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TMI Blog2016 (10) TMI 552X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee for the assessment year 2013-14, in view of voluminous information called for by the A.O. and also the assessment being a search assessment. Normally, search assessments are done for 7 years, wherein the assessee is required to furnish information at one stretch for all the assessment years, for which sufficient time is required. In the present case on hand, the A.O. has given 7 to 15 days time. In our opinion, it is difficult to gather all the required information within a short period. Therefore, we are of the view that the explanations offered by the assessee that he could not attend on the dates of hearing because of insufficient time to collect voluminous information appears to be reasonable and bonafide. Accordingly, we direct the A.O. to delete the penalty levied for the assessment year 2013-14. - Decided in favour of assessee. - I.T.A.No.81/Vizag/2016, I.T.A.No.32/Vizag/2016 - - - Dated:- 26-8-2016 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER For The Appellant : Shri G.V.N. Hari, AR For The Respondent : Shri R. Govindha Rajan,DR and Shri T. Satyanadham,DR ORDER PER G. MANJUNATHA, Accountant Member: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter dated 11.2.2015 stated that during the course of search seizure operations u/ 132 of the Act cash of ₹ 30 lakhs found in the locker no.6 of State Bank of India, jointly held in my name and my wife Smt. P. Vishnu Vandana. The source for cash is out of professional income earned by me in my individual capacity for the financial year 2013-14. The A.O. after considering the explanations of the assessee held that the assessee has offered explanation for cash found during the course of search as his professional income for the assessment year 2013-14 and hence, no further addition is made on this account. With these observations, completed assessment u/s 143(3) r.w.s. 153A of the Act and accepted income returned by the assessee. 4. The CIT(Central) issued show cause notice dated 27.11.2015 and asked to explain why the assessment order passed by the assessing officer u/s 143(3) of the Act dated 11.3.2015 shall not be revised under the provisions of section 263 of the Act. The CIT, proposed to revise the assessment order for the reason that the assessing officer, at the time of completion of assessment u/s 143(3) of the Act, has wrongly assessed cash found and seized dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d income, therefore, the assessment order passed by the A.O. cannot be termed as erroneous in so far as it is prejudicial to the interest of the revenue. 6. The CIT, after considering the submissions of the assessee held that assessing officer has failed to verify the issue in proper perspective and also applied incorrect provisions of the Act. The CIT, further, held that when the cash was seized during the course of search, the A.O. should have applied the provisions of section 69A of the Act to bring unexplained money to tax. However, the A.O. has applied incorrect provisions of the Act, ignoring specific provision provided u/s 115 BBE of the Act, which is erroneous and prejudicial to the interest of the revenue. The CIT, further, held that the A.O. has failed to call for necessary details and also failed to apply his mind on the issue. In the absence of such verification and non-application of correct provisions of the Act, the assessment order so framed by the A.O. is not only erroneous but also prejudicial to the interest of the revenue. Accordingly, the assessment order for the assessment year 2013-14 is set aside with a direction to the A.O. to re-do the assessment afresh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the assessment by accepting cash seized during the course of search as assessee s income from profession. The CIT further was of the opinion that the A.O. has completed assessment without applying his mind, as there is a specific provision is provided by way of section 115BBE of the Act to deal with the cases of search, wherein it is specifically provided that where the total income of an assessee includes any income referred to in section 68, section 69 and section 69A to 69D, no deductions or allowances in respect of expenditure is allowed against such income. The A.O. without examining the applicability of the provisions of section 115BBE of the Act, simply accepted income declared by the assessee under the head professional income , therefore, the assessment order passed by the A.O. u/s 143(3) of the Act, is erroneous in so far as it is prejudicial to the interest of the revenue. 10. It is the contention of the assessee that the assessment order passed by the A.O. is not erroneous in so far as it is prejudicial to the interest of the revenue. The assessee further contended that the issue pointed out by the CIT with regard to cash found during the course of search was ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come declared by the assessee under the normal provisions of income from profession and further allowed set off of brought forward loss from earlier years, which render the assessment order erroneous in so far as it is prejudicial to the interest of the revenue. We do not see any merits in the findings of the CIT for the reason that the assessee right from the beginning claims that cash found during the course of search represents his professional income earned in the individual capacity for the financial year 2012-13, accordingly included cash found during course of search as his professional income for the assessment year 2013-14 and filed returns of income. We further noticed that the assessee has admitted entire cash seized during the course of search as his professional income without there being any deductions towards expenditure, but, claimed set off of brought forward business loss of earlier years against such additional income. The allegation of the CIT is that when any income is admitted consequent to search proceedings, no deductions towards any expenditure or allowances or set off of loss shall be allowed against such income. But, the fact is that as per the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CIT alleged that the A.O. has ignored the provisions of section 115BBE of the Act, the amended provisions of sub section (2) of section 115BBE of the Act, makes it clear that the assessee can claim brought forward loss against such additional income even if such income is brought to tax u/s 69A of the Act up to the A.Y. 2016-17. Therefore, we are of the view that the assessment order passed by the A.O. u/s 143(3) of the Act, dated 11.3.2015 is not erroneous in so far as it is prejudicial to the interest of the revenue. 13. Now, it is pertinent to discuss the case law relied upon by the assessee. The assessee relied upon the decision of coordinate bench of Visakhapatnam Tribunal, in the case of Nu Tech Engineers Vs. CIT in ITA No.570/Vizag/2013 dated 10.6.2016. The coordinate bench of this Tribunal, under similar circumstances held that once the A.O. examined issues on which the CIT wants further verification, the CIT cannot assume jurisdiction on the same issues which was already examined by the A.O. at the time of assessment, by stating that the A.O. has conducted inadequate enquiry or there is a lack of enquiry. The relevant portion of the order is reproduced hereunder: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings. Since, the assessee has not complied with any of notices, a letter was issued on 3.11.2014 reminding to submit information as called for vide notices u/s 142(1) of the Act. The assessee neither appeared before the A.O. nor furnished any information as required by the A.O., accordingly, the A.O. initiated penalty proceedings u/s 271(1)(b) of the Act, by issuing notice on 9.12.2014. In response to penalty notice, the assessee filed his reply vide letter dated 16.12.2014 and submitted that non-attendance on the date of hearing is not intentional, as he was busy in collecting information sought by the A.O. in connection with the assessment proceedings. The assessee further submitted that the A.O. sought huge information for the period of 7 years, as such he could not able to gather all the information required by the A.O. within the time given in the notices. The assessee further submitted that I am always cooperating with the department for smooth completion of proceedings and I do not have any intention to avoid proceedings, hence, request the A.O. to drop penalty proceedings initiated u/s 271(1)(b) of the Act. The A.O. after considering the explanation furnished by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout a different recourse taken by the A.O., does not warrant penalty proceedings u/s 271(1)(b) of the Act. The intention for non-compliance must proceed and thought alone can give inference to the A.O. for levy of penalty. In the instant case, though there was initial failure on the part of the assessee for compliance of notices, the proceedings were completed u/s 143(3) of the Act, after supplying full information to the satisfaction of the A.O. Therefore, non-compliance will become technical and nothing serious in so far as assessment proceedings u/s 143(3) of the Act. With these observations, held that the A.O. has given insufficient time i.e. 8 days for notice u/s 142(1) of the Act in search related assessments, accordingly, directed the A.O. to delete penalty levied for the assessment year 2007-08 to 2013-14. In respect of A.Y. 2013-14, this plea cannot be accepted for notice u/s 142(1) of the Act, where the A.O. has given sufficient time of 15 days to comply with the requirements. With these observations, upheld the levy of penalty of ₹ 10,000/- u/s 271(1)(b) of the Act, for non-compliance of notice for the assessment year 2013-14. Aggrieved by the CIT(A) order, the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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