TMI Blog2018 (8) TMI 710X X X X Extracts X X X X X X X X Extracts X X X X ..... sputed 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. Since the department has failed to bring any evidence to hold that the printouts of computer related to the business of the assessee, we are unable to uphold the order of the Ld.Pr.CIT on this issue. Regarding non-examination of issues by the AO - 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unexplained source for construction of the building. Subsequently, the Ld.Pr.CIT, Vijayawada has taken up the case for revision and found that the AO has not examined certain issues properly at the time of making the assessment as under: (i) The assessee has purchased a house on 15.12.2006 vide registered document No.15297/2006 admeasuring 255 sq.yards at D.No.11-54-11 12, Gudivadavari street, Vijayawada for a consideration of ₹ 45, 50, 000/- including stamp duty as against the SRO Value of ₹ 59, 60, 000/- and the assessee has not filed the return of income duly reflecting the above transaction. Financial Year Amount of Loan repaid (in Rs.) 2007-08 4, 71, 586 2008-09 2, 81, 972 2009-10 20, 79, 822 (ii) The assessee has obtained a loan from REPCO Bank, Seshadri Sastry Street, Governorpet, Vijayawada and the assessee has repaid the entire loan on 06.07.2009 as per break up as under : (iii) The Ld.Pr.CIT observed that the property purchased on 15.12.2006 as against the loan san ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. 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, provisions of Section 50C of the Income Tax Act, 1961 is not applicable and further the assessee filed the return of income for the Asst.Year 2007-08 on 12.01.2009 and during the course of assessment proceedings explained all the sources for purchase of the property for ₹ 45, 50, 000/-, the property purchased on 15-02-2006, relevant to the Asst. Year 2007-08 the scrutiny assessment was completed after thorough verification and the assessee filed the receipts and payments A/c with sources before the Assessing Officer during the course of assessment proceedings and finalized the order. There is no un-explained income invested either for purchase ofproperty or for construction of property, for which, the assessee has already filed the receipts and payment A/c relevant to all the assessment years during the course of assessment proceedings, herewith enclosing the receipts and payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details submitted, made the addition of ₹ 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 not belonging to the assessee and belonged to the part time accountant. The said the laptop was neither impounded by the department nor recorded any statement from the part time accountant who was the owner. Though the department has extracted the printouts from the laptop, the same were not related to the business of the assessee. The assessee has denied the contents of the printouts taken from the laptop. The Ld.AR further submitted that the laptop of the accountant contain the information of other clients of the accountant also. As already stated earlier, the assessee is not maintaining the books of accounts and has offered income on estimation basis as per section 44AF of the Act. Thus argued that the Ld.Pr.CIT did not give any finding how the assessment order was erroneous and prejudicial to the interest of revenue, except making some passing remarks of impro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p 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 the order passed u/s 263 and restore the order of the AO. 6. On the other hand, the Ld.DR supported the orders of the Ld.Pr.CIT and argued that the assessee is maintaining the accounts in the laptop which is evidenced from the statement recorded from the assessee, therefore, the Ld.Pr.CIT has rightly taken up the case for revision which should be upheld. The Ld.DR strongly relied on the order of Ld.Pr.CIT. 7. We have heard both the parties and perused the material paced on record. In this case, a survey u/s 133A was conducted in the business premises of the assessee and consequent to the survey conducted, the AO reopened the assessment by issue of notice u/s 148 and completed the assessment u/s 143(3) on total income of ₹ 4, 50, 000/-. Subsequently, the Ld.Pr.CIT has taken up the case for revision u/s 263. The Ld.Pr.CIT has raised the iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere 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 the probable undisclosed income estimated by the Ld.Pr.CIT at ₹ 36, 53, 661/- for the assessment year 2010-11. Though the assessee has filed the return of income for the impugned assessment year, the Ld.Pr.CIT has stated in his notice, that no return of income was filed by the assessee which shows that the Ld.Pr.CIT has not completely verified the facts and landed in conclusion in haste. In this case, the assessee has already filed the return of income for the impugned assessment year on 29.02.2011 much before the issue of notice u/s 263. The AO completed the assessment after verifying the turnover in VAT Returns and Bank account details and accepted turnover and the estimation of income as per Section 44AF of the Act. The Ld.Pr.CIT has not given any basis for the probable undisclosed income. It does not emanate from the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Ld.CIT(A), Vijayawada Order No. in Appeal No. 428, 421/Vja/CIT(A)/2011-12 dated 22.04.2013. In these facts and circumstances, since the department has failed to bring any evidence to hold that the printouts of computer related to the business of the assessee, we are unable to uphold the order of the Ld.Pr.CIT on this issue. 8. The Ld.Pr.CIT has made a passing remark that the AO has not considered the issues raised in the show cause notice, but no specific finding was given by the Ld.Pr.CIT to hold that the assessment made u/s 143(3) resulted in under assessment. The Pr.CIT did not make out clear case how the assessment order is erroneous and prejudicial to the interest of the revenue. As observed from the assessment order and the materials placed before us the AO has examined all the issues related to the assessment year whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing (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. During the course of assessment proceedings, the assessee admitted the cost of construction at ₹ 37, 94, 000/- and explained the sources thereof. Details of plinth area, basis for arriving the cost of construction at ₹ 37, 94, 000/- etc. was neither ascertained nor verified. 9.2. The third issue for invoking the jurisdiction u/s 263 was the disallowance of an amount of ₹ 1, 11, 096/- being interest on term loan account (A/c No.097700509004310 held with TMB Ltd) for not utilizing the loan for the purpose of construction. The Ld.Pr.CIT observed from the details of construction account furnished by the assessee that a sum of ₹ 5, 00, 000/- was withdrawn from the aforesaid bank account on 05-04-2010 for the purpose of construction. When the AO disallowed the interest on loan on the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 belonged to the assessee. As discussed earlier, the Ld.CIT(A) also for the assessment year 2008-09 and 2009-10 in appeal order No.31/Viz/2017 had accepted the contention of the assessee that the contents of the laptop does not belong to the assessee. The assessee stated that the he has not maintained the books of accounts and filed the return of income on estimation basis u/s 44AF. The AO has accepted the return of income after verifying the information gathered during the survey. Therefore, issue is covered in favour of the assessee in our order for the A.Y. 2010-11, hence following the rule of consistency, we hold that there is no reason for taking up the case for revision u/s 263 on this issue. 10.2. The second issue raised by the Ld.Pr.CIT was verification of receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2-12, 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 inadequate inquiry but not lack of inquiry. On this issue also, the Ld.Pr.CIT heavily placed reliance on the survey report of the AO. At the cost of repetition, we are of the view that the survey report of the AO has no relevance and cannot be taken as a basis for taking the order as erroneous. From the show cause notice of the Ld.Pr.CIT as well as from the details submitted by the assessee in the paper book, it is established that the AO called for the details and examined the cost of construction and the sources of construction. Therefore, there is no case for revision u/s 263 on the issue of cost of construction of the building located at Gudivadavari street, Vijayawada. 11.3. The 3rd issue for taking up the case for revision u/s 263 was non utilisation of the loan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, 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 ₹ 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 total income of ₹ 3, 80, 500/-. A survey was conducted u/s 133A on 21.10.2010 in the business premises of the assessee. During the course of survey, the AO found certain cash deposits in Tamilnadu Mercantile Bank and some other issues. Consequent to the survey conducted u/s 133A, the AO issued notice u/s 148 and completed the reassessment. Subsequently, the Ld.Pr.CIT found that the AO has not examined certain issues properly, hence the assessment passed by the AO was considered to be erroneous and prejudicial to the interest of the revenue within the scope of 263 of the Act, hence, show cause notice was issued u/s 263 calling for the objections of the assessee. The Ld.Pr.CIT issued notice u/s 263 on the following issues. During the cours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etails 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 ₹ 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 questioned about certain properties, the mentioned properties in the show cause notice not belongs to the assessee and all are rough est ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 acquired the said properties and the AO also during the survey proceedings did not bring any evidence on record to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come 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. ITA No.34/Viz/2017, A.Y.2010-11 18. In this case, survey u/s 133A was conducted on 21.10.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eipts 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 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 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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 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 l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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