Chennuboina Srinivasa Rao, Hyderabad V. THE DCIT, Visakhapatnam

ITA 62/VIZ/2015

• Counselvise Citation: [2016] 130 COUNSELVISE.COM (IT) 9853 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 09-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R. GOVINDARAJAN
• Assessee Lawyers: SAMUEL; NAGADESHI
• Keywords: Business income; Reasonable cause; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 271(1)(c); 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 142(1); 251; 143(2); 13; 22

Judgement Text

ITA NO.62/VIZAG/2015 C. SRINIVASA RAO, VISAKHAPATAM 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.NO.62/VIZAG/2015 ( / ASSESSMENT YEAR: 2009-10) C. SRINIVASA RAO, VISAKHAPATNAM VS. DCIT, CIRCLE - 3(1), VISAKHAPATNAM [PAN: ACZPC2608R ] ( % / APPELLANT) ( &'% / RESPONDENT) S.P. NO.8/VIZAG/2015 (ARISING OUT OF I.T.A.NO.62/VIZAG/2015) ( / ASSESSMENT YEAR: 2009-10) C. SRINIVASA RAO, VISAKHAPATNAM VS. ITO, WARD - 1(4), VISAKHAPATNAM ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI SAMUEL, NAGADESHI, AR / RESPONDENT BY : SHRI R. GOVINDARAJAN, DR / DATE OF HEARING : 08.08.2016 / DATE OF PRONOUNCEMENT : 22.09.2016 ITA NO.62/VIZAG/2015 C. SRINIVASA RAO, VISAKHAPATAM 2 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A)-1, VISAKHAPATNAM DATED 2.1.2015 AND IT PERTA INS TO THE ASSESSMENT YEAR 2009-10. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E DERIVING INCOME BY WAY OF BUSINESS OF TRANSPORT CONTRACTS, HANDLING OF BUILDING MATERIALS AND MANUFACTURING BRICKS, FILED ITS RETURN OF INCOM E FOR THE ASSESSMENT YEAR 2009-10 ON 27.9.2009 ADMITTING TOTAL INCOME OF RS.27,03,410/-. CONSEQUENT TO SURVEY, THE ASSESSEES CASE WAS TAKEN UP FOR SCRUTINY AND ASSESSMENT FOR THE ASSESSMENT YEAR 2010-11 WAS COMP LETED U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT) ON 10.11.2010. DURING THE COURSE OF ASSESSMENT, IT WA S NOTICED THAT IN THE BALANCE SHEET OF M/S. SRI SRINIVASA BRICK INDUSTRIE S, A PROPRIETARY CONCERN OF THE ASSESSEE, THE ASSESSEE HAS DISCLOSED TWO ASSETS IN THE FIXED ASSET SCHEDULE ATTACHED TO THE BALANCE SHEET. AS PER THE SCHEDULE OF FIXED ASSETS, THE ASSESSEE HAS DISCLOSED A SITE AT ISUKATHOTA PURCHASED BETWEEN 1.4.2009 TO 30.9.2009 FOR AN AMOU NT OF RS.48,36,945/- AND AN AGRICULTURAL LAND AT KONDAPAL EM PURCHASED BETWEEN 1.10.2009 AND 31.10.2009 FOR RS.1,01,340/-. IT WAS NOTED ITA NO.62/VIZAG/2015 C. SRINIVASA RAO, VISAKHAPATAM 3 FROM THE PURCHASE DOCUMENTS PRODUCED BEFORE THE A.O . THAT THE SAID ASSETS WERE PURCHASED DURING THE FINANCIAL YEAR 200 8-09 RELEVANT TO ASSESSMENT YEAR 2009-10 AND WERE NOT RELATED TO ASS ESSMENT YEAR 2010-11. AS THE SAID INVESTMENT RELATED TO ASSESSM ENT YEAR 2009-10 AND WERE NOT REFLECTED IN THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10, THERE WERE REASONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT FOR THE ASSESSMENT YEAR 2009 -10 WITHIN THE MEANING OF SECTION 147 OF THE ACT, THEREFORE, THE A .O. ISSUED NOTICE U/S 148 OF THE ACT TO RE-OPEN THE ASSESSMENT. 3. IN RESPONSE THERETO, THE ASSESSEE FILED A REPLY STATING THAT THE RETURN FILED EARLIER ON 27.9.2009 MAY BE TREATED AS RETURN FILED IN RESPONSE TO THE NOTICE ISSUED U/S 148 OF THE ACT. THE ASSESSMENT HAS BEEN TAKEN UP FOR SCRUTINY AND ACCORDINGLY, NOTICES U/S 143(2) & 142(1) OF THE ACT WERE ISSUED. IN RESPONSE TO NOTICES, TH E A.R. OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FURNISHED REQUIRED D ETAILS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, SOURCES FOR THE T WO INVESTMENTS AS DISCUSSED ABOVE, HAS BEEN EXAMINED. THE A.O. FURTH ER OBSERVED THAT THE ASSESSEE HAS EXPLAINED THE SOURCE OF RS.14,61,0 00/- RELATING TO THE PURCHASE OF SITE AT ISUKATHOTA WHICH WAS PAID THROU GH BANK ACCOUNT AND THE REMAINING AMOUNT OF RS.33,75,945/- WHICH HAS BE EN PAID IN CASH ITA NO.62/VIZAG/2015 C. SRINIVASA RAO, VISAKHAPATAM 4 COULD NOT BE SUBSTANTIATED WITH ANY INFORMATION/EVI DENCE TO PROVE THE SOURCE OF SUCH INVESTMENT. THEREFORE, CONSIDERING THE EXPLANATIONS OF THE ASSESSEE, AN AMOUNT OF RS.34,77,285/- HAS BEEN ADDED TO THE TOTAL OF INCOME OF THE ASSESSEE UNDER THE PROVISIONS OF S ECTION 69 OF THE ACT. 4. SUBSEQUENTLY, THE A.O. INITIATED PENALTY PROCEED INGS U/S 271(1)(C) OF THE ACT, FOR THE REASON THAT THE ASSESSEE HAS CO NCEALED PARTICULARS OF HIS INCOME AND FURNISHED INACCURATE PARTICULARS OF INCOME. THE A.O. PROPOSED TO LEVY PENALTY FOR CONCEALMENT OF INCOME FOR THE REASON THAT THE ASSESSEE HAS FAILED TO DISCLOSE THE INVESTMENT IN PURCHASE OF ASSETS FOR THE ASSESSMENT YEAR 2009-10, THEREFORE, OPINED THAT THE ASSESSEE HAS WILLFULLY CONCEALED PARTICULARS OF INCOME WITHI N THE MEANING OF SECTION 271(1)(C) OF THE ACT AND HENCE, ISSUED A SH OW CAUSE NOTICE AND ASKED TO EXPLAIN WHY PENALTY SHALL NOT BE LEVIED UN DER THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. IN RESPONSE TO SHOW CAUSE NOTICE, THE ASSESSEE VIDE HIS LETTER DATED 26.3.2013 SUBMITTED THAT THE INVESTMENT IN PURCHASE OF SITE AND AN AGRICULTURAL LAND WHICH WAS NOT REFLECTED IN THE BOOKS OF ACCOUNTS FOR THE ASSESSMENT YEAR 2009- 10 HAS BEEN CONSIDERED AS HIS PERSONAL ASSET OUTSIDE THE BUSINE SS BOOKS AND THE SOURCES FOR THE INVESTMENT HAS BEEN EXPLAINED. THE ASSESSEE FURTHER SUBMITTED THAT THE ABOVE SAID INVESTMENTS WERE NOT REFLECTED IN THE ITA NO.62/VIZAG/2015 C. SRINIVASA RAO, VISAKHAPATAM 5 BOOKS OF ACCOUNTS, SINCE THE SAME WERE IN PERSONAL NAME AND THAT THE SOURCES FOR THE ABOVE INVESTMENT HAS BEEN PAID THRO UGH BANK ACCOUNT AND ALSO REMAINING CASH PORTION HAS BEEN EXPLAINED WHICH IS RECORDED IN THE BOOKS OF ACCOUNTS. THE ASSESSEE FURTHER SUBMIT TED THAT THOUGH HE HAD EXPLAINED THE SOURCES FOR THE INVESTMENT, HE HA D ADMITTED AN AMOUNT OF RS.34,77,285/- WHICH REPRESENTS CASH PAYM ENT TOWARDS PURCHASE OF PROPERTY, AS HIS INCOME FOR THE ASSESSM ENT YEAR 2009-10, THEREFORE, IT CANNOT BE CONSIDERED AS WILLFUL CONCE ALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCO ME. TO SUPPORT HIS ARGUMENTS, RELIED UPON THE DECISION OF HONBLE KARN ATAKA HIGH COURT IN THE CASE OF CIT VS. M/S. MANJUNATHA COTTON & GINNING FACTORY & OTHERS (2013) 92 DTR 111 (KAR) AND SUBMITTED THAT ADMISSION BY THE ASSESSEE CANNOT BE TAKEN AS CONCLUSIVE EVIDENCE TO PROVE THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME. 5. THE A.O. AFTER CONSIDERING THE EXPLANATIONS OF T HE ASSESSEE HELD THAT THE EXPLANATIONS FURNISHED BY THE ASSESSEE DOE S NOT INSPIRE ANY PLAUSIBLE/REASONABLE CAUSE AND ACCORDINGLY, OPINED THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF HIS INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT, AND AS SUCH IT IS A FIT CASE FOR LEVY OF PENALTY. THE A.O. FURTHER OBSERVED THAT THE ASSESSEE HAS FAILED TO DISCLOSE THE SAID ITA NO.62/VIZAG/2015 C. SRINIVASA RAO, VISAKHAPATAM 6 INVESTMENTS IN THE BOOKS OF ACCOUNTS FOR THE RELEVA NT PERIOD. THOUGH, HE HAD DISCLOSED THE INVESTMENT IN THE ASSETS IN TH E SUBSEQUENT FINANCIAL YEAR, THE ASSESSEE HAS FAILED TO PROVE THE SOURCES FOR THE INVESTMENT TO THE SATISFACTION OF THE A.O. THOUGH ASSESSEE HAS A DMITTED AN AMOUNT OF RS.34,77,285/-, WHICH CANNOT BE CONSIDERED AS VO LUNTARY ADMISSIONS AND THE ASSESSEE HAS ADMITTED THE INCOME AFTER THE A.O. HAS DETECTED SUCH OMISSION FOR THE RELEVANT FINANCIAL YEAR. THE A.O. FURTHER OBSERVED THAT THE ASSESSEES CLAIMS THAT THE INVESTMENT MADE OUT OF THE BUSINESS INCOME WAS NOT REFLECTED IN THE BOOKS OF ACCOUNTS A S IT WAS IN PERSONAL NAME IS MISLEADING AND ALSO FAR FROM TRUTH. IN THE BALANCE SHEET FILED FOR THE PERIOD ENDING 31.3.2010 AND PERTAINING TO M /S. SRI SRINIVASA BRICK INDUSTRIES, WHICH IS THE PROPRIETARY CONCERN OF THE ASSESSEE, THE SAID INVESTMENTS WERE CLEARLY REFLECTED. THIS PROV ES THAT EVEN THOUGH THE REGISTRATION OF THE PROPERTY WAS IN THE PERSONA L NAME, ASSESSEE HIMSELF ADMITTED THE SAME TO BE PART OF FIXED ASSET S FORMS PART OF PROPRIETARY BUSINESS AND THEREFORE, THE CLAIM OF TH E ASSESSEE THAT THESE ASSETS ARE PERSONAL ASSETS IS DEVOID OF ANY MERITS. AS REGARDS THE CASE LAWS RELIED UPON BY THE ASSESSEE, THE A.O. OBSERVED THAT THE CASE LAWS RELIED UPON BY THE ASSESSEE ARE DIFFERENT FROM THE FACTS OF ASSESSEES CASE, AS THE ASSESSEE HAS FAILED TO OFFER ANY EXPLA NATIONS WITH REGARD TO THE SOURCE OF INVESTMENT IN ASSETS AND ALSO AGREED FOR ADDITION AFTER ITA NO.62/VIZAG/2015 C. SRINIVASA RAO, VISAKHAPATAM 7 DETECTION BY THE DEPARTMENT WHICH CANNOT BE CONSIDE RED AS VOLUNTARY ADMISSION. WITH THESE OBSERVATIONS, OBSERVED THAT IT IS A FIT CASE FOR LEVY OF PENALTY, ACCORDINGLY LEVIED PENALTY OF RS.1 0,74,295/- U/S 271(1)(C) OF THE ACT. 6. AGGRIEVED BY THE PENALTY ORDER, THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE A SSESSEE REITERATED THE SUBMISSIONS BEFORE THE A.O. THE ASSESSEE FURTH ER SUBMITTED THAT THE INVESTMENTS IN TWO ASSETS HAS BEEN DISCLOSED IN THE BOOKS OF ACCOUNTS FOR THE ASSESSMENT YEAR 2010-11 AND THE SO URCES OF INVESTMENT HAS BEEN EXPLAINED. THE A.O. WAS NOT CO RRECT IN HOLDING THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCO ME OR FURNISHED INACCURATE PARTICULARS OF INCOME, AS THE SAID INVES TMENT HAS BEEN DETECTED FROM THE RETURN OF INCOME FILED FOR THE AS SESSMENT YEAR 2010- 11 AND HENCE, IT CANNOT BE CONSIDERED AS WILLFUL CO NCEALMENT OF PARTICULARS OF INCOME. THE ASSESSEE FURTHER SUBMIT TED THAT ONCE THE ASSESSEE VOLUNTARILY ADMITS INCOME TO BUY PEACE AND TO COOPERATE WITH THE DEPARTMENT, THE A.O. WAS NOT CORRECT IN IMPOSIN G PENALTY FOR CONCEALMENT OF INCOME. TO SUPPORT HIS ARGUMENTS, RELIED UPON THE DECISION OF HONBLE SUPREME COURT, IN THE CASE OF S URESH CHANDRA MITTAL ITA NO.62/VIZAG/2015 C. SRINIVASA RAO, VISAKHAPATAM 8 VS. CIT 251 ITR 9 AND THE HONBLE KARNATAKA HIGH CO URT, IN THE CASE OF CIT VS. M/S. MANJUNATHA COTTON GINNING FACTORY & OT HERS (SUPRA). 7. THE CIT(A) AFTER CONSIDERING THE EXPLANATIONS OF THE ASSESSEE HELD THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCES FOR THE INVESTMENT IN PURCHASE OF TWO ASSETS AND ALSO FAILED TO EXPLAIN W HY THE SAID ASSETS HAS NOT BEEN DISCLOSED IN THE RETURN OF INCOME FILED FO R THE ASSESSMENT YEAR 2009-10. THE PLEA THAT THE INVESTMENTS WERE PERSON AL ASSETS IS UNTENABLE, AS THE IMPUGNED INVESTMENTS WERE SHOWN A S PART OF FIXED ASSETS IN THE FINANCIAL STATEMENTS PERTAINING TO TH E ASSESSMENT YEAR 2010-11. FURTHER, THE ISSUE RELATING TO THE IMPUGN ED INVESTMENTS WERE OBSERVED BY THE A.O. DURING THE ASSESSMENT PROCEEDI NGS FOR THE ASSESSMENT YEAR 2010-11, HENCE IT CANNOT BE SAID TH AT THE ASSESSEE HAS VOLUNTARILY OFFERED THE AMOUNT FOR TAXATION. THE R ATIO OF THE DECISION OF HONBLE SUPREME COURT, IN THE CASE OF CIT VS. MAK D ATA PRIVATE LIMITED 358 ITR 593 (SC) WOULD SQUARELY APPLY TO THE FACTS OF THE CASE, WITH THESE OBSERVATIONS, UPHELD THE PENALTY LEVIED BY TH E ASSESSING OFFICER. AGGRIEVED BY THE CIT(A) ORDER, THE ASSESSEE IS IN A PPEAL BEFORE US. 8. THE LD. A.R. FOR THE ASSESSEE SUBMITTED THAT THE CIT(A) FAILS TO APPRECIATE THE FACT THAT THE INVESTMENT IN ASSETS H AS BEEN DISCLOSED IN THE BOOKS OF ACCOUNTS AND ALSO IN THE RETURN OF INC OME FILED FOR THE ITA NO.62/VIZAG/2015 C. SRINIVASA RAO, VISAKHAPATAM 9 ASSESSMENT YEAR 2010-11, BEFORE THE ASSESSING OFFIC ER HAS COMPLETED ASSESSMENT FOR THE ASSESSMENT YEAR 2009-10. THE A. R. FURTHER SUBMITTED THAT THOUGH ASSESSEE HAS EXPLAINED SOURCE S FOR THE INVESTMENT WHICH IS EVIDENCED BY HIS BOOKS OF ACCOU NTS, THE ASSESSEE HAS ADMITTED ADDITIONAL INCOME OF RS.34,77,285/- VO LUNTARILY TO BUY PEACE AND TO COOPERATE WITH THE DEPARTMENT FOR SMOO TH COMPLETION OF ASSESSMENT. THEREFORE, THE A.O. WAS NOT CORRECT IN HOLDING THAT THE ASSESSEE HAS WILLFULLY CONCEALED PARTICULARS OF HIS INCOME TO AVOID PAYMENT OF TAXES. THE A.R. FURTHER ARGUED THAT THE LD. COMMISSIONER OUGHT TO HAVE APPRECIATED THE FACT THAT PENALTY PRO CEEDINGS AND ASSESSMENT PROCEEDINGS ARE DIFFERENT AND ASSESSING OFFICER OUGHT TO HAVE CONSIDERED THE EXPLANATION OF THE ASSESSEE AND ITS BONAFIDES AND THE DISCLOSURE OF FACTS NECESSARY AND MATERIAL TO T HE COMPUTATION OF INCOME OF THE ASSESSEE AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE OUGHT NOT TO HAVE CONFIRMED LEVY OF PENALTY. ON THE OTHER HAND, THE LD. D.R. STRONGLY SUPPORTED THE ORDER OF CIT(A) . 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MA TERIALS AVAILABLE ON RECORD. THE A.O. LEVIED PENALTY U/S 2 71(1)(C) OF THE ACT, FOR THE REASON THAT THE ASSESSEE HAS WILLFULLY CONCEALE D PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF HIS I NCOME. THE A.O. WAS ITA NO.62/VIZAG/2015 C. SRINIVASA RAO, VISAKHAPATAM 10 OF THE OPINION THAT THE ASSESSEE HAS FAILED TO DISC LOSE INVESTMENTS IN PURCHASE OF ASSETS FOR THE ASSESSMENT YEAR 2009-10 AND ALSO FAILED TO EXPLAIN SOURCES FOR INVESTMENT IN PURCHASE OF ASSET S. THE A.O. FURTHER WAS OF THE OPINION THAT THE ADMISSION BY THE ASSESS EE CANNOT BE CONSIDERED AS VOLUNTARY, AS THE ASSESSEE HAS ADMITT ED ADDITIONAL INCOME AFTER THE DEPARTMENT HAS DETECTED CONCEALMENT WHICH IS PROVED BY HIS CONDUCT THAT THOUGH THE ASSETS HAD PURCHASED IN THE FINANCIAL YEAR 2008-09 RELEVANT TO ASSESSMENT YEAR 2009-10, HE HAD NOT DISCLOSED THE SAID INVESTMENTS IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2009-10. IT IS THE CONTENTION OF THE ASSESSEE THAT THE INVESTMENTS IN PURCHASE OF PROPERTIES WERE NOT REFLECTED IN THE BO OKS OF ACCOUNTS OF HIS PROPRIETARY CONCERN, SINCE THE SAME WERE IN PERSONA L NAME AND THE SOURCES FOR THE INVESTMENT HAS BEEN EXPLAINED. THE ASSESSEE FURTHER CONTENDED THAT HE HAD DISCLOSED THE SAID ASSETS IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2010-11 AND THE SOURC ES OF INVESTMENT HAS BEEN EXPLAINED WHICH IS EVIDENT FROM HIS BOOKS OF A CCOUNTS, THEREFORE, THE A.O. WAS NOT CORRECT IN HOLDING THAT HE HAD WIL LFULLY CONCEALED PARTICULARS OF HIS INCOME TO AVOID PAYMENT OF TAXES . THE ASSESSEE FURTHER CONTENDED THAT THOUGH HE HAD EXPLAINED SOUR CES FOR INVESTMENTS IN PURCHASE OF PROPERTIES, HE HAD ADMITTED ADDITION AL INCOME OF RS.34,77,285/- TO BUY PEACE AND TO COOPERATE WITH T HE DEPARTMENT FOR ITA NO.62/VIZAG/2015 C. SRINIVASA RAO, VISAKHAPATAM 11 COMPLETION OF ASSESSMENT, THIS CANNOT BE CONSIDERED AS WILLFUL CONCEALMENT OF PARTICULARS OF INCOME WHICH WARRANTS LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 10. THE A.O. LEVIED PENALTY U/S 271(1)(C) OF THE AC T, FOR THE SOLE GROUND THAT THE ASSESSEE FAILED TO DISCLOSE THE ASS ETS FOR THE ASSESSMENT YEAR 2009-10, THOUGH THE ASSETS HAS BEEN PURCHASED IN THE FINANCIAL YEAR 2008-09 RELEVANT TO ASSESSMENT YEAR 2009-10. THE A.O. NEVER DOUBTED THE SOURCES OF INVESTMENT IN PURCHASE OF AS SETS. THE ASSESSEE HAS DISCLOSED THE SAID INVESTMENTS IN HIS BOOKS OF ACCOUNTS FOR THE ASSESSMENT YEAR 2010-11 WHICH FACT WAS NOT DISPUTED BY THE A.O. IT IS ALSO AN ADMITTED FACT THAT THE ASSESSEE HAS DISCLOS ED THE SAID INVESTMENTS IN THE RETURN OF INCOME FILED FOR THE A SSESSMENT YEAR 2010- 11 AND THE SOURCES FOR THE INVESTMENTS HAS BEEN EXP LAINED IN THE BOOKS OF ACCOUNTS. THE ASSESSEE HAS PAID PART OF CONSIDE RATION THROUGH BANK ACCOUNT AND REMAINING CONSIDERATION HAS BEEN PAID B Y WAY OF CASH AND THE CASH PAYMENT HAS BEEN RECORDED IN HIS REGULAR B OOKS OF ACCOUNTS FOR THE ASSESSMENT YEAR 2010-11. INSPITE OF EXPLAI NING THE SOURCES FOR THE INVESTMENTS MADE IN PURCHASE OF ASSETS, THE ASS ESSEE HAD DECLARED ADDITIONAL INCOME OF RS.34,77,285/- TO BUY PEACE AN D TO COOPERATE WITH ITA NO.62/VIZAG/2015 C. SRINIVASA RAO, VISAKHAPATAM 12 THE DEPARTMENT, WHICH CANNOT BE CONSIDERED AS WILLF UL CONCEALMENT OF PARTICULARS OF INCOME. 11. THE A.O. CASE IS THAT THE ASSESSEE HAS PAID CAS H, THE SOURCES FOR WHICH HAS NOT BEEN EXPLAINED WITH NECESSARY EVIDENC ES. WE DO NOT FIND ANY MERITS IN THE FINDINGS OF THE A.O., FOR THE REA SON THAT THE ASSESSEE HAS RECORDED THE INVESTMENTS IN THE REGULAR BOOKS O F ACCOUNTS OF HIS PROPRIETARY CONCERN SRI SRINIVASA BRICK INDUSTRIES AND THE SOURCES FOR INVESTMENT HAS BEEN EXPLAINED WITH NECESSARY EVIDEN CES. THE ONLY ISSUE IS WHETHER THE ASSESSEE IS HAVING SOURCES FOR INVESTMENTS IN THE YEAR OF PURCHASE OF ASSETS TO COVER UP THE INVESTME NTS MADE IN ASSETS. ONCE, THE ASSESSEE HAS RECORDED INVESTMENTS IN HIS BOOKS OF ACCOUNTS AND THE SOURCES FOR INVESTMENT HAS BEEN EXPLAINED, THERE IS NO REASON FOR THE A.O. TO DOUBT THE SOURCES FOR THE INVESTMEN TS WHEN THE PURCHASE OF ASSETS HAS BEEN RECORDED IN THE REGULAR BOOKS OF ACCOUNTS. THEREFORE, WE ARE OF THE VIEW THAT THE A.O. WAS NOT CORRECT IN HOLDING THAT THE ASSESSEE HAS NOT EXPLAINED THE SOURCES FOR INVESTMENTS, WHEN THE ASSESSEE RECORDED THE INVESTMENT IN HIS BOOKS O F ACCOUNTS AND ALSO THE SOURCES FOR INVESTMENT HAS BEEN EXPLAINED IN BO OKS OF ACCOUNTS. AS REGARDS THE ALLEGATION OF A.O., THAT THE ADMISSION MADE BY THE ASSESSEE IS NOT VOLUNTARY AND THE ASSESSEE HAS ADMITTED ADDI TIONAL INCOME AFTER ITA NO.62/VIZAG/2015 C. SRINIVASA RAO, VISAKHAPATAM 13 THE DEPARTMENT HAS DETECTED INVESTMENTS IN ASSETS. WE FIND THAT THE ASSESSEE HAS DISCLOSED THE ASSETS IN HIS BOOKS OF A CCOUNTS AND DISCLOSED THE SAID INVESTMENTS IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2010-11, BEFORE THE A.O. HAS COMPLETED HIS ASS ESSMENT FOR THE YEAR 2009-10. IF THE ASSESSEE HAD AN INTENTION TO NOT TO DISCLOSE THE ASSETS FOR THE PURPOSE OF TAXATION, HE WOULD NOT HA VE DISCLOSED THE ASSET EVEN FOR THE ASSESSMENT YEAR 2010-11. FROM T HIS CONDUCT OF THE ASSESSEE, THE ASSESSEE PROVED THAT HE DID NOT HAVE ANY INTENTION TO AVOID PAYMENT OF TAXES. THEREFORE, WE ARE OF THE V IEW THAT THE A.O. WAS INCORRECT IN HOLDING THAT THE ADMISSION MADE BY THE ASSESSEE IS NOT VOLUNTARY, BUT AFTER THOROUGH EXAMINATION OF THE BO OKS OF ACCOUNTS BY THE DEPARTMENT. 12. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE ASSESSEES CASE SQUARELY COVERED BY T HE DECISION OF HONBLE SUPREME COURT, IN THE CASE OF SURESH CHANDR A MITTAL VS. CIT 251 ITR 9 (SC), WHEREIN THE HONBLE SUPREME COURT H ELD THAT WHEN ASSESSEE SURRENDERED INCOME WITH A REQUEST NOT TO I NITIATE PENALTY PROCEEDINGS TO BUY PEACE FROM THE DEPARTMENT AND TO COOPERATE FOR THE PROCEEDINGS, THE A.O. WAS NOT CORRECT IN LEVY OF PE NALTY U/S 271(1)(C) OF THE ACT. A SIMILAR VIEW HAS BEEN EXPRESSED BY THE COORDINATE BENCH OF ITA NO.62/VIZAG/2015 C. SRINIVASA RAO, VISAKHAPATAM 14 ITAT, DELHI BENCH IN THE CASE OF INCOME TAX OFFICER VS. RAKESH KUMAR GUPTA IN ITA NO.2690/2009, WHEREIN THE COORDINATE B ENCH BY FOLLOWING THE DECISION OF HONBLE HIGH COURT OF ALLAHABAD, HE LD THAT IF AN ASSESSEE SURRENDERED ADDITIONAL INCOME WITH A CONDITION THAT NO PENALTY SHALL BE TAKEN TO AVOID FURTHER LITIGATION AND ALSO TO BUY P EACE THEN IN SUCH SITUATION, PENALTY COULD NOT BE IMPOSED. 13. IN THE PRESENT CASE ON HAND, ON PERUSAL OF THE FACTS AVAILABLE ON RECORD, WE FIND THAT THE ASSESSEE HAS DISCLOSED THE SAID INVESTMENT IN HIS REGULAR BOOKS OF ACCOUNTS FOR THE ASSESSMENT YE AR 2010-11, BEFORE THE ASSESSING OFFICER INITIATED RE-ASSESSMENT PROCE EDINGS. THE A.O. INITIATED RE-ASSESSMENT PROCEEDINGS BASED ON THE IN FORMATION SUPPLIED BY THE ASSESSEE IN THE FORM OF RETURN FILED FOR THE ASSESSMENT YEAR 2010-11. THEREFORE, WE ARE OF THE VIEW THAT THE A. O. WAS INCORRECT IN HOLDING THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME TO AVOID PAYMENT OF TAXES. THE EXPLANATION OFFERED BY THE ASSESSEE THAT HE HAD PURCHASED THE ASSET IN HIS PERSONAL NAME AND THE SOURCES HAVE BEE N EXPLAINED OUT OF HIS BUSINESS INCOME APPEARS TO BE BONAFIDE, AS THE INVESTMENTS IN THE ASSETS HAS BEEN RECORDED IN THE REGULAR BOOKS OF AC COUNTS OF THE ASSESSEE. THE CIT(A) WITHOUT APPRECIATING THE FACT S, SIMPLY UPHELD THE ITA NO.62/VIZAG/2015 C. SRINIVASA RAO, VISAKHAPATAM 15 PENALTY LEVIED BY THE A.O. HENCE, WE SET ASIDE THE ORDER PASSED BY THE CIT(A) AND DIRECT THE A.O. TO DELETE THE PENALTY LE VIED U/S 271(1)(C) OF THE ACT. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 15. THE ASSESSEE HAS FILED STAY PETITION, SEEKING S TAY OF DEMAND FOR THE ASSESSMENT YEARS 2009-10. SINCE, THE APPEAL FI LED BY THE ASSESSEE FOR THE ABOVE ASSESSMENT YEAR HAS BEEN DISPOSED OFF , THE STAY PETITION FILED BY THE ASSESSEE BECOME INFRUCTUOUS AND HENCE, THE SAME IS DISMISSED AS INFRUCTUOUS. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 22 ND SEPT16. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 22.09.2016 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT SHRI SAMUEL NAGADESI, CHARTERED ACCOUNTANT, 408, SRI RAMAKRISHNA TOWERS, BESIDES IMAGE HOSPITALS, AMEERPE T, HYDERABAD-500073. 2. / THE RESPONDENT THE DCIT, CIRCLE-3(1), VISAKHAP ATNAM 3. / THE RESPONDENT ITO, WARD-1(4), VISAKHAPATNAM 4. + / THE CIT, VISAKHAPATNAM 5. + ( ) / THE CIT (A)-I, VISAKHAPATNAM ITA NO.62/VIZAG/2015 C. SRINIVASA RAO, VISAKHAPATAM 16 6. # . , . , # / DR, ITAT, VISAKHAPATNAM 7 . / GUARD FILE / BY ORDER // TRUE COPY // 12 . (SR.PRIVATE SECRETARY) . , # / ITAT, VISAKHAPATNAM