Tammana Viswanadha Rao, Bhimavaram V. Income Tax Officer, Ward-1, , Bhimavaram

ITA 393/VIZ/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7789 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 27-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CH SANJEEV
• Assessee Lawyers: K SIVA RAM KUMAR
• Section: 143(3); 14A; 143(1); 10; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO S . 393 & 394 / VIZ /201 8 (ASST. YEAR : 20 13 - 14 & 2014 - 15 ) TAMMANA VISWANADHA RAO, PROP. : TAMMANA TRADERS, D.NO. 3 - 5 - 2, BHIMAVARAM, WEST GODAVARI DISTRICT. V S . IT O , WARD - 1, BHIMAVARAM . PAN NO. AEDPV 8249 K (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K. SIVA RAM KUMAR , C A. DEPARTMENT BY : SHRI CH. SANJEEV , SR. DR DATE OF HEARING : 08 / 0 1 /201 9 . DATE OF PRONOUNCEMENT : 11 / 0 1 /201 9 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER THESE APPEAL S BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDER S OF COMMISSIONER OF INCOME TAX (APPEALS) - 12 , HYDERABAD , BOTH DATED 18 /0 4 /201 8 FOR THE ASSESSMENT YEARS 20 13 - 14 & 20 14 - 1 5 . SINCE THE FACTS AND ISSUES ARE COMMON, CLUBBED AND HEARD TOGETHER AND DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER. FOR THE SAKE OF CONVENIENCE, FACTS ARE TAKEN FROM ITA NO. 393/VIZ/2018. 2 ITA NO S . 393 & 394/VIZ/2018 ( TAMMANA VISWANADHA RAO ) 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS DERIVING INCOME FROM PRAWN TRADING , FILED HIS RETURN OF INCOME BY DECLARING TOTAL INCOME OF RS. 5,00,780/ - . THE RETURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'ACT') . S UBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY THROUGH CASS AND A NOTICE UNDER SECTION 143(2) WAS SERVED ON THE ASSESSEE AND ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE HAS ADMITTED A SUM OF RS. 48,99,996/ - UNDER THE HEAD INVESTMENTS IN SHARES . ON PERUSAL OF THE BALANCE SHEET, IT IS SEEN THAT ADVANCES OF RS. 25.00 LAKHS WAS GIVEN TO EDUCATIONAL INSTITUTION , N AMELY , BARAHMULLAH EDUCATIONAL SOCIETY. THE CAPITAL OF THE ASSESSEE IS MUCH LESS THAN THE FIXED ASSETS AND CURRENT ASSETS PUT TOGETHER. IT IS ALSO SEEN FROM THE BALANCE SHEET, T HE ASSESSEE AVAILED LOANS FROM BANKS AND THE INTEREST OF RS. 10,44,885/ - HAS BEEN DEBITED TO THE PROFIT & LOSS ACCOUNT. UNDER THESE CIRCUMSTANCES, IT IS APPARENT THAT THE PROVISIONS OF SECTION 14A APPLY IN RESPECT OF INVESTMENT IN SHARES . A S THE DIVIDEND INCOME FROM THE SHARES IS EXEMPT UNDER SECTION 10 OF THE ACT, THE ASSESSEE DID NOT MAKE ANY DISALLOWANCE AS REQUIRED UNDER SECTION 14A . IN VIEW OF THESE FACTS, EXPENSES INCURRED BY THE ASSESSEE 3 ITA NO S . 393 & 394/VIZ/2018 ( TAMMANA VISWANADHA RAO ) WERE DISALLOW ED BY INVOKING SECTION 14A R.W.R. 8D OF THE IT RULES, 1962 . ACCORDINGLY, THE ASSESSING OFFICER WORKED OUT DISALLOWANCES OF RS. 9,69,326/ - AND THE SAME IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 3 . ON BEING AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) , HOWEVER, HE HAS NOT APPEARED . THE LD.CIT(A) BY APPLYING RATIO LAID DOWN IN CIT VS. MULTIPAL (INDIA) PVT. LTD. [(38 ITD 320)(DEL.)] , DISMISSED THE APPEAL OF THE ASSESSEE EXPARTE . 4 . AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS SUBMIT TED THAT THE NOTICE ISSUED BY T H E LD. CIT(A) HAS NOT REC E IVED BY THE ASSESSEE AND THEREFORE HE PREVENTED TO APPEA R BEFORE HIM. 6 . ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE STRONGLY OPPOSED THE SUBMISSION MADE BY THE ASSESSEES REPRESENTATIVE AND RELIED ON THE ORDER OF THE ASSESSING OFFICER. 7 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 8 . IN THIS CASE, THE ASSESSING OFFICER MADE AN ADDITION BY INVOKING SECTION 14A R.W.R. 8D OF THE IT RULES , 1962. BEFORE THE ASSESSING OFFICER, THE ASSESSEE HAS NOT MADE ANY SUBMISSIONS IN 4 ITA NO S . 393 & 394/VIZ/2018 ( TAMMANA VISWANADHA RAO ) RESPECT OF APPLICATION OF THE ABOVE PROV ISIONS OF THE ACT. H OWEVER, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) AND SUBMITTED THAT SECTION 14A R.W.R. 8D OF THE IT RULES , 1962 HAS NO APPLICATION TO THE ASSESSEES CASE . THE ASSESSEE HAS NOT APPEARED BEFORE THE LD. CIT(A). THE LD. CIT(A) IS UNDER OBLIGATION TO ADJUDICATE THE APPEAL ON MERITS INSTEAD T H A T P A S S E D EXPARTE ORDER WITHOUT CONSIDERING THE MERITS. THE LD. CIT(A) OUGHT TO HAVE BEEN PASSED THE ORDER ON MERITS OF THE CASE. IN OUR OPINION, THE ORDER PASSED BY THE LD. CIT(A) DESERVES TO BE SET ASIDE. THEREFORE, ORDER PASSED BY THE LD. CIT(A) IS SET ASIDE AND REMITTED THE MATTER BACK TO HIM TO ADJUDICATE THE ISSUE AFRESH AFTER GIVING AFFORDABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. IT IS ALSO DIRECTED THE ASSESSEE TO APPEAR BEFORE THE LD. CIT(A) ON THE DATE GIVEN FOR HEARING WITHOUT FAIL. 9. IN THE RESULT, BOTH THE APPEAL S FILED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON TH IS 1 1 T H DAY OF JAN . , 201 9 . S D / - S D / - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 1 1 T H JAN . , 201 9 . VR/ - COPY TO: 5 ITA NO S . 393 & 394/VIZ/2018 ( TAMMANA VISWANADHA RAO ) 1. THE ASSESSEE TAMMANA VISWANADHA RAO, PROP. : TAMMANA TRADERS, D.NO. 3 - 5 - 2, BHIMAVARAM, WEST GODAVARI DISTRICT. 2. THE REVENUE ITO, WARD - 1, BHIMAVARAM. 3. THE PR. CIT , RAJAHMUNDRY. 4. THE CIT(A) - 12, HYDERABAD. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.