Sri Garadi Rambabu, Khammam V. ITO,Ward -2, Khammam

ITA 1796/HYD/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6414 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 24-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHAR REDDY
• Assessee Lawyers: K NEERAJA
• Keywords: Reasonable cause; Condonation of delay
• Section: 143(3); 133(6); 147; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA.NO.1796 & 1797/HYD/2013 ASSESSMENT YEAR 2005-2006 MR. GARADI RAMBABU KHAMMAM PAN AGIPG-2261-M VS. ITO, WARD-2 KHAMMAM (APPELLANT) (RESPONDENT) FOR ASSESSEE : MS. K. NEERAJA FOR REVENUE : MR. P. SOMASEKHAR REDDY DATE OF HEARING : 17.04.2014 DATE OF PRONOUNCEMENT : 23.04.2014 ORDER PER B.RAMAKOTAIAH, A.M. THESE TWO APPEALS ARE BY ASSESSEE ONE AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX PASSED UNDE R SECTION 263 OF THE I.T. ACT, 1961 DATED 14.03.2012 AND THE OTHER APPEAL IS AGAINST THE ORDER OF THE CIT(A) DIS MISSING THE ASSESSEES APPEAL AGAINST THE ORDER CONSEQUENT TO T HE ORDER UNDER SECTION 263. SINCE COMMON ISSUES ARE INVOLVED IN THESE APPEALS, THESE APPEALS ARE HEARD TOGETHER AND DECID ED BY THIS COMMON ORDER. ITA.NO.1797/HYD/2013 : 2. THIS APPEAL WAS FILED WITH A DELAY OF 585 DAYS. ASSESSEE HAS FILED AFFIDAVIT EXPLAINING THAT THE OR DER UNDER 2 ITA.NO.1796 & 1797/HYD/2013 MR. GARADI RAMBABU, KHAMMAM SECTION 263 WAS NOT APPEALED AS THE ASSESSEE WAS OF THE OPINION THAT IN CONSEQUENTIAL ORDER A.O. WOULD CONS IDER THE FACTS. HOWEVER, A.O. HAS PASSED THE ORDER MAKING A DDITIONS AND WHEN THE MATTER WAS CONTESTED BEFORE THE LD. CI T(A), THE APPEAL WAS DISMISSED OBSERVING THAT CIT(A) CANNOT D ECIDE THE APPEAL WHEN CIT EXERCISED JURISDICTION UNDER SECTIO N 263 AND THE ASSESSMENT ORDER WAS CONSEQUENT TO THE DIRECTIO NS OF THE ORDER PASSED UNDER SECTION 263 AND CONSEQUENT TO TH AT, FURTHER APPEAL WAS PREFERRED TO THE ITAT. AT THAT T IME, IT WAS SUBMITTED, THAT ASSESSEE WAS ADVISED THAT HE SHOULD CONTEST THE ORDER UNDER SECTION 263 AND ACCORDINGLY, APPEAL WAS FILED WITH CONDONATION OF DELAY. ASSESSEE RELIED ON THE C OORDINATE BENCH DECISION IN THE CASE OF KEWALKUMAR JAIN VS. A CIT, CIRCLE-4, PUNE (2013) 144 ITD 672 (PUNE-TRIBU.) SE EKING CONDONATION OF DELAY AS THERE IS NO MALAFIDE INTENT ION. 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE CONDONE THE DELAY IN FILING THE APPEAL BEFORE THE I TAT AS ASSESSEE HAS REASONABLE CAUSE IN NOT PRESENTING ITS APPEAL BEFORE THE ITAT IN TIME AGAINST THE ORDER OF THE CI T UNDER SECTION 263 OF THE ACT. 4. BRIEFLY STATED, FACTS OF THE APPEAL IN ITA.NO.1797/HYD/2013 ARE THAT THE ASSESSMENT ORDER WAS ORIGINALLY PASSED UNDER SECTION 143(3) READ WITH SE CTION 147 ON 15.12.2009. LD. CIT, VIJAYAWADA NOTICED THAT A.O . DID NOT EXAMINE THE ISSUE OF CONTRACT RECEIPTS FROM M/S. SA DBHAV ENGINEERING LTD., AHMEDABAD AS WELL AS CLAIM OF DIE SEL EXPENSES WHICH ARE SUPPOSED TO BE BORNE BY THE SAID COMPANY. FURTHER, IT WAS ALSO NOTICED THAT A SUM OF RS.14,72,150/- WAS DEBITED TO THE P & L ACCOUNT TOW ARDS FREIGHT AND NO DETAILS WERE CALLED FOR SO AS TO EXA MINE THAT ANY 3 ITA.NO.1796 & 1797/HYD/2013 MR. GARADI RAMBABU, KHAMMAM PROVISION OF TDS ARE APPLICABLE ON THE PAYMENTS SO MADE. IN VIEW OF THE ABOVE, HE HAS ISSUED A NOTICE DATED 17. 01.2012 CALLING FOR OBJECTIONS OF THE ASSESSEE. THEREAFTER, LD. CIT ALSO OBTAINED INFORMATION UNDER SECTION 133(6) FROM M/S. SADBHAV ENGINEERING LTD., AHMEDABAD AND NOTICED THAT THE GR OSS RECEIPTS FROM THEIR LEDGER ACCOUNT WAS TO THE TUNE OF RS.1,08,44,028/-. THEREAFTER, LEARNED CIT CONSIDERE D THE OPENING AND CLOSING BALANCE SHOWN IN THE LEDGER ACC OUNT OF THAT COMPANY AND DIRECTED THE A.O. TO MAKE ADDITION OF RS.4,23,814/- AS ITS GROSS RECEIPTS. THEREAFTER, WI TH RESPECT TO OPENING BALANCE SHOWN AT RS.7,08,483/-, THE LEARNED CIT DIRECTED THE A.O. TO VERIFY WHETHER THIS HAS BEEN I N THE GROSS CONTRACTS RECEIPTS SHOWN AND DECIDE ACCORDING TO LA W. WITH REFERENCE TO DIESEL EXPENSES ALSO WHILE ALLOWING TH E EXPENDITURE AS DEDUCTED BY THE SAID COMPANY/OR REIM BURSED, THE LD. CIT(A) DIRECTED THE A.O. TO DISALLOW AN AMO UNT OF RS.3,02,466/- ON THE REASON THAT ASSESSEE HAS NOT P RODUCED ANY EVIDENCE IN SUPPORT OF THE CLAIM OF THE ABOVE A MOUNT. 5. THE NEXT ISSUE CONSIDERED BY THE LEARNED CIT WA S WITH REFERENCE TO LORRY FREIGHT PAYMENTS AS EXTRACT ED BY THEM, HE WAS OF THE OPINION THAT MANY OF THE VEHICLES REP ORTED BY THE ASSESSEE WERE NOT EXACTLY LORRIES BUT OTHER VEHICLE S AND AT SOME PLACES DATA WAS NOT FOUND. THEREFORE, A.O. WAS DIRECTED TO MAKE FURTHER ENQUIRIES WITH ROAD TRANSPORT AUTHO RITY AND AFTER OBTAINING INFORMATION, DISALLOW THE EXCESS CL AIM IF ANY. ACCORDINGLY, HE SET ASIDE THE ASSESSMENT TO MAKE AF RESH, AFTER DULY EXAMINING THE ABOVE ISSUES. 6. CONSEQUENT TO THE ABOVE SET ASIDE, THE A.O. EXAMINED AND MADE ADDITIONS BY THE ORDER PASSED UND ER SECTION 143(3) READ WITH SECTION 263 (WRONGLY MENTI ONED AS 4 ITA.NO.1796 & 1797/HYD/2013 MR. GARADI RAMBABU, KHAMMAM 264 BY THE A.O). WHEN ASSESSEE PREFERRED APPEAL TO THE LD. CIT(A), LD. CIT(A) WITHOUT EXAMINING THE MERITS OF THE CONTENTIONS OF ASSESSEE, DISMISSED THE APPEAL HOLDI NG THAT THE ASSESSMENT WAS DONE CONSEQUENT TO THE DIRECTIONS UN DER SECTION 264 (AGAIN WRONGLY REFERRED). ASSESSEE HAS PREFERRED OTHER APPEAL ITA.NO. 1796/HYD/2013 ON THE REASON TH AT LD. CIT(A) WAS NOT CORRECT IN REJECTING THE APPEAL WITH OUT EVEN CONSIDERING THAT THERE ARE TWO ADDITIONS MADE AFTER DUE VERIFICATION BY THE A.O. ON WHICH THERE ARE NO DIRE CTIONS BY THE LD. CIT. THEREFORE, BOTH THE APPEALS CAME UP FOR CO NSIDERATION. 7. AFTER CONSIDERING THE RIVAL CONTENTIONS AND EXAMINING THE DETAILS PLACED ON RECORD, WE ARE OF T HE OPINION THAT PROCEEDINGS UNDER SECTION 263 CONSIDERED BY TH E CIT ARE TO BE UPHELD. IN FACT, EVEN THOUGH ORIGINAL PROCEED INGS ARE INITIATED UNDER SECTION 147 AND THE ORDER UNDER SEC TION 143(3) READ WITH SECTION 147 WERE PASSED ON 15.12.2009, TH ERE SEEMS TO BE NO ENQUIRY ON VARIOUS ISSUES RAISED BY THE LD . CIT AND ASSESSEE COULD NOT PLACE ON RECORD ANY INFORMATION THAT THESE ISSUES HAVE BEEN EXAMINED BY THE A.O. IN THE COURSE OF ASSESSMENT. THEREFORE, WE ARE OF THE OPINION THAT L D. CIT EXERCISED JURISDICTION UNDER SECTION 263 CORRECTLY ON THE FACTS OF THE CASE. 8. HOWEVER, WE ARE NOT IN AGREEMENT WITH THE DIRECTIONS GIVEN BY THE CIT TO ADD THE CLOSING BALA NCE OF THE AMOUNT AND ALSO DISALLOW THE EXPENSES IN THE COURSE OF PROCEEDINGS UNDER SECTION 263 WITHOUT SUBJECTING TH EM TO VERIFICATION BY THE A.O. IN THE ABSENCE OF PROPER OPPORTUNITY BEING GIVEN TO THE ASSESSEE TO JUSTIFY/RECONCILE AC COUNTS WHEN INFORMATION WAS OBTAINED UNDER SECTION 133(6) FROM A THIRD PARTY, WE ARE OF THE OPINION THAT THE DIRECTIONS G IVEN BY THE 5 ITA.NO.1796 & 1797/HYD/2013 MR. GARADI RAMBABU, KHAMMAM CIT CANNOT BE SUSTAINED. THEREFORE, IN ORDER TO GIV E PROPER OPPORTUNITY TO ASSESSEE TO EXPLAIN THE DIFFERENCE I F ANY, FROM HIS BOOKS OF ACCOUNTS WITH THAT OF M/S. SADHBHAV EN GINEERING LTD., AHMEDABAD, WE ARE OF THE OPINION THAT THE ORD ER OF THE CIT HAS TO BE MODIFIED, WITH A DIRECTION TO THE A.O . TO EXAMINE THE ABOVE ISSUES AFRESH WITHOUT DULY INFLUENCED BY THE OBSERVATIONS OF THE CIT. CONSEQUENTLY, THE ORDER UN DER SECTION 263 WAS MODIFIED WITH A DIRECTION TO THE A.O. TO EX AMINE THE ISSUES AFRESH AFTER DULY CONSIDERING THE SUBMISSION S OF THE ASSESSEE AND DECIDE THE ISSUE ON THE FACTS AND LAW OF THE CASE. THEREFORE, THE ORDERS PASSED BY THE A.O. CONSEQUENT TO THE ORDER UNDER SECTION 263 STANDS SET ASIDE AND THE AS SESSMENT PROCEEDINGS ARE RESTORED TO THE FILE OF THE A.O. FO R FRESH CONSIDERATION TO EXAMINE THE ISSUES TAKEN-UP BY LD. CIT, IN THE COURSE OF FRESH ASSESSMENT PROCEEDINGS. A.O. IS FREE TO MAKE ENQUIRIES IF ANY, REQUIRED AND SHOULD GIVE DUE OPPORTUNITY TO ASSESSEE TO EXPLAIN THE VARIOUS CLAI MS MADE THEREIN. WITH THESE DIRECTIONS, ITA.NO.1797/HYD/201 3 OF THE ASSESSEE IS CONSIDERED AS PARTLY ALLOWED FOR STATIS TICAL PURPOSES. ITA.NO.1796/HYD/2013 : 9. THIS APPEAL BECOMES INFRUCTUOUS AS THE CONSEQUENTIAL ORDER STANDS SET ASIDE IN VIEW OF THE MODIFICATION OF THE ORDER UNDER SECTION 263 AND SET TING ASIDE TO THE FILE OF THE A.O. HOWEVER, WE PLACE ON RECORD OUR OBSERVATIONS THAT LD. CIT(A) WRONGLY DISMISSED THE APPEAL WITHOUT EXAMINING THE ISSUES AT ALL, JUST BECAUSE CONSEQUENTIAL ORDER WAS PASSED BY THE A.O AS PER DI RECTIONS OF CIT. IT IS NOT PROPER ON THE PART OF THE CIT(A) TO DISMISS THE APPEAL. THE LEARNED CIT HAS DIRECTED THE A.O. TO EX AMINE SOME 6 ITA.NO.1796 & 1797/HYD/2013 MR. GARADI RAMBABU, KHAMMAM ISSUES AND ADDITIONS WERE MADE AFTER EXAMINING THE ISSUES. THEREFORE, CIT(A) SHOULD HAVE CONSIDERED THE ASSESS EES SUBMISSIONS ON THE ADDITIONS MADE BY THE A.O. AFTER VERIFICATION. MOREOVER, LD. CIT(A) ALSO COULD NOT C ORRECT THE MISTAKE COMMITTED BY THE A.O. THAT ORDER WAS CONSEQ UENT TO SECTION 264 WHEREAS SAME WAS PASSED CONSEQUENT TO PROCEEDINGS UNDER SECTION 263. BE THAT AS IT MAY, S INCE THE ORDER OF CIT STANDS MODIFIED BY THE DECISION IN ITA.1797/HYD/2013 HEREINABOVE, THIS APPEAL BECOMES INFRUCTUOUS. ACCORDINGLY, ITA.NO.1796/HYD/2013 IS CONSIDERED AS ALLOWED FOR STATISTICAL PURPOSES. 10. TO SUM-UP, ITA.NO.1797/HYD/2013 OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND ITA.NO.1796/HYD/2013 IS CONSIDERED AS ALLOWED FOR S TATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 23.04.2014 SD/- SD/- (P. MADHAVI DEVI) (B.RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 23 RD APRIL, 2014 VBP/- COPY TO : 1. MR. GARADI RAMBABU, S/O. KOTESWARA RAO, VENKATAY APALEM, KHAMMAM, 2. INCOME TAX OFFRICER, WARD-2, KHAMMAM. 3. CIT(A), HYDERABAD 4. CIT, VIJAYAWADA 5. D.R. ITAT, A BENCH, HYDERABAD.