Kalla Viswanadha Babu, Visakhapatnam V. The Income Tax Officer, Ward-1(2), , Visakhapatnam

ITA 249/VIZ/2020

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 0295 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 13-12-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS
• Section: 143(3); 142(1); 143(2)

Judgement Text

आयकर अपीऱीयअधिकरण, विशाखापटणम पीठ, विशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM श्री द ु व्ि ू रु आर एऱ रेड्डी, न्याययक सदस्य एिं श्री एस बाऱाक ृ ष्णन, ऱेखा सदस्य के समक्ष BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER & SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER आयकर अऩीऱ सं./ I.T.A. No.249/Viz/2020 (ननधधारण वषा / Assessment Year :2011-12) Kalla Viswanatha Babu, Visakhapatnam. PAN: AKVPK 9287 A Vs. Income Tax Officer, Ward-4(2), Visakhapatnam. (अऩीऱधथी/ Appellant) (प्रत्यथी/ Respondent) अऩीऱधथी की ओर से/ Appellant by : Sri GVN Hari, Advocate प्रत्यधथी की ओर से / Respondent by : Sri SPG Mudaliar, Sr. AR स ु नवधई की तधरीख / Date of Hearing : 13/06/2022 घोषणध की तधरीख/Date of Pronouncement : 08/07/2022 O R D E R PER S. BALAKRISHNAN, Accountant Member : This appeal filed by the assessee against the order of the Ld. CIT(A)-2, Guntur in appeal No.146/14-15, dated 09/08/2016 passed U/s. 143(3) r.w.s 250(6) of the Act for the AY 2011-12. 2. At the outset, it is noted that in this case there is a huge delay of 1528 days in filing the appeal before the Tribunal beyond 2 the prescribed time limited. In this regard, the Ld. AR brought our attention to the condonation petition filed by the assessee and read out the contents thereof which are as under: “.......... 2. The appellant did not receive the order of the Ld. CIT(A) and hence was not aware of the order. The appellant did not receive even the consequential order or any other notices from the Assessing Officer for payment of the demand. The appellant did not even know that his bank accounts bearing account no.166885 held with HDFC bank account No.68600 held with ICICI bank were attached by the Income Tax Department on 29/02/2019 for recovery of the demand as these bank accounts were not operated at the relevant time due to closure of business activity. 3. The appellant came to know only during the month of March, 2020 that his bank accounts were attached. At this point of time, the government of India announced the lock down of the country due to outbreak of COVID pandemic. Due to the lockdown and the COVID, the appellant could not move out of his place. The number of COVID cases started reducing from the last week of November, 2020. As soon as the situation improving, the appellant approached the Assessing Officer and requested him to issue a copy of the order of the Ld. CIT(A). The copy was obtained by the appellant on 7 th December, 2020 and without any further delay the appellant took necessary steps and filed the appeal on 14/12/2020. 4. The delay in filing the appeal is due to the reasons explained above which were beyond the control of the appellant. The delay is neither intentional nor deliberate. Therefore, it is respectfully prayed that the said delay of 1528 days may kindly be condoned and appropriate orders may kindly be 3 passed in the interest of rendering substantial justice.” 3. We have heard the rival contentions with regard to condonation of delay and perused the material available on record and the affidavit filed by the assessee seeking condonation of delay. It is apparent from the record that there is an inordinate delay of 1528 days in filing the appeal before the Tribunal. On perusal of the petition filed by the assessee seeking condonation of delay, explaining the reasons for such delay, we are of the considered opinion, the reasons advanced by the assessee are not appreciable. When an appeal filed by the assessee before the First Appellate Authority (FAA), the onus is on the assessee to pursue the appeal and to know the outcome of the appeal so as to take further steps on the decision of the FAA to avoid any coercive action from the Department’s side. It is also a settled principle that each case of the delay it has to be examined on its individual merits and jurisprudence does not extend to accommodating and condoning all inordinate delays. 4. However, in the present case, the Ld. CIT(A) has passed the order on 09/08/2016 and was not received by the assessee and the assessee was unaware of CIT(A)’s order and its subsequent actions of the Department till the bank accounts of the assessee 4 are attached. Later on the assessee realized and made efforts to obtain the order copy of the Ld. CIT(A) and after receiving the true copy from the Department, the assessee has filed the present appeal which resulted in delay of 1528 days. This fact was not disputed by the Ld. DR. Moreover, the Pandemic situation also added to the delay in filing the appeal. Considering the peculiar facts and circumstances of the case, in the interest of justice, we are of the considered view that this is a fit case for condoning the delay. Accordingly, we, respectfully following the ratio laid down by the Hon’ble Supreme Court in the case of Collector (LA) vs. Katiji (1987) 2 SCC 107 and also the decision of the Apex Court in SMW(A) No.3 of 2020 wherein the Apex Court held that the period of limitation for filing the appeals under general laws and all special laws falling between 15/3/2020 and 28/02/2022 shall be excluded for calculating the delay, hereby condone the delay of 1528 days and proceed to adjudicate the appeal on merits. 5. Brief facts of the case are that the assessee is an individual engaged in the business of running a retail liquor shop filed his return of income for the AY 2011-12 declaring a total income of Rs. 3,80,130/- on 1/3/2012. The return was processed U/s. 5 143(1) of the Act by the CPC, Bangalore wherein it was observed that the gross receipts from liquor business is at Rs. 2,21,42,500/- and the assessee has offered an amount of Rs. 3,80,132/- as his net profit from liquor business ie., NP @ 1.72% which is very low in this line of business. Later on the case was selected for manual scrutiny and accordingly statutory notices U/s. 143(2) and 142(1) were issued and served on the assessee calling for certain information. In response the assessee’s representative appeared and made submissions. On perusal and verification of the information submitted by the assessee’s Representative adhering the notice U/s. 142(1) of the Act along with a questionnaire, the Ld. AO observed that the assessee made total purchases at Rs. 1,64,43,051/- during the year and paid an amount of Rs. 53,35,450/- towards license fee for the AY 2011- 12 but no evidence has been furnished. Further, the Ld. AO also noted that assessee has offered an amount of Rs. 3,80,132/- as his net profit from liquor business during the period relevant to the AY 2011-12 which is very low on a huge turnover of Rs. 2,21,42,500/-. In the absence of any evidence in respect of Licence Fee and offering of very low percentage of net profit, the Ld. AO proposed to adopt 20% on the total purchases as the assessee’s net profit for the AY 2011-12 and added back to the 6 income returned by the assessee and accordingly completed the assessment U/s. 143(3) of the Act and determined the total income at Rs.50,67,093/- which includes addition of Rs.32,88,610/- on account of 20% of total purchases and Rs. 17,78,482/- on account of disallowance of 1/3 rd payment of license fee and passed assessment order dated 7/3/2014. Aggrieved by the order of the Ld. AO, the assessee went on appeal before the Ld. CIT(A). On appeal, the Ld. CIT(A) on the issue of estimation of income, directed the Ld. AO to recomputed the income @ 10% of the purchase price of the stock put to sale, net of all the deduction. On the issue of unexplained investment of Rs. 17,78,483/-, the Ld. CIT(A) called for remand report and on perusal of the same sustained the addition made by the Ld. AO and partly allowed the assessee’s appeal. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us. 6. The assessee has raised the following grounds of appeal: “1. The order of the Ld. CIT(A) is contrary to the f acts and also the law applicable to the facts of the case. 2. The Ld. CIT(A) is not justified in upholding the action of the Assessing Officer in rejecting the books of account. 3. Without prejudice to the above, the Ld. CIT(A) is not justified in direct the AO to estimate the net 7 profit @ 10% of purchases as against net profit of 5% on the stock put to sale. 4. (a) The Ld. CIT(A) is not justified in sustaining the addition of Rs. 17,78,483/- made by the AO towards alleged unexplained license fee paid. (b) The Ld. CIT(A) ought to have given sufficient opportunity to explain the investment. (c) Without prejudice to the above, the Ld. CIT(A) ought to have granted benefit of telescoping. 5. Any other grounds may be urged at the time of hearing.” 7. The Ld. AR argued that the Ld. CIT(A) has estimated the income @ 10% as against the net profit of 5%. The Ld. AR relied on the following case laws: 1. Judgment of the Hon’ble Supreme Court in the case of Senior Bhosale Estate (HUF), dated 7/11/2019, Civil Appeal Nos. 6671-6676 of 2010. 2. Decision of the ITAT in the case of Majji Naga in ITA No.494/Viz/2016, dated 31/7/2018. 3. Judgment of the Hon’ble High Court of Andhra Pradesh in the case of Hindwell Constructions vs. CIT (1998) 232 ITR 0776. 8. The Ld. AR also pleaded that the Hon’ble ITAT in another case has allowed 3% in this line of business. The Ld. AR also submitted that in order to run a wine shop license fee has to be paid to the Government of Andhra Pradesh and accordingly the 8 assessee has paid the same. The Ld. AO erred in disallowing the license fee paid to Government of Andhra Pradesh and pleaded that this may be allowed. Per contra, the ld. DR argued that the Ld. CIT(A) has given substantial relief of 10%. The Ld. DR also submitted that the assessee has not submitted any proof of payment of license fee and hence the Ld. AO has rightly disallowed the portion of the License fee. The Ld. DR relied on the order of the Revenue Authorities. The Ld. DR also relied on the following case laws: 1. Decision of the Supreme Court in the case of Balwant Sing (Dead) vs. Jagdish Singh & Ors, dated 8/7/2010. 2. Judgment of the Hon’ble High Court of Delhi in the case of Kamal Jewellers vs. ITO, dated 22/5/1995. 3. Decision of the ITAT, Mumbai in the case of M/s. Five Vision vs. ACIT dated 22/7/2016. 4. Decision of the ITAT, Cochin in the case of Catholic Syrian Bank Ltd vs. DCIT (TDS) CPC, Ghaziabad, dated 22/7/2016. 9. We have heard the rival contentions and perused the materials on record and the orders of the Authorities below. Admitted facts are that the assessee failed to produce any evidence in support of sales made and hence the Ld. AO rejected the books of account and estimated the income @ 20% of the stock put to sale. The reliance placed by the Ld. AR in the 9 decision of the Coordinate Bench of the Tribunal in the case of Majji Naga (supra) and Tangadu Jogisetty in ITA No. 96/Viz/2016 (supra) deserves consideration. Respectfully following the decisions of the Coordinate Bench of the Tribunal we hereby direct the AO to estimate the net profit @ 5% of the purchase price of the stock which was put to sale which is net of deductions. Accordingly, ground no.3 raised by the assessee is partly allowed. 10. With respect to Ground No.4 on payment of license fee of 53,35,450/- the Ld. AO has disallowed 1/3 rd of the license fee amounting to Rs. 17,78,483/-. The Ld. AO disallowed the same based on the facts that no receipt was provided by the assessee. The assessee has produced the receipt, payment account etc., before the Ld. CIT (A) and the Ld. CIT(A) forward the same to the AO for verification. Ld. AO in his remand report did not consider the additional evidence placed by the assessee before the Ld. CIT(A). The assessee also did not file any objections for the remand report by the Ld. AO. We note here that for running an IMFL shop any person needs to pay license fee to the Government on annual basis. The Ld. AO has not disputed the fact that the assessee is in the business of running a wine shop and whereby 10 the License fee is required to be paid in accordance with the guidelines of the respective State Government. Merely on the basis of absence of evidence in respect of the payment of license fee it cannot be said that the assessee has not paid any license fee for running the business. Therefore we are of the considered view that the Revenue Authorities erred in disallowing the same. Accordingly, the relevant ground raised by the assessee is allowed. 11. In the result appeal of the assessee is partly allowed. Pronounced in the open Court on the 08 th July, 2022. Sd/- Sd/- (द ु व्ि ू रु आर.एऱ रेड्डी) (एस बाऱाक ृ ष्णन) (DUVVURU RL REDDY) (S.BALAKRISHNAN) न्याययकसदस्य/JUDICIAL MEMBER ऱेखा सदस्य/ACCOUNTANT MEMBER Dated : 08.07.2022 OKK - SPS आदेश की प्रतिलिपि अग्रेपिि/Copy of the order forwarded to:- 1. ननधधाररती/ The Assessee – Kalla Viswanadha Babu, D.No.58-1- 234/88, Meridian Towers, NAD Kotha Road, Visakhapatnam. 2. रधजस्व/The Revenue – The Income Tax Officer, Ward-4(2), Pratyakshkar Bhavan, MVP Colony, Visakhapatnam. 3. The Principal Commissioner of Income Tax-2, Visakhapatnam. 11 4. आयकर आय ु क्त (अऩीऱ)/ The Commissioner of Income Tax (Appeals)-2, Guntur. 5. ववभधगीय प्रनतननधध, आयकर अऩीऱीय अधधकरण, ववशधखधऩटणम/ DR, ITAT, Visakhapatnam 6. गधर्ा फ़धईऱ / Guard file आदेशधन ु सधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam