Ramaroa Madhavarapu , Hyderabad V. Asst. Commissioner of Income Tax, Circle-1, Karimnagar

ITA 758/Hyd/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3200 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Assessment Year: 2014-2015
• Appeal Filed On: 13-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Business income; Revised return; Set aside
• Section: 271(1)(c); 5(2); 139(5); 264; 139(1); 64; 13; 145(3); 90

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 758 /HYD./201 9 ASSESSMENT YEAR: 20 14 - 15 SRI RAMA RAO MADHAVARAPU VS A CIT, CIRCLE 1 HYDERABAD KARIMNAGAR [PAN: AJIPM7296B ] (APPELLANT) (RESPONDENT) FOR ASSESSEE: SHRI MOHD. AFZAL, ADV. FOR REVENUE: SHRI SUNIL KUMAR PANDEY, D.R. DATE OF HEARING : 0 5 /05/2021 DATE OF PRONOUNCEMENT : 15 /0 6 /2021 O R D E R PER L.P. SAHU, A.M. THIS IS ASSESSEES APPEAL AGAINST THE CIT(A) - 8, HYDERABADS ORDER DATED 13.02.2019 FOR AY 2014 - 15 CHALLENGING PENALTY ORDER CONFIRMED BY CIT(A) ON TAKING VARIOUS GROUNDS OF APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME O N 06.10.2014 DECLARING TAXABLE INCOME OF RS.54,57,990/ - AND THE CASE WAS SELECTED FOR SCRUTINY THROUGH CASS AND STATUTORY NOTICES WERE ISSUED TO THE ASSESSEE. THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN CONTRACT BUSINESS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS SHOWN GROSS RECEIPTS OF RS.8,63,10,567/ - AND SHOWN NET PROFIT ITA NO. 758 / HYD/201 9 SRI RAMA RAO MADHAVARAPU, HYD. AY 20 14 - 15 2 OF RS.54,96,87 4 / - WHICH CO MES TO 4.3% OF THE NET PROFIT AND THE ASSESSEE WAS ASKED TO PROVE THE EXPENDITURE CLAIMED INTO PROFI T & LOSS A/C BUT THE ASSESSEE WAS UNABLE TO PROVE THE SAME . THEREFORE, THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNTS U/S 14 5(3) OF THE ACT AND ESTIMATED NET PROFIT ON PERCENTAGE BASIS AND CALCULATED THE ASSESSED INCOME OF RS.81,54,518/ - . THE ASSESSING OFFICER PASSED ORDER U/S 271(1)(C) ON 29 TH JUNE,2017 AND IMPOSED A PENALTY OF RS.5 LAKHS WHICH IS 100% OF THE TAX EVADED. 3. BEING AGGRIEVED FROM THE ORDER OF THE PENALTY APPEAL PASSED BY THE ASSESSING OFFICER THE ASSESSEE FILED APPEAL BEFORE T HE CIT(A) WHO DISMISSED THE APPEAL OF THE ASSESEE. 4. BEING AGGRIEVED BY THE ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN IMPOSING THE PE NALTY UPON ASSESSEE ON THE ESTIMATED ADDITIONS MADE BY THE ASSESSING OFFICER AND HE REQUESTED FOR SENDING THE MATTER BACK TO THE FILE OF ASSESSING OFFICER FOR RE - ADJUDICATION. 6. ON THE OTHER HAND, LD.DR RELIED ON THE ORDERS OF LOWER AUTHORITIES. 7. AFTER HEARING BOTH SIDES AND PERUSING ORDERS OF THE AUTHORITIES BELOW, WE OBSERVE THAT THE PENALTY HAS BEEN IMPOSED BY THE ASSESSING OFFICER ON THE ESTIMATE D ADDITIONS AND REJECTED BOOKS OF ACCOUNTS OF THE ASSESSEE APPLYING SEC.14 5 (3) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS LEADING TO CONCEALMENT OF INCOME U/S 271(1)(C ) OF THE ACT. 8 . ON A SIMILAR ISSUE THE COORDINATE BENCH OF THIS TRIBUNAL IN ITA 535/HYD/2019 HAS DECIDED THE APPEAL IN FAVOUR OF THE ASSESSEE HOLDING THAT PENALTY CANNOT BE IMPOSED ON E STIMATED ADDITIONS MADE BY THE ASSESSING OFFICER. THE RELEVANT PART OF THE ORDER IS EXTRACTED HEREUNDER. 7.1 AS REGARDS THE GROUND RAISED ON MERITS, ON GOING THROUGH THE ORDERS OF AUTHORITIES BELOW, WE OBSERVE THAT PENALTY HAS BEEN IMPOSED BY THE AO ON THE GROUND OF NON - DISCLOSURE OF THE CONTRACT WORKS AND ITA NO. 758 / HYD/201 9 SRI RAMA RAO MADHAVARAPU, HYD. AY 20 14 - 15 3 ADDITION MADE ON ESTIMATED BASIS, ON WHICH PENALTY HAS B EEN IMPOSED BY THE AO FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME DURING THE YEAR. PENALTY CANNOT BE LEVIED ON THE ESTIMATE ADDITION. 4.1 WITH REGARD TO THE LEVY OF PENALTY ON ADDITION OF RS. 1,38,750, IT WAS SUBMITTED THAT PENALTY WAS IMPOSED MER ELY ON ESTIMATE OF INCOME. THE AO REJECTED THE ASSESSEE'S CONTENTION ON THE REASON THAT THE PLOT THOUGH HAD NOT BEEN SOLD AT THE PRICE LOWER THAN THE PRICE FIXED BY THE REVENUE AUTHORITIES, THE SAME WAS NOT APPLICABLE TO THE ASSESSEE AS INCOME FROM THE SAL E OF PLOT WAS SHOWN UNDER THE HEAD 'BUSINESS INCOME'. FURTHER, FOR SOME OF THE PLOTS THE RATES ARE VERY LOWER AND THE CONTENTION OF THE ASSESSEE HAS ALREADY BEEN REJECTED BY THE CIT(A) UNDER S. 264 OF THE IT ACT. THE ASSESSEE CHALLENGED THE PENALTY ORDER B EFORE CIT(A) AND IT WAS SUBMITTED THAT PENALTY IS IMPOSED WITHOUT ARISING ANY REASON. THE ASSESSEE HAS, PURCHASED LAND AT RAHON ROAD, LUDHIANA FROM 9TH FEB.. 2004 ONWARDS UPTO FINANCIAL YEAR 2006 - 07 AND DEVELOPMENT OF THE ABOVE LAND HAD BEEN CARRIED OUT DU RING THE ABOVE PERIOD. THE TOTAL COST OF LAND AVAILABLE FOR SALE MEASURING 13100 SQUARE YARDS AFTER LEAVING SPACE FOR ROADS AND PARKING ETC. INCLUDING ESTIMATED DEVELOPMENT CHARGES WORKS OUT AT RS. 721 PER SQUARE YARD. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD SOLD FOUR PLOTS MEASURING 982.5 SQUARE YARDS FOR RS. 7,86,000 ON RATES VARYING FROM RS. 456 PER SQUARE YARD TO RS. 1,056 PER SQUARE YARD AND EARNED NET PROFIT OF RS. 77,600. THE ABOVE PROFIT HAS BEEN DISCLOSED IN THE RETURN UNDER THE HEAD 'BUSINESS INCOME'. THE SALE RATES ARE SUPPORTED BY SALE DEEDS. THE IRREGULARITIES IN THE SHAPE OF THE LAND HAD BEEN ATTENDED TO AND DUE TO VARIOUS REASONS THERE WAS DIFFERENCE IN THE RATES. THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF K.P. VARG HESE V ITO [1981] 131 ITR 597/7 TAXMAN 13 WAS RELIED ON IN WHICH IT WAS HELD THAT IT IS ONLY THE REGISTERED VALUE OF ANY PROPERTY WHICH HAS TO BE CONSIDERE D AND THE ONUS OF ESTABLISHING THAT ANY AMOUNT WAS RECEIVED OVER AND ABOVE THE AMOUNT DECLARED IS ALWAYS ON THE REVENUE. IT WAS FURTHER SUBMITTED THAT ADDITION IS MERELY ON THE ESTIMATE BASIS SO IT IS NOT A CONCLUSIVE EVIDENCE TO PROVE THAT ASSESSEE HAS CO NCEALED THE PARTICULARS OF INCOME OR FILED INACCURATE PARTICULARS OF INCOME. NO EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH FOR LEVY OF THE PENALTY. IT WAS, THEREFORE, SUBMITTED THAT LEVY OF PENALTY MAY ALSO BE CANCELLED. THE LEARNED CIT(A) ON CONSIDERA TION OF THE SUBMISSIONS OF THE ASSESSEE, CANCELLED THE PENALTY UNDER THIS HEAD ALSO. THE FINDINGS OF THE LEARNED CIT(A) IN PARA 8 OF THE APPELLATE ORDER ARC REPRODUCED BELOW : '8. I HAVE CONSIDERED THE FACTS OF THE CASE AND THE BASIS OF PENALTY IMPOSED BY THE AO ON THE ISSUE. IT IS A MATTER OF FACT THAT THE ADDITION MADE IS PURELY ON ESTIMATE BASIS AND NOTHING HAD BEEN BROUGHT ON RECORD BY THE AO WHICH COULD BE TERMED AS EVIDENCE TO REJECT THE SALE PRICE AS RECORDED IN THE REGISTERED DOCUMENT. THE AO REJECT ED THE VARIOUS CONTENTIONS OF THE APPELLANT FOR HAVING SOLD THE PLOT AT PRICE LOWER THAN THE NORMALLY EXPECTED PRICE BY RECORDING HIS OWN CONCLUSIONS AND FINALLY PROCEEDING TO MAKE THE ADDITION BY SUBSTITUTING AN ESTIMATED SALE PRICE AS AGAINST THE PRICE R ECORDED IN THE REGISTERED DOCUMENT WHICH WAS NOT BELOW THE PRICE FIXED BY THE REVENUE AUTHORITIES. THE ADDITION SO MADE GOT CONFIRMED BEFORE THE CIT(A) IN PROCEEDINGS UNDER S. 264, BUT THE FACT REMAINS THAT THE AO EVEN DURING THE PENALTY PROCEEDINGS HAS ME RELY RELIED UPON THE ADDITION MADE AND SUSTAINED AND NOT BROUGHT ANY EVIDENCE TO HOLD THAT THE PLOT IN QUESTION HAD ACTUALLY BEEN SOLD AT PRICE OTHER THAN THE REGISTERED PRICE. THE PENALTY UNDER S. 271(1)(C) WOULD NOT BE LEVIABLE AS THE ASSESSEE HAD GIVEN DETAILED EXPLANATION FOR CHARGING LOWER RATES AND THE SAME HAVE NOT BEEN CONTROVERTED BY THE AO BY BRINGING ON RECORD ANY EVIDENCE TO SHOW THAT THE REASONS/EXPLANATION GIVEN BY THE ASSESSEE WAS FALSE OR UNSUBSTANTIATED. THE RELIANCED PLACE BY THE AUTHORISE D REPRESENTATIVE ON THE HON'BLE PUNJAB & HARYANA HIGH COURT JUDGMENT IN THE CASE OF CIT V. SANGRUR VANASPATI MILLS LTD. IS PERFECTLY IN ORDER. AS SUCH THE PENALTY IMPOSED BY THE AO DESERVES TO BE DELETED.' ITA NO. 758 / HYD/201 9 SRI RAMA RAO MADHAVARAPU, HYD. AY 20 14 - 15 4 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER OF THE AO AND SUBMITTED THAT ASSESSEE HAS NOT DISCLOSED SUO MOTU THE SURRENDERED AMOUNT OF RS. 45 LAKHS IN HIS RETURN OF INCOME, THEREFORE, IT IS A CASE OF CONCEALMENT OF INCOME AND THE REVISED RETURN WAS FILED AFTER THE AO DETECTED THE CONC EALED INCOME UPON WHICH SHOW CAUSE NOTICE WAS ISSUED ON 24TH DEC, 2008. THEREFORE, IT IS A FIT CASE OF CONCEALMENT OF INCOME AND PENALTY SHOULD HAVE BEEN LEVIED. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT SINCE REVISED RETURN WAS FILED AFTER DE TECTION MADE BY THE AO, THEREFORE, THE DISCLOSURE OF RS. 45 LAKHS IS NOT VOLUNTARY AND BONA FIDE AND IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE FOLLOWING DECISIONS : (I) DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF PREMPAL GANDHI V. CIT [2011] 335 ITR 23/[2009] 185 TAXMAN 64 . (II) DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V. BANSAL ABHUSHAN BHANDAR [IT REFERENCE NOS. 272 TO 276 OF 1995, DATED 6 - 11 - 2006]. (III) DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF RAJESH CHAWLA V. CIT [2006] 154 TAXMAN 364 . (IV) UNREPORTED DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SHVETA NANDA V. CIT [2011] 336 ITR 298/[2012] 211 TAXMAN 129 (MAG.)/[2011] 13 TAXMANN.COM 133 . AS REGARDS THE PENALTY IMPOSED ON DIFFERENCE IN THE VALUATION OF SALE OF PROPERTY, THE LEARNED DEPARTMENTAL REPRESENTAT IVE MERELY RELIED UPON THE ORDER OF AO. 6. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LEARNED CIT(A) AND SUBMITTED THAT SURRENDER LETTER WAS FILED DURING THE SEARCH ITSELF ON 10TH AUG., 2006 WHICH IS ALREADY PART OF THE RECORD. THE ASSESSEE HA S PAID ADVANCE TAX OF RS. 5 LAKHS EACH ON DUE DATES AND THE SAME HAS ALSO BEEN THE PART OF THE RECORD AND THUS ASSESSEE PAID RS. 15 LAKHS AS ADVANCE TAX ON THE SURRENDERED INCOME WHICH IS ALSO SHOWN IN THE ORIGINAL RETURN OF INCOME FILED ON 3RD SEPTEMBER 2 007 UNDER S. 139(1) OF THE IT ACT (PAPER BOOK - 2). PAPER BOOK - 04 IS REVISED RETURN IN WHICH ASSESSEE HAS SPECIFICALLY MENTIONED THE SURRENDER OF RS. 45 LAKHS UPON WHICH ADVANCE TAX HAS ALSO BEEN PAID. THE CASH FLOW CHART AND BALANCE SHEETS WERE FILED BEFORE THE AO AND AT THE ASSESSMENT STAGE ON 16TH DEC, 2008 I.E. BEFORE THE ORDER SHEET DT. 24TH DEC, 2008 POINTED OUT BY THE LEARNED DEPARTMENTAL REPRESENTATIVE IN WHICH ALSO THE ASSESSEE HAS SPECIFICALLY DECLARED THE SURRENDERED INCOME OF RS. 45 LAKHS. THE COP Y OF THE SAME IS FILED AT PP. 6 AND 7 OF THE PAPER BOOK REFLECTING SURRENDERED AMOUNT OF RS. 45 LAKHS. THE ASSESSEE NEVER RETRACTED FROM THE SURRENDER OF RS. 45 LAKHS AT ANY STAGE. THERE WAS NO QUERY RAISED BY AO REGARDING NON - INCLUSION OF RS. 45 LAKHS TIL L 16TH DEC, 2008 THOUGH THE PROCEEDINGS STARTED EARLIER. FROM THE DETAILS FILED IN BALANCE SHEET AND CASH FLOW STATEMENT ON 16TH DEC, 2008 (PAPER BOOKS 6 AND 7), THE AO BECAME AWARE OF THE NON - INCLUSION OF THE AMOUNT OF RS. 45 LAKHS IN COMPUTATION OF INCOM E AND ON THAT BASIS ONLY HE RAISED THE QUERY ON 24TH DEC, 2008 AS TO HOW THIS AMOUNT HAS BEEN ACCOUNTED FOR IN THE RETURN. THUS, AO WAS AWARE OF THE SURRENDER OF THE AMOUNT AND FROM THE ADVANCE TAX ALREADY PAID BY THE ASSESSEE WERE NEITHER THE ASSESSEE NOR THE AO COULD NOTICE THE INADVERTENT ERROR, THEREFORE, EVERYTHING WAS PART OF THE RECORD, THEREFORE, THERE WAS NO CONCEALMENT ON THE PART OF THE ASSESSEE AT ANY POINT OF TIME. IT WAS AN INADVERTENT ERROR THAT WHILE PREPARING COMPUTATION OF INCOME, INCOME O F RS. 45 LAKHS WAS OMITTED TO BE DISCLOSED IN THE ORIGINAL RETURN BUT THERE WAS NO INTENTION TO CONCEAL ANYTHING BECAUSE EVERY FACT WAS DISCLOSED AND ITA NO. 758 / HYD/201 9 SRI RAMA RAO MADHAVARAPU, HYD. AY 20 14 - 15 5 WAS PART OF THE RECORD TO SHOW THE ASSESSEE VOLUNTARILY SURRENDERED RS. 45 LAKHS. HE HAS RELIED UPON THE D ECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF PRICE WATERHOUSE COOPERS (P.) LTD. V. CIT [2012] 348 ITR 306/211 TAXMAN 40/25 TAXMANN.COM 400 IN WHICH THOUGH EVERYTHING HAD BEEN MENTIONED IN THE TAX AUDIT REPORT BUT WAS NOT DISALLOWED WHILE PREPARING THE COMPUTATION OF INCOME, IT WAS HELD THAT IT WAS A CASE OF INADVERTENT MISTAKE AND NO PENALTY WAS LEVIABLE FOR CONCEALMENT. HE HAS ALSO RELIED UPON THE DE CISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V. RAVAIL SINGH & CO. [2002] 254 ITR 191/122 TAXMAN 831 HELD 'THAT PENALTY - CONCEALMEN T OF INCOME - ADDITIONS MADE ON BASIS OF ESTIMATE AND NOT ON CONCRETE EVIDENCE OF CONCEALMENT OF INCOME - PENALTY NOT LEVIABLE UNDER ' S. 271(1)(C) IT ACT, 1961, S. 271(1)(C), EXPLANATION'. 7. HE HAS ALSO RELIED UPON THE DECISION OF HON'BLE SUPREME COURT IN TH E CASE OF CIT V. RELIANCE PETROPRODUCTS (P) LTD. [2010] 322 ITR 158/189 TAXMAN 322 HELD THAT 'NO INFORMATION GIVEN IN RETURN FOUND TO BE INCORRECT - MAKING INCORRECT CLAIM - DOES NOT AMOUNT TO CONCEALMENT OF 'PARTICULARS' IT ACT, 1961, S. 271(1)(C) \ 8. THE LEARNED COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMITTED THAT ALL FACTS AND SURRENDER O F THE AMOUNT WERE ALREADY WITHIN THE KNOWLEDGE OF THE REVENUE DEPARTMENT AND PART OF THE RECORD AND IT WAS ALSO SPECIFICALLY DISCLOSED IN THE CASH FLOW AND BALANCE SHEET FILED AT ASSESSMENT STAGE ON 16TH DEC, 2008, THEREFORE, IT IS A CASE OF BONA FIDE ERRO R AND NOT A CASE OF CONCEALMENT OF INCOME. HE HAS SUBMITTED THAT ASSESSEE HAS SURRENDERED AMOUNT DURING THE COURSE OF SEARCH UNDER S. 132(4) R/W CL. (2) OF EXPLN. 5 TO S. 271(1)(C) OF THE ACT WHICH HAS BEEN ACCEPTED, THEREFORE, PENALTY IS NOT LEVIABLE. LEA RNED COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT NONE OF THE JUDGMENTS CITED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE ARE APPLICABLE BECAUSE IN ALL THESE CASES THERE WAS A ENQUIRY BY THE DEPARTMENT AND ALL THE FACTS WERE CONFRONTED TO THE ASSESSEE AND T HEREAFTER THE ASSESSEE MADE THE SURRENDER. THUS, THE FACTS ARE ENTIRELY DIFFERENT. AS REGARDS THE PENALTY ON SALE OF PROPERTY, HE HAS SUBMITTED THAT MERELY BECAUSE THE SALE RATE WAS ENHANCED BY THE AO AS AGAINST THE SALE DEED IS NO GROUND TO PROVE THAT ASS ESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FILED INACCURATE PARTICULARS OF INCOME. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CONSIDERED THE MATERIAL AVAILABLE ON RECORDS IT IS NOT DISPUTED THAT ASSESSEE HAS MADE SURRENDER OF RS. 45 LAKHS DURING THE C OURSE OF SEARCH ON 10TH AUG., 2006 ITSELF AND SURRENDER WAS WITHIN THE KNOWLEDGE OF THE REVENUE DEPARTMENT. THE ASSESSEE NEVER RETRACTED FROM THE SURRENDER SO MADE DURING THE COURSE OF SEARCH. THE ASSESSEE ALSO MADE SUCH SURRENDER WHILE HIS STATEMENT WAS R ECORDED DURING SEARCH UNDER S. 132(4) OF THE IT ACT. THE ASSESSEE IN PURSUANCE OF HIS SURRENDER ALSO DEPOSITED THE ADVANCE TAX OF RS. 15 LAKHS IN THREE INSTALMENTS OF RS. 5 LAKHS EACH ON 14TH SEPT., 2006, 12TH. DEC. 2006 AND 15TH MARCH, 2007. THUS, ALL FAC TS WERE DISCLOSED TO THE REVENUE DEPARTMENT IN PURSUANCE TO THE SURRENDER OF RS. 45 LAKHS THAT ASSESSEE MADE DURING THE COURSE OF SEARCH. THE ASSESSMENT YEAR UNDER APPEAL IS 2007 - 08 AND THE DUE DATE OF FILING OF RETURN UNDER S. 139(1) DID NOT EXPIRE ON THE DATE OF THE SURRENDER MADE BY THE ASSESSEE. THE LEARNED DEPARTMENTAL REPRESENTATIVE FILED THE COPY OF THE ORDER SHEET TO SHOW THAT AO ASKED FOR EXPLANATION OF THE ASSESSEE ON 24TH DEC, 2008 AS TO HOW THE AMOUNT OF RS. 45 LAKHS HAVE BEEN ACCOUNTED FOR IN T HE RETURN OF INCOME. THE LEARNED COUNSEL FOR THE ASSESSEE, HOWEVER, SUBMITTED THAT IN THE ORIGINAL RETURN OF INCOME FILED ON 3RD SEPT., 2007, THE ASSESSEE INDIVIDUAL COULD NOT - SHOW THE SURRENDER OF RS. 45 LAKHS BUT ADVANCE TAX OF RS. 15 LAKHS PAID ON SURRE NDERED AMOUNT OF RS. 45 LAKHS HAS BEEN DISCLOSED IN THE COMPUTATION OF INCOME FILED WITH THE ORIGINAL RETURN OF INCOME. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO POINTED OUT AS PER THE ORDER SHEET DT. 24TH DEC, 2008, POINTED OUT BY LEARNED DEPARTMENTAL REP RESENTATIVE THE ASSESSEE HAS FILED CASH FLOW CHART ITA NO. 758 / HYD/201 9 SRI RAMA RAO MADHAVARAPU, HYD. AY 20 14 - 15 6 AND BALANCE SHEET ON 16TH DEC, 2008 BEFORE AO WHEREIN THE SURRENDERED INCOME HAD BEEN REFLECTED AND THE COPY OF THE SAME IS FILED AT PP. 6 AND 7 , OF THE PAPER BOOK. IT WOULD, THEREFORE, SHOW THAT PRIOR TO THE ORDER SHEET DT. 24TH DEC, 2008, THE AO DID NOT RAISE ANY QUERY ON THIS ISSUE AND PRIOR TO THAT THE ASSESSEE HAD ALREADY DECLARED AND DISCLOSED THAT RS. 45 LAKHS HAD ALREADY BEEN DISCLOSED TO THE REVENUE DEPARTMENT IS ALSO ACCOUNTED FOR IN THE CASH FLO W STATEMENT (CAPITAL ACCOUNT) AND THE BALANCE SHEET. THE ASSESSEE, THEREFORE, DISCLOSED ALL THE PARTICULARS OF THE SURRENDER OF AMOUNT AS WELL AT THE STAGE OF THE ASSESSMENT. THE ASSESSEE ON REALIZING THE MISTAKE HAS IMMEDIATELY FILED THE REVISED RETURN ON 26TH DEC, 2008 INCLUDING THE SURRENDER AMOUNT OF RS. 45 LAKHS IN THE RETURN OF INCOME. SUCH WAS AN INADVERTENT MISTAKE ON THE PART OF THE ASSESSEE BECAUSE THE FACT OF THE SURRENDER OF RS. 45 LAKHS WAS ALREADY DISCLOSED BEFORE THE AO PRIOR TO THE ASSESSMEN T AS WELL AS THE ASSESSMENT STAGE BEFORE THE AO DETECTED ANY MISTAKE. REVISED RETURN FILED BY THE ASSESSEE UNDER S. 139(5) WAS ALSO VALID RETURN OF INCOME FILED IN ACCORDANCE WITH LAW. THUS, IT IS NOT A CASE OF DETECTION OF ANYTHING BY THE AO PRIOR TO FILI NG OF THE REVISED RETURN BY THE ASSESSEE. THE AO WAS HAVING ALL FACTS AND INFORMATION ON RECORD OF SURRENDER OF RS. 45 LAKHS AND PAYMENT OF TAX ON THE SAME BEFORE FILING THE ORIGINAL RETURN OF INCOME. 9.1 THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT V S.I. PARIPUSHPAM [2001] 249 ITR 550/118 TAXMAN 844 HELD THAT 'THERE WAS NO EVIDENCE ON THE BASIS OF WHICH THE DEPARTMENT COULD CONTEND THAT THE ASSESSEE HA D FRAUDULENTLY OR WILFULLY OR NEGLIGENTLY CONCEALED THE INCOME. THE ASSESSEE'S AGREEING TO THE ADDITION OF THE AMOUNT BY ITSELF DID NOT ESTABLISH FRAUD OR WILFUL NEGLECT WITHOUT SOMETHING MORE. HENCE THE TRIBUNAL WAS JUSTIFIED IN CANCELLING THE PENALTY LEV IED UNDER S. 271(1)(C) OF THE IT ACT, 1961.' 9.2 THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT V. UNION ELECTRIC CORPN. [2006] 281 ITR 266 HELD THAT 'P ENALTY WAS IMPOSED ON THE ASSESSEE IN THE ASST. YR. 1981 - 82. THE TRIBUNAL AFTER HEARING THE PARTIES CAME TO THE CONCLUSION THAT THE DEBT ENTRY WAS A SOLITARY INSTANCE IN WHICH THE COST OF WIRES WAS SHOWN AS 'CONSUMABLE STORES' AND THE ASSESSEE FAILED TO RE COVER THE SAME FROM THE SISTER CONCERN. THE ASSESSEE HAD COME FORWARD WITH A REQUEST TO DISALLOW THE SAME ON ACCOUNT OF APPARENT MISTAKE AND THE REQUEST WAS MADE BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE THE AO HAD DETECTED THIS FA CT. THE TRIBUNAL, THEREFORE, HELD THAT THE BONA FIDES OF THE ASSESSEE WERE EVIDENT AND IN SUCH CASE IMPOSITION OF PENALTY WAS NOT WARRANTED. ON A REFERENCE : HELD, THAT THE TRIBUNAL HAD RECORDED FINDINGS OF FACT AS TO THE ADMISSION MADE BY THE ASSESSEE AND THE BONA FIDES OF THE ASSESSEE. THE FACTS AS SUCH WERE NOT DISPUTED. HENCE PENALTY COULD NOT BE LEVIED.' 9.3 THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V. BUDHEWAL CO - OPERATIVE SUGAR MILLS LTD. [2009] 312 ITR 92/[2008] 171 TAXMAN 173 HELD 'DISMISSING THE APPEAL, THAT THE SOCIETY HAD PAID ADVANCE TAX AS WELL AS SELF - ASSESSMENT TAX NOT TAKING INTO ACCOUNT THE DEDUCTION CLAIMED UNDER S. 80P(2)( A)(III) OF THE ACT. IT WAS EVIDENT FROM THE FACTS THAT THE ASSESSEE'S CLAIM WAS BONA FIDE AND THAT ALL THE PARTICULARS RELATING, TO THE COMPUTATION OF INCOME HAD BEEN DISCLOSED. THUS, THE TRIBUNAL RIGHTLY CANCELLED THE PENALTY LEVIED. 9.4 THE HON'BLE PUNJA B & HARYANA HIGH COURT IN THE CASE OF CIT V. BHANDARI SILK STORE. [2011] 337 ITR 153/[2012] 20 TAXMANN.COM 439 HELD THAT 'THE TRIBUNAL WHILE UPHOLDING THE DELETION OF PENALTY ON SURRENDER OF RS. 2 LAKHS HAD CATEGORICALLY RECORDED THAT THE SURRENDER RELATED TO THE STOCKS INCLUDED UNDER THE DEFINITION OF OTHER VALUABLE ARTICLES OF THINGS AND THAT THE CONDITION ENUMERATED UNDER EXPLN. 5 TO S. 271(1)(C) WERE FUL FILLED. IT WAS ALSO NOT DISPUTED THAT ITA NO. 758 / HYD/201 9 SRI RAMA RAO MADHAVARAPU, HYD. AY 20 14 - 15 7 THE STATEMENT OF THE ASSESSEE WAS RECORDED UNDER S. 132(4) OF THE ACT ON THE DATE OF SEARCH. THEREFORE, THE TRIBUNAL WAS RIGHT IN UPHOLDING THE ORDER OF THE CIT(A) CANCELLING THE PENALTY ON RS. 2 LAKHS. IT HAD BEEN NOT ICED BY THE TRIBUNAL THAT THE ASSESSEE HAD DISCLOSED THE AMOUNT OF RS. 1,25,000 AT THE TIME THE SEARCH PARTY WAS LEARNING THE PREMISES OF THE ASSESSEE. IT WAS FURTHER RECORDED THAT THE TIME FOR FILING THE RETURN OF INCOME FOR THE ASST. YR. 1989 - 90 UNDER S. 139(1) HAD NOT EXPIRED ON THE DATE OF SEARCH AND THE ASSESSEE HAVING DISCLOSED THE AMOUNT OF RS. 1,25,000 IN THE RETURN FILED FOR THE ASST. YR. 1989 - 90 AND PAID ALL TAXES COULD NOT BE HELD TO HAVE CONCEALED THE PARTICULARS OF INCOME WHICH WERE LIABLE TO P ENALTY UNDER S. 271(1)(C). THE TRIBUNAL WAS, THUS, RIGHT IN UPHOLDING THE CANCELLATION OF PENALTY ON THIS AMOUNT AS WELL'. 10. CONSIDERING THE ABOVE DISCUSSION AND THE CASE LAWS, IT IS CLEAR THAT ALL THE FACTS OF SURRENDERED INCOME AND ACTUAL SURRENDER OF RS. 45 LAKHS AND PAYMENT OF TAX THEREON WERE WITHIN THE KNOWLEDGE OF THE REVENUE DEPARTMENT AND WERE IN FACT DISCLOSED BY THE ASSESSEE TO THE REVENUE DEPARTMENT PRIOR TO THE ORDER SHEET DT. 24TH DEC, 2008. IT APPEARS TO BE INADVERTENT MISTAKE ON THE PART O F THE ASSESSEE IN NOT MENTIONING RS. 45 LAKHS IN THE ORIGINAL RETURN OF INCOME, THEREFORE, THE DECISION IN THE CASE OF PRICE WATERHOUSE COOPERS (P) LTD. (SUPRA) DELIVERED BY HON'BLE SUPREME COURT SQUARELY APPLIED IN FAVOUR OF THE ASSESSEE. THE ASSESSEE THU S WOULD BE ENTITLED FOR BENEFIT OF EXPLN. 5(2) TO S. 271(1)(C) OF THE IT ACT. THE DECISIONS CITED BY LEARNED DEPARTMENTAL REPRESENTATIVE ARE, THEREFORE, CLEARLY DISTINGUISHABLE ON FACTS BECAUSE THE AO DID NOT DETECT ANYTHING ON OR BEFORE 24TH DEC, 2008 BEC AUSE EVERY FACT WAS DISCLOSED TO THE REVENUE DEPARTMENT AND WITHIN THE KNOWLEDGE OF AO. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(A) AND DELETE THE PENALTY WITH REGARD TO THE SURRENDER OF RS. 45 LAKHS. 10.1 A S REGARDS THE LEVY OF PENALTY ON ACCOUNT OF SALE OF PROPERTY AT RAHON ROAD, LUDHIANA, THE MAIN REASON FOR LEVY OF PENALTY WAS THAT ASSESSEE DISCLOSED LOWER RATES OF PLOTS BUT THE SAME WAS NOT SUPPORTED BY ANY REASONS BY THE AO FOR TAKING HIGHER VALUATION. THE LEARNED DEPARTMENTAL REPRESENTATIVE ADMITTED THAT NO MATERIAL OR EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH TO SUPPORT FINDINGS OF THE AO THAT ASSESSEE HAS CONCEALED ANY HIGHER SALE CONSIDERATION. THE ASSESSEE IN SUPPORT OF THE SALE CONSIDERATION F ILED SALE DEEDS WHICH HAVE NOT BEEN REBUTTED THROUGH ANY EVIDENCE. THE ASSESSEE DID NOT MAINTAIN REGULAR BOOKS OF ACCOUNT, THEREFORE, PROVISIONS OF S. 145(3) WERE APPLIED AND RATES WERE ENHANCED BY THE AO FOR MAKING ESTIMATED ADDITION OF RS. 1,38.750. IT I S WELL - SETTLED LAW THAT FOR ESTIMATED ADDITION, NO PENALTY IS LEVIABLE. THE PARTICULARS OF SALE OF PLOTS WERE ALSO DISCLOSED IN THE RETURN OF INCOME FILED BY THE ASSESSEE. THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT V. K.R. CHINNI KRISHNA CHETTY [2000] 246 ITR 121/[2002] 120 TAXMAN 871 HELD THAT 'MERE REVISION OF INCOME TO A HIGHER FIGURE BY ASSESSING AUTHORITY DOES NOT AUTOMATICALLY WARRANT INFERENCE O F CONCEALMENT OF INCOME'. 11. CONSIDERING THE ABOVE DISCUSSION,. WE ARE OF. THE VIEW THAT LEARNED CIT(A) HAD PROPERLY APPRECIATED THE FACTS AND MATERIAL ON RECORD AND CORRECTLY CANCELLED THE PENALTY ON THIS ISSUE ALSO. : 12. IN VIEW OF THE ABOVE DISCUSSION , WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(A) IN CANCELLING THE PENALTY. 8 . 1. RESPECTFULLY FOLLOWING THE ABOVE DECISION, WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY LEVIED U/S ITA NO. 758 / HYD/201 9 SRI RAMA RAO MADHAVARAPU, HYD. AY 20 14 - 15 8 271(1)(C) OF THE ACT. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE ON THIS ISSUE IS ALLOWED IN ABOVE TERMS. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 15 /0 6 /2021. SD/ - SD/ - (P. MADHAVI DEVI ) ( L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 15 TH JUNE, 2021 *GMV COPY OF ORDER FORWARDED TO: 1. SRI RAMA RAO MADHAVARAPU, C/O MOHD AFZAL, ADVOCATE, 402, SHERSONS RESIDENCY, 11 - 5 - 465, CRIMINAL COURT ROAD, RED HILLS, HYD ERABAD 500 0 04 , TELANGANA 2. A CIT, CIRCLE 1 , KARIMNAGAR 3. A CIT, KARIMANAGAR RANGE , KARIMNAGAR . 4. CIT(A) - 8 , HYDERABAD 5. PR.CIT - 2 , HYDERABAD. 6. D.R. ITAT HYDERABAD 7. GUARD FILE