S. Ramakumar Reddy V. Asstt. CIT 4(3),

ITTA/72/2006

AI Insights

The case involves S. Ramakumar Reddy, the appellant, who was a bookie at the Hyderabad Race Club and failed to comply with the audit requirements under Section 44AB of the Income Tax Act, 1961, for the assessment year 1994-95. The appellant declared a total income of Rs. 5,82,490 but did not submit audited accounts, leading to a penalty of Rs. 1,00,000 imposed by the assessing officer. This penalty was affirmed by the Commissioner of Income Tax (Appeals) and subsequently by the Income Tax Appellate Tribunal. The appellant's appeal to the High Court challenged the legality and validity of the Tribunal's order, but the court found no substantial question of law arising from the Tribunal's decision.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 746230 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 02-11-2022
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: J V PRASAD
• Assessee Lawyers: A V KARTHIKEYA
• Keywords: Audit; Entertainment Tax; Income Tax; Penalty; Turnover
• Section: 148; 44AB; 260A; 271B

Judgement Text

"IN THE HIGH COURT fOR THE STATE OF TELANGANA AT HYDERABAD WEDNESDAY, THE SECOND DAY OF NOVEMBER TWO THOUSAND AND TWENTY TWO PRESENT THE HON'BLE THE CHIEF JUSTICE UJJAL BHUYAN AND THE HON'BLE SRI JUSTICE C.V. BHASKAR REDOY INCOME TAX TRIBUNAL APPEAL NO: 72 OF 2006 Appeal Under Section 2604 of the lncome Tax Act, 1961 against the order dated 08-04-2005 in lTANo. 164lHydl 1999 (A.Y. 1995-96 ) on the file of the lncome Tax Appellate Tribunal , Hyderabad Bench \"B\" Hyderabad preferred against the order dated 15-01-1999 in Appeal No. 134/Ac4(3)/ClT A3/97 98 on the file of the Commissioner of lncome Tax ( Appeals ) , Hyderabad preferred against the order of the Deputy Commissioner of lncome Tax , Circle 4 (3) , Hyderabad dated 25-03-1999 in PAN / GIR No. R- 751 Between: S. Ramakumar Reddy, Ryo. 8-2-67418.14119 & 20, Banjara Hills, Road No. 13, Hyderabad. ..APPELLANT AND Asstt. CIT 4(3), Hyderabad ...RESPONDENT Counsel for the Appellant: SRI A.V. Siva Karthikeya, representing for SRI A.V KRISHNA KOUNOINYA Counsel for the Respondent: SRl J,v. PRASAo The Court delivered the following: Judgment THE HON'BLE THE CHIEF JUSTICE UJJAL BHUYAN AND THE HON'BLE SRI JUSTICE C.V,BHASKAR REDDY JUDGMENT: fer the Hon'ble the Chief Justice IJjjaI Bhugan) Heard Mr. A.V.Siva Karthikeya, learned counsel representing Mr. A.V.Krishna Kaundinya, learned counsel for the appellant and Mr. J.V.Prasad, learned Standing Counsel, Income Tax Department for the respondent. 2. This appeal has been preferred by the assessee as the appellant under Section 260A of the Income Tax Act, 1961 (briefly rclerred to hereinafter as the 'ActJ, assailing the legality and validit-r'of the orcler dated O8.O4.2005 passed by the Income Tax Appellate Tribunal, Hyderabad Bench ts', Hyderabad (Tribunal) in I.T.A.No. l6alHydl1999 for the assessmentyear 1995-96. 3. Thougl-i the appeal was filed way back in the year 2005, the same is yet to be admitted. Only notice was issued on t5 02.2006. I.T.T.A. No.72 of 2006 2 HCJ & CVBR,T I.T.T.A.No.72 of 2OO6 4. Be that as it may, the question appellant for consideration of the Court as a substantial of law as can be discerned from the memo of appea.l is as proposed by the question under: Whether on the fact the rribunar *\"\" :,\"uilr*:-ff\"Tr-:::\"il:,Tr\"i:: Commissioner of Income Tz Rs. r,oo,ooo.0o o, *\" \"\"\"\"\"T,,lloj,il\"\"lrconfirming levv or pena-rtv or S. Appellant is an assessee under the Act and was a Bookie at Hyderabad Race Club. For the assessment year 1994_ 95, he filed his refurn of income declaring total income of Rs.5,82,490.00. Assessing oflicer noted that appellant had not complied with the provisions of Section 44AB of the Acr i.e., by submitting audited accounts, levied penalty of Rs. I,OO,0OO.O0 under Sectio n 2Z 78 of the Act. 6. In appeal before the first appellate authority i.e., Commissioner of Income Tax (Appeals), order passed by the assessing oflicer was affirmed. before the ?ribunal. This led to filing of further appeaJ HC] & CVBRJ I.T.T.A.No.72 of 2OO6 7. Tribunal in the order dated 08.O4.2005 held as follows: \"6. We have heard rival contentions. On a careful consideration of the facts and circumstances of the case, we find that a notice under sec. 148 was issued and it was only in response to that notice that the assessee had liled his return of income. The entertainment tax retum of the assessee shows that his turnover is Rs.3,37,70,270. Tlee assessee paid entertainment tax. Subsequent to the notice given by the AO for levy of penalty under sec. 2718, the assessee claimed that he was under a genuine belief that his turnover had not crossed Rs.40 lakhs and he need not get his accounts audited. While saying so, he hled additional evidence stating that due to seizure o[ books by the Sa-les tax authorities, the audit of accounts under sec. 44AB got delayed. This is a contradictory stand. As the assessee bona fide believed that his accounts need not bc audited, he would not have taken a plea tJ at the audit got delirycd due to seizure of books by the Sales tax authorities. Having paid entertainment lax on a turnover of Rs.3,37 ,70,27(), the assessee cannot claim that he believed that his turnover was much below that amount. The retum itself u,as not filed voiuntarily, but in response to a notice under sec. 148. The argument of the learned counsel for the assessee that the penalty was levied much prior to completion of assessment also, does not come to the rescue of the assessee as nothing in law prevents the AO from levying penalty under sec. 27lB prior to completion of assessment ,,,-proceedinBs. 7. The petition for admission of additional evidence cannot be entcrtained at this stage as before the CIT (A) no plea was taken that due to seizure of books by Sales tax auttrorities the audit got clelavecl. Even othcrwise, no copy of letter from the 3 r : HC] & CVBRJ I.T.T.A.No.72 of 2OO6 Sales tax authorities is frled before us. The two letters dated 28-A-1996 and,25-3-7997 are of the assessee written to the Commercia-l Tax OIIicer, and are self-serving. 8. In view of the fact that the assessee himself filed entertainment tax return and paid tax on a turnover of Rs.3,37,70,27O, we are inclined to upheld the order of the CIT (A) and conhrm levy of penalty of Rs.1,0O,OO0. 9. In the result, the appeal of the assessee is dismissed.\" B. Thus Tribunal noticed that subsequent to notice issued by the assessing oflicer for levy of penalty under Section 27lB of the Act, appellant had claimed that he was under a genuine belief that his turnover had not crossed Rs.40 lakhs and therefore he need not get his accounts audited. It may be mentioned that the entertainment tax return of the appellant shou,ed his turnover at Rs.3,37,70,27O.OO. Tribunal further noted the contradictory stand of the appellant when he contended that due to seizure of books by the sales tax authorities, audit of accounts under Section 44AB of the Act got delayed. Additionally Tribunal held that appellant did not file the income tax return voluntarily but it was in response to a notice under Section 148 of the Act. 4 HC] & CVBRJ I.T.T.A.No.72 of 2006 9. In vierv of above, Tribunal confirmed the levy of penalty. 10. We do not find any error or infirmity in the view taken by the Tribuna-I. No question of law arises out of the aforesaid order of the Tribunal dated 08.04.2005, not to speak of any substantial question of law. 1 I . The appeal is accordingly dismissed. However, there shall be no order as to costs. 12. Miscellaneous applications pending, if any, shall stand closed. Sd/.B.S.CHIRANJEEVI JOINT REGISTRAR 5 /ITRUE COPY// SECTION OFFICER To 'I. The lncome Tax Appellate Tribunal , Hyderabad Bench \"8\" Hyderabad 2. The Gommissioner of lncome Tax ( ApPeals ) ' Hyderabad 3. The Oeputy Commissioner of lncome Tax ' Circle 4 (3) ' Hyderabad 4. One CC to SRl. A. V KRTSHNA KOUNDINYA' Advocate [OPUC] 5. One CC to SRl. J V.PRSAD, SC FOR INCOME TAX [OPUC] 6. Two CD CoPies .t)-- qD HIGH COURT DATED:02/1 112022 JUDGMENT ITTA.No.72 of 2006 DIS IISSINC THE I'ITA .ITIIOUT COSTS E S I'4 7a i) o r) 2 3 JA}l ?tl?3 a .,, I' l.a / i (9 i A- "