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2018 (8) TMI 710

he time of making the assessment - Held that:- since the issues under consideration was not related to assessment year in question but were related to earlier years, CIT the Ld.Pr.CIT is not permitted to invoke jurisdiction u/s 263 for examination of the issues. - Further, 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. - Additions on the basis of printouts taken from the laptop - 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. - Held that:- 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 be .....

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retail wedding cards business. For the assessment year 2010-11, the assessee filed return of income admitting total income of ₹ 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 by an order passed under section 143(3) r.w.s. 147 dated 18.03.2014, determining the total income at ₹ 4, 50, 000/-. The Assessing Officer(AO) made the addition of ₹ 1, 00, 000/- in the assessment, towards the 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 .....

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vant 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, 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 .....

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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 ₹ 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 .....

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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 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/-. S .....

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mmissioner 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 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.C .....

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e 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 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 mater .....

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on 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. 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 purpos .....

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.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 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 .....

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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 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 26 .....

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he 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 ₹ 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. Du .....

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ifferent 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 estimated papers only, so many brokers/marketing people are coming and explaining about the layout and further the above assets are no way concerned to the assessee, during the course of assessment proceedings asked he assessing officer and explained the sane. Actually the assessee is having only two properties situated at D.No. 11-1-25, B.R.P. Road, Vijayawada and D.No.11- 25-250, Main Road, Vijayawada and offered rental income by the assessee on the above two properties in the return of income. During the assessment proceedings, the difference in returned income and actual rental income also taken into consideration by the AD on the above two prop .....

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ceived 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 establish that the assessee has acquired the properties in the year under consideration. Since the survey was conducted in this case, and no other evidence was found with regard to acquiring the properties, except the noting of Lanco side, RTC Layout, Guntupalli site. During the appeal hearing, the assessee furnished the copy of the consequential order giving effect to the Pr.CIT s order u/s 263, and it is observed that the AO also did not make any addition on account of above notings. Merely with some noting it cannot be presumed that the assessee had acquired the properties without supporting evidence. In this case, there is no material to show that the assessee has acquir .....

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oning 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 21.10.2010. During the course of survey, the AO found that the assessee firm had availed Over draft facility for the previous year relevant to the assessment year 2010-11 to the tune of ₹ 27, 35, 918/- with Account No.0977000050900266 from Tamilnadu Mercantile Bank, Vijayawada and repaid the same during the assessment year. Therefore, the AO has issued notice u/s 148 and reopened the assessment and completed the assessment u/s 143(3) on total income of ₹ 26, 706/-. Subsequently, the Ld.Pr.CIT held that the AO has not properly examined certain issues, hence considered the order passed by the AO u/s 143(3) was erroneous and prejudicial to the interest of the revenue on the following issues. .....

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pect. 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 the assessment and it is not correct to say that the assessing officer not examined the issues. Herewith enclosing the statement filed before the assessing officer for the deposits made in the bank. It is stated in para 3 of the show cause notice that the assessee has availed overdraft facility in Tamilnadu Mercantile bank for ₹ 27, 35, 918 is not correct, the assessee has taken a loan of ₹ 7, 00, 000/- as OD in TM8 A/c 097700050900266 and not ₹ 27, 35, 918/-. The figure Rs. 27, 35, 918/- is not just bank loan but it is the total of credits in the bank. For that the assessee has explained before the assessing officer in the course of assessment proceedings. 21. 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) .....

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urse 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 ₹ 8, 57, 254/- with Account No.0977000050900266 from Tamilnadu Mercantile Bank, Vijayawada and repaid the same during the assessment year. Therefore, the AO has issued notice u/s 148 and reopened the assessment. Subsequently completed the assessment u/s 143(3) on total income of ₹ 5, 150/-. Subsequently, the Ld.Pr.CIT held that the AO has not properly examined certain issues, hence considered the order passed by the AO u/s 143(3) was erroneous and prejudicial to the interest of the revenue on the following issues. 25. The Ld.Pr.CIT has issued show cause notice to the assessee and the assessee filed reply to the show cause notice which is extracted as under : During the course of survey, printouts of accounts for the calendar years 2008, 2009 and 2010 were taken from the laptop. As seen from .....

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om 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 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 f .....

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