9911796707
TMI Blog2018 (8) TMI 710X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 called as 'Act'). The assessment was completed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing 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 show cause notice Para No.3, I request your kind perusal that the assessee is the buyer, not the seller of the property, provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove 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 accountant has maintained some details in his laptop along with the accounts of other customers and the laptop found during the course of survey was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 laptop does not belong to the assessee, hence no evidentiary value. Thus, the Ld.AR argued that the Ld.Pr.CIT has committed blatant error in revising the assessment order and requested to quash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or 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, revision was not justified. Similar view has been expressed by this Tribunal in G.V.R Associates vs ITO reported in (2017) 49 CCH 0223 Visakapatanam. 7.3. The 4th issue raised by the Ld.Pr.CIT was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt 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 a finding that the AO has not brought on record any cogent material to strengthen the department view to hold that the contents of the computer printouts related to the business of the assesses, Vide L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 undertaken during the financial years 2009-10 and 2010-11. In the survey final report it was mentioned that the property was referred to the Valuation Cell for ascertaining the correct value of construction. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessee's case for the assessment year 2010-11, we have already held that having denied the ownership of the laptop and the denial of the contents of the printout extracts of the laptop, the onus is on the revenue to establish that the contents b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vey 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 sources there of. However, the Ld.Pr.CIT was of the view that the AO has not examined the plinth area and the basis of arriving at the cost of construction at 37.94 lakhs. Such detailed examination of the cost of construction can at best be said to be inadeq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 allow the appeal of the assessee. ITA No.32/Viz/2017, A.Y.2010-11 12. In this case, the assessee filed return of income declaring total income of Rs. 3, 15, 840/- on 29.02.2012. The assessment was completed u/s 143(3) r.w.s. 147 by order dated 26.12.2013 on tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 total amount of Rs. 9, 43, 500/- which is as per lose sheets No. 14&15, these amounts are rough figures/estimates only and not belongs to the assessee and the same was informed to the assessing officer during the course of assessment proceedings and satisfied by the assessing officer. As per show cause notice and as per page No.29 of the survey folder, the assessee was ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicial 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 received by the assessee as per page No.29 of the survey folder. Similarly notings made in respect of the properties of Lanco side area-90 cents, RTC Lay Out - 1.98 cents, Guntupalli site - 1.80 cents and construction account in Page. No.20. 17(1). With regard to the noting in respect of Lanco side area, RTC Lay out, Guntupalli site was stated to be projections and estimations. The assessee has never acquir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iary 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 mentioning or not recording the findings in the assessment order, does not establish that the AO has not examined the issues especially when the material is available to the AO at the time of assessment. Therefore, we hold that assessment order passed by AO is neither erroneous nor prejudicial to the interest of the revenue. Hence, we set aside the order of the Ld.Pr.CIT and allow the appeal of the assessee. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessment 'proceedings the assessing officer thoroughly verified the aspect. During the course of assessment proceedings assessee the assessee filed the sources elaborately for deposits made in, the bank. The assessee has given every information/sources for deposits in the bank statement Theassessee is not maintaining any books of accounts and offered income u/s 44AF on the sales as per VAT returns. The assessing officer examined all the aspects and finalized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, 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 income. It does not emanate from the assessment order or from the material found during the course of survey. Therefore, it shows the guess work of the Ld.Pr.CIT and the revision u/s 263 is not permitted on guess work. ITA No.35/Viz/2017, A.Y.2011-12 24. In this case, survey u/s 133A was conducted on 21.10.2010. During the course of survey, the AO found that the assessee firm had availed OD facility for the previous year relevant to the assessment year 2011-12 to the tune of Rs. 8, 57 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced 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 books of accounts for the purpose of assessment while completing the assessment. The assessee denied ownership of the extracts taken from the laptop stating that the laptop does not belong to their firm. At the time of survey itself, the assessee has denied the contents of the extracts. The laptop was neither seized, no statement was recorded from the part time accountant. Having denied the contents of the extracts of the laptop belonging to the assessee, it is for the revenue to establish that the contents do belong ..... X X X X Extracts X X X X X X X X Extracts X X X X
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