SRINIVASA RAO ARNEPALLI, KRISHNA DIST V. PRINCIPAL COMMISSIONER OF INCOME TAX, VIJAYAWADA

ITA 153/VIZ/2023

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 5551 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 16-10-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 17-05-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAMA MURTHY
• Keywords: Business income; Revision of order; Principle of natural justice; Reasonable cause; Assessment record; Condonation of delay; TDS
• Section: 263; 143(3); 2(A)

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.153/Viz/2023 (ननधधारण वर्ा / Assessment Year : 2017-18) Srinivasa Rao Arnepalli Bhavishya Edible Oil Refinery 140/1, Kodurupadu Bapulapadu Mandalam Krishna Dist. [PAN : AFTPA9285K] Vs. Principal Commissioner of Income Tax Vijayawada (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) अपीलधथी की ओर से/ Appellant by : Shri Rama Murthy Tejomurtula, AR प्रत्यधथी की ओर से / Respondent by : Dr.Satyasai Rath, CIT(DR) सुनवधई की तधरीख / Date of Hearing : 17.10.2023 घोर्णध की तधरीख/Date of Pronouncement : 22.11.2023 आदेश /O R D E R Per Shri Duvvuru RL Reddy, Judicial Member : Condonation of Delay : This appeal is filed by the assessee against the order of Principal Commissioner of Income Tax [PCIT] vide DIN & Order No.ITBA/REV/F/REVS/2021-22/1040915192(1) dated 16.03.2022, arising out of assessment order passed u/s 143(3) of the Income Tax Act, 2 I.T.A. No.153/Viz/2023, A.Y.2017-18 Sinivasa Rao Arnepalli, Krishna Dist. 1961 (in short ‘Act’) dated 25.12.2019 for the Assessment Year (A.Y.) 2017-18 with the delay of 368 days. The assessee filed a petition for condonation of delay, submitting that the order of the Ld.PCIT, Vijayawada dated 16.03.2022 was served on the assessee on 16.03.2022 and the due date for filing of appeal was 14.05.2022, but the appeal was filed on 18.05.2023 with the delay of 368 days, the reasons for the delay was due to ill health, post covid and personal family problems and the assessee was expecting consequential notice to respond from assessing officer and he was unaware of the fact that the case has been transferred to NFAC. On approaching the present counsel, the assessee was advised to file appeal against the order of the revision authority before the Tribunal. He, therefore pleaded to condone the delay and allow the appeal for hearing. We have heard the Ld.AR and gone through the condonation petition filed. We find that there is a reasonable cause in filing the appeal belatedly before the Tribunal. Hence, we condone the delay and admit the appeal for hearing. 2. Brief facts of the case are that the assessee is an individual, in the business of manufacturing edible oil in the name & style of Bhavishya Edible Oil Refinery filed return of income for the A.Y.2017-18 on 3 I.T.A. No.153/Viz/2023, A.Y.2017-18 Sinivasa Rao Arnepalli, Krishna Dist. 30.10.2017, admitting total income of Rs.11,67,680/- and agricultural income of Rs.5,00,000/-. The case was selected for scrutiny. The assessment was completed u/s 143(3) of the Act, determining the total income at Rs.16,45,430/- by making an addition of Rs.4,77,749/- towards low Gross Profit. With the powers vested with the PCIT, the Ld.PCIT examined the relevant assessment record and found that the assessment order was passed without making enquiries or verification which should have been made, thereby making the said assessment order liable to be considered as erroneous in so far as it is prejudicial to the interests of revenue, within the meaning and scope of section 263 of the Act. Detailed show cause notices u/s 263 dated 27.12.2021 and 07.01.2022 were issued and served on the assessee, but the assessee did not furnish the requisite information. Hence, the Ld.PCIT considered that the assessee has no explanation to furnish the information in respect of the issues mentioned in the show cause notice and held that it is unambiguously clear that the assessment order was passed without making inquiries or verification, which should have been made with regard to one of the issue for which the case was selected for scrutiny. The Ld.PCIT set aside the assessment order with a direction to the AO to redo the assessment in accordance with law after making all necessary inquiries and verification 4 I.T.A. No.153/Viz/2023, A.Y.2017-18 Sinivasa Rao Arnepalli, Krishna Dist. and after affording a reasonable opportunity of being heard to the assessee. 3. Aggrieved by the order of the Ld.PCIT, the assessee preferred an appeal before the Tribunal by raising the following grounds of appeal : 1. On the facts and circumstance of the case and in law, the Pr.CIT, Vijayawada erred in passing the order U/s. 263 of the Act which is contrary to the material on record and provisions of the Act, unjust and bad in law. 2. On the facts and in the circumstance of the case, the order passed by the Ld. Pr. CIT is not valid as per the Explanation 2(a) of section 263 of the Act since the AO has passed the order only after due inquiry and verification. Hence the observation of the Ld. Pr. CIT that the order passed by the Ld. AO dated 25/12/2019 has been completed without any inquiry is not correct. 3. On the facts and circumstances of the case, the Ld. Pr.CIT ought to have appreciated that the AO called for the details of cash deposits of Rs. 7,37,840/- in the ICICI Bank Nuzividu Branch and Rs. 18,20,000/- in Saptagiri Grameena Bank, Veeravalli Branch and examined such information with the books of account, financial statements and bank account statements submitted by the assessee before the Ld. AO and hence it is not correct to state that proper verification has not been carried on by the AO. 4. On the facts and circumstances of the case, the Ld. Pr.CIT ought to have appreciated the fact that the AO had called for the details of assessee’s claim of housing loan interest of Rs. 5,96,817/- and the Ld. AO examined the loan interest certificate submitted by the assessee before the Ld. AO and hence it is not correct to state that proper verification has not been carried on by the AO. 5 I.T.A. No.153/Viz/2023, A.Y.2017-18 Sinivasa Rao Arnepalli, Krishna Dist. 5. On the facts and in the circumstances of the case, the Ld. Pr.CIT is not justified in holding that the interest income of Rs. 12,45,095/- and commission Rs. 7,57,242/- shall exclude while computing the actual gross profit as these two items are part of the business income and cannot be considered separately and therefore it is not correct to state that the Ld.AO did not consider the interest and commission while adopting the GP @ 1.85% on the assessee’s turnover. 6. The Ld. Pr.CIT is erred in holding that the assessee has not deducted tax on the payment of Rs. 39.43 lakhs and ought to have appreciated the fact that these are interest payments made to the Nationalized Bank on the ODS availed by the assessee in which case the assessee is not supposed to deduct TDS. 7. On the facts and circumstances of the case, the Ld. Pr. CIT ought to have appreciated the fact that the AO had called for the details with regard to unsecured loans (Rs. 1,00,77,991/-) and sundry creditors ( Rs. 2,24,58,147/-) which are taken and repaid during the FY and the Ld. AO has verified and examined the relevant documents, financial statements, books of accounts etc., submitted by the assessee before the Ld. AO and hence it is not correct to state that proper verification has not been carried on by the AO. 8. The Ld. Pr. CIT is erred in holding that the assessee’s claim of agricultural income of Rs.5 lakhs was not properly examined by the fact that only after verifying the assessee’s pattadar pass book and title Deed and the relevant details only the Ld. AO accepted the assessee’s claim and therefore it is not correct to state that proper verification has not been carried on by the AO. 8. On the facts and circumstance of the case the Ld. Pr.CIT ought to have called for assessment record and cogent evidence submitted by the assessee during the assessment proceedings before jumping into a conclusion that the Ld AO passed the order without verifying 6 I.T.A. No.153/Viz/2023, A.Y.2017-18 Sinivasa Rao Arnepalli, Krishna Dist. the genuineness of the claims and examination of the documentary evidence and invoking section 263 of the Act is not in accordance with law. 9. Without prejudice to each of the above grounds raised by the assessee, the Ld. Pr.CIT is erred in not providing proper opportunity of being heard to the assessee which is against the principles of natural justice. 4. The only contention of the assessee is that the assessee filed reply before the PCIT, but the Ld.PCIT without considering the submissions, without according second and subsequent opportunity to submit further information to substantiate the assessee’s case proceeded with revision proceedings and passed order u/s 263 dated 16.03.2022, without calling for further information, documentary evidences, books of account, clarifications or explanations on various issues covered in the show cause notice. The assessee filed paper book with all documentary evidences before the Tribunal and pleaded to afford one more opportunity of being heard before the Ld.PCIT to substantiate his case. 5. Per contra, the Ld.DR relied on the order of the Ld.PCIT and submitted that the Ld.PCIT is justified in remitting matter back to the file of the AO for reassessment and therefore pleaded to uphold the order passed by the Ld.PCIT and dismiss the appeal of the assessee. 7 I.T.A. No.153/Viz/2023, A.Y.2017-18 Sinivasa Rao Arnepalli, Krishna Dist. 6. We have heard both the parties and perused the material available on record. The only grievance of the assessee is that the assessee filed all documentary evidences before the AO as well as the PCIT, but the Ld.PCIT has not considered the reply submitted along with all documentary evidences furnished by the assessee and without providing property opportunity of being heard passed order u/s 263 which is against the principles of natural justice. As is evident from records, we observe that the assessee was given sufficient opportunities, however, considering the submissions made by the assessee and in order to meet the principles of natural justice, we remit the matter back to the file of the PCIT with a direction to afford one more opportunity of being heard to the assessee to substantiate his case. The assessee is also directed to adhere to the notices issued by the department and present his case with proper documentary evidences. Hence, all the grounds raised by the assessee are allowed for statistical purpose. 7. In the result, appeal of the assessee is allowed for statistical purpose. 8 I.T.A. No.153/Viz/2023, A.Y.2017-18 Sinivasa Rao Arnepalli, Krishna Dist. Order pronounced in the open court on 22 nd November, 2023. Sd/- Sd/- (एस बालाकृ ष्णन) (द ु व्वूरु आर.एल रेड्डी) (S.BALAKRISHNAN) (DUVVURU RL REDDY) लेखा सदस्य/ACCOUNTANT MEMBER न्याधयक सदस्य/JUDICIAL MEMBER Dated : 22.11.2023 L.Rama, SPS आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. ननधधाऩरती/ The Assessee– Srinivasa Rao Arnepalli, Bhavishya Edible Oil Refinery, 140/1, Kodurupadu, Bapulapadu Mandalam, Krishna Dist. 2. रधजस्व/The Revenue – Principal Commissioner of Income Tax, Vijayawada 3. नवभधगीय प्रनतनननध, आयकर अपीलीय अनधकरण, नवशधखधपटणम / DR,ITAT, Visakhapatnam 4..गधर्ा फ़धईल / Guard file आदेशधनुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam Sl. No. Description Date Initials 1. Date of dictation by the Author 11.2023 Sr.PS 2. Draft placed before the Dictating Member 11.2023 Sr.PS 3. Draft placed before the Second Member 11.2023 Sr. PS 4. Draft approved by the Second Member 11.2023 Sr. PS 5. Date of approved order comes to the Sr. PS 11.2023 Sr. PS 6. Date of pronouncement of order 11.2023 Sr. PS 7. Date of file sent to the Bench Clerk 11.2023 Sr. PS 8. Date on which file goes to the OS 11.2023 B.Clk 9. Date on which file goes to the Sr.PS 11.2023 OS 10 Date of despatch of order 11.2023 Sr. PS