ITO Ward-3, Nellore v. Sri Vemula Anjaiah, Pr. in Venkata Prasad Raw & Boild Rice Mill, Nellore

ITA 1068/HYD/2011 | 2007-2008
Pronouncement Date: 29-09-2011 | Result: Dismissed

Appeal Details

RSA Number 106822514 RSA 2011
Assessee PAN AGOPP3868P
Bench Hyderabad
Appeal Number ITA 1068/HYD/2011
Duration Of Justice 3 month(s) 27 day(s)
Appellant ITO Ward-3, Nellore
Respondent Sri Vemula Anjaiah, Pr. in Venkata Prasad Raw & Boild Rice Mill, Nellore
Appeal Type Income Tax Appeal
Pronouncement Date 29-09-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 29-09-2011
Assessment Year 2007-2008
Appeal Filed On 02-06-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH HYDERABAD BEFORE SHRI CHANDRA POOJARI AM AND SMT. ASHA VIJAYARAGHAVAN JM ITA NO.1066/HYD/2011 ASSESSMENT YEAR 2007-08 THE ITO WARD NO. 3 NELLORE VS SHRI P ABBISETTY VENKATESWARLU NELLORE (PAN : AGOPP3868P) APPELLANT RESPONDENT ITA NO.1067/HYD/2011 ASSESSMENT YEAR 2007-08 THE ITO WARD NO. 3 NELLORE VS SRI VEMULA RAM M URTHY NELLORE (PAN: ABHPV4307R) APPELLANT RESPONDENT ITA NO.1068/HYD/2011 ASSESSMENT YEAR 2007-08 THE ITO WARD NO. 3 NELLORE VS SRI VEMULA ANJAIAH NELLORE. (PAN ACEPV6605L) APPELLANT RESPONDENT ITA NO.1069/HYD/2011 ASSESSMENT YEAR 2007-08 THE ITO WARD NO. 3 NELLORE VS SRI VEMULA VEERANJANEYULU NELLORE. (PAN ABHPV4682P) APPELLANT RESPONDENT APPELLANT BY: SMT. NIVEDITA BISWAS RESPONDENT BY: SHRI P. VINOD DATE OF HEARING: 12.9.2011 DATE OF PRONOUNCEMENT: 29.9.2011 ITA NOS.1066 TO 1069/HYD/2011 MR. P. VENKATESWARALU & ORS ============================= 2 ORDER PER BENCH THESE FOUR APPEALS PREFERRED BY THE REVENUE ARE DI RECTED AGAINST THE COMMON ORDER PASSED BY THE CIT(A) GUNT UR DATED 28.1.2011 AND PERTAINS TO THE ASSESSMENT YEAR 2007- 08. SINCE COMMON ISSUES ARE INVOLVED WE ARE DISPOSING OF THE SAME BY THIS CONSOLIDATED ORDER. 2. BRIEF FACTS OF THE CASE ARE THAT A SURVEY OPERATION U/S 133A OF THE INCOME-TAX ACT 1961 WAS CONDUCTED IN T HE BUSINESS PREMISES OF M/S. SRI VENKATA PRASAD RAW & BOIL RICE MILL NELLORE ON 13.3.2007 IN WHICH THE ASSESSEES ARE PARTNERS. DURING THE COURSE OF SURVEY IT WAS FOUND THAT THE CAPITAL ACCOUNTS OF THE PARTNERS WERE CREDITED WITH RS. 28 50 000/- AND THE ASSESSEE COULD NOT EXPLAIN THE SOURCES FOR THE INVESTMENTS MADE BY HIM AND OTHER PARTNERS. THEREFORE THE ASS ESSEE CAME FORWARD TO OFFER RS. 8 LAKHS AS ADDITIONAL INCOME I N HIS HANDS AND THE REMAINING INVESTMENT OF RS. 20 50 000/- IN THE HANDS OF THE OTHER PARTNERS AT THE TIME OF SURVEY. 3. SUBSEQUENTLY THE ASSESSEE FILED HIS RETURN OF INCO ME FOR THE ASSESSMENT YEAR 2007-08 ON 26.9.2008 ADMITTING TOTAL INCOME OF RS. 7 96 640/- AND PAID THE TAXES. SIMIL ARLY OTHER PARTNERS FILED THEIR RETURN OF INCOME FOR THE ASSES SMENT YEAR 2007-08 AND PAID THE TAXES. SCRUTINY U/S 143(3) WA S COMPLETED ON 29.12.2009 ACCEPTING THE INCOME RETURN ED. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS ON THE GROUND THAT THE ASSESSEES HAVE FAILED TO FILE THE RETURNS OF INCOME BEFORE THE DUE DATE I.E. ON 31.10.2007. THE ASSESS ING OFFICER LEVIED PENALTY U/S 271(1)(C ) WHICH WAS CONTESTED T O BY THE ASSESSEE IN APPEAL BEFORE THE CIT(A). BEFORE THE C IT(A) THE ITA NOS.1066 TO 1069/HYD/2011 MR. P. VENKATESWARALU & ORS ============================= 3 LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT DUR ING THE COURSE OF SURVEY THE PARTNERS OF VENKATA PRASAD RAW & BOILED RICE MILL NELLORE VOLUNTARILY ADMITTED AND OFFERED THEIR CAPITAL INVESTMENT IN THE PARTNERSHIP FIRM OUT OF TOTAL PAR TNERS CAPITAL OF RS. 28.50 LAKHS AS HIS INCOME ON THE UNDERSTANDI NG THAT NO PENAL ACTION WOULD BE TAKEN. FURTHER IT WAS POINT ED OUT THAT SHRI P. VENKATESWARLU HAD PAID RS. 1.90 LAKHS BY WA Y OF ADVANCE TAX ON 27.3.2007 DURING THE FINANCIAL YEAR ITSELF AND FULFILLED THE OBLIGATION EVEN THOUGH SECTION 133A W AS NOT DIRECTED AGAINST HIM PERSONALLY. 4. SUBSEQUENTLY THE ASSESSEE HAD FILED HIS RETURN ADM ITTING TOTAL INCOME AT RS. 7 96 640/- INCLUDING PARTNERSHI P CAPITAL INVESTMENT OF RS. 8 LAKHS ON 26.9.2008 FOR THE ASSE SSMENT YEAR 2007-08. THE OTHER ASSESSEES IN THE GROUP VIZ. SH RI VEMULA RAMMURTHY SHRI VEMULA ANJAIAH AND SHRI VEMULA VEERANJANEYULU HAVE ALSO FILED THEIR RETURNS OF INC OME. SIMILARLY SHRI. V. RAMMURTHY VOLUNTARILY ADMITTED TO OFFER CAPITAL INVESTMENT IN PARTNERSHIP AT RS. 8 LAKHS TH ROUGH HIS PARTNER SHRI. V. VEERANJANEYULU AS HIS INCOME SUBJE CT TO NO PENAL ACTION WOULD BE TAKEN AGAINST HIM AND ACCORDI NGLY PAID RS. RS. 1.90 LAKHS BY WAY OF ADVANCE TAX. HE FILED HIS RETURN OF INCOME ADMITTING TOTAL INCOME OF RS. 7 89 630/- INC LUDING PARTNERSHIP CAPITAL INVESTMENT OF RS. 8 LAKHS ON 26 .9.2008 FOR THE ASSESSMENT YEAR 2007-08. THE SAME WAS THE CASE WITH THAT OF SHRI VEMULA VEERANJANEYULU WHERE HE HAD OFFERED RS. 8 LAKHS AS CAPITAL IN PARTNERSHIP AND PAID RS. 1.05 L AKHS BY WAY OF ADVANCE TAX AND FILED RETURN ADMITTING TOTAL INC OME AT RS. 7 76 380/- INCLUDING PARTNERSHIP CAPITAL INVESTMENT OF RS. 8 LAKHS ON 29.9.2008 FOR THE ASSESSMENT YEAR 2007-08. SHRI VEMULA ANJAIAH ALSO FOLLOWED THE SAME PATTERN VOLUN TARILY ADMITTED TO OFFER CAPITAL IN PARTNERSHIP INVESTMENT AT RS. 4.5 LAKHS AND PAID RS. 1.08 LAKHS AS ADVANCE TAX AND FI LED RETURN OF ITA NOS.1066 TO 1069/HYD/2011 MR. P. VENKATESWARALU & ORS ============================= 4 INCOME ADMITTING HIS INCOME AT RS. 5 47 020/- INCLU DING PARTNERSHIP CAPITAL INVESTMENT OF RS. 4.50 LAKHS ON 2.12.2009 FOR THE ASSESSMENT YEAR 2007-08 IN RESPONSE TO NO TICE U/S 148 OF THE ACT. THE LEARNED COUNSEL FURTHER SUBMITTED THAT IN RESPONSE TO NOTICE U/S 271(1)(C) OF THE ACT THE LE ARNED COUNSEL FOR THE ASSESSEE HAD REPLIED VIDE DETAILED LETTER D ATED 8.2.2010. THE LEARNED COUNSEL POINTED OUT THAT THE ASSESSING OFFICERS REASONS ARE FALLACIOUS AND ILLOGICAL AND ARE NOT FA LLING U/S 271(1)(C) OF THE ACT. HE FURTHER OBSERVED THAT THE ASSESSEE HAS BEEN DENIED APPLICATION OF PROVISIONS OF SECTION 13 3A TO HIS CASE AS HE HAD COOPERATED WITH THE DEPARTMENT DURI NG THE COURSE OF SURVEY AND ADMITTED ADDITIONAL INCOME AND THEREAFTER PAID ADVANCE TAX ON THE CONDITION THAT NO PENAL ACT ION WOULD BE TAKEN AGAINST HIM. IT WAS FURTHER SUBMITTED DURING THE FINANCIAL YEAR 2006-07 ITSELF THE ASSESSEE HAD ADMI TTED THE INVESTMENT AS HIS INCOME AND PAID ADVANCE TAX SUBJE CT TO THE CONDITION THAT NO PENAL ACTION IS TAKEN EVEN BEFORE 31.3.2007 WHICH DID NOT AMOUNT TO CONCEALMENT OF INCOME OR OF FURNISHING OF INACCURATE PARTICULARS OF INCOME TO ATTRACT PROV ISIONS OF SECTION 271(1)(C) OF THE ACT. HENCE HE EXPLAINED T HAT THIS WOULD NOT ATTRACT THE PROVISIONS OF SECTION 271(1)(C) AS NO INCOME WAS CONCEALED WHILE FILING THE RETURN OF INCOME. THE A R RELIED ON THE DECISION OF THE ITAT AHMEDABAD BENCH C IN TH E CASE OF DCIT VS. DR. SATISH B. GUPTA (2010) (42 SOT 48) (A HD.) IN SUPPORT OF HIS CLAIM. 5. THE LEARNED CIT(A) HAS GONE THROUGH THE SUBMISSIONS MADE BY THE ASSESSEE THE ASSESSMENT ORDER AND THE PENALTY ORDER OF THE ASSESSING OFFICER AND AFTER PERSONALLY HEARING THE LEARNED AR THE CIT(A) HELD AS FOLLOWS: 'IT IS A CASE OF SURVEY IN CASE OF A FIRM WHEREIN THE PARTNERS MADE INVESTMENTS FOR WHICH PROPER ITA NOS.1066 TO 1069/HYD/2011 MR. P. VENKATESWARALU & ORS ============================= 5 EXPLANATION WAS NOT OFFERED. HENCE DURING THE COURSE OF SURVEY ITSELF THE PARTNERS HAVE EXPRESSED THEIR DESIRE THAT THEY WOULD DISCLOSE THE INVESTMEN TS OF THE FIRM IN THEIR INDIVIDUAL RETURNS FOR WHICH M ADE A REQUEST NOT TO LEVY PENALTY UNDER SECTION 271(1)( C). AS REQUEST THIS PARTNER HAS PAID ADVANCE TAX AND FILED RETURN ADMITTING ADDITIONAL INCOME AS ADMITTE D IN COURSE OF THE SURVEY PROCEEDINGS OF THE FIRM BU T HOWEVER FILED SUCH RETURN BELATEDLY AFTER THE DUE DATE U/S 139(1). THE RETURN FILED BY THE ASSESSEE WAS ACCEPTED BUT LEVIED PENALTY U/S 271(1)(C) WHIC H IS UNDER CHALLENGE NOW. IN THIS CASE THE ASSESSEE HAS FILED A RETURN ADMITTING ADDITIONAL INCOME AS PROMISED IN COURSE OF SURVEY WHICH IS NOT DENIED. IT IS A CASE WHERE THE ASSESSING OFFICER HAS NOT MADE ANY ADDITION BUT THE INCOME DECLARED WAS ACCEPTED. IT IS TRUE THAT THE ASSESSEE HAS FILED A BELATED RE TURN FOR WHICH THE PENAL CONSEQUENCE IS NOT A PENALTY U/ S 271(1)(C). IT IS UNDERSTOOD THAT THE DEPARTMENT HA S GIVEN AN ASSURANCE THAT IT WOULD NOT INITIATE PENAL ACTION U/S 271(1)(C) PROVIDED THE ASSESSEE DISCLOS ES THE INVESTMENTS MADE IN THE FIRM AS ADDITIONAL INCOME WHICH HAS BEEN TRULY CARRIED OUT BY THE ASSESSEE. THERE IS NO FINDING BY THE REVENUE THAT THE ASSESSEE HAS NEITHER CONCEALED INCOME NOR FURNISHED INACCURATE PARTICULARS OF HIS INCOME. IN THE CIRCUMSTANCES THE PENALTY LEVIED BY THE ASSESSING OFFICER CANNOT BE SUSTAINED AND IT HAS TO BE DELETE D. 6. THE LEARNED COUNSEL SHRI P. VINOD RELIED ON THE ORD ER OF THE CIT(A) AND REITERATED THE CONTENTIONS PUT FORTH BEFORE HIM. THE LD. COUNSEL ALSO FILED WRITTEN SUBMISSIONS AND RELIED ON THE DECISION OF DELHI HIGH COURT IN THE CASE OF CIT V S AS PHARMACEUTICALS IN I.T.A. NO. 1058 OF 2009. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED T HAT THE ASSESSEES' EXPLANATION IS NOT SATISFACTORY SINC E IT IS THE PRIMARY RESPONSIBILITY OF THE ASSESSEES TO PAY THE TAX AND FILE THE RETURN OF INCOME BEFORE THE DUE DATE. SINCE TH E ASSESSEE HAS FAILED TO DO SO AND HAS COME FORWARD ONLY AFTER SURVEY OPERATION U/S 133A WAS CONDUCTED BY THE DEPARTMENT THE ITA NOS.1066 TO 1069/HYD/2011 MR. P. VENKATESWARALU & ORS ============================= 6 ASSESSEES CASE WOULD COME UNDER THE PURVIEW OF PRO VISIONS OF SECTION 271(1) (C) OF THE IT ACT. 8. WE HAVE HEARD BOTH THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL ON RECORD. BRIEF FACTS OF THE CASE ARE TH AT A SURVEY OPERATION U/S 133A WAS CONDUCTED IN THE PREMISES OF THE FIRM VENKATA PRASAD RAW & BOILED RICE MILL. THE ASSESSE ES BEING PARTNERS OF THE FIRM HAVE VOLUNTARILY DECLARED ADDI TIONAL INCOME TOWARDS CREDIT IN THE CAPITAL ACCOUNT IN THE FIRM F OR THE ASSESSMENT YEAR 2007-08 AND PAID ADVANCE TAX AND SE LF ASSESSMENT TAX. THEREAFTER THE ASSESSEE HAS SUBMI TTED RETURN OF INCOME ON 2.12.2009. THE ASSESSEE HAS FULFILLED HIS OBLIGATION EVEN THOUGH SECTION 133A WAS NOT DIRECTE D AGAINST HIM PERSONALLY. IN THE COURSE OF SURVEY OF THE FIR M THE PARTNERS HAD MADE INVESTMENTS FOR WHICH PROPER EXPLANATION W AS NOT OFFERED AND THEREFORE THE PARTNERS DISCLOSED THE IN VESTMENTS OF THE FIRM IN THEIR INDIVIDUAL RETURNS WITH A REQUEST THAT LEVY OF PENALTY WOULD NOT BE INITIATED. 9. FIRSTLY THE RELIANCE PLACED BY THE ASSESSING OFFICE R IN THE GROUNDS OF APPEAL ON THE DECISION OF KERALA HIGH CO URT IN THE CASE OF CIT VS. KERALA TRANSPORT CO. (270 ITR 149) IS TOTALLY MISPLACED. THE FACTS IN THE SAID CASE ARE TOTALLY AT VARIANCE WHEN COMPARED TO THAT OF THE ASSESSEES. IN THE SAI D CASE THERE IS A CLEAR FINDING OF FACT THAT KERALA TRANSPORT HA S OMITTED DISCLOSURE OF FREIGHT RECEIPTS TO THE EXTENT OF RS. 15 88 204 AND ON DETECTION OF SUCH INCOME THE SAME WAS OFFERED A S INCOME. HOWEVER IN THE PRESENT CASE THE PARTNERSHIP FIRM H AS CREDITED THE PARTNERS WITH THE CONTRIBUTION MADE BY THE PART NERS AND IT IS ONLY ON THE INSISTENCE FOR ADDITIONAL INCOME TH E ASSESSEES HAVE AGREED TO DECLARE THE SAME AS ADDITIONAL INCOM E. THEREFORE THE QUESTION OF CONCEALMENT DOES NOT ARI SE IN THE ITA NOS.1066 TO 1069/HYD/2011 MR. P. VENKATESWARALU & ORS ============================= 7 PRESENT CASE. HENCE THE RATIO IN THE JUDGEMENT OF KERALA HIGH COURT CANNOT BE APPLIED TO THE FACTS OF THE PRESENT CASE. 10. WE FIND THAT IN THE CASE OF D & H SECHERON ELECTROD ES LTD. 296 ITR 193 THE RATIO LAID DOWN IN THE CASE O F SHRI SHADILAL SUGAR & GENERAL MILLS VS. CIT 168 ITR 705 (SC) WAS FOLLOWED WHEREIN THEIR LORDSHIPS OF THE APEX COURT HAD OBSERVED THAT THERE MAY BE 101 REASONS FOR THE ASSE SSEE TO AGREE TO CERTAIN ADDITIONS. HOWEVER FROM THE ASSE SSEE AGREEING TO THE SAID ADDITIONS TO HIS INCOME IT DOES NOT FO LLOW THAT THE AMOUNT AGREED TO BE ADDED WAS CONCEALED INCOME. FU RTHER IN THE ABSENCE OF ANY EVIDENCE BROUGHT ON RECORD BY TH E REVENUE THAT THE AMOUNT OFFERED WAS CONCEALED INCOME OF THE ASSESSEE THE PENALTY FOR CONCEALMENT IS NOT EXIGIBLE AT ALL. IN THE PRESENT CASE THE ASSESSEE HAS AGREED TO THE INCLUSION OF CE RTAIN AMOUNTS AS HIS INCOME DURING THE COURSE OF SURVEY A ND THE FULL AMOUNT OF TAX HAS BEEN PAID BUT NOTHING WAS PRODUC ED BY THE DEPARTMENT THAT THE AMOUNT WAS REALLY THE CONCEALED INCOME OF THE ASSESSEE. PENALTY CANNOT BE IMPOSED ON SUSPICI ON. 11. IN A RECENT JUDGEMENT OF HONBLE DELHI HIGH COURT I N THE CASE OF CIT VS. SAS PHARMACEUTICALS WHEREIN IT WAS HELD THAT CONCEALMENT ARISES ONLY ON A RETURN BEING FILED AND THAT TOO ONLY WHEN THE ASSESSEE CONCEALS INCOME FROM SUCH RE TURN OF INCOME. IT WAS A CASE WHERE DEPARTMENT FOUND MATER IAL IN THE COURSE OF SURVEY THAT WAS OFFERED IN THE RETURN OF INCOME. THE HONBLE DELHI HIGH COURT HELD THAT PENALTY FOR CONC EALMENT CANNOT BE LEVIED AS THERE IS NO CONCEALMENT IN THE RETURN OF INCOME FILED. 12. THE ASSESSEES HAVE FILED RETURNS OF INCOME ADMITTIN G ADDITIONAL INCOME AS PROMISED IN THE COURSE OF SURV EY. THE ITA NOS.1066 TO 1069/HYD/2011 MR. P. VENKATESWARALU & ORS ============================= 8 ASSESSEES CAN ONLY BE PENALISED FOR FILING BELATED RETURN. WHEREAS THE PROVISIONS OF SECTION 271(1)(C) WILL NO T BE ATTRACTED UNLESS THERE IS CONCEALMENT OF INCOME. THE ASSESSE ES HAVE NEITHER CONCEALED INCOME NOR FURNISHED ANY INACCURA TE PARTICULARS OF THEIR INCOME FOR THE IMPOSITION OF P ENALTY U/S. 271(1)(C) OF THE ACT. 13. WE THEREFORE CONFIRM THE ORDERS OF THE CIT(A) AN D DISMISS ALL THE APPEALS OF THE REVENUE WITH RESPECT TO SHRI PABBISETTY VENKATESWARLU SHRI VEMULA RAMMURTHY SH RI VEMULA ANJAIAH AND SHRI VEMULA VEERANJANEYULU THE PARTNERS OF M/S. VENKATA PRASAD RAW & BOILED RICE MILL. 14. IN THE RESULT ALL THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 29 TH SEPTEMBER 2011 SD/ - (CHANDRA POOJARI) SD/ - (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD DATED THE 29 TH SEPTEMBER 2011 COPY FORWARDED TO: 1. THE ITO WARD NO. 3 24 - 2 - 438 GNT ROAD DARGAMITTA NELLORE. 2. SHRI P. VENKATESWARLU PARTNER M/S. VENKATA PRASAD RAW & BOILED RICE MILL KOTHA KALVA CENTRE NELLORE. 3. SHRI V. RAMMURTHY PARTNER 4. SHRI V. ANJAIAH PARTNER 5. SHRI V. VEERANJANEYULU PARTNER 6. THE CIT(A) GUNTUR 7. THE CIT GUNTUR 8. THE DR A BENCH ITAT HYDERABAD NP/TPRAO