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2018 (8) TMI 710
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....ice to the assessee. We have heard both the parties and prima facie there appears to be a case of merit. Therefore, we are of the considered opinion that merely because of technical mistake justice should not suffer, hence, in the interest of justice we condone the delay of 255 days in filing the appeals and admit the appeals. 2. These appeals are filed by the assessees against the order of the Pr.Commissioner of Income Tax (Pr.CIT), Vijayawada dated 15.03.2016 and 16.03.2016 for the assessment year 2010-11 and 2011-12. Since the issues involved in these appeals are common, all the appeals are clubbed, heard together and disposed off in a common order for the sake of convenience as under. ITA No.31 & 33/Viz/2017 3. The assessee is engaged in the retail wedding cards business. For the assessment year 2010-11, the assessee filed return of income admitting total income of Rs. 3, 50, 950/- on 29.02.2011. A survey u/s 133A was conducted in the group cases and found certain discrepancies during the course of survey. Therefore, the assessee's case was reopened by issue of notice u/s 148 and completed the assessment u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter ca....
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....y the AO that the year-wise probable undisclosed income of the assessee for the following assessment years would be as under : Asst.Year The Probable Income Income Returned 2007-08 1, 06, 79, 115 No ROI 2008-09 16, 60, 530 No ROI 2009-10 31, 41, 045 1, 59, 880 2010-11 36, 53, 661 No ROI The AO while completing the assessment has not verified the aspect of probable income. (vi) During the course of survey, printouts of accounts for the calendar years 2008, 2009 and 2010 were taken from the laptop, in which accounts relating to M/s Ghantasala Manikyala Rao Cards were also included, but in the survey final report dated 29.11.2010, there was no mention about the accounts of the assessee concern for the calendar years 2009 and 2010 relevant to the financial year 2009-10 which is relevant to the assessment year 2010-11. The AO has neither reconciled the accounts maintained by the assessee firm in the laptop nor considered for the purpose of assessment. 3.1 Accordingly the Ld.Pr.CIT issued the show cause notice calling for explanation of the assessee and the assessee filed his explanation stating as under: As per s....
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....al to the interest of the revenue, accordingly set aside the assessment order and directed the AO to redo the assessment afresh after verifying the above issues in accordance with law. 4. Aggrieved by the order of the Ld.Pr.CIT, the assessee is in appeal before this Tribunal. During the appeal hearing, the Ld.AR argued, that a survey u/s 133A was conducted in the business premises of the assessee on 21.10.2010 and during the course of survey, the AO found some material and consequently reopened the assessment u/s 147 to examine the evidences gathered during the course of survey. In the reassessment proceedings, the assessee furnished all the details i.e. sources for repayment of bank loans, proof for municipal taxes paid, receipts and payments accounts etc. and completed the assessment after going through the entire information furnished at the time of assessment. As evidenced from para No.4 of the assessment order, the AO called for the sources for construction of the building and after due verification of the details submitted, made the addition of Rs. 1, 00, 000/-. The Ld.AR further submitted that the assessee is not maintaining the regular books of accounts and the part time....
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.... house at Gudivadavari street, Vijayawada which was explained to the AO in the assessment proceedings for the A.Y.2007-08 and furnished the complete information with regard to dates of payment, sources etc. The issue is not relevant or related to the impugned assessment year, therefore, argued that there is no case for revision u/s 263. (iv) The 4th issue was probable undisclosed income for the assessment years. This was neither admitted by the assessee nor any evidence found during the course of survey. This is a pure guess work of the Ld.Pr.CIT and the Ld.Pr.CIT cannot take up the case for revision u/s 263 on guess work. (v) The last issue was the print outs taken from the laptop. The assessee has denied that the printouts belonged to the assessee and stated that the assessee has never maintained the books of accounts and admitted the income on estimation basis as per section 44AF of the Act. The assessee also stated that the assessee's turnover never exceeded the limit of 44AF. The extracts were taken from the laptop belonging to the part time accountant who has maintained the books of accounts of other customers and argued that the extracts taken from the lapt....
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....tion u/s 263 for examination of the issues relating to the earlier assessment years of 2007-08 and 2008-09 in the impugned assessment year of 2010-11. 7.2. The 3rd issue for taking up the case for revision u/s 263 was the repayment of REPCO bank loan and sources for repayment. As evidenced from the assessment order para No.3, assessee furnished the complete details with regard to the bank loans, deposits and sources before the AO which was examined by the AO and accepted the sources for repayment of loan as genuine and no addition was made. Therefore, reexamination of same issues which was considered at the time of assessment would amount to difference of opinion and does not make the assessment erroneous. Therefore, the issue raised by the Ld.Pr.CIT with regard to verification of the sources of the repayment of bank loan also cannot be a valid reason for invoking the jurisdiction u/s 263. Hon'ble High court of Karnataka in Commissioner of Income-tax, Bangalore Vs. Kurlon Ltd, [2014] 52 taxmann.com 92 (Karnataka) held that Where assessing authority had already considered all details mentioned in computation statement which was taken from books of account maintained by assessee, ....
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.... establish that the contents do belonged to the assessee. The fact that the laptop does not belong to the assessee was not disputed by the AO. The contention of the assessee that the part time accountant maintained the books of accounts of many other customers was also not disputed. During the assessment proceedings, the assessee stated that the assessee has not maintained books of accounts and admitted the income as per section 44AF of the Act. The AO has not brought on record any material to establish that the turnover recorded in the computer extract belonged to the assessee by comparing the contents of the printouts of the assessee with the entries in the books of accounts or with the information found during the course of survey. The entire survey material was available with the AO at the time of assessment and the case was reopened for verification of the material found during the course of survey, and the AO has completed the assessment after examining the entire details available with the AO. Similar issue of extract of print outs has come up before the AO for the A.Y. 2008-09 and 2009-10 and the AO made the addition. On appeal, the Ld.CIT(A) deleted the addition and given ....
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....e filed return of income on 29.02.2011 admitting total income of Rs. 1, 41, 580/-. The assessment was completed total income of Rs. 2, 58, 280/- by order u/s 143(3) r.w.s 147 by an order dated 18.03.2014. 9. The Ld.Pr.CIT has taken up the case for revision observing that during the course of survey, inventory of physical stock was taken pertaining to the assessee's proprietary concern, M/s Ghantasala Manikyala Rao Cards and in the preliminary report dated 22.10.2010, it was reported by the AO that the inventory of stock was under reconciliation. But in the final report dated 29.11.2010, there was no mention about the reconciliation of the stock found. While completing the assessment the value of the physical stock found on the date of survey was neither quantified nor reconciled with reference to the books of accounts and considered for the purpose of assessment. 9.1. The second issue in the notice u/s 263 relates cost of construction of the house at Vijayawada. The assessee constructed a two storied building (G+2) at D.No.11-52-12, Gudivadavari street, Vijayawada on a site admeasuring 255 sq yards after demolishing the old house. It was also noticed that the construction was....
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....on-Investment in construction and hence there is no ex-explained investments by the assessee, the term loan was utilized for repayment of earlier loans taken for construction. The laptop belongs to the part time accountant and not the assessee and in the laptop many assessee's information will be available and the laptop was not seized by the department and further the assessee filed the income tax return considering the VAT return. Not being convinced with the explanation of the assessee, the Ld.Pr.CIT held that the assessment made u/s 143(3) was erroneous and prejudicial to the interest of the revenue. Accordingly set aside the order with a direction to redo the assessment. 10. Aggrieved by the order of the Ld.Pr.CIT, the assessee is in appeal before us. We have heard both the parties and perused the material placed on record. The revision was taken for the purpose of verification of books of accounts maintained in laptop and suspicion of the Ld.Pr.CIT with regard to verification of receipts and payments of accounts for construction and the utilisation of the loan taken from Tamilnadu Mercantile bank ltd. 10.1. With regard to the extracts of the lap tops in the....
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....letion of the survey to his higher authorities. The copies of survey reports are not provided to the assessees. That was internal correspondence of the department but not a document used in the assessment proceedings. Therefore, the contents of the survey report are irrelevant for taking up the case for revision u/s 263. In this case, the assessee submitted before the AO that the assessee is not maintaining the books of accounts and offered the income u/s 44AF of the Act which the AO had accepted and completed the assessment. The AO has not given any finding with regard to excess stock or shortage of stock during the survey proceedings. Once the assessment is completed accepting the contention of the assessee u/s 44AF of the Act, nonreconciliation of the stock taken during the course of survey is irrelevant, and cannot be reason for taking up the case for revision u/s 263. 11.1. The 2nd issue for taking up the case for revision was the cost of construction in respect of the two storied building at Door No.11-52-12, Gudivadavari street, Vijayawada. The assessee during the course of assessment proceedings submitted the details of cost of construction and expenditure, and the so....
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....d up for the purpose of examining the various issues found during the course of survey. The material was in the possession of the AO . Though the AO did not make the noting in writing, merely because no noting was made it cannot be presumed that the AO failed to examine the issues in the material. The Ld.Pr.CIT in para No.2 of the order stated that due to certain issues were not properly examined by the AO, the case was taken up for revision. Improper verification of the issues will lead to inadequate enquiry but not lack of enquiry. Though the lack of enquiry is a case for revision, inadequate enquiry is not a case for revision u/s 263. ITAT, Visakhapatnam in the case of Vegesina Komala Vs. ITO, Ward-1, Palakol (supra) has taken the similar view following the decision of Hon'ble High Court of Delhi in CIT Vs. Sunbeam Auto Ltd. (2010) 189 Taxmann 436 (Delhi). Therefore, we are of the considered opinion that the revenue did not make out a case for revision and there was no error in the order passed by the AO. Hence, the order passed u/s 143(3) r.w.s. 147 is neither erroneous nor prejudicial to the interest of the revenue. Accordingly, we set aside the order of the Ld.Pr.CIT and allo....
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.... other properties, there was no explanation from him. While completing the assessment, the sources nature and details of the properties were neither ascertained nor considered for the purpose of assessment. 5. At page No.20 of the survey folder, there was construction account totaling to Rs. 32, 72, 961 (August, 2009 and September, 2009, It was stated by Sri G. V. Raman, in his statement recorded u/s 133A in response to question No.7 that it relates to construction. But he did not furnish the details of the property to which it relates. While completing the assessment, the sources and details of the property for which construction was undertaken, were neither ascertained nor considered for the purpose of assessment' 13. The assessee filed reply to show cause notice issued by the Ld.Pr.CIT which reads as under : During the course or assessment proceedings the assessee filed the receipts and payments a/c and every information/papers asked by the AO and after thorough examination, the assessment was completed by the AO. During the course of survey operations, the assessee was questioned about certain amounts paid to different persons, resulting a tota....
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....ssets belonging to the assessee. The construction account noted in the Page No.20 does not belong to the assessee but belonged to his brother. After examining all the issues, the AO completed the assessment, therefore, there is no case for revision u/s 263. The Ld.Pr.CIT did not give any finding and not made out a case as to how the assessment order passed u/s 143(3) r.w.s. 147 was erroneous and prejudicial to the interest of the revenue. Further, the Ld.Pr.CIT in the preamble of the order stated that the AO has not examined certain issues properly. From the reading of the revision order u/s 263 passed by the Ld.Pr.CIT shows that the Ld.Pr.CIT has taken up the case for revision u/s 263 because of difference of opinion and also because of inadequate enquiry. The Ld.AR argued inadequate enquiry cannot be a basis for revision u/s 263, accordingly requested to quash the order passed by the Ld.Pr.CIT. 16. On the other hand, the Ld.DR supported the orders of the Ld.Pr.CIT. 17. We have heard both the parties and perused the material placed on record. In this case, the Ld.Pr.CIT has taken up the case for revision u/s 263 for non-examination of the issues with regard to the rents rece....
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....sh that the payments were made in the year under consideration to consider the income in the impugned assessment year Neither the Ld.Pr.CIT nor the AO made out a case that notings mentioned in the loose sheets were related to the payments made during the previous year related to the assessment year under consideration. In the absence of the complete details, such as, the date of payment, name of the beneficiary and the name of the payer, it cannot be inferred that the payments were related to undisclosed income of the year under consideration. Therefore, we are unable to hold that the assessment made is erroneous and prejudicial to the interest of the revenue. 17(4). Plain reading of the revision order of the Ld.Pr.CIT shows that the Ld.Pr.CIT has taken up the case for revision u/s263 for not properly examining the issues which can be held to be inadequate enquiry, but not lack of enquiry. In this case, survey was conducted in the assessees premises and the assessment is reopened u/s 147 r.w.s. 143(3) to examine the issues found during the course of survey. Therefore, the responsibility cast upon the Ld.Pr.CIT to establish that the issues were not examined by the AO. Mere non me....
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.... of F.Y.2009-I0 were neither reconciled with reference to the books of account nor considered for the purpose of assessment. It clearly shows that the assessee has concealed the true particulars of income by not properly accounting for its day to day business transactions. The assessee has neither substantiated his turnover reported in the return of income nor to offered payment of taxes on the above discrepancies. 3.1. During the course of survey operations conducted, it was concluded that the year-wise probable undisclosed incomes of the assessee for the following asst. Years was arrived at as under; Asst. Year The Probable Income Income Returned 2008-09 11, 72, 994 No ROI 2009-10 31, 18, 982 Nil 2010-11 8, 59, 004 No ROI However, it is observed that while completing the assessment, the AO has not verified this aspect. 20. The assessee filed reply to show cause notice issued by the Ld.Pr.CIT which reads as under : The year wise probable undisclosed income as considered in para No.3.1 is not correct, and it is baseless, it is only a hypothicated figure for ascertaining such amounts, during the course of ass....
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.... the assessee is not maintaining the books of accounts and filing the return of income u/s 44AF of the Act. Though the AO found that there was suppression of sales to the extent of Rs. 3, 70, 297/-, the AO considered the same and held that it is reasonable to estimate the net profit of excess receipts and accordingly completed the assessment. The assessee admitted the sales as per the VAT returns and the bank account which the AO has examined the same at the time of assessment. Therefore, the assessment order cannot be held to be prejudicial and erroneous to the interest of the revenue on this issue. 23.2. The 3rd issue is the Ld.Pr.CIT's opinion with regard to the probable income. It is not known how the Pr.CIT has estimated the probable income. Therefore without supporting documents, the same cannot be held to be the income of the assessee. From the order of the Ld.Pr.CIT and plain reading of the order passed u/s 263, the Ld.Pr.CIT has taken up the case for revision for not properly examining certain issues.. In this case, the assessee has filed return of income for the impugned assessment year on 29.02.2011. The Ld.Pr.CIT has not given any basis for the probable undisclosed i....
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....the department. It is stated in the show cause notice that while completing the assessment accounts of the firm maintained in the laptop not considered for the purpose of assessment. The statement is not correct since the laptop is not belongs to the assessee and moreover while finalizing the assessment, the assessing officer reconciled with the VAT returns, purchase bil ls and physical stock. So, the assessing officer considered each and every aspect and completed the assessment. 27. Not being convinced with the explanation of the assessee, the Ld.Pr.CIT set aside the order of the AO passed u/s 143(3) r.w.s. 147 and directed the AO to redo the assessment afresh as per law. 28. Aggrieved by the order of the Ld.Pr.CIT, the assessee is in appeal before this Tribunal. 29. The Ld.Pr.CIT observed that the printouts of accounts for the calendar years 2008, 2009 and 2010 were taken from the laptop and it was observed from the said extracts, that the accounts relating to M/s Sri Vijaya Lakshmi Stationery and Fancy Mart pertaining to the assessee were also included. The Ld.Pr.CIT found that the AO has neither reconciled the accounts nor examined same with reference to the ....