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Pillala Ramakrishna Rao Versus ACIT, Central Circle-2, Visakhapatnam

2016 (10) TMI 552 - ITAT VISAKHAPATNAM

Penalty u/s 271(1)(b) - failure to comply with statutory notices issued u/s 142(1) of the Act - A.O. was of the opinion that the assessee has failed to offer proper explanation for nonattendance as on the date of hearing - contention of the assessee that non-attendance as on the date of hearing is not intentional, as the A.O. has called for voluminous information for 7 assessment years within a short period of 7 to 15 days - Held that:- We find force in the arguments of the assessee for the reas .....

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the CIT(A) appreciated the facts, failed to consider the explanation offered by 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 .....

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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: These two appeals filed by the assessee are directed against separate orders of CIT(Central), u/s 263 of the Income Tax Act, 1961 (hereinafter called as the Act ) and CIT(A)-3, Visakhapatnam u/s 250 of the Act, for the assessment year 2013-14. Since, t .....

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32 of the Act, on 20.12.2012 in the Gayatri Group. During the course of search & seizure operation, cash of ₹ 30 lakhs was found and seized in a locker in the name of the assessee in State Bank of India, Kohinoor branch, near Aqua Sports complex, Pandurangapuram, Visakhapatnam. A statement was recorded from the assessee u/s 132(4) of the Act and he was asked to explain the source for the cash. The assessee while deposing before the investigation officer, admitted that the cash found in .....

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u/s 153A of the Act was issued. In response to notice, the assessee has filed his return of income for the assessment year 2013-14 on 30.9.2013 admitting nil total income after claiming set off of brought forward losses from earlier years. The case has been selected for scrutiny and accordingly, notice u/s 142(1) & 143(2) of the Act were issued. In response thereto, the authorized representative of the assessee appeared from time to time and furnished relevant information. During the course .....

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r 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 assessm .....

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fficer has failed to verify the issue and applied correct provisions of the Act. The assessing officer accepted returned income after adjusting setting off brought forward loss from the earlier years, ignoring specific provision of section 115BBE of the Act, which render the assessment order erroneous in so far as it is prejudicial to the interest of the revenue. With these observations, issued a show cause notice and asked to explain why the assessments order dated 11.3.2015 shall not be revise .....

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l income earned in the individual capacity for the financial year 2012-13 and accordingly, declared such income in the return filed for the assessment year 2013-14. The assessee further submitted that he had not maintained regular books of accounts for his profession. Had he maintained regular books of accounts and recorded professional receipts, there would have been cash balance in the books of accounts equal to the amount seized during the course of search. Merely because books of accounts we .....

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tatement cannot be ignored to arrive at a different conclusion. The assessee further submitted that all these facts were brought to the notice of the A.O. at the time of assessment and the A.O. after considering the explanations, accepted returned 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 .....

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he 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 after examining details and after providing an opportuni .....

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ofessional income ought to have been assessed as unexplained money u/s 69A of the Act. The A.R. further submitted that the provisions of section 115BBE of the Act are applicable only when addition is made u/s 69A of the Act. But, in the present case on hand, the assessee has explained cash found during the course of search as his professional income which was accepted by the A.O. at the time of completion of assessment u/s 143(3) of the Act, therefore, it is not correct to say that the A.O. has .....

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thorities below. The CIT assumed jurisdiction to revise the assessment order for the reason that the A.O. has not conducted proper enquiry before completion of assessment, thereby the assessment order passed by the A.O. u/s 143(3) of the Act, dated 11.3.2015 is erroneous in so far as it is prejudicial to the interest of the revenue. The CIT, revised the assessment order for the reason that the A.O. has completed assessment by applying incorrect provisions of the Act towards cash found during the .....

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pleted 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, .....

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ng the course of search was examined by the A.O. at the time of assessment. The assessee further contended that it has explained sources for cash found during the course of search as his professional income, earned in the individual capacity for the financial year 2012-13 at the time of deposition before the assessing officer while recording statement u/s 132(4) of the Act. We find force in the arguments of the assessee for the reason that the A.O. has examined the issue of cash found during the .....

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income filed for the assessment year 2013- 14. Therefore, we are of the view that the CIT was not correct in coming to the conclusion that the A.O. has not examined the issue of cash seized during the course of search and accordingly the assessment order passed by the A.O. is not erroneous in so far as it is prejudicial to the interest of the revenue. 11. The CIT, assumed jurisdiction to revise the assessment order on the ground that there is a lack of enquiry on the part of the A.O., in examin .....

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8 to 69D of the Act, then notwithstanding anything contained in this Act, no deduction in respect of any expenditure or allowance (or set off of any loss) shall be allowed to the assessee under any provision of this Act, in computing his income referred to in clause (a) of sub section (1) of section 115 BBE of the Act. The CIT was of the opinion that the A.O. ignoring the provisions of section 115BBE of the Act, accepted income declared by the assessee under the normal provisions of income from .....

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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 .....

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correct provisions of the Act, to tax cash found during the course of search, the assessee can always claim set off of brought forward loss from earlier years up to the assessment year 2016-17, even if the same has been added under the provisions of sec. 68 to 69D of the Act. Therefore, we are of the view that the assessment order passed by the A.O. is neither erroneous nor prejudicial to the interest of the revenue, as there is no prejudice is caused to the revenue. 12. The CIT has power to rev .....

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by the A.O. may be erroneous, but it may not be prejudicial to the interest of the revenue or vice versa. Unless the order passed by the A.O. is erroneous and also prejudicial to the interest of the revenue, the CIT cannot assume jurisdiction to revise the assessment order, this is because the twin conditions i.e. the order is erroneous and the same is prejudicial to the interest of the revenue are co-exist. In the present case on hand, on perusal of the facts available on record, we find that .....

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ns of the Act. Though, the 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 a .....

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ues 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: CIT(A) assumed jurisdiction to revise the assessment order on the sole ground that there is a lack of enquiry on the part of the A.O. in examining the issues referred to in his show cause notice. The question of low net profit declared by the assessee and also TDS on rent and hire .....

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TAT are of the view that once the issues which are subject matter of revision u/s 263 of the Act, have been examined by the A.O. at the time of assessment, the CIT has no jurisdiction to entertain fresh enquiry on the same issues, because he has a different opinion on the issues. In ITAT considered opinion, the issue of net profit and TDS on rent and hire charges has been examined by the A.O. at the time of assessment, therefore, the CIT was not correct in coming to the conclusion that the A.O. .....

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ed by the assessee is allowed. ITA 32/Vizag/2016: 16. The assessee has filed this appeal, challenging the order of the CIT(A)-3, Visakhapatnam confirming levy of penalty u/s 271(1)(b) r.w.s. 274 of the Act for the assessment year 2013-14. The facts which lead to imposition of penalty u/s 271(1)(b) of the Act are that during the course of assessment proceedings, the assessing officer issued notice u/s 143(2) of the Act dated 14.11.2013, 142(1) of the Act dated 10.9.2014 & 142(1) of the Act da .....

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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 furthe .....

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ing on the date fixed for hearing, therefore opined that the assessee has not complied with statutory notices dated 14.11.2013, 10.9.2014 and dated 12.11.2014 and hence is liable to pay penalty of ₹ 10,000/- each for such failure. Accordingly, an amount of ₹ 30,000/- is being levied within the meaning of section 271(1)(b) of the Act for each failure to comply with statutory notices. 17. Aggrieved by the penalty orders, the assessee preferred an appeal before the CIT(A). Before the CI .....

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e, the information called for by the A.O. is huge, he is unable to gather information within a span of 7 days, accordingly, could not appear on the date fixed for hearing. The assessee further submitted that non-appearance before the A.O. is not purposeful. Because of voluminous materials required to be collected, he could not attend, however, the fact remains that he had submitted all the information required by the A.O. and the A.O. has completed the assessment u/s 143(3) of the Act. Therefore .....

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Ltd. Vs. ACIT (2014) 40 CCH 0374 Del Trib. 18. The CIT(A) after considering the explanations furnished by the assessee, held that a mere non-compliance of initial notices without 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 no .....

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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 assessee is in appeal before us. 19. The Ld. A.R. for the assessee submitted that the Ld. CIT(A) is not justified in partly sust .....

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the assessee has failed to comply with statutory notices without any reasons, therefore, the A.O. has rightly levied penalty and his order should be upheld. 21. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The A.O. levied penalty u/s 271(1)(b) of the Act for failure to comply with statutory notices issued u/s 142(1) of the Act. The A.O. was of the opinion that the assessee has failed to offer proper explanation f .....

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