S. Lakshmaiji, Vijayawada V. The ITO, Vijayawada

ITA 46/VIZ/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6794 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 06-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D J P ANAND
• Keywords: Business income; Depreciation; Condonation of delay
• Section: 143(3); 142(1); 144

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. 287 / VIZ /201 3 (ASST. YEAR : 20 06 - 07 ) IT O , WARD - 2(4), VIJAYAWADA. V . SABINKAR LAKSHMAJI, PROP. BHAVANI AGENCIES, D.NO. 14 - 11 - 11, ACHYUTARAMAIAH STREET, HANUMANPET, VIJAYAWADA. PAN NO. AHQPS 0212 H (APPELLANT) (RESPONDENT) ITA NO. 270 / VIZ /201 3 & ITA NO.46/VIZ/2017 (ASST. YEAR : 20 06 - 07 ) S ABINKAR LAKSHMA JI , PROP. BHAVANI AGENCIES, D.NO. 14 - 11 - 11, ACHYUTARAMAIAH STREET, HANUMANPET, VIJAYAWADA . V . IT O , WARD - 2(4 ), VIJAYAWADA . PAN NO. AHQPS 0212 H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI C. SUBRAHMANYAM FC A. DEPARTMENT BY : SHRI D.J.P. ANAND - SR. DR DATE OF HEARING : 08 / 0 8 /201 7 . DATE OF PRONOUNCEMENT : 11 / 0 8 /201 7 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER ITA NOS. 2 8 7/VIZ/2013 & 27 0 /VIZ/2013 ARE THE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE AGAINST THE ORDER OF 2 ITA NO. 270 & 287 /VIZ/2013 ITA NO. 46/VIZ/2017 ( SABINKAR LAKSHMAJI ) COMMISSIONER OF INCOME TAX (APPEALS) , VIJAYAWADA , DATED 22 /0 2 /201 3 FOR THE ASSESSMENT YEAR 2006 - 07 . ITA NO.46/VIZ/2017 IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A), VIJAYAWADA DATED 30/09/2016 FOR THE ASSESSMENT YEAR 2006 - 07. ITA NOS. 2 8 7 & 27 0 /VIZ/2013 2. THE R E IS A DELAY OF 03 DAY S IN FILING THE APPEAL. THE ASSESSEE HAS FILED AN AFFIDAVIT FOR CONDONATION OF DELAY , WHEREIN IT IS CONTENDED THAT DELAY IS NEITHER INTENTIONAL NOR DELIBERATE AND PRAYED FOR CONDONATION OF DELAY . THE DEPARTMENTAL REPRESENTATIVE HAS NOT RAISED ANY SERIOUS OBJECTION. WE FIND THAT THERE IS A SUFFICIENT CAUSE FOR NOT TO FILE THIS APPEAL IN TIME . THEREFORE, DELAY IN FILING THE APPEAL FOR 03 DAYS IS HEREBY CONDONED. 3 . FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL IS ENGAGED IN THE DISTRIBUTION OF SOLUTIONS/ADHESIVES USED IN MANUFACTURE OF FOOTWEAR , FILED HIS RETURN OF INCOME BY DECLARING TOTAL INCOME OF 1,53,473/ - . THE RETURN FIELD BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE 'ACT') . THEREAFTER, CASE OF THE ASSESSEE WAS S ELECTED FOR SCRUTINY AND AFT E R DUE PROCESS , ASSESSMENT IS COMPLETED UNDER SECTION 143(3) READ WITH SECTION 144 OF THE ACT. IN THE ASSESSMENT ORDER , THE ASSESSING OFFICER HAS NOTED THAT , DESPITE REPEATED NOTICES, THE ASSESSEES AR WAS APPEARED ON 26/12/2008 ONLY AND , EVEN ON THAT DATE ALSO HE HAS NOT PRODUCED ANY BOOKS OF ACCOUNT, BILLS/VOUCHERS ETC. THE CHRONOLOGICAL DEVELOPMENTS OF THE CASE ARE REPRODUCED AS UNDER: - 3 ITA NO. 270 & 287 /VIZ/2013 ITA NO. 46/VIZ/2017 ( SABINKAR LAKSHMAJI ) 1 10/07/2008 NOTE UNDER SECTION 143(2) ISSUED AND DATE OF HEARING FIXED TO 25/07 /2008 2 24/07/2008 ADJOURNMENT LETTER FILED FOR 10 DAYS ADJOURNMENT. NOT APPEARED ON 10 DAYS. 3 04/09/2008 NOTICE UNDER SECTION 142(1) ISSUED ALONG WITH QUESTIONNAIRE. DATE OF HEARING 12/09/2008 AT 11.30 AM 4 12/09/2008 ADJOURNMENT LETTER FILED BY YOUR AR ALONG WITH V A KALATH SEEKING SHORT ADJOURNMENT. 5 23/09/2008 NOTICE UNDER SECTION 143(1) WITH QUESTIONNAIRE ISSUED FIXING THE DATE OF HEARING ON 06/10/2008 AT 11.30 AM 6 06/10/2008 ADJOURNMENT LETTER FILED BY YOUR AR SEEKING 7 DAYS ADJOURNMENT. 7 06/10/2008 NOTICE UNDER SECTION 143(1) WITH QUESTIONNAIRE ISSUED FIXING THE DATE OF HERING ON 16/10/2008 8 16/10/2008 LETTER FOR ADJOURNMENT FILED SEEKING SHORT ADJOURNMENT OF 7 DAYS. 9 19/11/2008 NEITHER APPEARED NOR FILED ANY INFORMATION TILL DATE I.E. EVEN AFTER LAPSE OF ONE MONTH 10 27/11/2008 LETTER HAS BEEN ISSUED CALLING FOR OBJECTIONS FOR INVOKING PROVISIONS OF SECTION 144 AND ON THE PROPOSED ADDITIONS /DISALLOWANCES. POST FOR HEARING ON 03/12/2008 11 02/12/2008 ADJOURNMENT LETTER FILED SEE KING 10 DAYS TIME FOR FILING EXPLANATION. 12 18/12/2008 ONE MORE LETTER HAS BEEN ISSUED CALLING FOR OBJECTION. DOH 24/12/2008 13 24/12/2008 NEITHER APPEARED NOR FILED ANY LETTER OF ADJOURNMENT. 14 26/12/2008 THE ASSESSEES AR APPEARED BUT NO BOOKS OF ACCOUNT, BILLS/VOUCHERS ETC. WERE PRODUCED. A WRITTEN STATEMENT DATED 2612/2008 IS FILED. 15 29/12/2008 THE ASSESSEE FILED ONE MORE LETTER DATED 29/12/2008 FROM THE ABOVE, THE ASSESSING OFFICER HAS OBSERVED THAT IT IS CL EARL Y EVIDENT TH A T THE ASSESSEE HAS NEVER COMPLIED TO THE STATUTORY NOTICES AND NOT PRODUCED ANY BOOKS OF ACCOUNT, BILLS, VOUCHERS ETC. FOR VERIFICATION. TH O UGH PROCEEDINGS WERE IN I TIATED DURING JULY 2008 ITSELF AND; EVEN NOTICES WERE SENT REGULARLY TO THE ASSESSEE, HE RESPONDED TO THE D EPARTMENTS PROCEEDINGS AT THE FAG END OF THE LAST MONTH I . E. ON 26/12/2008 . ON THE DATE OF APPEARING ALSO, THE ASSESSEE COULD NOT PRODUCE ANY BOOKS OF ACCOUNT, BILLS, VOUCHERS ETC. FOR VERIFICATION AND FILED A WRITTEN STATEMENT WITH ENCLOSURES. THE ISSUES , ON WHICH ADDITIONS WERE PROPOSED IN THE SHOW - CAUSE NOTICE ONLY WERE ANSWERED IN THE ASSESSEES WRITTEN STATEMENT . THE ASSESSEE HAS NOT AFFORDED ANY REASONABLE TIME TO CROSS VERIFY THE CLAIMS MADE AND , NOT FURNISHED SUFFICIENT INFORMATION TO SUBSTA NTIATE HIS CLAIM . ACCOUNT COPIES OF THE 4 ITA NO. 270 & 287 /VIZ/2013 ITA NO. 46/VIZ/2017 ( SABINKAR LAKSHMAJI ) ASSESSEE WERE OBTAINED FROM BANKS AND HIS SUPPLIER BY INVOKING PROVISIONS OF SECTION 133(6). THE ASSESSEE HAS NOT PRODUCED ANY BOOKS OF ACCOUNT, BILLS, VOUCHERS AND OTHER MATERIAL EVIDENCES IN SUPPORT OF VARIOUS IN FORMATION FURNISHED IN THE RETURN OF INCOME. IN VIEW OF THE ABOVE, ASSESSMENT IS COMPLETED BY INVOKING THE PROVISIONS OF SECTION 144 OF THE ACT TO THE BEST JUDGMENT OF THE ASSESSING OFFICER. THE ASSESSING OFFICER MADE AN ADDITION ON ACCOUNT OF SUPPRESSED BUSINESS RECEIPTS TO THE TUNE OF 28,73,164/ - AND THE SAME IS ADDED TO THE INCOME OF THE ASSESSEE , WHICH IS IMPUGNED DISPUTE BEFORE US. 4 . ON APPEAL, LD. CIT(A) CASUALLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER BY OBSERVING THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE NOT RELIABLE AND A CCORDINGLY, ON THE TOTAL TURNOVER AS PER BOOKS OF ACCOUNT AT 39,03,46 7 / - AND ONE FOUND OUT BY THE ASSESSING OFFICER I N THE COURSE OF ASSESSMENT PROCEEDINGS UNDER SECTION 144 AT 28,73,164/ - AND THE TURNOVER CONSIDERED BY THE ASSESSING OFFICER AS DIRECTED BY THE COMMISSIONER IN 263 PROCEEDINGS AT 28,56,239/ , IN ALL AMOUNTING TO 96,32,870/ - HAS TO BE TAKEN AS BASE AND REASONABLE ESTIMATE HAS TO BE MADE TO ARRIVE AT AN INCOME FOR THE YEAR UNDER CONSIDERATION . SINCE , THE ASSESSING OFFICER IN HIS ORDER MADE UNDER SECTION 143(3) READ WITH 263 HAS CONSIDERED THE RATE AT 10.5% AS APPROPRIATE, THE SAME RATE HAS TO BE ADOPTED HERE ALSO. ON THE INCOME SO MADE , THERE ARE NO FURTHER DEDUCTIONS LIKE DEPRECIATION AS THE ESTIMATION IS NET OF ALL EXPENSES INCLUDING DEPRECIATION. SINCE THE ASSESSING OFFICER IS DIRECTED TO ESTIMATE THE INCOME FOR THE YEAR UNDER 5 ITA NO. 270 & 287 /VIZ/2013 ITA NO. 46/VIZ/2017 ( SABINKAR LAKSHMAJI ) CONSIDERATION, ALL OTHE R ADDITIONS MADE IN THE ORIGINAL ASSESSMENT UNDER SECTION 144 ABATE AND THE INCOME AS ESTIMATED BY THE ASSESSING OFFICER AS DIRECTED ABOVE SHALL PREVAIL. 5 . AGAINST THE ORDER OF THE LD. CIT(A) , THE ASSESSEE AS WELL AS REVENUE ARE IN APPEAL BEFORE US. 6 . THE L EARNED DEPARTMENTAL REPRESENTATIVE HAS SUBMITTED THAT THE ASSESSEE HAS NOT FILED ANY DETAILS BEFORE THE ASSESSING OFFICER. THEREFORE, THE DIRECTION GIVEN BY THE LD. CIT(A) TO ESTIMATE THE INCOME AT 10.5% IS NOT CORRECT AND SUBMITTED THAT THE ENTIRE O RDER PASSED BY THE LD.CIT(A) MAY BE SET ASIDE AND DIRECTED THE ASSESSING OFFICER TO DECIDE THE ISSUES IN DENOVO IN ACCORDANCE WITH LAW. 7 . ON THE OTHER HAND, L EARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS NOT RAISED ANY OBJECTION. 8 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW . 9 . FROM THE ASSESSMENT ORDER , IT IS VERY CLEAR THAT THE ASSESSEE HAS BEEN GIVEN AS MANY AS 15 OPPORTUNI TI ES, BUT HE DID NOT CHOOSE TO APPEAR BEFORE THE ASSESSING OFFICER. IT SHOWS THE CALLOUS ATTITUDE OF THE ASSESSEE. WHEN WE ASKED THE L EARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AS TO WHY ASSESSEE HAS NOT APPEARED BEFORE THE ASSESSING OFFICER, HE HAS NOT GIVEN ANY PROPER REPLY FOR NON - APPEARANCE BEFORE THE ASSESSING OFFICER. THIS ATTITUDE OF THE ASSESSEE CANNOT BE ALLOWED. ONCE ASSESSING OFFICER HAS ISSUED NOTICE, IT IS THE DUTY OF THE ASSESSEE TO APPEAR BEFORE HIM AND TO FILE RELEVANT DOCUMENTS AS CALLED FOR . IN 6 ITA NO. 270 & 287 /VIZ/2013 ITA NO. 46/VIZ/2017 ( SABINKAR LAKSHMAJI ) THIS CASE, THE ASSESSEE HAS SHOWN NOT ONLY DISOBEDIENCE AND DELIBERATE ATTEMPT IN NOT TO FILE ANY DETAILS BEFORE THE ASSESSING OFFICER TO PASS THE ASSESSMENT IN ACCORDANCE WITH LAW. THIS ATTITUDE OF THE ASSESSEE IS NOT ACCEPTABLE. HOWEVER, IN THE INTEREST OF JUSTICE, AS POINTED OUT BY THE AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AT PAGE NO. 49 OF THE PAPER BOOK , THE ENTIRE TRANSACTIONS ARE CARRIED OUT BY THE ASSESSEE FROM BANK TO BANK AND THEREFORE HE MAY BE PERMITTED TO SUBSTANTIATE HIS CASE BEFORE THE ASSESSING OFFICER. 10 . SO FAR AS THE ORDER PASSED BY THE LD. CIT(A) IS CONCERNED, WE FIND TH A T THE LD. CIT(A) CASUALLY PASSED THE ORDER BY OBSERVING THAT ONCE ESTIMATION IS MADE, NO ADDITIONS CAN BE CONSIDERED BY THE ASSESSING OFFICER. WE FIND THAT LD. CIT(A) IS NOT CORRECT IN DIRECTING THE ASSESSING OFFICER TO ESTIMATE THE INCOME AT 10.5% BY LEAVING ALL THE ADDITIONS. IN V I EW OF THE ABOVE, WE SET ASIDE THE ENTIRE ORDER PASSED B Y THE LD.CIT(A) AND DIRECT THE ASSESSING OFFICER TO PASS A FRESH ASSESSMENT ORDER DENOVO IN ACCORDANCE WITH LAW AFTER GIVING PROPER OPPORTUNITY OF HE A RING TO THE ASSESSEE. WE HA VE ALREADY OBSERVED THAT IN THE EARLIER OCCASION, THE ASSESSEE HAS ADOPTED IRRESPONSIBLE/DISOBEDIENCE TO THE NOTICES ISSUED BY THE ASSESSING OFFICER AND THEREFORE, WE DIRECT THE ASSESSEE TO OBEY THE NOTICES ISSUED BY THE ASSESSING OFFICER AND FILED NECESSARY EVIDENCE AS REQUIRED AND COOPERATE WITH THE ASSESSING OFFICER IN COMPLET ING ASSESSMENT. IN VIEW OF THE ABOVE, THE APPEALS FILED BY THE ASSESSEE AND THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 7 ITA NO. 270 & 287 /VIZ/2013 ITA NO. 46/VIZ/2017 ( SABINKAR LAKSHMAJI ) ITA NO. 46/VIZ/2017 1 1 . TH IS APPEAL IS BARRED BY LIMITATION BY 28 DAYS. THE ASSESSEE HAS FILED AN AFFIDAVIT FOR CONDONATION OF DELAY , WHEREIN IT IS CONTENDED THAT DELAY IS NEITHER INTENTIONAL NOR DELIBERATE AND PRAYED FOR CONDONATION OF DELAY. THE DEPARTMENTAL REPRESENTATIVE HAS NOT RAISED ANY SERIOUS OBJECTION. WE FIND THAT THERE IS A SUFFICIENT CAUSE FOR NOT TO FILE THIS APP EAL IN TIME. THEREFORE, DELAY IN FILING THE APPEAL FOR 03 DAYS IS HEREBY CONDONED . 1 2 . THE ASSESSING OFFICER HAS INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) ON ACCOUNT OF ALLEGED SUPPRESSED TURNOVER OF 28,73,164/ - AND PENALTY IS LEVIED. 1 3 . AS T HE QUANTUM ADDITION MADE BY THE ASSESSING OFFICER IS SET ASIDE AND THE MATTER IS REMANDED BACK TO THE ASSESSING OFFICER TO PASS THE ASSESSMENT ORDER DENOVO, THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER HAS NO LEGS TO STAND. THEREFORE, THE PENALTY LEVIED BY THE ASSESSING OFFICER IS CANCELLED, HOWEVER, IT IS OPEN TO THE ASSESSING OFFICER TO LEVY PENALTY UNDER SECTION 271(1)(C) AFTER PASSING THE ASSESSMENT ORDER IN QUANTUM APPEAL (IF NECESSARY) , IN ACCORDANCE WITH LAW . 1 4 . IN THE RESULT, ALL THE APPEAL S ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON TH IS 1 1 T H DAY OF AUGUST , 201 7 . S D / - S D / - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 1 1 T H AUGUST , 201 7 . 8 ITA NO. 270 & 287 /VIZ/2013 ITA NO. 46/VIZ/2017 ( SABINKAR LAKSHMAJI ) VR/ - COPY TO: 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT 4. THE CIT(A) 5. THE D.R . 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.