Liberty Tea Corporation, Hyderabad V. Income Tax Officer, Ward-5(2), Hyderabad

ITA 72/Hyd/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8398 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 02-04-2019
• Assessment Year: 2006-2007
• Appeal Filed On: 08-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NILANJAN DEY
• Assessee Lawyers: TABREZULLA KHAN
• Keywords: Reasonable cause
• Section: 143(3); 5(2); 133A; 148

Judgement Text

ITA NO 72 OF 2018 LIBERTY TEA CORPN HYDERABAD. PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.72/HYD/2018 (ASSESSMENT YEAR: 2006-07) M/S. LIBERTY TEA CORPN. HYDERABAD PAN: AABFL2729G VS INCOME TAX OFFICER WARD 5(2) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI TABREZULLA KHAN FOR REVENUE : SHRI NILANJAN DEY, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2006-07 AGAIN ST THE ORDER OF THE CIT (A)-4, HYDERABAD, DATED 24.11. 2017. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI RM ENGAGED IN THE WHOLE SALE BUSINESS OF TEA, FILED IT S RETURN OF INCOME FOR THE A.Y 2006-07 ON 31.10.2006 ADMITTING A TOTAL INCOME OF RS.16,34,560/-. SINCE THERE WAS A SURVEY CONDUCTED ON 4.01.2006, THE CASE WAS TAKEN FOR COMPULSORY SCRUTI NY. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, T HERE WAS NO ADJUSTMENT MADE TO THE RETURNED INCOME OF THE ASSES SEE. DATE OF HEARING : 02.04.2019 DATE OF PRONOUNCEMENT : 12.04.2019 ITA NO 72 OF 2018 LIBERTY TEA CORPN HYDERABAD. PAGE 2 OF 5 3. THEREAFTER, A NOTICE U/S 148 WAS ISSUED TO THE ASSESSEE ON NOTICING THAT THERE WAS A DIFFERENCE IN THE STOCK FOUND AT THE TIME OF SURVEY AND STOCK AS PER THE BO OKS OF ACCOUNT. DURING THE RE-ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO EXPLAIN THE DIFFERENCE. THE ASSESSEE FILED ITS EXPL ANATION, BUT THE AO WAS NOT SATISFIED WITH THE SAME AND THEREFORE, H E MADE AN ADDITION OF RS.12,54,477/- ON ACCOUNT OF DIFFERENCE IN STOCK AND ALSO DISALLOWANCE OF OTHER EXPENSES. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A). THE CIT (A) OBSERVED THAT THOUGH THE CASE WAS POSTED FOR HEARING SEVERAL TIME S, THE ASSESSEES AR APPEARED ONLY ONCE AND ON THE REMAINI NG HEARING DATES, THE ASSESSEE WENT ON ASKING FOR ADJOURNMENTS AND DID NOT FILE ANY COUNTER OBJECTIONS. THEREFORE, SHE DECIDED THE APPEAL ON MERITS ON THE BASIS THE MATERIAL AVAILABLE ON RECOR D. AGAINST THE ORDER OF THE CIT (A), THE ASSESSEE IS IN APPEAL BEF ORE US BY RAISING THE FOLLOWING GROUNDS OF APPEAL: 1.' THE ASSESSEE SOUGHT ADJOURNMENTS DUE TO GENUIN E REASONS. THE HON. COMMISSIONER OF INCOME TAX (APPEA LS)-4, DID NOT CONSIDER THE REASONS FOR SEEKING ADJOURNMEN T AND PASSED THE ORDER WITHOUT GIVING TIME TO COUNTER THE FINDINGS OF THE ASSESSING OFFICER. THE HON. MEMBERS OF THE T RIBUNAL ARE REQUESTED TO CONSIDER THE GENUINE REASONS FOR SEEKI NG ADJOURNMENT SYMPATHETICALLY. 2. THE CONTENTION OF THE HON. COMMISSIONER OF INCOM E TAX (APPEALS)-4, THAT THE REASSESSMENT U/S 148 WAS DONE CONSEQUENT TO THE SURVEY U/S 133A IS NOT CORRECT. C ONTRARY TO THIS INTENTION, IN FACT THE ORIGINAL ASSESSMENT WAS DONE CONSEQUENT TO THE SURVEY IN WHICH THE ASSESSING OFF ICER VERIFIED ALL THE RECORDS AND INFORMATION AND ACCEPT ED THE INCOME OF RS. 16,34,560/- RETURNED BY THE ASSESSEE. 3. THE METHOD ADOPTED BY THE ASSESSING OFFICER IN A SSESSING THE INCOME UNDER SECTION 148 OF THE INCOME TAX ACT 1961 IS NOT CORRECT. HE HAS TAKEN THE TOTAL INCOME OF THE A .Y 2005-06 AS THE BASE AND ADDED TO IT THE ADDITIONS ADMITTED BY THE ITA NO 72 OF 2018 LIBERTY TEA CORPN HYDERABAD. PAGE 3 OF 5 ASSESSEE DURING SURVEY PROCEEDINGS AND ARRIVED AT T HE INCOME OF THE A.Y 2006-07 WHICH IS ERRONEOUS. 4. THE ASSESSING OFFICER ERRED IN IGNORING THE FACT THAT THE FINANCIAL RESULTS OF EACH FINANCIAL YEAR ARE INDEPE NDENT, DEPENDING UPON MANY FACTORS SUCH AS DEMAND, SUPPLY, PRICING, MARKET CONDITIONS, COMPETITION AND THE LIK E. THE FINANCIAL RESULTS NEED NOT BE IDENTICAL AS IN THE E ARLIER YEARS. 5. THE ASSESSING OFFICER ERRED IN NOT CONSIDERING T HE FACT THAT THE ADDITIONS TO STOCKS AND REDUCTION IN THE FREIGH T EXPENDITURE WERE BROUGHT IN THE BOOKS OF THE ASSESS EE ON 06- 01-2006 IMMEDIATELY AFTER THE CONCLUSION OF SURVEY. THUS, THERE WAS NO NEED TO SHOW SEPARATELY IN THE COMPUTA TION STATEMENT THE ADDITIONS ADMITTED DURING THE SURVEY, SINCE THE SAME WAS INCORPORATED IN THE BOOKS DURING THE C URRENCY OF THE F.Y 2005-06 AND THE PROFIT ARRIVED AS ON 31- 03-2006 INCLUDE THE ADDITIONS ALREADY INCORPORATED IN THE B OOKS. HAD THE ASSESSEE NOT MADE ADDITIONS IN THE RECORDS DURI NG THE CURRENT RECORDS, IN SUCH A CASE SUCH ADDITIONS NEED TO BE MADE IN THE INCOME COMPUTATION. 6. THE ASSESSING OFFICER ERRED IN IGNORING THE FACT THAT THE SURVEY WAS CONDUCTED DURING THE F.Y. 2005-06 ON 04- 01- 2006, THAT IS DURING THE CURRENCY OF THE F.Y 2005-0 6 AND THE PROFIT OR LOSS SHALL BE ARRIVED AT THE END OF THE F INANCIAL YEAR I.E., ON 31-03-2006. 7. THE ASSESSEE BEGS TO PRAY FOR REDRESSAL AND RELI EF, OTHERWISE THE ASSESSEE SHALL BE PUT TO UNJUST LOSS. 8. THE ASSESSEE CRAVES LEAVE TO AMEND ANY OR MORE O F THE ABOVE GROUNDS OR TO ADD ONE OR MORE TO THE ABOVE AS THE OCCASION MAY ARISE. 4. WE FIND THAT GROUND 1 RAISED BY THE ASSESSEE THA T THE CIT (A) HAS CONFIRMED THE ASSESSMENT ORDER WITHOUT GIVING THE ASSESSEE AN OPPORTUNITY TO COUNTER THE FINDINGS OF THE AO AND WITHOUT CONSIDERING THE GENUINE REASONS FOR SEEKING ADJOURNMENTS. 5. THE LEARNED COUNSEL FOR THE ASSESSEE HAS DRAWN O UR ATTENTION TO PAGE 10A OF THE PAPER BOOK WHEREIN VAR IOUS DATES OF ITA NO 72 OF 2018 LIBERTY TEA CORPN HYDERABAD. PAGE 4 OF 5 HEARING AND THE REASONS FOR NOT APPEARING IS GIVEN. THE SAME IS REPRODUCED HEREUNDER FOR READY REFERENCE: NOTICE DATE DATE OF HEARING REASONS FOR NOT APPEARING 25.08.2016 13.09.2016 THE DATE 13.09.2016 WAS DECLA RED A PUBLIC HOLIDAY DUE T O BAKRID FESTIV AL 1-11- 2017 07-11-2017 COULD NOT APPEAR, SINCE 07.11.2017 WAS TH E LAST DATE (EXTENDED) FOR FILING I.T. RETURNS AND TAX AUDIT REPORTS FOR THE A.Y 2016-17 AND OUR A.R WAS FULLY OCCUPIED WITH THAT WORK. WE REQUESTED FOR ADJOURNMENT OF HEARING VIDE OUR LETTER DATED 6.11.2017. - 21/11/2017 WE REQUESTED HON'BLE CIT (A)-4 FOR ADJOURNMENT, VIDE OUR LETTER DATED 21.11.2017, SINCE OUR AR WAS ON LEAVE FROM HIS OFFICE DUE TO THE ARRANGEMENTS OF HIS DAUGHTER S MARRIAGE. 6. ON GOING THROUGH THE ABOVE REASONS, WE ARE SATIS FIED THAT THE ASSESSEES REPRESENTATIVE WAS PREVENTED BY REASONABLE CAUSE FROM APPEARING BEFORE THE CIT (A) ON THE DATE S FIXED FOR HEARING AS THE REASONS SOUGHT FOR ADJOURNMENTS ARE REASONABLE. THEREFORE, WE DEEM IT FIT AND PROPER TO REMAND THE ISSUE TO THE FILE OF THE CIT (A) FOR RECONSIDERATION OF THE ISSUE DE NOVO IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE A FAI R OPPORTUNITY OF HEARING. 7. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH APRIL, 2019. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 12 TH APRIL, 2019. VINODAN/SPS ITA NO 72 OF 2018 LIBERTY TEA CORPN HYDERABAD. PAGE 5 OF 5 COPY TO: 1 M/S. LIBERTY TEA CORPORATION, SHOP NO.4, HOUSING BOARD COMPLEX, MJ ROAD, HYDERABAD 500001 2 ITO WARD 5(2) IT TOWERS, MASAB TANK, HYDERABAD 50 0004 3 CIT (A)-4 HYDERABAD 4 PR. CIT 4 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER