Pakkeeru Srikanth, RR Dist., R.R.Dist V. ITO, Ward-9(1), Hyd, Hyderabad

ITA 845/HYD/2015

• Counselvise Citation: 84522514 RSA 2015
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-10-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 22-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M SITARAM
• Assessee Lawyers: A V RAGHURAM
• Keywords: Assessment record; Condonation of delay
• Section: 143(3); 147; 27; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA.NO.844, 845 & 846/HYD/2015 ASSESSMENT YEAR 2011-2012 MR. PAKKEERU SRIKANTH DOCTORS COLONY, SAROORNAGAR, R.R. DIST. PAN ANCPP0841K VS. THE INCOME TAX OFFICER WARD 9(1) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. A.V. RAGHURAM FOR REVENUE : MR. M. SITARAM DATE OF HEARING : 0 8. 1 0.2015 DATE OF PRONOUNCEMENT : 13 . 1 1 .2015 ORDER PER SMT. P. MADHAVI DEVI, J.M. ALL THESE APPEALS ARE BY THE ASSESSEE FOR THE A.Y. 2011-2012 AGAINST THE ORDER OF THE LD. CIT(A)- VII, HYDERABAD DATED 25 TH MAY, 2015 IN DISMISSING ASSESSEES APPEALS AGAINST THE ORDERS OF THE A.O. UNDER SECTIO N 143(3) READ WITH SECTION 147 DATED 28.02.2014, PENA LTY ORDER UNDER SECTION 271(1)(C) DATED 28.08.2014 AND ORDER UNDER SECTION 271D DATED 11.07.2014 RESPECTIVELY BY REFUSING TO CONDONE THE DELAY IN FILING OF THESE AP PEALS BEFORE THE LD. CIT(A). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL, TRADING IN IMFL, FILED HIS RETURN OF IN COME FOR 2 ITA.NO.844, 845 & 846/HYD/2015 MR. PAKKEERU SRIKANTH THE A.Y. 2011-2012 ON 14.10.2011 DECLARING TOTAL IN COME OF RS.3,10,200. THE RETURN WAS INITIALLY PROCESSED UNDER SECTION 143(3) ON 03.02.2012 RESULTING IN REFUND OF RS.3,68,870. THEREAFTER, INFORMATION WAS RECEIVED F ROM THE ACB WITH REGARD TO THE INVESTMENT MADE BY THE ASSESSEE TOWARDS LICENSE-FEE FOR THE PERIOD OF 2010 -2011 AND SUBSEQUENT PURCHASES FROM THE APBCL (IMFL). IT WAS FOUND THAT THE AMOUNT PAID BY THE ASSESSEE AS PER T HE INFORMATION FURNISHED BY THE ACB ARE NOT SUPPORTED BY SUFFICIENT SOURCE OF THE ASSESSEE AS REFLECTED IN T HE RETURNS OF INCOME FILED FOR A.Y. 2011-2012. THEREAF TER, AFTER RECORDING THE REASONS AS REQUIRED UNDER SECTI ON 147 OF THE ACT, NOTICE UNDER SECTION 148 WAS ISSUED AND SERVED ON THE ASSESSEE. ASSESSEE APPEARED ALONG WIT H HIS REPRESENTATIVE AND FILED NECESSARY INFORMATION AS C ALLED FOR. 3. DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS, A.O. NOTICED THAT THE NET PROFIT PERCE NTAGE AS ADMITTED BY THE ASSESSEE IS ONLY 0.67% AGAINST THE TURNOVER ACHIEVED AT RS.4,55,68,739, WHICH ACCORDIN G TO HIM, WAS VERY LOW WHEN COMPARED WITH OTHER CASES INVOLVED IN SIMILAR BUSINESS. THEREFORE, ASSESSEE WAS ASKED TO PRODUCE THE SALE BILLS FOR GROSS RECEIPTS CREDITED AND EVIDENCE FOR EXPENDITURE DEBITED TO THE P & L ACCOUNT, FOR VERIFICATION. IN RESPONSE TO THE SAME, ASSESSEE STATED THAT HE IS RUNNING A RETAIL OUTLET IN IMFL AND THEREFORE, IT IS VERY DIFFICULT TO MAINTAIN PRO PER SALE BILLS AS CUSTOMERS DID NOT PREFER TO HAVE THEM. FUR THER, IT 3 ITA.NO.844, 845 & 846/HYD/2015 MR. PAKKEERU SRIKANTH WAS ALSO EXPLAINED THAT ASSESSEE MADE PURCHASES ONL Y FROM THE APBCL WHICH IS OWNED BY THE STATE GOVERNME NT AND MRP IS ALSO FIXED BY IT. THE A.O. THEREFORE, AS KED THE ASSESSEE TO CLARIFY WHETHER ASSESSEE ADMITTED THE G ROSS PROFIT BY FOLLOWING THE FIXED MRP AND IF NOT, WHY T HE GROSS PROFIT SHOULD NOT BE ESTIMATED AT, AS PER THE MRP. IN RESPONSE, THE ASSESSEE EXPLAINED THAT DUE TO HEAVY LICENSE FEE FIXED BY THE STATE GOVERNMENT, ALL THE SHOP OWN ERS INVOLVED IN SIMILAR TRADE WERE VERY MUCH EAGER IN G ETTING BACK INVESTMENT AT THE EARLIEST AND SO WERE FORCED TO SELL THE LIQUOR AT LESSER THAN THE MRP PRICE WHICH RESUL TED IN LESS GROSS PROFIT THAN IT SHOULD BE AND REQUESTED T O CONSIDER THE FINAL RESULTS ADMITTED BY THE ASSESSEE . THE A.O. DREW THE ATTENTION OF THE ASSESSEE TO THE DECI SION OF ITAT IN THE CASE OF M/S. AMARAVATHI WINE SHOP IN ITA.NO.1196/HYD/2011 DATED 08.06.2012 IN WHICH INCOME OF THE RETAIL LIQUOR SHOP WAS DECIDED AT 5% OF THE COST OF THE STOCK PUT TO SALE AND PROPOSED TO ADOPT THE SAME IN ASSESSEES CASE ALSO. THE ASSESSEE ACCEPTED THE PROPOSAL AND PRODUCED THE WORKING OF INCOME TO BE T AXED. 3.1. THEREAFTER, THE A.O. FURTHER OBSERVED THAT TH E ASSESSEE HAS OBTAINED LICENSE FROM PROHIBITION & EX CISE SUPERINTENDENT, SAROORNAGAR, RANGAREDDY DISTRICT FO R THE SALE OF IMFL FOR THE PERIOD FROM 01.07.2010 TO 30.06.2012. ON QUERY, ASSESSEE FURNISHED DETAILS OF INITIAL PAYMENT OF LICENSE FEE AND THE EXPLANATION FOR SOUR CES THEREOF. AFTER CONSIDERING THE ASSESSEES CONTENTIO NS WITH RESPECT TO SOURCE OF INVESTMENT, A.O. HELD THAT ASS ESSEE 4 ITA.NO.844, 845 & 846/HYD/2015 MR. PAKKEERU SRIKANTH COULD EXPLAIN SOURCES ONLY FOR RS.23,89,334 OUT OF THE EXPENDITURE INCURRED OF RS.38,16,700 AND THEREBY, T HE BALANCE AMOUNT OF RS.14,27,366 REMAINS UNEXPLAINED. IN VIEW OF SAME, ASSESSEE AGREED FOR THIS ADDITION ALS O IN HIS HANDS VIDE A.OS ORDER SHEET NOTING DATED 25.02.201 4. THEREAFTER, THE ASSESSEE DID NOT FILE ANY APPEAL BE FORE THE LD. CIT(A) WITHIN THE TIME PRESCRIBED UNDER THE LAW . THE A.O. INITIATED PENALTY PROCEEDINGS UNDER SECTION 27 1(1)(C) OF THE ACT BY ISSUING NOTICE DATED 28.02.2014 BUT T HE ASSESSEE DID NOT APPEAR BEFORE THE A.O. DURING THE PENALTY PROCEEDINGS. THEREFORE, THE A.O. CONCLUDED THE PROCEEDINGS EXPARTE ON 28.08.2014 AND PENALTY OF RS.5,81,360 WAS LEVIED. SUBSEQUENT THERETO, THE A.O . ALSO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271D OF THE I.T. ACT BY ISSUING NOTICE DATED 27.03.2014. ON 23.05.2015, ASSESSEE WAS REPRESENTED THROUGH HIS REPRESENTATIVE AND DETAILED SUBMISSIONS WERE MADE. HOWEVER, THE A.O. WAS NOT CONVINCED WITH THE CONTEN TIONS OF THE ASSESSEE AND LEVIED PENALTY OF RS.4,00,000 U NDER SECTION 271D OF THE ACT, VIDE ORDERS DATED 11.07.20 14. 3.2. SUBSEQUENT TO THE SAID ORDER, ASSESSEE FILED APPEALS AGAINST ALL THE THREE ORDERS BEFORE THE LD. CIT(A) ON 03.11.2014 ALONG WITH AN APPLICATION FOR CONDONA TION OF DELAY IN EACH OF THE APPEALS. ALONG WITH THE PET ITIONS FOR CONDONATION OF DELAY, AN AFFIDAVIT OF SMT. K. J YOTHI, O/O. MR. RAO & CO., WAS FILED STATING THAT THE ASSE SSMENT ORDER PASSED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT DATED 28.202.104 WAS HANDED-OVER TO THE 5 ITA.NO.844, 845 & 846/HYD/2015 MR. PAKKEERU SRIKANTH REPRESENTATIVE OF THE ASSESSEE, BUT INADVERTENTLY, THE SAME ALONG WITH THE ENTIRE FILE WAS MISPLACED AND G OT MINGLED WITH ANOTHER OF ASSESSEES FILE AND THE SAM E WAS TRACED OUT ONLY IN THE LAST WEEK OF OCTOBER, 2014. TAKING SUPPORT OF THIS AFFIDAVIT, ASSESSEE STATED THAT DEL AY IN FILING THE APPEAL IS NEITHER WILLFUL NOR WANTON BUT DUE TO AFORE-CITED REASONS AND PRAYED FOR CONDONATION OF D ELAY OF 217 DAYS IN FILING APPEAL AGAINST THE ASSESSMENT OR DER; 81 DAYS IN FILING OF APPEAL AGAINST THE PENALTY ORDER PASSED UNDER SECTION 271(1)(C); AND 29 DAYS IN FILING OF A PPEAL AGAINST THE PENALTY ORDER UNDER SECTION 271D OF THE I.T. ACT, 1961. THE LD. CIT(A), HOWEVER, REFUSED TO COND ONE THE DELAY AND CONSEQUENTLY, REFUSED TO ADMIT THE AP PEALS AND DISMISSED THE SAME. AGGRIEVED, ASSESSEE IS IN A PPEAL BEFORE US. 4. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) FOR CONDONAT ION OF DELAY, WHILE THE LD. D.R. SUPPORTED THE ORDER OF LD. CIT(A) FOR REJECTION OF THE CONDONATION OF DELAY. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT DURING THE ASSESSM ENT PROCEEDINGS, ASSESSEE APPEARED THROUGH HIS REPRESENTATIVE AND PRESENTED ITS VERSION ON ALL THE ISSUES RAISED BY THE A.O. THEREAFTER, AFTER BEING CONFRONT ED BY THE A.O., ASSESSEE AGREED FOR THE ADDITIONS MADE BY THE A.O. HOWEVER, THE ASSESSEE DID NOT APPEAR BEFORE TH E A.O. DURING THE PENALTY PROCEEDINGS UNDER SECTION 271(1) (C) 6 ITA.NO.844, 845 & 846/HYD/2015 MR. PAKKEERU SRIKANTH BUT NOT ONLY REPRESENTED BEFORE THE A.O. IN THE PROCEEDINGS UNDER SECTION 271D BUT HAS ALSO FILED DETAILED SUBMISSIONS IN SUPPORT OF HIS CONTENTIONS. THE PROCEEDINGS UNDER SECTION 271D THOUGH INITIATED AFT ER INITIATING THE PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT, BUT WAS CONCLUDED PRIOR TO PASSING OF THE PENA LTY ORDER UNDER SECTION 271(1)(C) OF THE ACT. IT IS THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ASSESSMENT FILE WAS NOT REQUIRED BY THE ASSESSEE TO FILE ITS SUBMISSIONS AGAINST THE LEVY OF PENALTY UNDER SECTI ON 271D AND THEREFORE, IT CANNOT BE PRESUMED THAT ASSESSEES CONTENTION THAT THE FILE WAS MISPLACED I S INCORRECT. HE HAS SUBMITTED THAT IT IS NOTEWORTHY T O CONSIDER THAT THE ASSESSEE WAS NOT REPRESENTED DURI NG THE 271(1)(C) PROCEEDINGS. IT WAS SUBMITTED THAT THIS W AS DUE TO NON-AVAILABILITY OF THE ASSESSMENT RECORDS. HE F URTHER SUBMITTED THAT ASSESSEE, HAVING EXPLAINED THE REASO NS FOR THE DELAY, THE LD. CIT(A) OUGHT TO HAVE CONDONED TH E DELAY AND CONSIDERED ASSESSEES APPEALS ON MERIT. THIS ARGUMENT OF THE ASSESSEE HAS BEEN COUNTERED BY THE LD. D.R. STATING THAT THE APPEALS HAVE BEEN FILED BY TH E ASSESSEE AS AN AFTERTHOUGHT AND THEREFORE, THE CONT ENTION CANNOT BE ACCEPTED. 6. WE FIND THAT ASSESSEE HAVING AGREED FOR THE ADDITIONS MADE BY THE A.O. MAY HAVE DECIDED NOT TO FILE AN APPEAL AGAINST THE ORIGINAL ASSESSMENT ORDER BUT HAS DECIDED TO FILE APPEAL ONLY ON RECEIPT OF PENALTY O RDER UNDER SECTION 271(1)(C) OF THE I.T. ACT. THIS APPEA L ALSO 7 ITA.NO.844, 845 & 846/HYD/2015 MR. PAKKEERU SRIKANTH HAS BEEN FILED WITH DELAY. THEREFORE, IT CANNOT BE SAID THAT NON-FILING OF THE APPEAL IS ONLY DUE TO MISPLACEMEN T OF THE RECORD BUT IT MAY ALSO BE DUE TO ADDITIONS AGREED T O BY THE ASSESSEE. HOWEVER, AN AFFIDAVIT HAS BEEN FILED BY THE OFFICE ASSISTANT OF THE REPRESENTATIVE OF THE ASSES SEE STATING THAT THE FILE HAS BEEN MISPLACED AND WAS TA GGED WITH ANOTHER OF ASSESSEES FILE. THIS CONTENTION CA NNOT BE HELD TO BE TOTALLY UNBELIEVABLE. IN VIEW OF THE LAT EST LAND MARK JUDGMENT OF THE HONBLE SUPREME COURT IN THE C ASE OF BASAVARAJ AND ANOTHER VS. THE SPL. LAND ACQUISIT ION OFFICER REPORTED IN (2013) 14 SCC 811 (SC), WHEREI N ALL THE PREVIOUS LAND MARK JUDGMENTS OF THE APEX COURT ON THE SUBJECT OF CONDONATION OF DELAY HAVE BEEN CONSI DERED AND IT HAS BEEN HELD AS UNDER : 15. THE LAW ON THE ISSUE CAN BE SUMMARISED TO THE EFFECT THAT WHERE A CASE HAS BEEN PRESENTED IN THE COURT BEYOND LIMITATION, THE APPLICANT HAS TO EXPLAIN THE COURT AS TO WHAT WAS THE SUFFICIENT CAUSE WHICH MEANS AN ADEQUATE AND ENOUGH REASON WHICH PREVENTED HIM TO APPROACH THE COURT WITHIN LIMITATION. IN CASE A PARTY IS FOUND TO BE NEGLIGEN T, OR FOR WANT OF BONAFIDE ON HIS PART IN THE FACTS AND CIRCUMSTANCES OF THE CASE, OR FOUND TO HAVE NOT ACT ED DILIGENTLY OR REMAINED INACTIVE, THERE CANNOT BE A JUSTIFIED GROUND TO CONDONE THE DELAY. NO COURT COU LD BE JUSTIFIED IN CONDONING SUCH AN INORDINATE DELAY BY IMPOSING ANY CONDITION WHATSOEVER. THE APPLICATION IS TO BE DECIDED ONLY WITHIN THE PARAMETERS LAID DO WN BY THIS COURT IN REGARD TO THE CONDONATION OF DELAY . IN CASE THERE WAS NO SUFFICIENT CAUSE TO PREVENT A LITIGANT TO APPROACH THE COURT ON TIME CONDONING TH E 8 ITA.NO.844, 845 & 846/HYD/2015 MR. PAKKEERU SRIKANTH DELAY WITHOUT ANY JUSTIFICATION, PUTTING ANY CONDIT ION WHATSOEVER, AMOUNTS TO PASSING AN ORDER IN VIOLATIO N OF THE STATUTORY PROVISIONS AND IT TANTAMOUNTS TO SHOWING UTTER DISREGARD TO THE LEGISLATURE. 16. IN VIEW OF ABOVE, NO INTERFERENCE IS REQUIRED WITH IMPUGNED JUDGMENT AND ORDER OF THE HIGH COURT. THE APPEALS LACK MERIT AND ARE, ACCORDINGLY, DISMISSED. 7. THUS, THE ASSESSEE HAS CLAIMED THAT THE DELAY IS DUE TO MISPLACEMENT OF HIS FILE. BECAUSE THE ASS ESSEE APPEARED BEFORE THE A.O. AND FILED DETAILED REPRESE NTATION DURING 271D PROCEEDINGS, CIT(A) DISBELIEVED THIS CONTENTION WHILE IT IS THE CONTENTION OF THE ASSESS EE THAT FOR FILING OF SUBMISSION IN 271D PROCEEDINGS, THE ASSESSMENT RECORDS WAS NOT NECESSARY. WE FIND THAT PENALTY UNDER SECTION 271D IS LEVIABLE FOR CONTRAVE NTION OF THE PROVISION OF SECTION 269SS OF THE ACT BY ACCEPT ING LOANS OR ADVANCES IN CASH OVER AND ABOVE THE SPECIF IED SUM. THIS ISSUE WAS ALSO PART OF THE ASSESSMENT PROCEEDINGS AND THE ASSESSEES EXPLANATIONS IN THE ASSESSMENT PROCEEDINGS WOULD THEREFORE BE THE BASIS FOR LEVY OF PENALTY UNDER SECTION 271D. THE ASSESSEE WO ULD, THEREFORE REQUIRED ASSESSMENT RECORDS TO SUBMIT ITS EXPLANATION DURING PENALTY PROCEEDINGS UNDER SECTIO N 271D AND THEREFORE THE ASSESSEES CONTENTION THAT T HE ASSESSMENT RECORDS WERE NOT REQUIRED TO REPRESENT I N 271D PROCEEDINGS IS NOT SUSTAINABLE. WHEN THE ASSES SEE HAD THE ASSESSMENT RECORDS FOR REPRESENTING IN THE PROCEEDINGS UNDER SECTION 271D, IT CANNOT BE SAID T HAT IT 9 ITA.NO.844, 845 & 846/HYD/2015 MR. PAKKEERU SRIKANTH WAS PREVENTED BY SUFFICIENT CAUSE TO FILE APPEAL AG AINST THE ORDER UNDER SECTION 143(3) READ WITH SECTION 14 7 OF THE ACT OR IN APPEAL AGAINST THE PENALTY PROCEEDING S UNDER SECTION 271(1)(C) DUE TO MISPLACEMENT OF FILE IS NOT MAINTAINABLE AT LEAST TILL THE PROCEEDINGS UNDER SE CTION 271D GOT CONCLUDED. THE ASSESSEE DID NOT REPRESENT BEFORE THE A.O. DURING THE PENALTY PROCEEDINGS UNDE R SECTION 271(1)(C) AND HAS FILED THE APPEAL AGAINST THE SAME ALSO WITH DELAY. THE ASSESSEE, HAS THEREFORE, NOT BEEN VIGILANT IN CHALLENGING THE RE-ASSESSMENT PROCEEDINGS AS WELL AS THE PENALTY PROCEEDINGS. THE ASSESSEES EXPLANATION IS COMMON FOR ALL THE APPEAL S PROCEEDINGS. THEREFORE, THE CIT(A)S ORDER FOR REFU SING TO CONDONE THE DELAY OF 217 DAYS IN FILING THE APPEAL AGAINST ORDER UNDER SECTION 143(3) READ WITH SECTION 147 AN D 29 DAYS AND 81 DAYS IN FILING OF THE APPEALS AGAINST T HE PENALTY PROCEEDINGS MENTIONED ABOVE IS UPHELD. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA.NO.844/HYD/2015 IS DISMISSED AND ITA.NOS.845 & 846/HYD/2015 OF THE ASSESSEE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13.11.2015. SD/- SD/- (B. RAMAKOTAIAH) (SMT. P. MADHAVI DEVI) ACOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 13 TH NOVEMBER, 2015 VBP/- 10 ITA.NO.844, 845 & 846/HYD/2015 MR. PAKKEERU SRIKANTH COPY TO : 1. MR. PAKKEERU SRIKANTH, H.NO.11 - 15 - 135/4, PLOT NO.166, ROAD NO.5, DOCTORS COLONY, SAROORNAGAR, RANGA REDDY DISTRICT. 2. THE INCOME TAX OFFICER, WARD 9(1), HYDERABAD. 3. CIT(A) - VII, HYDERABAD 4 . C IT - VII, HYDERABAD 5 . D.R. ITAT A BENCH, HYDERABAD. 6 . GUARD FILE