Dheeraj Reddy Borra, Waragal, Hyderabad V. ITO, Ward-3, Warangal, Warangal

ITA 350/HYD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2488 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 21-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N SWAPNA
• Assessee Lawyers: S RAMA RAO

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 350/HYD/2016 ASSESSMENT YEAR: 2009-10 DHEERAJ REDDY BORRA, WARANGAL [PAN: AFBPB4008B] VS INCOME TAX OFFICER, WARD-3, WARANGAL (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S. RAMA RAO, AR FOR REVENUE : SMT N. SWAPNA, DR DATE OF HEARING : 16-10-2017 DATE OF PRONOUNCEMENT : 25-10-2017 O R D E R THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-3, HYDERABAD, DATED 21-10-2015. THE MATERIAL GROUND RAISED BY ASSESSEE IS AS UNDER: 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN L EVYING PENALTY TREATING THE DISALLOWANCE OF COMMISSION OF RS. 4,70,790/- AS CONCEALED INCOME. 2. CONDONATION: THERE WAS A DELAY OF 47 (FORTY SEVEN ) DAYS IN FILING THE APPEAL. IT WAS EXPLAINED THAT ASSESSEE H AD FRACTURE IN LEG AND WAS ADVISED MEDICAL REST AND COULD NOT TRAVEL TO HYDERABAD. CONSIDERING THE AFFIDAVIT AND OBJECTIONS OF LD.DR, THE DELAY IS CONDONED AND APPEAL IS ADMITTED. 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A DEALE R FOR PIAGGIO (P) LIMITED MOTORS. FOR AY. 2009-10, HE ADMITTED INCO ME OF I.T.A. NO. 350/HYD/2016 :- 2 - : RS. 4,28,540/-. THE SALE REFLECTED IN P&L A/C WERE RS. 19.58 CRORES. AGAINST THESE SALE RECEIPTS, ASSESSEE HAD CLAI MED TRANSPORT AND HAMALI CHARGES OF RS. 14,01,768/-. THE ASSESSI NG OFFICER (AO) DISALLOWED A ROUDSUM AMOUNT OF RS. 3,10,000/- ON THE GROUND THAT EXPENSES WERE NOT PROPERLY VOUCHED, VOUCHERS WERE SELF-MADE AND NOT SIGNED BY THE PAYEE. THE ADDITION MADE WAS ACC EPTED BY ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS, THE AO OBSERVED THAT AFTER VERIFICATION OF 26AS DETAILS, GROSS RECEIPTS WERE RS. 9,41,316/- AND THE TDS WAS RS. 1,03,162/-. HOWEV ER, THE ASSESSEE OFFERED GROSS RECEIPTS OF ONLY RS. 4,70,526 /- AND CLAIMED TDS OF RS. 48,749/-. THE AO MADE ADDITION OF RS. 4, 70,790/- (RS. 9,41,316 4,70,526) IN SCRUTINY ASSESSMENT. HOWEVER, IN TAX CALCULATION, HE ALLOWED TDS CREDIT ONLY FOR AN AMOUN T OF RS. 48,753/-. THE AO FURTHER STATED THAT THE ASSESSEE AGREE D FOR ADDITION OF RS. 4,70,790/- TOWARDS SHORTFALL IN GROSS RECEIPTS. ASSESSEE ALSO HAD NOT APPEALED AGAINST SUCH ADDITION. PENALTY U/S. 271(1)(C) WAS LEVIED WITH REFERENCE TO THESE TWO AMOUN TS. 4. LD.CIT(A) DELETED THE PENALTY ON ADHOC ADDITION A ND CONFIRMED THE PENALTY ON ADDITION FOR RS. 4,70,790/-. HENCE THE PRESENT APPEAL BY ASSESSEE. 5. LD. COUNSEL REFERRING TO THE ASSESSMENT ORDER AND THE STATEMENT OF 26AS RELIED ON BY AO, SUBMITTED THAT THE AMOUN TS REFLECTED IN FORM DOES NOT REFLECT THE TRANSACTIONS OF THE YEAR, BUT ASSESSEE COULD NOT RECONCILE THE DIFFERENCE IN A TUR NOVER OF RS. 20 CRORES AND HENCE ACCEPTED THE ADDITION. I.T.A. NO. 350/HYD/2016 :- 3 - : 6. LD.DR, HOWEVER, REFERRED TO THE REPORT OF THE AO TO SUBMIT THAT ASSESSEE HAS NOT OFFERED THE SAME IN LATER YEAR ALS O HENCE THE PENALTY IS WARRANTED. IN REPLY IT WAS SUBMITTED THAT AS SESSEE HAS OFFERED COMMISSION OF RS. 14.92 LAKHS AS OTHER INCO ME IN AY. 2010-11 AND REFERRED TO PAGE 28 OF THE PAPER BOOK. 7. HAVING CONSIDERED THE RIVAL CONTENTIONS, I AM OF THE OPINION THAT PENALTY U/S. 271(1)(C) IS NOT WARRANTED ON THE FAC TS OF THE CASE. IN FACT AO HAS NOT MADE OUT ANY CASE FOR PENA LTY AS HIS ORDER IS AS UNDER: 5. DURING THE COURSE OF VERIFICATION OF 26AS DETAI LS TDS IS RS. L,03,162=96 AND GROSS RECEIPTS IS RS.9,41,316=55 BU T THE ASSESSEE OFFERED RS. 4,70,527=75 AND TDS CLAIMED IS RS. 48,7 49. THE DIFFERENCE IN GROSS RECEIPTS OF RS. 4,70,789/- WAS NOT OFFERED TO TAX. THEREFORE IN ADDITION TO ADDITION MADE OF RS. 3,10,000/- AND THI S AMOUNT OF RS. 4,70,790/- ALSO ADDED BACK TO THE INCOME RETURNED O N ACCOUNT OF DIFFERENCE IN RECEIPTS. 5. ALL THE ABOVE MISTAKES/DISCREPANCIES NOTICED AND DISCUSSED AT PARA NO. 4 & 5 WERE BROUGHT TO THE NOTICE OF TH E ASSESSEE'S A.R AND WAS ASKED TO EXPLAIN AS TO WHY RS. 3,10,000 /- + RS. 4,70,790/- (I.E. TOTAL AMOUNT OF RS.7,80,790/-) SHOULD NOT BE DISALLOWED AND ADDED BACK TO THE INCOME RETURNED. IN RESPONSE, THE ASSESSEES A.R STATED THAT HE DON T HAVE ANY OBJECTION TO THE PROPOSED ADDITION. HENCE AN AMOUNT OF RS. 7,80,790/- IS ADDED BACK TO THE INCOME RETURNED. ( EMPHASIS SUPPLIED .) 7.1. AO HIMSELF HAS CATEGORIZED THE SAME AS MISTAKE/DISCREPANCIES. AS CAN BE SEEN FROM 26AS PLA CED ON RECORD, THE TRANSACTION ALSO INDICATE THE DATE OF ACCEPTA NCE AS 30 TH JAN, 2013, 30 TH JUNE, 2009 AND 23 RD JUNE, 2009 ETC., WHICH DO NOT PERTAIN TO THE YEAR UNDER CONSIDERATION. A PENALTY U/ S. 271(1)(C) CANNOT BE LEVIED FOR DISCREPANCIES IN RECONCILIATION , THAT TOO FOR A SMALL AMOUNT, OUT OF RS. 20 CRORES TURNOVER. SINCE TH E ADDITION IS I.T.A. NO. 350/HYD/2016 :- 4 - : ONLY DUE TO NON-RECONCILIATION OF THE AMOUNT REFLECTED IN FORM 26AS, THE SAME DOES NOT WARRANT PENALTY U/S. 271(1)(C ), HENCE DELETED. 7.2. ASSESSEE HAS RAISED ADDITIONAL GROUND THAT THE N OTICE ISSUED DOES NOT REFLECT WHETHER THE SAME IS FOR CONCEALMENT OR FOR FURNISHING INACCURATE PARTICULARS. SINCE THE GROUND ON MERIT IS ALLOWED, THE ADDITIONAL GROUND HAS BECOME ACADEMIC IN NATURE. HENCE, THE SAME IS NOT ADMITTED/ADJUDICATED. 8. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH OCTOBER, 2017 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 25 TH OCTOBER, 2017 TNMM I.T.A. NO. 350/HYD/2016 :- 5 - : COPY TO : 1. DHEERAJ REDDY BORRA, WARANGAL. C/O. SRI S. RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYAS ELEGANCE, 3-6-643, STREET NO. 9, HIMAYAT NAGAR, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-3, WARANGAL. 3. COMMISSIONER OF INCOME TAX(APPEALS)-3, HYDERABAD . 4. THE PR. COMMISSIONER OF INCOME TAX-3, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.