO BUY PEACE AND ALSO TO COOPERATE WITH THE DEPARTMENT FOR SMOOT H COMPLETION OF ASSESSMENT PROCEEDINGS. WHEN THE INCOME IS SURRENDE RED, THE QUESTION OF LEVY OF PENALTY U/S 271(1)(C) OF THE ACT FOR CON CEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME DOES NO T ARISE. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CONFIRMED THE PENALTY LEVIED BY THE A.O. IN RESPECT OF CONCEALMENT OF INC OME TOWARDS UNACCOUNTED TURNOVER AND CASH GIFT. SIMILARLY, THE CIT(A) HAS ENHANCED THE PENALTY AND DIRECTED THE A.O. TO LEVY PENALTY I N RESPECT OF UNEXPLAINED INVESTMENT IN CONSTRUCTION OF BUILDING. AGGRIEVED BY THE CIT(A) ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 12. THE LD. A.R. SUBMITTED THAT THE CIT(A) WAS ERRE D IN ENHANCING THE PENALTY U/S 271(1)(C) OF THE ACT. THE LD. A.R. FUR THER SUBMITTED THAT THE A.O. HAS MADE ADDITIONS ON ESTIMATION BASIS. ALL TH E 3 ADDITIONS ARE ITA NOS.323,324&325/VIZAG/2013 L. CHINASIMHACHALAM & L. VENKATESWARA RAO, RAJAHMUN DRY 11 MADE ON ESTIMATION BASIS, THEREFORE, THIS IS NOT A CASE OF CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCO ME. IT WAS FURTHER SUBMITTED THAT THE LOWER AUTHORITIES SHOULD HAVE TE LESCOPED THE SOURCES AVAILABLE FROM SALE OF DEFICIT STOCK FOUND DURING T HE COURSE OF SURVEY TOWARDS UNEXPLAINED INVESTMENT IN BUILDING AND CASH GIFT. ON THE OTHER HAND, THE LD. D.R. STRONGLY SUPPORTED THE ORDER OF THE CIT(A). 13. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIALS AVAILABLE ON RECORD. THE A.O. LEVIED PENALTY U/S 2 71(1)(C) OF THE ACT FOR CONCEALMENT OF INCOME AND FURNISHING INACCURATE PAR TICULARS OF INCOME. THE A.O. WAS OF THE OPINION THAT THE ASSESSEE HAS C ONCEALED THE TURNOVER AND ALSO MADE UNEXPLAINED INVESTMENT IN CO NSTRUCTION OF BUILDING. THE A.O. FURTHER OPINED THAT THE ASSESSEE HAS NOT DISCLOSED CASH GIFT OF ` 2 LAKHS GIVEN TO HIS BROTHER. THEREFORE, OPINED TH AT IT IS A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C) OF THE A CT. IT IS THE CONTENTION OF THE ASSESSEE THAT HE HAS NEITHER CONCEALED THE P ARTICULARS OF INCOME NOR FURNISHED INACCURATE PARTICULARS OF INCOME, AS THE A.O. HAS MADE ADDITIONS ON ESTIMATION BASIS. THE ASSESSEE FURTHE R SUBMITTED THAT HE HAS ADMITTED ADDITIONAL INCOME DURING THE COURSE OF SURVEY OPERATIONS TOWARDS DEFICIT STOCK TO BUY PEACE AND TO COOPERATE TO THE DEPARTMENT FOR SMOOTH COMPLETION OF PROCEEDINGS. THE ASSESSEE FURTHER SUBMITTED ITA NOS.323,324&325/VIZAG/2013 L. CHINASIMHACHALAM & L. VENKATESWARA RAO, RAJAHMUN DRY 12 THAT WHEN INCOME IS SURRENDERED WITH A REQUEST TO N OT TO LEVY ANY PENALTY PROCEEDINGS, THE A.O. WAS NOT CORRECT IN LE VYING THE PENALTY FOR CONCEALMENT OF INCOME. WE FIND FORCE IN THE ARGUMENT S OF THE ASSESSEE FOR THE REASON THAT THE A.O. HAS MADE ADDITIONS IN RESPECT OF UNACCOUNTED TURNOVER ON ESTIMATION BASIS. WE FURTHE R NOTICED THAT THE A.O. HAD ESTIMATED THE COST OF CONSTRUCTION AND DET ERMINED THE UNEXPLAINED INVESTMENT. IN RESPECT OF CASH GIFT OF ` 2 LAKHS GIVEN TO HIS BROTHER, THE ASSESSEE HAS EXPLAINED THE SOURCE FOR THE CASH GIFT BEFORE THE A.O. THE ASSESSEE EXPLAINED THAT HE HAD SOURCE FROM SALE OF DEFICIT STOCK FOUND DURING THE COURSE OF SEARCH. THEREFORE, WE ARE OF THE OPINION THAT NO PENALTY CAN BE LEVIED FOR CONCEALME NT OF INCOME U/S 271(1)(C) OF THE ACT WHEN ADDITIONS ARE MADE ON EST IMATION BASIS. IN THE PRESENT CASE ON HAND, THE A.O. HAS ESTIMATED TH E GROSS PROFIT ON UNACCOUNTED TURNOVER AND ALSO MADE ADDITIONS TOWARD S UNEXPLAINED INVESTMENTS IN BUILDING ON ESTIMATION BASIS. THE A SSESSEE HAS ADMITTED THE ADDITIONAL INCOME DURING THE COURSE OF SURVEY P ROCEEDINGS AND PAID THE TAXES. THE ASSESSEE ALSO EXPLAINED THE REASONS BEFORE THE A.O. AND REQUESTED FOR IMMUNITY FROM THE PENALTY PROCEEDINGS . THEREFORE, WHEN THE ADDITION IS MADE ON ESTIMATION BASIS AND ASSESS EE HAS ADMITTED THE ADDITIONAL INCOME TO BUY PEACE AND TO COOPERATE WIT H THE DEPARTMENT FOR SMOOTH COMPLETION OF THE ASSESSMENT PROCEEDINGS , THE A.O. WAS NOT ITA NOS.323,324&325/VIZAG/2013 L. CHINASIMHACHALAM & L. VENKATESWARA RAO, RAJAHMUN DRY 13 CORRECT IN LEVY OF PENALTY U/S 271(1)(C) OF THE ACT . THE CIT(A) WITHOUT APPRECIATING THE FACTS, CONFIRMED THE PENALTY LEVIE D BY THE A.O. AND ALSO ENHANCED THE PENALTY IN RESPECT OF UNEXPLAINED INVE STMENTS IN THE BUILDING. THEREFORE, WE SET ASIDE THE ORDER PASSED BY THE CIT(A) AND DIRECT THE A.O. TO DELETE THE PENALTY LEVIED U/S 27 1(1)(C) OF THE ACT. ITA NO.325/VIZAG/2013: 14. THE FACTS AND ISSUE INVOLVED IN THIS APPEAL IS IDENTICAL TO ITA NO.324/VIZAG/2013. THEREFORE, FOR THE REASONS RECO RDED IN THE PRECEDING PARAGRAPH, WE ALLOWED THE APPEAL FILED BY THE ASSESSEE. 15. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E ARE ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 29 TH APR16. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 29.04.2016 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT LAVETI CHINASIMHACHALAM, PROP: N AVEEN TEXTILES, SHOP NO.218, TADITHOTA, MGWCC, RAJAHMUNDRY. 2. / THE APPELLANT LAVETI CHINASIMHACHALAM, PROP: N AVEEN TEXTILES, SHOP NO.218, TADITHOTA, MGWCC, RAJAHMUNDRY. 3. / THE RESPONDENT ITO, WARD-3, RAJAHMUNDRY ITA NOS.323,324&325/VIZAG/2013 L. CHINASIMHACHALAM & L. VENKATESWARA RAO, RAJAHMUN DRY 14 4. + / THE CIT, RAJAHMUNDRY 5. + ( ) / THE CIT (A)-11, MUMBAI, CAMP AT VISAKHAPATNAM 6. # . , . , # / DR, ITAT, VISAKHAPATNAM 7 . / GUARD FILE / BY ORDER // TRUE COPY // 12 . (SR.PRIVATE SECRETARY) . , # / ITAT, VISAKHAPATNAM