Progressive Poultry Farm, Peravali Mandal V. The Income Tax Officer, Ward-1, Tanuku

ITA 131/VIZ/2020

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 2537 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 16-03-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Condonation of delay
• Section: 143(3)

Judgement Text

आयकरअपीलीयअधिकरण, धिशाखापटणम पीठ, धिशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM श्री द ु व्वूरु आर एल रेड्डी, न्याधयक सदस्य एिं श्री एस बालाकृ ष्णन, लेखा सदस्य के समक्ष BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER & SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER आयकर अपील सं./I.T.A.No.160/Viz/2020, 131 & 157/Viz/2020 (ननधधारण वर्ा / Assessment Year : 2011-12 & 2012-13) M/s Progressive Poultry Farm NH-5 Road, Khandavalli Peravali Mandal [PAN : AACFP7205N] Vs. Income Tax Officer Ward-1 Tanuku (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) अपीलधथी की ओर से/ Appellant by : None प्रत्यधथी की ओर से / Respondent by : Shri S.P.G.Mudaliar, DR सुनवधई की तधरीख / Date of Hearing : 02.05.2022 घोर्णध की तधरीख/Date of Pronouncement : 11.05.2022 O R D E R Per Shri Duvvuru RL Reddy, Judicial Member : Condonation of Delay : Appeals in I.T.A.No.160/Viz/2020 and 157/Viz/2020 are filed with the delay of 121 days and 124 days respectively. The assessee filed petition for condonation of delay and submitted that the appeals could not be filed in time due to his ill health during Covid pandemic which is beyond his 2 ITA No.160/Viz/2020, 131&157/Viz/2020, A.Y.2011-12 & 2012-13 M/s Progressive Poultry Farm, Peravali control. The assessee pleaded for condonation the delay and for admitting the appeals, for which the Ld.DR has raised no objection. After going through the condonation petition filed, we observe that there is sufficient cause for the delay in filing the appeals during covid pandemic, hence, we condone the delay and admit the appeals for hearing. 2. These appeals are filed by assessee against the orders of the Commissioner of Income Tax (Appeals) [in short, “CIT(A)”], Rajamahendravaram in Appeal No.10021&22/2018-19/CIT(A)/RJY dated 06.12.2019 for the Assessment Year (A.Y.) 2011-12 and 2012-13. Since the grounds raised in these appeals are common, these appeals are clubbed, heard together and a common order is being passed for the sake of convenience as under. 3. Brief facts of the case are that the assessee is a partnership firm, has filed it’s return of income declaring taxable income of Rs.65,758/-. The case was selected for scrutiny and accordingly, notices were served on the assessee. In response, the assessee furnished certain information. The Assessing Officer (AO) completed the reassessment u/s 143(3) r.w.s. 147 and made an addition of Rs.8,57,883/-. 3 ITA No.160/Viz/2020, 131&157/Viz/2020, A.Y.2011-12 & 2012-13 M/s Progressive Poultry Farm, Peravali 4. Aggrieved by the order of the AO, the assessee preferred an appeal before the CIT(A) and the Ld.CIT(A) confirmed the addition made by the AO holding that the amounts borrowed from the assessee firm are interest bearing funds in the form of capital from the partners and in the form of secured loans. As per provision of 36(1)(iii) of the Income Tax Act, 1961 (in short ‘Act’), if any amounts are used for non-business purposes by the assessee, the same are to be disallowed. The Ld.CIT(A) held that since in this case, the partners have made drawings from the assessee firm and used for non business purposes, the provisions of section 36(1)(iii) are squarely applicable. 5. Aggrieved by the order of the Ld.CIT(A), the assessee preferred an appeal before the Tribunal. During the course of appeal hearing, none appeared on behalf of the assessee, inspite of service of notice on the assessee. 6. The Ld.DR submitted that the assessee was given sufficient opportunities, but the assessee did not appear before the Ld.CIT(A). Thereafter, the CIT(A) passed the order on merits. Hence, the order passed by the Ld.CIT(A) is to be confirmed. 4 ITA No.160/Viz/2020, 131&157/Viz/2020, A.Y.2011-12 & 2012-13 M/s Progressive Poultry Farm, Peravali 7. We have heard the Ld.DR and perused the material available on record. The main contention of the Ld.CIT(A) is that the assessee firm gave interest free advances to the then partners out of the borrowed funds. This aspect has come to light during the assessment proceedings during the A.Y.2010-11, wherein an amount of Rs.6.88 lakhs representing interest attributable to diversion of interest bearing funds towards non business purposes, therefore the AO added the same. The Ld.CIT(A) also confirmed the addition made by the AO. It is an undisputed fact that the assessee firm borrowed some interest bearing funds in the form of capital from the partners and in the form of secured loans. It is also an undisputed fact that some of the partners have borrowed some interest free loans from the firm for non business purposes. Therefore, the AO rightly disallowed by applying the provisions of 36(1)(iii) of the Act. The Ld.CIT(A) has also confirmed the same. Therefore, we do not find any infirmity in the orders passed by the AO as well as the Ld.CIT(A) and the grounds raised by the assessee are dismissed. 8. The assessee has filed I.T.A.No.157/Viz/2020 erroneously in duplicate. Hence, the same is dismissed in limine. 9. In the result, appeals of the assessee are dismissed. 5 ITA No.160/Viz/2020, 131&157/Viz/2020, A.Y.2011-12 & 2012-13 M/s Progressive Poultry Farm, Peravali Order Pronounced in open Court on 11 th May, 2022. Sd/- Sd/- (एस बालाकृ ष्णन) (द ु व्वूरु आर.एल रेड्डी) (S.BALAKRISHNAN) (DUVVURU RL REDDY) लेखा सदस्य/ACCOUNTANT MEMBER न्याधयकसदस्य/JUDICIAL MEMBER Dated : 11.05.2022 L.Rama, SPS आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. ननधधाऩरती/ The Assessee– M/s Progressive Poultry Farm, NH-5 Road, Khandavalli, Peravali Mandal 2. रधजस्व/The Revenue – Income Tax Officer, Ward-1 Aayakar Bhavan, Sajjapuram, Tanuku 3. प्रधान आयकर आयुक्त / The Pr.Commissioner of Income Tax-2, Visakhapatnam 4. आयकर आयुक्त (अपील) / Commissioner of Income Tax (Appeals), Rajamahendravaram 5. नवभधगीय प्रनतनननध, आयकर अपीलीय अनधकरण, नवशधखधपटणम/ DR,ITAT, Visakhapatnam 6.गधर्ा फ़धईल / Guard file आदेशधनुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam