Kasaraneni Rama Tulasi, Guntur V. The ITO., Guntur

ITA 458/VIZ/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3840 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 23-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEBA KUMAR SONAWAL
• Keywords: Business expenditure
• Section: 40A(3); 143(3); 143(1); 148; 263

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. 458 / VIZ /201 6 (ASST. YEAR : 20 1 0 - 11 ) SMT. KASARANENI RAMA TULASI L/R OF KASARANENI SRINIVASA RAO , FLAT NO. 406, YAGANTI SIKHOORA, D.NO. 1 - 3 - 28/3, GUJJANAGUNDLA, GUNTUR DISTRICT. V S . IT O , WARD - 1(1), GUNTUR . PAN NO. AJLPK 6775 C (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADV OCATE . DEPARTMENT BY : SHRI DEBA KUMAR SONAWAL - CIT DR DATE OF HEARING : 24 / 0 4 /201 8 . DATE OF PRONOUNCEMENT : 09 / 0 5 /201 8 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF PRINCIPAL COMMISSIONER OF INCOME TAX, GUNTUR , DATED 21 /0 9 /201 6 FOR THE ASSESSMENT YEAR 20 1 0 - 11 . 2. FACTS OF THE CASE, IN BRIEF, ARE THAT ASSESSEE IS AN INDIVIDUAL , DERIVING INCOME FROM CONTRACT WORKS, FILED HIS RETURN OF INCOME ADMITTING TOTAL INCOME OF RS. 6,93,200/ - . THE RETURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX 2 ITA NO. 458/VIZ/2016 ( SMT. K. RAMA TULASI L/R OF KASARANENI SRINIVASA RAO ) ACT, 1961 (HEREINAFTER REFERRED TO AS 'ACT'). THEREAFTER, CAS E OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND ASSESSMENT IS COMPLETED UNDER SECTION 143(3) OF THE ACT BY DETERMINING TOTAL INCOME AT RS. 15,25,100/ - O N 26/03/2013 . SUBSEQUENTLY, THE ASSESSING OFFICER ISSUED A NOTICE UNDER SECTION 148 ON THE GROUND THAT THERE IS AN ESCAPEMENT OF INCOME. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE HAS PAID AN AMOUNT OF RS. 5,49,415/ - IN CASH TOWARDS PURCHASE OF CEMENT IN EXCESS OF RS. 20,000/ - PER DAY. THEREFORE, THE SAME HAS BEEN DISALLOWE D UNDER SECTION 40A(3) OF THE ACT. THE ASSESSING OFFICER FURTHER OBSERVED THAT AS PER THE ACCOUNT COPY , AN AMOUNT OF RS.4,80,571/ - WAS DUE , TO SRI GAJULANKA SRINIVASU AS ON 31/03/2010. THE SAME HAS NOT BEEN SHOWN AS LIABILITY SIDE IN THE BALANCE SHEET . THEREFORE, THE ASSESSING OFFICER HAS ARRIVED TOTAL SHORT COMPUTATION OF INCOME AT RS. 10,30,320/ - . THE AUTHORIZED REPRESENTATIVE APPEARED BEFORE THE ASSESSING OFFICER AND EXPLAIN ED THE DEFECTS POINTED OUT, WHICH ARE REPRODUCED AS UNDER: - DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AUTHORISED REPRESENTATIVE FILED A LETTER STATING THAT THE PAYMENTS FOR CEMENT FOR AN AMOUNT OF RS. 5,49,415/ - IN CASH IN EXCESS OF RS.20,000/ - WERE MADE ON SUNDAYS. HE ALSO SUBMITTED THE PURCHASES WERE MAD E IN CASH IN CASE OF EMERGENCY. AS THE PAYMENTS WERE MADE ON BANK HOLIDAY WHICH IS COVERED UNDER 3 ITA NO. 458/VIZ/2016 ( SMT. K. RAMA TULASI L/R OF KASARANENI SRINIVASA RAO ) RULE 6DD (J ) OF INCOME TAX RULES THE PROVISIONS OF SEC.40A(3) ARE NOT APPLICABLE. NO PAYMENTS WERE MADE BETWEEN 27.3.2010 TO 31.3.2010 TOWARDS CEMENT. THE ASSES SEE'S AUTHORIZED REPRESENTATIVE WED REVISED BALANCE SHEET AS ON 31.03.201 0 WHICH CLEARLY SHOW THE AMOUNT OF RS.4,80,871/ - DUE TO GAJULANKA SRINIVASU AS CREDITOR. HE ALSO INFORMED WHILE FILING THE BALANCE SHEET AS ON 31.03.2010 THE PREVIOUS AUTHORIZED REPR ESENTATIVE SHOWED DEBTORS NET OF CREDITORS ON THE ASSETS SIDE OF THE BALANCE SHEET. THE AR FILED ACCOUNT COPY OBTAINED FROM K.BUTCHAIAH. ACCORDING TO THE ACCOUNT COPY AN AMOUNT OF RS.49,07,999/ WAS DUE TO THE ASSESSEE FROM K.BUTCHAIAH TOWARDS CONTRACT BILL S AS ON 31.032010. AN AMOUNT OF RS.30,79,999R WAS DUE TO CREDITORS AS ON 31.03.2010. INSTEAD OF SHOWING CREDITORS ON THE LIABILITIES SIDE AND DEBTORS ON THE ASSETS SIDE, THE PREVIOUS AUTHORIZED REPRESENTATIVE SHOWED NET AMOUNT OF RS. 18,28,000/ - ON THE ASS ETS SIDE OF THE BALANCE SHEET AS DEBTORS. THIS WAS MISTAKE COMMITTED BY PREVIOUS AUTHORIZED REPRESENTATIVE. THE ASSESSEE'S AUTHORIZED REPRESENTATIVE ALSO FILED REPLY STATING THAT LABOUR PAYMENT WAS NOT PAID TO INDIVIDUAL WORKER IN EXCESS OF RS20,000/ - . THE AMOUNT WAS PAID THROUGH MASTRIES. FOR THE SAKE OF CONVENIENCE ACCOUNT WAS MAINTAINED IN THE NAME OF MASTRI IN HOOKS OF THE ASSESSEE. THE PAYMENTS MADE TO EACH INDIVIDUAL WORKER IS LESS THAN RS.20.000/ - ON A SINGLE DAY. THE AMOUNT PAID TO ALL THE WORKERS W ORKED IN MUTTA WAS NOTED DOWN IN THE NAME OF MASTRI. DUE TO ABOVE REASON, PROVISIONS OF SEC.40A(3) ARE NOT APPLICABLE. THE CONTENTIONS OF THE ASSESSEE HAS BEEN VERIFIED WITH THE MATERIAL AVAILABLE AND IN FORMATION FURNISHED BY THE AUTHORIZED REPRESENTATIVE AND FOUND CORRECT. HENCE THE INCOME ASSESSED PREVIOUSLY U/S. 143(3) WAS ACCEPTED. 3 . SUBSEQUENTLY, LD. COMMISSIONER BY EXERCISING POWERS CONFERRED IN SECTION 263 , ISSUED A NOTICE TO THE ASSESSEE ON THE GROUND THAT THE ORDER PASSED BY THE ASSESSING OFFICER DATED 12/03/2015 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE FOR THE FOLLOWING REASONS: - 4 ITA NO. 458/VIZ/2016 ( SMT. K. RAMA TULASI L/R OF KASARANENI SRINIVASA RAO ) THE ASSESSEE HAS INCURRED BUSINESS EXPENDITURE OF RS.5,49,415/ - BY WAY OF CASH PAYMENTS MADE TO THE VARIOUS PERSONS TOWARDS PURCHASE OF CEMENT IN EXCESS OF RS. 20,000/ - VIOLATING THE PROVISIONS OF SECTION 40A(3) OF THE ACT. 4 . SO FAR AS ABOVE ASPECT IS CONCERNED, THE LD. COMMISSIONER HAS OBSERVED THAT THE ASSESSEE HAS MADE CASH PAYMENTS BELOW RS. 20,000/ - ON WORKING DAYS , WHICH APPEARS TO BE SUSPICIOUS AND THE ASSESSING OFFICER HAS NOT EXAMINED PROPERLY. WE FIND TH A T THE ASSESSING OFFICER HAS EXAMINED THIS ISSUE AND GAVE A CATEGORICA L FINDING THAT SECTION 40A(3) HAS NO APPLICATION. THEREFORE, LD.COMMISSIONER CANNOT INVOKE SECTION 263 ON SUSPICIOUS BASIS. ON THIS COUNT, THE ORDER PASSED BY THE LD. COMMISSIONER IS NOT CORRECT. INSOFAR AS , AN AMOUNT OF RS. 4,80,571/ - IS CONCERNED, A D ETAILED EXPLANATION WAS GIVEN BEFORE THE ASSESSING OFFICER, WHO CONSIDERED THE SAME AND OBSERVED THAT THERE WAS A MISTAKE COMMITTED BY THE AUTHORIZED REPRESENTATIVE AND RELIE F WAS GRANTED TO THE ASSESSEE. WE FIND THAT THE LD. COMMISSIONER HAS OBSERVED THA T ASSESSING OFFICER HAS NOT MADE ANY ENQUIRY , IS NOT CORRECT. THE ASSESSING OFFICER HAS EXAMINED THE ISSUE AND HE IS OF THE OPINION THAT IT IS A MISTAKE COMMITTED BY THE AUTHORIZED REPRESENTATIVE AND THE RE FORE, RELIEF WAS GRANTED TO THE ASSESSEE. SO FAR AS THIRD ISSUE RAISED BY THE LD. COMMISSIONER WITH REGARD TO 5 ITA NO. 458/VIZ/2016 ( SMT. K. RAMA TULASI L/R OF KASARANENI SRINIVASA RAO ) LABOUR PAYMENTS EXCEEDING RS. 20,000/ - IS CONCERNED , THE ASSESSING OFFICER HAS EXAMINED THE ISSUE AND OBSERVED THAT AMOUNT WAS PAID TO M UT T A M ASTR Y AND IN TURN , MUTTA MASTRY HAS PAID THE AMOUNTS TO THE INDIVIDUAL WORKERS AND SECTION 40A(3) HAS NO APPLICATION. WE FIND THAT ASSESSING OFFICER HAS EXAMINED THIS ISSUE AND RELIEF WAS GRANTED TO THE ASSESSEE. UNDER THESE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE A RE OF THE OPINION THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE LD. COMMISSIONER EXERCISED HIS POWERS CONFERRED IN SECTION 263 ON A SUSPICIOUS BASIS, THEREFORE, 263 CANNOT BE INVOKE D ON SUSPICIOUS BASIS, PARTICULARLY WHEN ASSESSING OFFICER EXAMINED EACH AND EVERY ISSUE, IT CAN NOT BE SAID THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. ON THE FACTS OF THE PRESENT CASE WE ARE SATISFIED THAT THE AO MADE DUE ENQUIRIES BEFORE COMPLETING THE ASSESSMENT AND ORDER OF THE AO CANNOT BE TERMED AS ERRONEOUS FOR LACK OF PROPER ENQUIRY BEFORE CONCLUDING THE ASSESSMENT. FOR THE REASONS STATED ABOVE WE QUASH THE ORDER U/S 263 OF THE ACT AND ALLOW THE APPEAL OF THE ASSESSEE . 6 ITA NO. 458/VIZ/2016 ( SMT. K. RAMA TULASI L/R OF KASARANENI SRINIVASA RAO ) 5 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON TH IS 0 9 T H DAY OF MAY , 201 8 . S D / - S D / - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 0 9 T H MAY , 201 8 . VR/ - COPY TO: 1. THE ASSESSEE - SMT. KASARANENI RAMA TULASI L/R OF KASARANENI SRINIVASA RAO, FLAT NO. 406, YAGANTI SIKHOORA, D.NO. 1 - 3 - 28/3, GUJJANAGUNDLA, GUNTUR DIST 2. THE REVENUE - ITO, WARD - 1(1), GUNTUR . 3. THE PR. CIT , GUNTUR. 4. THE D.R . , VISAKHAPATNAM. 5. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.