P.Gopal Reddy, Hyd, Hyderabad V. ITO, Ward-8(2), Hyderabad, Hyderabad

ITA 747/HYD/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5857 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 24-10-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 19-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A SITARAMA RAO
• Assessee Lawyers: S RAMA RAO

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 747/HYD/2016 ASSESSMENT YEAR: 2009-10 P. GOPAL REDDY, HYDERABAD. PAN AGGP 3953K VS. INCOME-TAX OFFICER, WARD 8(2), HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S. RAMA RAO REVENUE BY : SHRI A. SITARAMA RAO DATE OF HEARING : 27-12-2016 DATE OF PRONOUNCEMENT : 30-12-2016 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS IS AN APPEAL OF THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(A) - 2, HYDE RABAD, DATED 22/02/2016, FOR AY 2009-10. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT IN THE CA SE OF THE ASSESSEE, AN INDIVIDUAL, HAS FILED A RETURN OF INCO ME FOR THE AY 2009- 10 ON 29/07/2009 DECLARING THEREIN A TOTAL INCOME O F RS. 1,48,360/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. THE AO OBSERVED THAT ON PERUSAL OF RECORD, IT WAS REVEALED THAT THE ASSESSEE HAD DEPOSITED AMOUNTS TO THE EXTENT OF RS. 21,08,500/- IN CASH. WHEN THE AO ASKED THE ASSESSEE TO EXPLAIN THE SOURCES FOR T HE DEPOSITS/CREDITS MADE IN THE BANK ACCOUNT, IT WAS E XPLAINED THAT THE ASSESSEE UNDERTOOK SMALL CIVIL CONTRACTS/ WORK CONT RACTS AND GOT THE AMOUNTS AND THE SAME WAS DEPOSITED IN THE BANK ACCO UNT. WHEN THE AO ASKED TO PRODUCE THOSE PERSONS FROM WHOM THE SAI D AMOUNTS WERE RECEIVED AND UNDERTOOK WORKS, ASSESSEE REQUEST ED FOR 15 DAYS 2 ITA NO. 747/H/16 SRI P. GOPAL REDDY TIME TO FURNISH. SINCE THERE WAS NO TIME AND THE AS SESSEE WAS ASKED TO PRODUCE THE EVIDENCE IMMEDIATELY BUT THE ASSESSE E EXPRESSED HIS INABILITY TO PRODUCE THEM AND CAME FORWARD TO ADMIT THE PROFIT ON THE RECEIPTS AT 12.5%. SINCE THE AO DID NOT SATISFY WIT H THE OFFER OF THE ASSESSEE, THE ASSESSEE ADMITTED AN AMOUNT OF RS. 8, 00,000/- AS ADDITIONAL INCOME VOLUNTARILY AND TO THIS EFFECT FI LED A LETTER. ACCORDINGLY, THE AO MADE ADDITION OF RS. 8,00,000/- . 3. THEREAFTER, THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT ON THE GROUND THAT THE SOURCES FOR THE A MOUNTS DEPOSITED WERE NOT EXPLAINED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. SINCE THE ADMISSION OF RS. 8,00,000/- AS ADDITIONAL INCOME IN ADDITION TO THE INCOME RETURNED WAS MADE DURING THE SCRUTINY AND NOT WHILE FILING THE RETURN OF INCOME, THE AO CAME TO THE CON CLUSION THAT THE ASSESSEE CONCEALED HIS INCOME. ACCORDINGLY, HE LEVI ED A MINIMUM PENALTY OF RS. 1,96,000/- U/S 271(1)(C) OF THE ACT. 4. ON APPEAL BEFORE THE CIT(A), THE ASSESSEE CONTE NDED THAT THE IT IS NOT CORRECT FOR THE AO TO MENTION THAT THE CA SH DEPOSITS WERE NOT PROPERLY EXPLAINED AND THE AO HAS NOT ESTABLISHED T HAT THE ASSESSEE CONCEALED ANY PART OF INCOME. THEREFORE, THE ASSESS EE SUBMITTED THAT THE AO IS NOT JUSTIFIED IN LEVYING PENALTY U/S 271( 1)(C) OF THE ACT. THE CIT(A) CONFIRMED THE ACTION OF THE AO IN LEVYING PE NALTY. 5. AGGRIEVED BY THE ACTION OF THE CIT(A) IN CONFIRM ING THE PENALTY LEVIED BY THE AO, THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN L EVYING PENALTY U/S 271(1)(C) OF THE I.T. ACT OF RS.1,96,000/- WITH OUT CONSIDERING THE FACT THAT THERE IS NEITHER CONCEALMENT OF INCOM E NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 3 ITA NO. 747/H/16 SRI P. GOPAL REDDY 5.1 THE ASSESSEE FILED A PETITION REQUESTING FOR A DMISSION OF THE ADDITIONAL GROUND, WHICH IS AS UNDER: THE INITIATION OF PROCEEDINGS U/S 271(1)(C) OF THE INCOME-TAX ACT, IS NOT VALID AS THE AO DID NOT STRIKE OFF THE INAPPROPRIATE PORTION OF THE NOTICE. THE AO OUGHT TO HAVE STRUCK OFF THE INAPPROPRIATE PORTION AND INDICATED TO THE APPELLA NT THE APPLICABLE PORTION IN THE NOTICE. 6. AS THE SAID ADDITIONAL GROUND IS A LEGAL GROUND, WHEREIN, THE FACTS ARE ON RECORD AND FACTS DO NOT REQUIRE FRESH INVESTIGATION, FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO., LIMITED VS. CIT 229 ITR 383 (SC), WE ADMIT THE SAID ADDITIONAL GROUND OF ASSESSEE. 7. THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS BY ISSUE OF A NOTICE U/S 274 R.W.S. 271(1)(C) ON 09.11.2011. HE SUBMITTED THAT W HILE ISSUING THE SAID NOTICE, THE ASSESSING OFFICER DID NOT MENTION WHETHER THE NOTICE IS ISSUED FOR CONCEALMENT OF INCOME OR FOR FURNISHI NG OF INACCURATE PARTICULARS OF INCOME. THEREFORE, THE NOTICE IS NOT VALIDLY ISSUED. CONSEQUENTLY, THE ORDER PASSED U/S 271(1)(C) ALSO I S NOT VALID. FOR THIS PROPOSITION, HE RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. SSAS EMERALD MEADOWS, [2016] 73 TAXMANN.COM 248 (SC). 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND RELIED ON THE ORDERS OF REVENUE AUTHORITIES. 9. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL FACTS ON RECORD. THE ISSUE IN DISPUTE IS SQUARELY COVERED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. SS AS EMERALD MEADOWS, [2016] 73 TAXMANN.COM 248 (SC) WHEREIN THE APEX COURT UPHELD THE DECISION OF THE HONBLE HIGH COURT, IN W HICH, THE HONBLE HIGH COURT CONFIRMED THE ORDER OF THE TRIBUNAL AND DISMISSED THE APPEAL OF THE REVENUE, WHO CAME IN APPEAL AGAINST T HE ORDER OF THE 4 ITA NO. 747/H/16 SRI P. GOPAL REDDY TRIBUNAL. THE TRIBUNAL RELYING ON A DECISION OF KA RNATAKA HIGH COURT IN CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACT ORY, [2013] 359 ITR 565/210 ALLOWED THE APPEAL OF THE ASSESSEE HOLD ING THAT NOTICE ISSUED BY ASSESSING OFFICER U/S 274 READ WITH SECTI ON 271(1)(C) WAS BAD IN LAW, AS IT DID NOT SPECIFY UNDER WHICH LIMB OF SECTION 271(1)(C) PENALTY PROCEEDINGS HAD BEEN INITIATED, I.E. WHETHE R FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURAT E PARTICULARS OF INCOME. 9.1 IN THE CASE UNDER CONSIDERATION, ON PERUSAL OF THE SHOW CAUSE NOTICES ISSUED BY THE ASSESSING OFFICER U/S 274 R.W .S. 271(1)(C) OF THE IT ACT, 1961, DATED 09/11/2011 IT IS SEEN THAT THE ASSESSING OFFICER DID NOT MENTION WHETHER THE NOTICE IS ISSUED FOR CO NCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THEREFORE, AS PER THE RATIO LAID DOWN BY THE HONBL E SUPREME COURT IN THE CASE OF SSAS EMERALD MEADOWS, THE NOTICE ISSU ED BY THE ASSESSING OFFICER IS NOT VALID AND CONSEQUENTLY, TH E ORDER PASSED U/S 271(1)(C) IS ALSO NOT VALID. HENCE, WE SET ASIDE TH E ORDER OF THE CIT(A) AND QUASH THE ORDER PASSED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE ACT. ACCORDINGLY, THE APPEAL OF TH E ASSESSEE IS ALLOWED. 10. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 30 TH DECEMBER, 2016. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAH MAN) JUDICIAL MEMBER AC COUNTANT MEMBER HYDERABAD, DATED: 30 TH DECEMBER, 2016 KV 5 ITA NO. 747/H/16 SRI P. GOPAL REDDY COPY TO:- 1) SHRI P. GOPAL REDDY, C/O S. RAMA RAO, FLAT NO. 1 02, SHRIYAS ELEGANCE, H. NO. 3-6-643, ST. NO. 9, H IMAYATNAGAR, HYDERABAD 500 029. 2) ITO, WARD 8(2), HYD. 3) CIT(A) - 2, HYDERABAD 4 PR. CIT - 2, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE