K Srinivasa Rao, Khammam V. ITO, Ward-1, Khammam

ITA 1332/HYD/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7718 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 21-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Assessee Lawyers: V SIVA KUMAR
• Keywords: Condonation of delay
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA.NO.1332/HYD/2014 ASSESSMENT YEAR 2007-2008 MR. K. SRINIVASA RAO, KHAMMAM, PAN AOAPK7018J VS. THE INCOME TAX OFFICER, WARD-1, KHAMMAM. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. V. SIVA KUMAR FOR REVENUE : MR. D. SUDHAKAR RAO DATE OF HEARING : 03.12.2014 DATE OF PRONOUNCEMENT : 29.12.2014 ORDER PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY ASSESSEE AGAINST THE ORDER OF LD. CIT(A), VIJAYAWADA DISMISSING THE APPEAL ON THE REA SON THAT THE CONSEQUENTIAL ORDER WAS PASSED ON DIRECTIONS OF CIT UNDER SECTION 263 AND THEREFORE, ISSUES CANNOT BE DECIDED BY LD. CIT(A) ON MERITS. 2. ASSESSEE FILED THE PRESENT APPEAL WITH A DELAY OF 7 DAYS. THE REASON FOR FILING THE APPEAL WAS STATED A S THAT OF DELAY IN PAYING THE FEES AND TRANSMITTING THE APPEA L PAPERS WITH CONDONATION APPLICATION AS ASSESSEE STAYS OUTS IDE HYDERABAD. IT WAS SUBMITTED THAT THE APPEAL PAPERS WERE TAKEN TO THE OFFICE OF ITAT ON 14.07.2014 I.E., DUE DATE FOR FILING APPEAL AND OFFICE FOUND THAT APPEAL FEE WAS PAID UNDER A DIFFERENT HEAD. THEREFORE, THE COUNSEL PAID THE FEE S ON THE NEXT DAY CORRECTLY BUT THEN DUE DATE HAD ALREADY EXPIRED . THEREFORE, 2 ITA.NO.1332/HYD/2014 MR. K. SRINIVASA RAO, KHAMMAM. PETITION SEEKING CONDONATION OF DELAY AND AFFIDAVIT WAS PREPARED AND COMMUNICATED TO ASSESSEE. THEREAFTER, IMMEDIATELY THE PAPERS WERE TRANSMITTED BACK TO THE COUNSEL AND FILED AND IN THE PROCESS, THERE WAS A DELAY OF 7 DAYS. AFTER CONSIDERING THE EXPLANATION AND AFFIDAVIT FILED ON RECORD AND AFTER TAKING OBJECTION FROM LEARNED D.R. WE ARE OF THE OPINION THAT THE DELAY CAUSED IS GENUINE AND THEREFORE, THE SAME IS CONDONED AND APPEAL IS ADMITTED. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT ASSESSEE IS AN INDIVIDUAL DERIVED INCOME FROM COMMI SSION BUSINESS OF TRADING IN CHILLIES. HE FILED RETURN OF INCOME ADMITTING TOTAL INCOME OF RS.4,74,640 AND AN ASSESS MENT UNDER SECTION 143(3) WAS COMPLETED ON 05.09.2008 DETERMINING TOTAL INCOME OF RS.6,71,480. LD. CIT IN ITIATED PROCEEDINGS UNDER SECTION 263 DATED 21.02.2011 AND DIRECTED A.O. TO EXAMINE THE FOLLOWING FOUR GROUNDS. I) WITH REGARD TO GENUINENESS OF UNSECURED LOANS, THE ASSESSEE WAS NOT ABLE TO FURNISH CONFIRMATION LETTERS IN THE NAMES OF SMT. LAKSHMI DURGA, SMT. K. KAVYA SRI AND SRI M. KONDAL REDDY. II) AS REGARDS THE SUNDRY CREDITORS AND SUNDRY DEBTORS, THE ASSESSEE HAD FURNISHED CONFIRMATION LETTERS PARTLY. THE SAME SHOULD BE OBTAINED FROM THE REMAINING PERSONS AND EXAMINE THEM. III) SHORT FALL IN GROSS PROFIT COMPARED TO EARLIER YEAR S; IV) DISCREPANCIES IN STOCK AND DIFFERENCES IN VALUATION OF CLOSING STOCK. 4. ASSESSING OFFICER HAS COMPLETED THE RE-ASSESSME NT PROCEEDINGS VIDE HIS ORDER DATED 29.09.2011 AND MAD E VARIOUS ADDITIONS. ASSESSEE PREFERRED APPEAL BEFORE LD. CIT (A). LD. CIT(A) DISMISSED THE APPEAL BY STATING BRIEFLY AS U NDER : 3 ITA.NO.1332/HYD/2014 MR. K. SRINIVASA RAO, KHAMMAM. 2. ON VERIFICATION OF THE ASSESSMENT ORDER, IT WAS FOUND THAT THE A.O. HAS MADE ADDITIONS BASED ON THE DIRECTIONS OF THE COMMISSIONER OF INCOME TAX ONLY A ND NO OTHER ADDITIONS WERE MADE. 3. AS THE COMMISSIONER OF INCOME TAX AND THE COMMISSIONER OF INCOME TAX (APPEALS) ARE EQUAL AUTHORITIES, AN APPEAL AGAINST THE ASSESSMENT COMPL ETED AS PER THE DIRECTIONS OF THE COMMISSIONER OF INCOME TAX U/S. 263 OF THE ACT COULD NOT BE DECIDED BY THE COMMISSIONER OF INCOME TAX (APPEALS). ACCORDINGLY, THE APPEAL IS TREATED AS DISMISSED FOR STATISTICAL PURP OSES. 5. BEFORE US, LD. COUNSEL REFERRED THE ORDER UNDER SECTION 263 TO SUBMIT THAT CIT HAS NOT GIVEN ANY DI RECTIONS BUT HAS ONLY SET ASIDE TO EXAMINE THE ISSUES AFRESH AND REFERRED TO VARIOUS PARAS IN THE ORDER AND FINALLY REFERRED PARA- 6 OF LD. CIT ORDER WHICH IS AS UNDER : 6. IN VIEW OF THE ABOVE, THE ASSESSMENT ORDER PASS ED BY THE A.O. U/S.143(3) OF THE I.T. ACT, 1961 DATED 05.09.2008 IS SET ASIDE WITH A DIRECTION TO THE A.O . TO REDO THE ASSESSMENT AS PER THE DIRECTIONS GIVEN AND TO TAKE APPROPRIATE DECISION AFTER EXAMINATION OF THES E ISSUES (I) CONFIRMATION LETTERS OBTAINED FROM THE U NSECURED LOAN CREDITORS, SUNDRY CREDITORS AND SUNDRY DEBTORS AND (II) COMPARE THE SHORTAGE CLAIMED BY THE ASSESSEE W ITH OTHER ASSESSEES IN THE SAME LINE OF BUSINESS. 5.1. IT WAS THE SUBMISSION THAT SINCE LD. CIT DID NOT GIVE ANY FINDING/DIRECTION SPECIFICALLY ON ANY ISSU E, A.O. HAS EXAMINED THE ISSUES AFRESH. THEREFORE, LD. CIT(A) I S COMPETENT TO PASS THE ORDER. IT WAS THE SUBMISSION THAT MATTE R CAN BE RESTORED TO THE FILE OF LD. CIT(A) FOR FRESH ADJUDI CATION ON MERITS. 6. AFTER CONSIDERING THE OBJECTIONS FROM LD. D.R., WE ARE OF THE OPINION THAT THE LD. CIT(A) IS COMPETENT TO DECIDE 4 ITA.NO.1332/HYD/2014 MR. K. SRINIVASA RAO, KHAMMAM. THE ISSUES ON MERITS. AS SEEN FROM THE ORDER UNDER 263, LD. CIT MADE CERTAIN OBSERVATIONS ON VARIOUS ISSUES WHI LE CONSIDERING THAT A.O. HAS NOT EXAMINED SUCH ISSUES IN THE COURSE OF SCRUTINY, SO AS TO INVOKE JURISDICTION UN DER SECTION 263. HOWEVER, HE HAS NOT GIVEN ANY SPECIFIC DIRECTI ON AND LEFT THE MATTERS TO THE DISCRETION OF THE A.O. TO EXAMIN E AND DECIDE. IN FACT, IN PARA-2 THE OBJECTION ON PURCHAS E OF CHILLY SEEDS WERE DROPPED BY CIT. 7. THE SECOND GROUND FOR REVISION UNDER SECTION 26 3 WAS ABOUT UNSECURED LOANS. VIDE PARA 3.2.1. ASSESSI NG OFFICER WAS DIRECTED TO GIVE AN OPPORTUNITY AND OBTAIN CONF IRMATION AS SUCH AND IN CASE, ASSESSEE FAILS TO FURNISH CONFIRM ATION LETTERS, A.O. WAS DIRECTED TO SHOW CAUSE WHY THE SAME SHOULD NOT BE TREATED AS ASSESSEES INCOME AND TAKE APPROPRIATE D ECISION. 8. WITH REFERENCE TO THIRD GROUND ON SHORT FALL IN G.P. AND FOURTH GROUND REGARDING DISCREPANCIES IN STOCKS , THEY ARE DISCUSSED TOGETHER AND VIDE PARA 4.3 A.O. WAS DIREC TED TO VERIFY THE SHORTAGE CLAIMED BY ASSESSEE WITH OTHER ASSESSEES WHO ARE IN THE SAME LINE OF BUSINESS. THEREAFTER, L D. CIT DIRECTED THAT IF A.O. CONSIDERED THAT SHORTAGES CLA IMED BY ASSESSEE IS NOT REASONABLE, HE MAY TAKE APPROPRIATE DECISION AND PASS ORDER ACCORDINGLY. 9. WITH REFERENCE TO FIFTH GROUND ON WHICH PROCEEDINGS WERE INITIATED, LD. CIT DROPPED THE ISS UE HIMSELF. THUS, AS CAN BE SEEN FROM THE ORDER OF LD. CIT HE D ID NOT GIVE ANY DIRECTION TO ENHANCE OR MAKE ADDITIONS BUT DIRE CTED THE A.O. TO CONSIDER THEM AFRESH ON MERITS. THEREFORE, WE ARE OF THE OPINION THAT ASSESSEE HAS VALIDLY FILED APPEAL BEFORE LD. CIT(A). LD. CIT(A) SHOULD HAVE EXAMINED THE ISSUES ON MERITS 5 ITA.NO.1332/HYD/2014 MR. K. SRINIVASA RAO, KHAMMAM. RATHER THAN DISMISSING THE APPEAL IN LIMINI . CONSIDERING THE FACTS OF THE CASE AND ORDER OF LD. CIT U/S 263, WE HOLD THAT THE ISSUES HAVE NOT BEEN DECIDED IN THE ORDER OF 263. T HEREFORE, LD. CIT(A) IS COMPETENT TO DECIDE THEM ON MERITS. A CCORDINGLY, THE ORDER OF LD. CIT(A) IS SET ASIDE AND APPEAL IS RESTORED TO THE FILE FOR ITS CONSIDERATION ON MERITS. ASSESSEES GR OUNDS ARE ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED F OR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 29.12.2014. SD/- SD/- (SAKTIJIT DEY) (B.RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 29 TH DECEMBER, 2014 VBP/- COPY TO 1. MR. K. SRINIVASA RAO, S/O. KUMARA SWAMY, PROP. SAGA R CHILLIES COMPANY, D.NO.2-1-306, PSR ROAD, KHAMMAM. 2. INCOME TAX OFFICER, WARD-1, KHAMMAM. 3. CIT(A), VIJAYAWADA 4. CIT, VIJAYAWADA 5. D.R. ITAT B BENCH, HYDERABAD.