Handum Industries Limited, Hyderabad V. ACIT, Circle-8(1), Hyderabad

ITA 382/HYD/2013

• Counselvise Citation: 38222514 RSA 2013
• Duration Of Justice: 1 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2001-2002
• Appeal Filed On: 22-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIR MOHAN REDDY
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Depreciation; Search and seizure; Assessment record; Condonation of delay; Revenue expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NOS. 382 & 386/HYD/2013 ASSESSMENT YEARS: 2001-02 & 2008-09 HANDUM INDUSTRIES LTD., HYDERABAD PAN AAACH6888O ASST. COMMISSIONER OF INCOME- TAX, CIRCLE 8(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI P. MURALI MOHAN RAO REVENUE BY SHRIR. MOHAN REDDY DATE OF HEARING 26-06-2014 DATE OF PRONOUNCEMENT 01-08-2014 O R D E R PER SAKTIJIT DEY, J.M.: THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIRECT ED AGAINST SEPARATE ORDERS OF THE CIT(A)-III, HYDERABAD DATED 28 TH JANUARY, 2013 AND 25/02/2013 FOR THE ASSESSMENT YEARS 2001-02 AND 2008-09. ITA NO. 382/HYD/2013 2. BRIEFLY THE FACTS ARE, ASSESSEE IS A COMPANY. A SEARCH AND SEIZURE OPERATION WAS CONDUCTED ON GROUP CONCERNS DURING THE FY 2004-05. IN PURSUANCE TO THE SEARCH AND SEIZURE OPE RATION, NOTICE U/S 153C WAS ISSUED TO THE ASSESSEE CALLING FOR RETURNS OF INCOME. HOWEVER, ASSESSEE DID NOT COMPLY TO THE SAME. DURIN G THE ASSESSMENT PROCEEDING ALSO, THOUGH THE AO CALLED FO R VARIOUS INFORMATION AND DETAILS NEITHER THE ASSESSEE APPEAR ED NOR FILED ANY RETURN OF INCOME. SUBSEQUENTLY, AFTER REPEATED REM INDERS, ASSESSEE 2 ITA NOS. 382 & 386/H/13 HANDUM INDUSTRIES LTD. FILED ITS RETURN OF INCOME ON 15/02/2006 DECLARING NIL INCOME. HOWEVER, SO FAR AS OTHER INFORMATIONS CALLED FOR AR E CONCERNED, ASSESSEE STATED THAT NECESSARY INFORMATIONS WERE FU RNISHED ON 15/12/2006 BY TAPAL. AS NOTED BY THE AO IN THE ASSE SSMENT ORDER, IN ABSENCE OF ANY INFORMATION REGARDING THE DEFERRED R EVENUE EXPENDITURE OF RS. 49,79,000/-, WHICH WAS REDUCED F ROM THE PROFIT OF RS. 28,34,000/- TO SHOW NIL INCOME THE AO DISALLO WED THE DEFERRED REVENUE EXPENDITURE AND WRITTEN OFF PROFIT OF RS. 2 8,34,000/-. BY MAKING SOME MORE ADDITIONS, THE INCOME WAS FINALLY DETERMINED AT RS. 32,72,641/-. AGAINST THE AFORESAID ORDER OF ASS ESSMENT, ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). THE CIT(A) UPON CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND EXAMINING THE DETAI LS SUBMITTED BEFORE HIM ALLOWED AN AMOUNT OF RS. 17,95,390/- OUT OF THE TOTAL DEFERRED REVENUE EXPENDITURE OF RS. 49,79,098/- CLA IMED BY THE ASSESSEE. NOT BEING SATISFIED WITH THE RELIEF GRAN TED BY THE CIT(A), THE ASSESSEE FILED APPEAL BEFORE THE ITAT. THE ITAT AFTER CONSIDERING SUBMISSIONS OF THE PARTIES DISPOSED OF THE APPEAL B Y REMITTING THE MATTER BACK TO THE AO FOR CONSIDERING AFRESH. 3. IN COURSE OF ASSESSMENT PROCEEDING TAKEN UP IN P URSUANCE TO THE DIRECTION OF THE ITAT, AS NOTED BY THE AO, ASSE SSEE EXPRESSED HIS HELPLESSNESS TO FURNISH ANY EVIDENCE IN CONSONANCE WITH ITS CLAIM IN RESPECT OF AGRO BASED PRODUCTS AND EXPENSES FOR MA RKETING OF THE SAME, THE AO, THEREFORE, ADDED THE DEFERRED REVENUE EXPENDITURE DISALLOWED BY THE CIT(A) AMOUNTING TO RS. 31,82,708 /-. BEING AGGRIEVED OF SUCH ADDITION MADE BY THE AO, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). 4. AS IT APPEARS FROM THE ORDER OF THE CIT(A), EVEN AFTER NUMBER OF OPPORTUNITIES BEING GRANTED TO THE ASSESSEE, SINCE NO ONE APPEARED TO REPRESENT THE CASE, THE CIT(A) DECIDED THE APPEA L EX-PARTE BY DISMISSING IT AND SUSTAINING THE ADDITION MADE BY T HE AO. BEING 3 ITA NOS. 382 & 386/H/13 HANDUM INDUSTRIES LTD. AGGRIEVED OF SUCH ORDER OF CIT(A), ASSESSEE IS IN A PPEAL BEFORE US RAISING AS MANY AS 9 GROUNDS. 5. HOWEVER, AT THE TIME OF HEARING, THE LEARNED AR SUBMITTED THAT DUE TO UNAVOIDABLE CIRCUMSTANCES, ASSESSEE COULD NO T APPEAR BEFORE THE CIT(A) TO REPRESENT HIS CASE. HE, THEREFORE, RE QUESTED FOR GRANTING OPPORTUNITY TO THE ASSESSEE TO REPRESENT HIS CASE BEFORE THE CIT(A). 6. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED THA T SINCE THE ASSESSEE INSPITE OF SEVERAL OPPORTUNITIES BEING GRA NTED TO HIM FAILED TO APPEAR AND REPRESENT HIS CASE, NO LENIENCY SHOUL D BE SHOWN TO IT. 7. WE HAVE CONSIDERED THE SUBMISSION OF THE PARTIES AND PERUSED THE MATERIAL ON RECORD AS WELL AS THE ORDERS OF THE REVENUE AUTHORITIES. THE LIMITED GRIEVANCE OF THE ASSESSEE IS THAT THE APPEAL OF THE ASSESSEE HAVING BEEN DECIDED EXPARTE, ASSESS EE WAS NOT ABLE TO SUBSTANTIATE ITS CLAIM OF EXPENDITURE DISALLOWED BY THE AO. HE, THEREFORE, SEEKS ONE MORE OPPORTUNITY TO REPRESENT HIS CASE BEFORE THE CIT(A). THOUGH, IT IS A FACT ON RECORD THAT CIT(A) HAS GRANTED SEVERAL OPPORTUNITIES TO THE ASS ESSEE TO REPRESENT HIS CASE, WHICH ASSESSEE HAS NOT AVAILED, HOWEVER, CONSIDERING THE NATURE OF DISPUTE AND IN THE INTEREST OF JUSTICE, W E ARE INCLINED TO GRANT ONE MORE OPPORTUNITY TO THE ASSESSEE TO REPRE SENT HIS CASE BEFORE THE CIT(A). IN VIEW OF THE ABOVE, WE SET ASI DE THE ORDER OF CIT(A) AND REMIT THE MATTER BACK TO HIS FILE FOR CO NSIDERING AFRESH AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING H EARD TO THE ASSESSEE. IF THE ASSESSEE FAILS TO COMPLY TO ANY NO TICE AND DOES NOT APPEAR BEFORE THE CIT(A) TO REPRESENT HIS CASE AND SUBSTANTIATE THE CLAIM MADE WITH PROPER DOCUMENTARY EVIDENCE, THEN, THE CIT(A) WOULD BE AT LIBERTY TO DECIDE THE ISSUE AS PER HIS OWN WISDOM AND ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 4 ITA NOS. 382 & 386/H/13 HANDUM INDUSTRIES LTD. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 386/HYD/2013 FOR AY 2008-09 9. BRIEFLY THE FACTS ARE, ASSESSEE FILED ITS RETUR N OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 13/08/2008 DECLARING LO SS OF RS. 8,95,30,505/-. DURING SCRUTINY ASSESSMENT PROCEEDIN G, THE AO NOTICED THAT ASSESSEE HAS CLAIMED TRADE DISCOUNT OF RS. 19.9 CRORES AND ON FURTHER EXAMINATION HE NOTICED THAT OUT OF T HE TOTAL OF 14 PARTIES TO WHOM SALES HAVE BEEN MADE DURING THE YEA R, DISCOUNT IS ALLOWED ONLY TO THE FOLLOWING TWO PARTIES: 1. SUJANA OIL PRODUCTS RS. 6.10 CRORES 2. SUJANA UNIVERSAL LTD. RS. 13.8 CRORES WHEN THE AO CALLED UPON THE ASSESSEE TO JUSTIFY THE DISCOUNT GIVEN, ASSESSEE SUBMITTED ITS EXPLANATION. HOWEVER, THE AO NOT BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE, DIS ALLOWED TRADE DISCOUNT OF RS. 19,91,52,720/-. SIMILARLY, AO ALSO DISALLOWED DEPRECIATION CLAIM OF RS. 43,35,602/-. AS A RESULT, TOTAL INCOME WAS DETERMINED AT RS. 1,39,57,857/-. BEING AGGRIEVED OF SUCH ASSESSMENT ORDER, SO PASSED, ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). 10. AS IT APPEARS FROM THE ORDER OF CIT(A) ON EXAMI NING THE MEMORANDUM OF APPEAL IN FORM NO. 35, HE NOTICED THA T ASSESSEE HAS MENTIONED THE DATE OF RECEIPT OF THE ORDER AS 14/01 /2011. HOWEVER, ON VERIFYING THE ASSESSMENT RECORD, THE CIT(A) FOUN D THAT ASSESSMENT ORDER WAS ACTUALLY SERVED ON THE ASSESSEE 31/10/201 0, HENCE, APPEAL WAS FILED WITH A DELAY OF 12 DAYS, WHEREAS, THE AS SESSEE HAS FALSELY REPRESENTED THAT THE ORDER WAS SERVED ON 14/01/2011 . AS NOTED BY THE CIT(A), SINCE ASSESSEE DID NOT APPEAR AND CLARIFY T HE ISSUE, HE DISMISSED THE APPEAL INLIMINE WITHOUT CONDONING THE DELAY. 5 ITA NOS. 382 & 386/H/13 HANDUM INDUSTRIES LTD. 11. WE HAVE HEARD THE PARTIES AND PERUSED THE ORDER S OF THE REVENUE AUTHORITIES AS WELL AS THE OTHER MATERIALS ON RECORD. AT THE TIME OF HEARING BEFORE US, THE LEARNED AR HAS SUBMI TTED AN AFFIDAVIT SWORN ON 19/03/2013 BY ONE SHRI P.V. RAMANA REDDY, DIRECTOR OF THE ASSESSEE COMPANY BY STATING THE CAUSE OF DELAY, AS UNDER: I. P.V. RAMANA REDDY, DIRECTOR OF M/S HANDUM INDUST RIES LTD., DO HEREBY SOLEMNLY AFFIRM AND STATE AS UNDER: THE ASSESSMENT ORDER OF M/S HANDUM INDUSTRIES LTD., FOR THE AY 2008-09 WAS SERVED ON 31/12/2010 AND THE APPEAL BEFORE CIT, APPEALS IS DUE TO BE FILED ON 30/01/2011. THE APPEAL WAS FILED ON 11/02/2011 WITH A DELAY OF 12 DAYS. I WAS NOT AT STATION ON 31/12/2010 AND WAS OUT OF S TATION AND DURING THAT TIME THE ORDER WHICH HAS BEEN RECEIVED AND IT HAD BEEN MISPLACED AND COULD ONLY BE TRACED OUT TILL 8 TH FEBRUARY, 2011 AND DUE TO THAT THE DELAY IN FILING OF THE APP EAL HAS BEEN ARISED AND THE APPEAL PAPERS COULD BE PREPARED AND BEING FILED ON 11/02/2011. IN VIEW OF THE ABOVE, I WOULD LIKE TO STATE THAT TH E APPEAL IN RESPECT OF M/S HANDUM INDUSTRIES LTD., MAY PLEASE B E CONSIDERED AND THE DELAY MAY PLEASE BE CONDONED AND THE APPEAL MAY PLEASE BE ACCEPTED FOR THE ASSESSMENT YE AR 2008- 09. YOU ARE THERE REQUESTED TO KINDLY CONDONE THE DELAY IN FILING OF THE APPEAL WHICH WAS BEYOND MY CONTROL. I STATE THAT THE DELAY IS FOR GOOD AND SUFFICIENT R EASONS. WHAT IS STATED ABOVE IS TRUE TO THE BEST OF MY KNO WLEDGE AND BELIEF. 12. THE LEARNED AR HAS SUBMITTED THAT DELAY BEING B ONAFIDE AND ONLY FOR 12 DAYS, IT SHOULD BE CONDONED AND APPEAL BE DECIDED ON MERITS. FOR THAT PURPOSE, HE REQUESTED TO REMIT THE MATTER BACK TO THE FILE OF THE CIT(A). IT IS AN ADMITTED FACT THAT TH E ASSESSEE HAS FILED THE APPEAL BEFORE THE CIT(A) WITH A DELAY OF 12 DAY S. HOWEVER, IN THE AFFIDAVIT ASSESSEE HAS EXPLAINED THE CAUSE OF DELAY AND REQUESTED FOR CONDONING THE DELAY. THIS AFFIDAVIT HAS BEEN FILED FOR THE FIRST TIME BEFORE US AND WAS NOT FILED BEFORE THE CIT(A) BEFOR E WHOM THE DELAY 6 ITA NOS. 382 & 386/H/13 HANDUM INDUSTRIES LTD. HAS OCCURED. THEREFORE, CONSIDERING THE NATURE OF D ISPUTE WE ARE INCLINED TO REMIT THE MATTER BACK TO THE FILE OF TH E CIT(A) FOR THE PURPOSE OF CONSIDERING CONDONATION OF DELAY AND HEA RING THE APPEAL ON MERIT. WE EXPECT THAT THE CIT(A) WILL CONSIDER A SSESSEES EXPLANATION AND DECIDE THE APPEAL ON MERIT AFTER CO NDONING DELAY. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER OF THE CI T(A) AND REMIT THE MATTER BACK TO HIM FOR DECIDING THE APPEAL AFRESH I N TERMS WITH OUR DIRECTIONS HEREINABOVE AFTER AFFORDING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 13. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 01/08/2014 SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JU DICIAL MEMBER HYDERABAD, DATED: 1 ST AUGUST, 2014 KV COPY TO:- 1) HANDUM INDUSTRIES LTD., C/O P. MURALI & CO., CAS ., 6-3-655/2/3, I FLOOR, SOMAJIGUDA, HYDERABAD 500 082. 2) ASST. CIT, CIRCLE 8(1), HYDERABAD. 3) CIT(A)-III, HYDERABAD. 4) THE CIT-II, HYDERABAD 5)THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDER ABAD.