Income Tax Appellate Tribunal - Hyderabad
Ch Goverdhan Naidu, Prodduturu, ... vs Assessee on 5 August, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH "A" : HYDERABAD
BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER
AND
SHRI SAKTIJIT DEY, JUDICIAL MEMBER
ITA.No. A.Y. Appellant Respondent
593/H/2015 2007-08
594/H/2015 2008-09 Mr. Ch. DCIT,
595/H/2015 2009-10 Govardhan Naidu, Central
596/H/2015 2010-11 Prodduturu. Circle-1(2),
597/H/2015 2011-12 PAN ADDPC6489M Hyderabad.
For Assessee : Mr. P. Muralimohan Rao
For Revenue : Mr. D. Srinivasa
Date of Hearing : 29.07.2015
Date of Pronouncement : 05.08.2015
ORDER
PER BENCH :
These five appeals filed by the assessee are directed against the common order dated 25.03.2015 passed by the Principal Commissioner of Income Tax, Central, Hyderabad under section 263 revising the assessments made by the A.O. under section 143(3) read with section 153A of the Act for A.Ys. 2007-2008 to 2011- 2012.
2. The assessee in the present case is an individual. A search and seizure action under section 132 was conducted at his residential premises on 25.11.2010. Consequently, notices under section 153A were issued by the A.O. on 07.12.2012, in response to which, the returns 2 ITA.No.593 to 597/Hyd/2015 Mr. Ch. Govardhan Naidu, Prodduturu.
of income for all the five years under consideration were filed by the assessee on 16.03.2012 declaring his total income as under :
A.Y. Total Agricultural
Income Income
2007-2008 4,00,000 1,26,000
2008-2009 2,19,560 1,48,500
2009-2010 2,72,820 2,05,200
2010-2011 1,80,334 2,90,520
2011-2012 2,43,360 3,12,540
2.1. In the assessments completed under section 143(3) read with section 153A vide orders dated 25.03.2013, the total income of the assessee was determined by the A.O. for the years under consideration as under :
A.Y. Total Agricultural
Income Income
2007-2008 6,74,681 1,26,000
2008-2009 83,76,195 1,48,500
2009-2010 5,33,188 2,05,200
2010-2011 1,80,334 2,90,500
2011-2012 36,06,638 3,12,510
3. The record of the assessments made by the A.O. under section 143(3) read with section 153A for all the five years under consideration came to be examined by the Ld. CIT. On such examination, he was of the view that the assessments completed by the A.O. suffered from the following mistakes :
3ITA.No.593 to 597/Hyd/2015 Mr. Ch. Govardhan Naidu, Prodduturu.
i. "It is observed from the balance sheet pertaining to A.Ys. 2007-08 to 2011-12 that the assessee was not having any agricultural lands, but, the assessee had shown agricultural income. Further, there was no proof of incurring agricultural expenditure and sale patties etc. The A.O. while completing the assessment has not verified the issue and failed to bring the agricultural income to tax as "income from other sources".
ii. It is also seen from the assessment records for the A.Y. 2007-08 to 2011-12, the assessee has raised/repaid loans in cash, violating the provisions u/s.269SS/269T which attracts penalty leviable u/s.271D/271E of the I.T. Act. The same was not examined by the A.O."
3.1. Accordingly, notices under section 263 were issued by the Ld. CIT on 03.03.2015 requiring the assessee to show cause as to why the assessments made by the A.O. under section 143(3) read with section 153A for all the five years under consideration should not be revised. In reply, the following explanation was offered by the assessee in writing on 20.03.2015.
"A.Y. 2007-08 to 2011-12 :
i. The assessee is having agricultural lands to the extent of ac.27.81 which were received from his parents. Hence, these lands are not reflected in the balance sheet. Further, the assessee is mainly an agriculturist and later on he has started civil contracts on small scale. The crops grown in the lands are mainly cotton and Bengal-gram. The assessee admitted the net agricultural income after meeting the expenditure in agricultural operations, as he 4 ITA.No.593 to 597/Hyd/2015 Mr. Ch. Govardhan Naidu, Prodduturu.
has not maintained any books in respect of agricultural activities. Further, the A.O. has considered the issue adequately while completing the assessment and accepted the agricultural income admitted as follows :
A.Y. Agricultural
Income
2007-2008 1,26,000
2008-2009 1,48,500
2009-2010 2,05,200
2010-2011 2,90,500
2011-2012 3,12,514
ii. The assessee is carrying on business in contract works which involves labour work, purchase of sand, transportation of items like cement, iron and steel etc., and thereby to incur expenditure day to day. These expenses have to pay as and when above activities occurred. When no funds were available and as the bill amounts have not been received in time, the assessee took loans from others to meet the above business exigencies, as he was in urgent need of money for payment to labourers etc. Moreover, the amounts were received by the assessee through entry in the books, is as follows :
A.Y. 2007-08 Rs.11,01,060 Received from the HUF of the assessee A.Y. 2008-09 Rs. 2,16,100 Received from I. Kavitha A.Y. 2009-10 Rs.2,14,989 Received from Sri I.V. Nanda Gopal A.Y. 2010-11 Rs.10,66,212 Received from the HUF of the assessee A.Y. 2011-12 There are no cash receipts/cash payments in contravention to the provisions of Sec.269SS and 269T of the Act.5
ITA.No.593 to 597/Hyd/2015 Mr. Ch. Govardhan Naidu, Prodduturu.
The above parties, from the whom the assessee received amounts, were also assessed to income tax separately. Further, at the time of search, the search authorities have not disturbed anything about the loans obtained in cash as well as repayment of such loans in cash."
3.2. The above explanation of the assessee was not found acceptable by the Ld. CIT. According to him, the A.O. while passing orders under section 143(3) read with section 153A had neither examined nor made any enquiries in proper perspective on both the issues pointed out by him in the notices issued under section 263 and such non-examination made the orders passed by the A.O. erroneous as well as prejudicial to the interests of the Revenue. Accordingly, the said orders were set aside by the Ld. CIT by exercising the powers conferred upon him under section 263 with a direction to the A.O. to re- do the same after making detailed enquiries and investigation on the issues pointed out in the notices issued under section 263. Aggrieved by the Orders of the Ld. CIT, the Revenue has preferred these appeals before the Tribunal.
4. The Ld. Counsel for the assessee submitted that there were no errors in the orders passed by the A.O. under section 143(3) read with section 153A for all the five years under consideration as allegedly pointed out by the Ld. CIT. He contended that the issue relating to the agricultural income claimed by the assessee was duly 6 ITA.No.593 to 597/Hyd/2015 Mr. Ch. Govardhan Naidu, Prodduturu.
examined by the A.O. during the course of assessment proceedings and it was not a case of non-examination of the said issue as alleged by the Ld. CIT in the notices issued under section 263. In this regard, he invited our attention to the relevant questionnaire issued by the A.O. during the course of assessment proceedings as well as the reply given by the assessee to show that the assessee's claim for agricultural income was duly examined by the A.O. by making necessary enquiry. He contended that if at all such enquiries, according to the Ld. CIT, were not sufficient, it was not permissible to him to invoke his powers under section 263 on this ground.
5. As regards the second error allegedly pointed out by the Ld. CIT in the notice issued under section 263, the Ld. Counsel for the assessee submitted that this issue is squarely covered in favour of the assessee by the decision of Kolkata Bench of this Tribunal in the case of M.Dhara & Brothers vs. CIT-XVI, Kolkata (ITA.No.2881/Kol/2013 dated 30.04.2015) wherein it was held that the failure of the assessee to initiate penalty proceedings under section 271D for violation of section 269SS could not be a ground for revision by the Ld. CIT under section 263. He placed on record a copy of the order passed by the Tribunal in the said case and pointed out that while deciding a similar issue in favour of the assessee, the Tribunal has relied on the decision of Hon'ble Calcutta High Court in the case of CIT vs. Linotype & Machinery Ltd., 192 ITR 337 wherein it was 7 ITA.No.593 to 597/Hyd/2015 Mr. Ch. Govardhan Naidu, Prodduturu.
held that the Commissioner could not invoke his power under section 263 on the ground that the A.O. did not initiate any penalty proceedings under section 273(a) while making the assessment.
6. The learned D.R. on the other hand, strongly relied on the impugned order passed by the Ld. CIT under section 263 and contended that in the absence of necessary enquiries conducted by the A.O. during the course of assessment proceedings on both the issues pointed out by the Ld. CIT in the notices issued under section 263, the assessment orders passed by the A.O. for all the five years under consideration were erroneous as well as prejudicial to the interests of the revenue calling for revision under section 263.
7. We have considered the rival submissions and also perused the relevant material on record. As regards the first error allegedly pointed out by the Ld. CIT in the orders passed by the A.O. under section 143(3) read with section 153A of the Act for all the five years under consideration that the issue relating to the assessee's claim for agricultural income was accepted by the A.O. without making necessary enquiries, it is observed that in the common questionnaire issued by the A.O. on 30th July, 2012 (copy placed at page Nos. 28 to 33 of the paper book) for all the five years under consideration, the assessee vide point No.43 was required by the A.O. to furnish details of agricultural income along with the 8 ITA.No.593 to 597/Hyd/2015 Mr. Ch. Govardhan Naidu, Prodduturu.
documentary proof of ownership of the land cultivated, agriculture produce sold and agricultural inputs used. In reply filed vide letter dated 24.09.2012 (copy placed at page Nos. 34 to 38 of the paper book), the assessee not only furnished the year-wise details of net agricultural income earned during all the five years under consideration but also pointed out that the said agricultural income was earned by him by cultivating and selling Ground Nuts, Bengal-grams, Sunflower Seeds and Cotton Kappas. Copies of the relevant pass books were also filed by the assessee as proof of agricultural lands owned by him. This enquiry made by the A.O. and reply given by the assessee thereto clearly show that the claim of the assessee for agricultural income as declared in the returns of income for all the five years under consideration was examined by the A.O. after making specific enquiries and after having satisfied himself, the claim of the assessee was allowed by him. In our opinion, there was thus no error in the orders passed by the A.O. under section 143(3) read with section 153A on this issue for all the five years under consideration as alleged by the Ld. CIT and even if the Ld. CIT was of the opinion that the enquiries made by the A.O. on this issue were not sufficient, the same could not be a ground for revision under section 263 as held by the Hon'ble A.P. High Court in the case of Spectra Shares & Scrips Pvt Ltd. vs. CIT 354 ITR 35 (AP).
9ITA.No.593 to 597/Hyd/2015 Mr. Ch. Govardhan Naidu, Prodduturu.
8. As regards the second mistake allegedly pointed out by the Ld. CIT in the orders passed by the A.O. under section 143 read with section 153A for all the five years under consideration in not initiating penalty proceedings under section 271D/271E for the violation of the provisions of section 269SS and 269T, it is observed that this issue is squarely covered in favour of the assessee by the decision of Kolkata Bench of this Tribunal in the case of M. Dhara & Broters vs. CIT-XVI, Kolkata (supra) wherein it was held by the Tribunal by following the decision of Hon'ble Calcutta High Court in the case of CIT vs. Linotype & Machinery Ltd., (supra) that the failure of the A.O. to initiate proceedings under section 271D for violation of section 269SS could not be considered as an error calling for revision under section 263. We therefore, find merit in the contention of the Ld. Counsel for the assessee that there were no errors in the orders passed by the A.O. under section 143(3) read with section 153A of the Act for all the five years under consideration which were prejudicial to the interests of the Revenue calling for revision by the Ld. CIT(A) under section 263. Accordingly, the impugned common order passed by the Ld. CIT under section 263 for all the five years under consideration is set aside restoring back the orders passed by the A.O. under section 143(3) read with section 153A.
9. In the result, appeals of the assessee are allowed.
10ITA.No.593 to 597/Hyd/2015 Mr. Ch. Govardhan Naidu, Prodduturu.
Order pronounced in the open Court on 05.08.2015.
Sd/- Sd/- (SAKTIJIT DEY) (P.M. JAGTAP) JUDICIAL MEMBER ACOUNTANT MEMBER Hyderabad, Dated 05th August, 2015 VBP/- Copy to :
1. Mr. Ch. Govardhan Naidu, Prodduturu. C/o. Mr. P. Murali & Co., Chartered Accountants, 6-3-655/2/3, 1st Floor, Somajiguda, Hyderabad - 82.
2. The DCIT, Central Circle 1(2), Hyderabad.
3. Prl. CIT (Central), 3rd Floor, Posnett Bhavan, Tilak Road, Ramkote, Hyderabad.
4. Addl. CIT, Central Range-1, Hyderabad.
5. D.R. ITAT 'A' Bench, Hyderabad.
6. Guard File