Income Tax Appellate Tribunal - Panji
Ghanta Sambasiva Rao,, Tenali vs The Pr.Cit,, Guntur on 26 July, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
VISAKHAPATNAM BENCH, VISAKHAPATNAM
BEFORE SHRI V. DURGA RAO, HON'BLE JUDICIAL MEMBER &
SHRI D.S. SUNDER SINGH, HON'BLE ACCOUNTANT MEMBER
ITA No. 58/VIZ/2016
(Asst. Year : 2011-12)
Ghanta Sambasiva Rao, vs. PCIT, Guntur.
D.No.11-10-13/A,
Donka Road, Chenchupet,
Tenali, Guntur District.
PAN No. ABRPG 3477 B
(Appellant) (Respondent)
Assessee by : Shri D.L. Narasimha Rao-Adv.
Department By : Shri K.C. Das - Sr.DR
Date of hearing : 25/07/2017.
Date of pronouncement : 26/07/2017.
ORDER
PER V. DURGA RAO, JUDICIAL MEMBER
This appeal by the assessee is directed against the order of Principal Commissioner of Income Tax, Guntur, dated 21/01/2016 for the Assessment Year 2011-12.
2. Facts of the case, in brief, are that the assessee is an individual deriving income from executing civil contract works. The assessee has filed a return of income by declaring total income of ₹ 10,42,730/-. The return filed by the assessee was processed under section 143(1) of the Income Tax Act, 1961 (hereinafter referred to as the 'Act'). Subsequently, after following due procedure, assessment was 2 ITA No.58/VIZ/2016 (Ghanta Sambasiva Rao) completed under section 143(3) by making addition of ₹ 3,50,000/-. Thereafter, learned Pr.CIT by exercising his powers conferred under section 263, is of the opinion that the order passed by the Assessing Officer under section 143(3) dated 08/01/2014 was erroneous as much as prejudicial to the interest of the revenue for the reason that assessee has made payments for purchase of cement in cash exceeding ₹20,000/- to the tune of ₹ 6,20,000/-, which attracts the provisions of section 40A(3) of the Act and hence, issued show-cause notice dated 21/10/2015 and called explanation. In response to the show-cause notice, the assessee filed a detailed written submission on 13/11/2015, wherein it is mainly submitted that once income is estimated, no disallowance can be made under the Act. The learned Pr.CIT has examined the reply given by the assessee and observed that the Assessing Officer failed to examine the application of section 40A(3) and directed the Assessing Officer to examine the issue in respect of violation of section 40A(3) and decide as per law.
3. On appeal before us, learned counsel for the assessee has submitted that the Assessing Officer estimated the income of the assessee and therefore no separate addition can be made under section 40A(3) of the Act and submitted that the order passed by the learned Pr.CIT under section 263 is bad in law.
4. On the other hand, learned Departmental Representative has submitted that the order passed by the Assessing Officer under section 143(3) dated 08/01/2014 is erroneous and prejudicial to the interest of 3 ITA No.58/VIZ/2016 (Ghanta Sambasiva Rao) the revenue for the reason that the order is passed without application of mind.
5. We have heard both the sides, perused the material available on record and orders of the authorities below.
6. In the assessment order, though the Assessing Officer has referred to section 40A(3) violation, however, without examining the issue, estimated the income of the assessee. We find that when the assessee has made the payments by violating section 40A(3) of the Act, the Assessing Officer ought to have been examined and decide the issue. Therefore, we are of the opinion that the order passed by the Assessing Officer without considering the application of the provisions of section 40A(3) is erroneous and also prejudicial to the interest of the revenue. Thus, we find that learned Pr.CIT correctly exercised his jurisdiction under section 263 of the Act. Therefore, this appeal filed by the assessee is dismissed.
7. In the result, appeal filed by the assessee is dismissed. Order Pronounced in the open Court on this 26th day of July, 2017.
Sd/- sd/-
(D.S. SUNDER SINGH) (V. DURGA RAO)
Accountant Member Judicial Member
Dated : 26 t h July, 2017.
vr/-
4 ITA No.58/VIZ/2016
(Ghanta Sambasiva Rao)
Copy to:
1. The Assessee - Ghanta Sambasiva Rao, D.No.11-10-13/A, Donka Road, Chenchupet, Tenali, Guntur District.
2. The Revenue - PCIT, Guntur.
3. The D.R., Visakhapatnam.
4. Guard file.
By order (VUKKEM RAMBABU) Sr. Private Secretary, ITAT, Visakhapatnam.