Venkateshwara Agro Agencies, Karimnagar, Hyderabad V. ITO, Ward-3, Karimnagar, Karimnagar

ITA 929/HYD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2584 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 20-06-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P CHANDRA SEKHAR
• Keywords: Revision of order; Assessment record; Condonation of delay
• Section: 40A(3); 143(3); 263

Judgement Text

ITA NO 929 OF 2016 VENKATESHWARA AGRO AGENCIES KARIMNAGAR PAGE 1 OF 6 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.929/HYD/2016 (ASSESSMENT YEAR: 2011-12) M/S. VENKATESHWARA AGRO AGENCIES, KARIMNAGAR PAN: AABFV 4254 G VS INCOME TAX OFFICER WARD 3 KARIMNAGAR (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI K.C. DEVDAS FOR REVENUE : SHRI P. CHANDRA SEKHAR, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2011-12. THIS APPEAL IS AGAINST THE ORDER OF THE PRINCIPAL CIT-2, HYDERABAD, DATED, 4.3.2016 PASSED U/S 263 OF THE I.T. ACT. 2. AT THE OUTSET, IT IS SEEN THAT THERE IS A DELAY OF 45 DAYS IN FILING OF THE APPEAL. THE ASSESSEE HAS FILED AN APPLICATION FOR CONDONATION OF DELAY STATING THAT THE DELAY HAS OCC URRED DUE TO THE ILLNESS OF THE MANAGING PARTNER. THE ASSESSEE H AS FILED THE COPIES OF THE MEDICAL REPORTS IN SUPPORT OF THE ASS ESSEES CONTENTION OF THE ILLNESS OF THE MANAGING PARTNER. HAVING TAKEN INTO CONSIDERATION THE RELEVANT MATERIAL, WE ARE SA TISFIED THAT THE REASONS GIVEN FOR FILING OF THE APPEAL WITH A DELAY . ACCORDINGLY, WE DATE OF HEARING : 04.08.2017 DATE OF PRONOUNCEMENT : 22.09.2017 ITA NO 929 OF 2016 VENKATESHWARA AGRO AGENCIES KARIMNAGAR PAGE 2 OF 6 CONDONE THE DELAY OF 45 DAYS AND PROCEED TO DISPOSE OF THE APPEAL ON MERIT AS UNDER:-. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE HON'BLE PRINCIPLE CIT-2 PASSED U/S.263 OF THE IT ACT IS ERRONEOUS IN LAW AS WELL AS FACTS OF THE CASE. 2. THE HON'BLE PR.CIT-2 OUGHT TO HAVE OBSERVED THAT THE ASSESSMENT WAS COMPLETED U/S.143(3) OF THE IT ACT BY THE ASSESSING OFFICER AFTER VERIFICATION OF ACCOUNT BOOKS AND RELEVANT VOUCHERS AND SATISFYING HIMSELF WITH THE MATERIAL PRODUCED. 3. THE HON'BLE PR.CIT-2 OUGHT TO HAVE OBSERVED THAT THE ORDER U/S.143(3) OF THE IT ACT PASSED BY THE ASSESSING OFFICER WAS NEITHER ERRONEOUS IN LAW NOR PREJUDICIAL TO THE INTEREST OF REVENUE AS THE ASSESSING OFFICER PASSED THE SAME AFTER GOING THROUGH ALL RELEVANT FACTS. 4. THE ORDER PASSED BY THE HON'BLE PR.CIT-2, HYDERABAD IS NOT LEGALLY TENABLE IN THE GIVEN FACTS AND A CIRCUMSTANCE OF THE CASE AND THEREFORE THE SAME IS LIABLE TO BE QUASHED. 5. ANY OTHER GROUND WILL BE RAISED AT THE TIME OF HEARING. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A FIRM WHICH IS ENGAGED IN THE BUSINESS OF PURCHASE AND SA LE OF PESTICIDES. IT FILED ITS RETURN OF INCOME FOR THE A .Y 2011-12 ON 22.09.2011 DECLARING TOTAL INCOME OF RS.31,490. DUR ING THE COURSE OF SCRUTINY PROCEEDINGS U/S 143(3) OF THE AC T, IT WAS NOTICED THAT THE AO REQUIRED THE ASSESSEE TO FURNIS H CERTAIN ITA NO 929 OF 2016 VENKATESHWARA AGRO AGENCIES KARIMNAGAR PAGE 3 OF 6 INFORMATION AND AFTER GOING THROUGH THE SAID INFORM ATION, HE MADE THE FOLLOWING ADDITIONS: I) TRANSPORTATION & HAMALI CHARGES RS.8831/- II) OTHER EXPENSES RS.7119/- 5. SUBSEQUENTLY, THE PR. CIT, BY ASSUMING POWERS U/ S 263 OF THE ACT, PURSUED THE ASSESSMENT RECORD AND O BSERVED THAT THE AO HAS NOT VERIFIED THE CASH PAYMENT EXCEEDING RS.20,000 WHICH ATTRACTS THE PROVISIONS OF SECTION 40A(3) OF THE ACT AND THAT TOTAL OF SUCH PAYMENTS EXCEEDING RS.20,000, WORKED OUT TO RS.61,23,463. HE THEREFORE, ISSUED A SHOW-CAUSE NOT ICE DATED 29.10.2015 FOR REVISING THE ASSESSMENT ORDER. IN IT S EXPLANATION, THE ASSESSEE STATED ITS REASONS FOR MAKING THE CASH PAYMENTS ON SOME OCCASIONS LIKE SUNDAYS, PUBLIC HOLIDAYS, STRIK E AND BANDH PERIOD DURING TELANGANA AGITATION ETC., AND AFTER B ANKING HOURS. IT WAS STATED THAT IN ORDER TO OVERCOME CUT-THROAT COMPETITION IN THE MARKET AND TO GAIN DISCOUNTS BY MAKING PROMPT A ND TIMELY PAYMENTS EVEN ON SUNDAYS AND THE PUBLIC HOLIDAYS, T HE ASSESSEE COMPANY TRIED TO COVER UP ITS LOWER MARGINS TO RETA IN ITS CUSTOMERS AND SAVE ITSELF FROM LOSSES. THE CIT, HOW EVER, WAS NOT CONVINCED WITH THE ASSESSEES CONTENTIONS. HE OBSER VED THAT ALL THE CASH PAYMENTS EXCEEDING RS.20,000 WERE PAID TO THE SUPPLIER COMPANY, M/S. ICON AGRO LTD, VIJAYAWADA AND PAYMENT TO OTHER SUPPLIERS WERE MADE THROUGH ACCOUNT PAYEE CHEQUES O R DRAFTS ONLY. THEREFORE, HE OBSERVED THAT THE MAIN CONTENT ION OF THE ASSESSEE I.E. TO GET DISCOUNTS BY MAKING PROMPT PAY MENTS IN CASH, IS NOT CORRECT. HE THEREFORE, OBSERVED THAT T HE PROVISIONS OF SECTION 40A(3) ARE ATTRACTED. HE ACCORDINGLY SET AS IDE THE ITA NO 929 OF 2016 VENKATESHWARA AGRO AGENCIES KARIMNAGAR PAGE 4 OF 6 ASSESSMENT ORDER TO THE AO WITH A DIRECTION TO REDO THE ASSESSMENT AFTER GIVING REASONABLE OPPORTUNITY OF B EING HEARD TO THE ASSESSEE AND DETERMINING THE QUANTUM OF ADDITIO NS U/S 40A(3) OF THE ACT AFTER A PROPER VERIFICATION, CONS IDERING THE CASH REMITTANCES WHICH WERE ACTUALLY DUE AND PAID ON THE DUE DATES WITH REFERENCE TO RULE 6DD(J) & (K). AGGRIEVED BY T HE ORDER OF THE CIT, THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE LEARNED COUNSEL FOR THE ASSESSEE, WHILE REIT ERATING THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE CIT , SUBMITTED THAT THE AO HAD CALLED FOR VARIOUS DETAILS DURING T HE ASSESSMENT PROCEEDINGS AND THE ASSESSEE HAD FURNISHED THE RELE VANT MATERIAL BEFORE THE AO WHICH IS PLACED AT PAGES 4 TO 5 OF TH E PAPER BOOK. THEREFORE, ACCORDING TO HIM, THE AO HAD APPLIED HER MIND BEFORE ACCEPTING THE ASSESSEES CLAIM OF CASH PAYMENTS IN EXCESS OF RS.20,000 AND THEREFORE, THE REVISION IS NOT SUSTAI NABLE. 7. THE LEARNED DR, HOWEVER, TOOK STRONG OBJECTION T O THE DOCUMENTS BEING RELIED UPON BY THE ASSESSEE BEFORE US AS SUBMITTED BEFORE THE AO AND SUBMITTED THAT THERE IS NO REFERENCE TO THIS DOCUMENT IN THE ASSESSMENT ORDER AND THAT T HIS DOCUMENT IS NOT DATED NOR DOES IT BEAR ANY ACKNOWLEDGMENT FR OM THE DEPARTMENT. IN ORDER TO VERIFY THE GENUINENESS OF T HIS DOCUMENT, WE HAD DIRECTED THE DR TO PRODUCE THE ASSESSMENT RE CORDS. THE DR PRODUCED THE REPORT FROM THE AO AND ALSO THE ASS ESSMENT RECORD TO DEMONSTRATE THAT THIS LETTER WAS NEVER FI LED BEFORE THE AO. ITA NO 929 OF 2016 VENKATESHWARA AGRO AGENCIES KARIMNAGAR PAGE 5 OF 6 8. AFTER GOING THROUGH THE RECORD, WE ARE SATISFIED THAT THIS DOCUMENT DOES NOT FORM PART OF THE ASSESSMENT RECORD AND PARTICULARLY SINCE THERE IS NO ACKNOWLEDGMENT OF FI LING OF THIS DOCUMENT BEFORE THE AO, WE ARE NOT INCLINED TO ACCE PT THIS DOCUMENT AS FILED BEFORE THE AO. WE HAVE ALSO GONE THROUGH THE ASSESSMENT ORDER AND WE FIND THAT THERE IS NO MENTI ON OF ANY INQUIRY WITH REGARD TO THE PAYMENTS IN CASH EXCEEDI NG RS.20,000 BEING MADE INTO BY THE AO. THE ASSESSEE HAS ALSO NO T FILED ANY DOCUMENT OR COPY OF THE NOTICES U/S 143(2) OR 14291 ) OF THE I.T. ACT ISSUED BY THE AO. THEREFORE, WE ARE OF THE OPIN ION THAT THE AO HAS NOT CAUSED ANY INQUIRY WITH REGARD TO PAYMENTS IN CASH EXCEEDING RS.20,000 AND THEREFORE, THE ASSESSMENT O RDER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE. WE ALSO FIND THAT THERE IS NO PREJUDICE CAUSED TO THE ASSES SEE SINCE THE CIT HAS SET ASIDE THE MATTER TO THE FILE OF THE AO WITH A DIRECTION TO REDO THE ASSESSMENT AFTER GIVING REASONABLE OPPO RTUNITY OF BEING HEARD TO THE ASSESSEE AND AFTER TAKING INTO C ONSIDERATION THE CASH REMITTANCES WHICH WERE ACTUALLY DUE AND PA ID ON THE DUE DATE WITH REFERENCE TO RULE 6DD(J) AND (K) OF T HE I.T. ACT. 9. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND SEPTEMBER, 2017. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 22 ND SEPTEMBER, 2017. VINODAN/SPS ITA NO 929 OF 2016 VENKATESHWARA AGRO AGENCIES KARIMNAGAR PAGE 6 OF 6 COPY TO: 1 B.NARSING RAO & CO. CAS, PLOT NO.554, ROAD NO.92, JUBILEE HILLS, HYDERABAD 500096 2 INCOME TAX OFFICER WARD 3 KARIMNAGAR 3 CIT -2 HYDERABAD 4 ADDL. CIT KARIMNAGAR RANGE, KARIMNAGAR 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER