Sri P Venkata Subba Rao, Narsaraopet, Hyderabad V. The ITO, Ward-1, Narasaraopeta

ITA 53/VIZ/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7237 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-12-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 02-02-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D S SUNDER SINGH
• Keywords: Unexplained cash credit

Judgement Text

ITA NO 53 OF 2010 P VENKATA SUBBA RAO NARSARAOPETA PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.53/VIZAG/2010 ASSESSMENT YEAR: 2005-06 P. VENKATA SUBBA RAO, NARSARAOPET VS. ITO WARD-1 NARSARAOPETA (APPELLANT) PAN NO: AGZPP 4821 D (RESPONDENT) APPELLANT BY: SHRI G.V.N. HARI, CA RESPONDENT BY: SHRI D.S. SUNDER SINGH, SR.DR ORDER PER SHRI B. R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 27.11.2009 PASSED BY LEARNED CIT(A)GUNTUR AND IT RE LATES TO THE ASSESSMENT YEAR 2005-06. 2. THE ASSESSEE IS CHALLENGING THE PENALTY OF RS.85 ,000/- LEVIED UNDER SECTION 271(1) (C) OF THE ACT. 3. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION WAS COMPLETED IN THE H ANDS OF THE ASSESSEE BY MAKING, INTER ALIA, FOLLOWING TWO ADDITIONS: A) UNEXPLAINED CASH CREDIT SHOWN IN BALANCE SHEET RS.2,30,000/- B) UNEXPLAINED CREDIT FOUND IN BANK ASSESSEE COMPAN Y RS.44,100/- THE ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271(1)(C) ON THE ABOVE CITED TWO ADDITIONS. BEFORE THE LEARNED CIT (A) THE ASSESSEE PLEADED THAT THE IMPUGNED PENALTY IS NOT LEVIABLE AS THE ASSESSE E HAD AGREED TO BOTH THE ADDITIONS. THE LEARNED CIT (A) WAS NOT CONVINCED WI TH THE CONTENTIONS OF THE ASSESSEE AND HENCE CONFIRMED THE PENALTY. AGGRI EVED THE ASSESSEE IS IN APPEAL BEFORE US. ITA NO 53 OF 2010 P VENKATA SUBBA RAO NARSARAOPETA PAGE 2 OF 3 4. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THOUGH THE ASSESSEE HAD AGREED FOR THE ADDITION OF UNEXPLAINED CASH CREDIT OF RS.2,30,000/-, YET ON A PERUSAL OF BALANCE SHEET, I T APPEARS THAT SOME OF THE CASH CREDITORS ARE OLD CREDITORS CARRIED FORWAR D FROM EARLIER YEARS. IN THAT CASE, THE PENALTY WOULD NOT BE LEVIABLE MERELY BECAUSE THE ASSESSEE HAS ACCEPTED FOR THE ADDITION OF THE SAME. WITH REG ARD TO THE UNEXPLAINED CREDITS AVAILABLE IN THE BANK ACCOUNT, THE ASSESSIN G OFFICER COULD HAVE TELESCOPED THE SAME AGAINST THE ADDITION OF CASH CR EDITS AND ACCORDINGLY HE COULD HAVE AVOIDED LEVYING PENALTY ON THE SAID ADDI TION ALSO. 5. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPRE SENTATIVE SUBMITTED THAT IT IS NOT CLEAR WHETHER THE CREDITOR S ARE OLD CREDITORS AND IN THE ABSENCE OF ANY MATERIAL, IT SHOULD BE PRESUMED THAT THEY ARE FRESH CREDITS ONLY. HE FURTHER SUBMITTED THAT THE PENALTY IS LEVIABLE EVEN IF THE UNEXPLAINED BANK DEPOSITS ARE CAPABLE OF TELESCOPIN G WITH OTHER ADDITIONS. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE RECORD. WE NOTICE THAT NEITHER THE ASSESSEE NOR TH E ASSESSING OFFICER HAS GIVEN THE DETAILS OF SUNDRY CREDITORS FOR THE AMOUN T FOUND DISCLOSED IN THE BALANCE SHEET. HENCE, AS SUBMITTED BY LEARNED AUTH ORISED REPRESENTATIVE IT IS NOT CLEAR WHETHER THE SUNDRY CREDITORS RELATING TO THE IMPUGNED ADDITION OF RS.2,30,000/- ARE FRESH CREDITS TAKEN DURING TH E INSTANT YEAR OR IT IS CARRIED FORWARD BALANCE. IT IS A WELL SETTLED PROPO SITION THAT THE ASSESSING OFFICER HAS TO LOOK AT THE ISSUES AFRESH IN THE PEN ALTY PROCEEDINGS, THOUGH THE FINDINGS RECORDED IN THE ASSESSMENT PROCEEDINGS CAN BE TAKEN SUPPORT IN THIS REGARD. AS SUBMITTED BY LEARNED AUTHORISED REPRESENTATIVE, THE PENALTY IS NOT EXIGIBLE MERELY BECAUSE THE ASSESSEE HAS ACCEPTED TO AN ADDITION. THE NATURE OF ADDITION HAS TO BE INDEPEND ENTLY CONSIDERED IN PENALTY PROCEEDINGS. FROM THE PENALTY ORDER, IT IS NOT CLEAR WHETHER THE ASSESSING OFFICER HAS CONSIDERED THE ISSUE IN THE M ANNER STATED ABOVE. IN VIEW OF THE FOREGOING, WE ARE OF THE VIEW THAT THE ISSUE OF LEVY OF PENALTY WITH REGARD TO THE ADDITION OF RS.2,30,000/- NEEDS PROPER EXAMINATION. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LEARNED CIT (A) WITH REGARD TO ITA NO 53 OF 2010 P VENKATA SUBBA RAO NARSARAOPETA PAGE 3 OF 3 THE PENALTY RELATABLE TO THE ABOVE SAID ADDITION AN D RESTORE THE SAME TO THE FILE OF THE ASSESSING OFFICER FOR EXAMINATION AFRES H IN ACCORDANCE WITH THE LAW. 7. WITH REGARD TO THE ADDITION RELATING TO UNEXPLAI NED CREDITS IN THE BANK ACCOUNT OF THE ASSESSEE, WE FIND THAT THE ASSE SSEE COULD NOT FURNISH PROPER EXPLANATION IN THAT REGARD. IN OUR VIEW THE POSSIBILITY OF TELESCOPING ALSO DOES NOT ARISE IN THE FACTS OF THE INSTANT CAS E. ACCORDINGLY WE CONFIRM THE LEVY OF PENALTY RELATABLE TO THIS ADDITION. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREA TED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 2 ND FEBRUARY, 2011. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATE: 02-02-2011 COPY TO 1 SHRI P. VENKATA SUBBA RAO C/O S. RAMA RAO, ADVOCA TE, FLAT NO.102,SHRIYAS ELEGANCE, DOOR NO.3-6-643 ST.NO.9 H IMAYATNAGAR, HYDERABAD 2 THE ITO WARD - 1, NARSARAOPET 3 4. THE CIT GUNTUR THE CIT(A), GUNTUR 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM