Kamatham Pradeep Kumar Reddy, Gandweed, Hyderabad V. ITO, Ward-1, Vikarabad, Vikarabad

ITA 1736/HYD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6054 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 28-12-2016
• Court: TRIBUNAL
• Department Lawyers: B RAMA KRISHNA
• Assessee Lawyers: D V ANJANEYULU
• Keywords: Principle of natural justice; Revised return
• Section: 44AD; 143(3)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 1736/HYD/2016 ASSESSMENT YEAR: 2012-13 SHRI KAMATHAM PRADEEP KUMAR REDDY, GANDWEED. RR DIST., PAN AGGPR9310N VS. THE INCOME TAX OFFICER, WARD-1, VIKARABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI D.V. ANJANEYULU REVENUE BY : SHRI B. RAMAKRISHNA DATE OF HEARING : 16-03-2017 DATE OF PRONOUNCEMENT : 22-03-2017 ORDER PER B. RAMAKOTAIAH, A.M: THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORDER OF CIT(A)-2, HYDERABAD DATED 30-09-2016. 2. CONDONATION OF DELAY: THIS APPEAL WAS FILED WITH A DELAY OF ELEVEN DAYS AND ASSESSEE HAS PRAYED FOR CONDONATION WITH THE FOLLOWING REASONS: THE DELAY IN FILING OF THIS APPEAL IS BECAUSE OF THE PETITION FILED BEFORE THE CIT(A) AGAINST THE EX-PARTE ORDER PASSED ON THE REASON THAT NO ONE APPEARED AT THE TIME OF POSTING OF THE APPEAL WHICH WAS IN FACT NOT SERVED PROPERLY ADDRESS MENTIONED IN FORM NO. 35 (LAST COLUMN) APART FROM THE ABOVE FACT, THE NOTICES SERVED WHERE NOT PROPERLY SERVED EVEN TO ASSESSEE EXCEPT ONE NOTICE DT. 18/09/2016 POSTING THE CASE TO 21/09/2016 WITHOUT HAVING SUFFICIENT TIME TO APPROACH THE COUNSEL. FURTHER, WHEN WE APPROACHED THE DEPARTMENT TOWARDS STATUS OF THE PETITION, THEY EXPRESSED THEIR INABILITY TOWARDS THE DISPOSAL OF SAID 2 ITA NO. 1736/HYD/2016 SHRI KAMATHAM PRADEEP KUMAR REDDY, GANDWEED. PETITION AND IMMEDIATELY, I APPROACHED THE COUNSEL TO FILE THE APPEAL AND ACCORDINGLY, THIS APPEAL IS NOW BEING FILED ON EVEN DATE CONSIDERING THE PRAYER, I HEREBY CONDONE THE DELAY IN FILING THE APPEAL AND THE APPEAL IS ADMITTED. 2. BRIEFLY STATED, ASSESSEE HAS SMALL BUSINESS IN VEGETABLES IN A VILLAGE AND FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.1,93,398/- ALONG WITH AGRICULTURAL INCOME OF RS. 82,500/-, HOWEVER, ASSESSEE HAS WRONGLY UPLOADED THE DATA IN ITR-II INSTEAD OF ITR-IV. IT IS EVIDENT FROM THE RETURN AS THE TRANSACTIONS PERTAINING TO GROSS RECEIPTS AT RS. 16,58,500/- AND EXPENSES AT RS 14,17,500/- WAS SHOWN IN COLUMN-I UNDER THE HEAD OTHER SOURCES AS ITR-II PERTAINS TO INDIVIDUALS, NOT HAVING INCOME FROM BUSINESS OR PROFESSION. IN THE SCRUTINY ASSESSMENT COMPLETED, A.O ASKED FOR DETAILS OF EXPENSES. ASSESSEE SUBMITTED THAT THE FORM WAS WRONGLY USED AND ASSESSEE WAS A SMALL TIME BUSINESS PERSON, HAVING TURNOVER OF RS. 16,58,500/- AND INCOME SHOULD HAVE BEEN ASSESSED UNDER 44AD/44AF OF THE IT ACT, AND AS THE INCOME DECLARED AT RS. 2,41,100/- BEING MORE THAN WHAT WAS PRESCRIBED, THE SAME SHOULD BE ACCEPTED. THE A.O DID NOT ACCEPT THE CONTENTIONS STATING THAT THE ASSESSEE HAS NOT FILED A REVISED RETURN OF INCOME AND SINCE NO EVIDENCE WAS FURNISHED AGAINST THE EXPENSES CLAIM OF RS. 14,17,400/-, THE ENTIRE AMOUNT WAS DISALLOWED THEREBY BRINGING TO TAX, THE ENTIRE TURNOVER DECLARED BY ASSESSEE. 3. BEFORE THE LD. CIT(A), ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 3 ITA NO. 1736/HYD/2016 SHRI KAMATHAM PRADEEP KUMAR REDDY, GANDWEED. THE ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) BY TREATING THE EXPENDITURE AS BOGUS AND MAKING ADDITION OF RS. 14,17,000/- IGNORING THE MANDATORY PROVISIONS OF SECTION 44AD/44AF READ WITH RULE 6DD (E)(I) IS ERRONEOUS IN LAW, CONTRARY TO FACTS, PROBABILITIES OF THE CASE AND AGAINST THE PRINCIPLES OF EQUITY AND NATURAL JUSTICE. 02. THE AO HAS NOT APPRECIATED IN PROPER PERSPECTIVE THE EXPLANATION SUBMITTED BY THE APPELLANT WHILE MAKING THE ALLEGED ADDITION, DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE RETURN WAS FILED MISTAKENLY BY TAX RETURN PREPARER IN LTR 2 INSTEAD OF ITR 4 AND THE CLAIM WAS MADE U /S 44AD INSTEAD OF ELIGIBLE CLAIM U/S 44AF AND INCOME DISCLOSED IS MUCH HIGHER THAN THE ABOVE MANDATORY PROVISIONS AND WITHOUT BRINGING ANY SUBSTANTIVE MATERIAL EVIDENCE IS TOTALLY UNJUSTIFIED AND UN WARRANTED BOTH IN LAW AND FACTS. 03. THE AO ERRED IN LAW BY IN ONE WAY ACCEPTING THE NATURE OF ACTIVITY AND GROSS RECEIPTS, ALSO ACCEPTING THAT THERE WERE NO DEBITS OR CREDITS IN THE BANK AFTER DUE VERIFICATION AND MAKING ADDITION ALLEGING THAT NO BILLS WERE OFFERED AS SUPPORTING TO EXPENDITURE IGNORING PROVISIONS OF SEC 44AD / 44AF READ WITH RULE 6DD (E)(I) AND IGNORING THE COMMON PHENOMENON THAT WITHOUT PURCHASE THERE CAN BE NO SALE. 04. THE AO FURTHER ERRED IN LAW BY IGNORING THE MANDATORY, PROVISIONS OF SECTION 143(2) READ WITH 145(3) BY NOT I5SUING SHOW CAUSE NOTICE PROPOSING THE DISALLOWANCE IS AGAINST THE PROVISIONS OF INCOME TAX ACT, 1961. 05. THE APPELLANT CRAVE TO SUBMIT THAT ALL THE FACTS, CONTENTIONS AND CASE LAWS MENTIONED IN THE STATEMENT OF FACTS ACCOMPANIED THESE GROUNDS, SHALL BE TREATED AS PART AND PARCEL OF THESE GROUNDS AND SHALL BE DEALT WITH. 3.1 HOWEVER, ASSESSEE RECEIVED AN ORDER FROM THE CIT(A) DATED 30-09-2016 DISPOSING OF THE APPEAL EX-PARTE, IN WHICH LD. CIT(A) NOT ONLY CONSIDERED DISMISSAL OF THE APPEAL FOR NON-PROSECUTION BY ASSESSEE, BUT ALSO ON MERITS IN PARA 10 AS UNDER: 10. I HAVE PERUSED THE ABOVE AND I FIND THAT THE A.O HAS MADE AN ADDITION OF RS. 14,17,400/-, TOWARDS BOGUS EXPENDITURE CLAIMED. SINCE THE ASSESSEE CLAIMED THAT HE RECEIVED RS. 16,58,500/- FOR THE YEAR MEANS PER MOUNT HE SOLD VEGETABLE AROUND RS. 1.3 LAKHS TO 1.4 LAKHS, WHICH SHOULD OBVIOUSLY BE SUPPORTED BY BILLS AND VOUCHERS. FURTHER, THE ASSESSEE FAILED TO FURNISH THE DETAILS OF EXPENDITURE AND BILLS & VOUCHERS. IN THE ABSENCE OF THE SUCH EVIDENCE, THE A.O HAS MADE THE SAID ADDITIONS. 10.1 FURTHER, DESPITE SUFFICIENT OPPORTUNITIES PROVIDED, NEITHER THE ASSESSEE NOR AUTHORIZED REPRESENTATIVE FURNISHED ANY EVIDENCE DURING APPELLATE PROCEEDINGS ALSO REBUTTING THE CONCLUSIONS DRAWN BY THE AO. THEREFORE, I AM OF 4 ITA NO. 1736/HYD/2016 SHRI KAMATHAM PRADEEP KUMAR REDDY, GANDWEED. THE CONSIDERED OPINION THAT THE AO IS JUSTIFIED IN MAKING THE ABOVE MENTIONED ADDITION. AS RESULT, THE GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED. 4. ASSESSEE RAISED THE FOLLOWING GROUNDS IN HIS APPEAL: 1. THE ORDER OF THE CIT (A) IN SO FAR AS DISMISSING THE APPEAL OF THE ON THE GROUND OF NON-APPEARANCE WITHOUT SERVING THE NOTICE TO THE ADDRESS MENTIONED AS PER FORM NO. 35 DULY FILED BY THE APPELLANT IS ERRONEOUS IN LAW, CONTRARY TO FACTS AND AGAINST THE PRINCIPLES OF EQUITY AND NATURAL JUSTICE. 02. THE CIT (A) OUGHT TO HAVE CONSIDER THE FACT THAT THE VERY NOTICES TOWARDS HEARING ON 01/08/2016 AND 02/09/2016 WERE NOT SERVED EVEN TO THE ASSESSEE AND APPELLANT RECEIVED ONLY ONE NOTICE POSTING THE HEARING TO 21/09/2016 THROUGH SPEED POST ON 18/09/2016 WITHOUT ANY SUFFICIENT TIME TO APPROACH THE COUNSEL. SUBJECT TO THE ABOVE, EVEN ON MERITS 03. THE CIT(A) AND HAS NOT APPRECIATED IN PROPER PERSPECTIVE THE EXPLANATION SUBMITTED BY THE APPELLANT WHILE MAKING THE ALLEGED ADDITION BEFORE AD, DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE RETURN WAS FILED MISTAKENLY BY TAX RETURN PREPARER IN ITR 2 INSTEAD OF ITR 4 AND THE CLAIM WAS MADE U /S 44AD INSTEAD OF ELIGIBLE CLAIM U /S 44AF AND INCOME DISCLOSED IS MUCH HIGHER THAN THE ABOVE MANDATORY PROVISIONS AND WITHOUT BRINGING ANY SUBSTANTIVE MATERIAL EVIDENCE IS TOTALLY UNJUSTIFIED AND UN WARRANTED BOTH IN LAW AND FACTS. 04. THE CIT(A) ERRED IN LAW BY IGNORING THE VERY FACT THAT AO IN ONE WAY ACCEPTED THE NATURE OF ACTIVITY AND GROSS RECEIPTS AND ALSO ACCEPTED THAT THERE WERE NO DEBITS OR CREDITS IN THE BANK AFTER DUE VERIFICATION AND MADE ADDITION ALLEGING THAT NO BILLS WERE OFFERED AS SUPPORTING TO EXPENDITURE IGNORING PROVISIONS OF SEC 44AD / 44AF READ WITH RULE 6DD (E)(I) AND IGNORING THE COMMON PHENOMENON THAT WITHOUT PURCHASE THERE CAN BE NO SALE. 05. THE CIT(A) FURTHER FAILED TO APPRECIATE THE FACT THAT, AO PASSED THE ORDER IGNORING THE MANDATORY PROVISIONS OF SECTION 143(2) READ WITH 145(3) BY NOT ISSUING SHOW CAUSE NOTICE PROPOSING THE DISALLOWANCE IS AGAINST THE PROVISIONS OF INCOME TAX ACT, 1961. 07. FOR THESE AND OTHER REASONS THAT MAY BE URGED AT THE TIME OF HEARING, THE APPELLANT PRAYS THE HONORABLE TRIBUNAL TO KINDLY CONDONE THE DELAY AND ADMIT THE APPEAL AND DISPOSE OF THE CASE ON MERITS. 5. AFTER CONSIDERING THE RIVAL CONTENTIONS, I AM OF THE VIEW THAT THE ORDER OF THE CIT(A) CANNOT BE SUSTAINED. FIRST OF ALL THERE IS NO EVIDENCE THAT ASSESSEE WAS SERVED WITH NOTICES BY THE CIT(A). 5 ITA NO. 1736/HYD/2016 SHRI KAMATHAM PRADEEP KUMAR REDDY, GANDWEED. ASSESSEES COUNSEL FAIRLY ADMITTED THAT NO NOTICE WAS RECEIVED FOR POSTING THE CASES ON 18-09-2016 AND 29-09-2016, WHEREAS ONE NOTICE WAS RECEIVED ON 18-09-2016 POSTING THE CASE ON 29-09- 2016, WITHOUT SUFFICIENT TIME TO APPROACH THE COUNSEL. IT WAS ALSO SUBMITTED THAT GROUNDS RAISED BEFORE THE CIT(A) WERE NOT ADJUDICATED, PARTICULARLY GROUND NO. 2,3 & 4. 6. AFTER CONSIDERING THE RIVAL CONTENTIONS, I AM OF THE OPINION THAT THE ORDERS OF THE A.O AND CIT(A) CANNOT BE SUSTAINED AS SUCH. IT IS OBVIOUS THAT ASSESSEE HAS USED A WRONG FORM AND ALSO REFLECTED THE INCOME FROM BUSINESS UNDER THE HEAD OTHER SOURCES. IT IS THE DUTY OF THE A.O TO ADVICE THE ASSESSEE WHEN CERTAIN PROCEDURAL / TECHNICAL MISTAKES WERE COMMITTED BY ASSESSEE. THE A.O SHOULD NOT TAKE ADVANTAGE OF MISTAKES COMMITTED BY THE ASSESSEE, WHILE DISCHARGING STATUTORY DUTIES. ASSESSEES ENTIRE TURNOVER, AS ACCEPTED BY THE A.O, WAS ONLY RS. 16,58,500/- AND PROVISIONS OF 44AD OF THE IT ACT WOULD AUTOMATICALLY APPLY. SINCE ASSESSEE HAS DECLARED MORE INCOME THAN REQUIRED UNDER PROVISIONS, A.O SHOULD HAVE ACCEPTED THE SAME. THE BENEFITS PROVIDED TO SMALL TIME ASSESSEES / SMALL BUSINESS PERSONS CANNOT BE DENIED BY A.O. THE ORDER OF THE LD. CIT(A) ALSO WAS WITHOUT CONSIDERING THE GROUNDS RAISED BEFORE HIM. IN VIEW OF THAT, IN THE INTEREST OF JUSTICE, I SET ASIDE THE ORDERS OF THE A.O AND CIT(A) AND RESTORE THE ASSESSMENT TO THE FILE OF A.O TO BE REDONE, AFTER GIVING DUE OPPORTUNITY TO ASSESSEE. A.O CAN ADVISE ASSESSEE TO FILE A PROPER FORM OF RETURN IF REQUIRED, BEFORE COMPLETING THE ASSESSMENT. WITH THESE OBSERVATIONS, THE GROUNDS ARE CONSIDERED ALLOWED FOR STATISTICAL PURPOSES. 6 ITA NO. 1736/HYD/2016 SHRI KAMATHAM PRADEEP KUMAR REDDY, GANDWEED. 7. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 22 ND MARCH, 2017. SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED: 22 ND MARCH, 2017 KRK 1) SHRI K PRADEEP KUMAR REDDY, C/O M/S. ANJANEYULU & CO., CAS, 30, BHAGYALAKSHMI NAGAR, GANDHI NAGAR, HYDERABAD 500 080 2) THE ITO, WARD-1, VIKARABAD. 3) CIT(A) -2, HYDERABAD 4) PCIT -2, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 6) GUARD FILE