SANTOSHI SUBBA LAXMI MANDALA,VISAKHAPATNAM V. INCOME TAX OFFICER, WARD-1, ANAKAPALLE

ITA 326/VIZ/2025

AI Insights

The case involves Santoshi Subba Laxmi Mandala, the appellant, who contested an order from the CIT(A) confirming an income estimation at 8% of INR 1,14,88,155, which she argued was unjust as she only received a commission of 1% for commodity supply and 5% for contract farming. The Assessing Officer (A.O.) had initially estimated her income based on the total credits in her bank account, which she claimed were business receipts from acting as an agent between farmers and a company. The CIT(A) dismissed her appeal ex parte due to her non-participation, which the Tribunal later found was due to her not being properly notified of the hearing dates. The Tribunal noted her health issues and lack of physical communication as reasons for her absence and thus decided to set aside the CIT(A)'s order and remand the case for a fresh hearing.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 716706 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 22-05-2025
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Business income; Opportunity of being heard
• Section: 147; 131

Judgement Text

"आयकर अपीलीय अधिकरण, विशाखापटणम पीठ में IN THE INCOME TAX APPELLATE TRIBUNAL Visakhapatnam Bench श्री रिीश सूद, माननीय न्याययक सदस्य एिं श्री एस. बालक ृष्णन, माननीय लेखा सदस्य SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER AND SHRI BALAKRISHNAN. S, HON’BLE ACCOUNTANT MEMBER, आयकरअपीलसं./I.T.A.No.326/Viz/2025 (निर्धारण वर्ा/ Assessment Year: 2017-18) Santoshi Subba Laxmi Mandala, R/o.Visakhapatnam. PAN : CCCPM5126R Vs. The Income Tax Officer, Ward – 1, Anakapalli. (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) करदाता का प्रतततितित्व/ Assessee Represented by : Shri KSS Sarma, CA (Hybrid hearing) राजस्व का प्रतततितित्व/ Department Represented by : Dr. Aparna Villuri, Sr.DR सुिवाई समाप्त होिे की ततति/ Date of Conclusion of Hearing : 06.08.2025 घोर्णध की तधरीख/ Date of Pronouncement : 20.08.2025 O R D E R प्रनत रवीश सूद, जे.एम./PER RAVISH SOOD, J.M. The present appeal filed by the assessee is directed against the order passed by the Addl/JCIT(A)-9, Delhi, dated 14.05.2024, which in turn arises from the order passed by the Assessing Officer (for short Printed from counselvise.com 2 ITA No.326/Viz/2025 Santoshi Subba Laxmi Mandala “A.O.”) under Section 147 of the Income Tax Act, 1961 (for short “the Act”) dated 25.09.2021 for A.Y. 2017-18. The assessee has assailed the impugned order on the following grounds of appeal before us: “1. The order of CIT (Appeals) NFAC is arbitrary and unjust. 2. The Hon'ble CIT(A) is not justified in confirming the estimation profit at 8% of INR 1,14,88,155/- as the assessee is only an Agent and he is in receipt of only 1% commission for commodity supplied and 5% for the contract farming expenses. This embedded in page 4 point i of the agreement. 3. The Hon'ble CIT(A) ignored the agreement between the SA RAWTHER SPICES (PVT) LTD and the appellant. 4. Hon'ble CIT(A) Ought to have accepted the income returned by the appellant instead of confirming the income @ 8% of INR 1,14,88,155 which comes to INR 9,19,052. 5. The appellant craves leave to add to, amend, alter, delete all or any of the above grounds of appeal.” 2. Succinctly stated, the assessee had filed her return of income for A.Y. 2017-18, belatedly, on 31.03.2018, declaring an income of Rs. 3,45,400/-. Subsequently, the case of the assessee was selected for limited scrutiny under CASS to examine the cash withdrawals made from her bank account during the year. 3. During the course of the assessment proceedings, the assessee on being queried about the cash deposits in her bank account No.173811100000724, held with Andhra Bank, Village: Madugula, submitted that the same were sourced from her business of trading in Printed from counselvise.com 3 ITA No.326/Viz/2025 Santoshi Subba Laxmi Mandala milk on commission basis and amounts deposited in the said account were given to her by companies for making payment to farmers. The A.O. in order to verify the veracity of the aforesaid claim of the assessee, issued summons under Section 131 of the Act, dated 05.12.2019 and recorded her statement on oath on 12.12.2019. On being queried about her business model, it was submitted by the assessee that the money transferred to her account during the year was mainly received from M/s. S A Rawther Spices (P) Ltd., having its registered office at Bangalore and that she was acting as a mediator between the farmers and the said company for disbursement of amounts to the farmers. Elaborating further, it was the claim of the assessee that she acted as an agent between the farmers and the company because of development of her business of polishing/processing of raw turmeric received from the company after purchase from the farmers. The A.O. observed that, for every question regarding withdrawals made from her bank account, the assessee stated that the same were made for disbursing the same among the farmers. Thereafter, the assessee had (through her husband) filed before the A.O. a copy of an agreement that was entered into with the aforementioned company i.e. M/s. S A Rawther Spices (P) Ltd. The A.O., however, observed that the signature of the assessee in the agreement was not reflected in the place Printed from counselvise.com 4 ITA No.326/Viz/2025 Santoshi Subba Laxmi Mandala designated for the agent and hence, held a conviction that the agreement filed by the assessee was not genuine. Apart from that, the A.O. observed that the assessee could not furnish the ledger account appearing in the books of the aforementioned company and the confirmation letter. Although, it was the claim of the assessee that a similar business was done by her with M/s. SARCO, but she could not substantiate the same based on any documentary evidence. 4. The A.O. observed that, though the assessee had admittedly received amounts in her bank account from the aforementioned party viz. (i). M/s. S A Rawther Spices (P) Ltd; and (ii) M/s. SARCO, but had failed to establish any nexus between the said parties and her business transactions. Accordingly, the A.O. held the total amount of credits of Rs. 1,14,88,155/- appearing in the aforementioned bank account i.e. 173811100000724 of the assessee maintained with Andhra Bank, Village: Madugula during the subject year as her business receipts and estimated her income @ 8% i.e. at Rs. 9,19,052/-. 5. Aggrieved, the assessee carried the matter in appeal before the CIT(A). As the assessee failed to participate in the proceedings before the CIT(A), therefore, he was constrained to dispose of the appeal vide Printed from counselvise.com 5 ITA No.326/Viz/2025 Santoshi Subba Laxmi Mandala an ex parte order. For the sake of clarity, the observations of the CIT(A) are culled out as under : Printed from counselvise.com 6 ITA No.326/Viz/2025 Santoshi Subba Laxmi Mandala Printed from counselvise.com 7 ITA No.326/Viz/2025 Santoshi Subba Laxmi Mandala Printed from counselvise.com 8 ITA No.326/Viz/2025 Santoshi Subba Laxmi Mandala -left blank intentionally- Printed from counselvise.com 9 ITA No.326/Viz/2025 Santoshi Subba Laxmi Mandala Printed from counselvise.com 10 ITA No.326/Viz/2025 Santoshi Subba Laxmi Mandala 6. The assessee, being aggrieved with the order of CIT(A), has carried the matter in appeal before us. 7. We have heard the learned Authorized Representatives of both parties, perused the orders of the lower authorities and the material available on record. 8. Shri KSS Sarma, learned Authorized Representative (for short “Ld.AR”) for the assessee, at the threshold of hearing of the appeal, submitted that the present appeal involves a delay of 295 days. Elaborating on the reasons leading to the delay, the assessee had come up with two-fold reasons viz. (i). that the assessee during the subject year suffered from certain health problems and having undergone a surgery, was advised bed rest for a period of 10 months; and (ii). that as there was no physical communication regarding the ongoing appellate proceedings as well as the disposal of the appeal by the CIT(A), Printed from counselvise.com 11 ITA No.326/Viz/2025 Santoshi Subba Laxmi Mandala therefore, she had remained unaware about the same. Elaborating on his contentions, the Ld. AR submitted that though the assessee, in the memorandum of appeal i.e. “Form No.35” filed before the CIT(A) had specifically opted out of receiving notices/ communications from the office of CIT(A) through e-mail, but no physical notice intimating the fixation of the appeal was ever served upon her on any of the four occasions i.e. 27.01.2021, 12.09.2022, 25.01.2024 and 06.05.2024. The Ld. AR to fortify his aforesaid contention, has specifically drawn our attention to Form No. 35, which substantiated his aforesaid contention. Apart from that, the Ld. AR has taken us to the observations of the CIT(A), wherein he had specifically mentioned that the notices fixing the hearing of the appeal were delivered at the e-mail of the assessee. The Ld. AR submitted that, as the assessee was never validly put to notice about the fixation of hearing of the appeal on any of the four occasions, therefore, she had, for no fault on her part, remained divested of participating in the said proceedings and putting up her defence regarding the impugned addition made by the A.O. 9. Carrying his contention further, the Ld. AR submitted that the assessee despite having opted out of receipt of notices/ communications from the office of CIT(A) through e-mail was not served with the physical Printed from counselvise.com 12 ITA No.326/Viz/2025 Santoshi Subba Laxmi Mandala copy of the order passed by the Additional/JCIT (Appeal)-9, Delhi, dated 14.05.2024. The Ld. AR submitted that as the delay in filing of the present appeal had occasioned for the aforesaid reasons, viz. (i). ill- health of the assessee during the relevant period; and (ii). the assessee had not been validly served with the copy of the order passed by the Additional/JCIT (Appeal)-9, Delhi, therefore, the impugned delay of 295 days involved in the present appeal, in all fairness, and in the interest of justice, be condoned. 10. Per contra, Dr. Aparna Villuri, the learned Senior Departmental Representative (for short “Ld. DR”) objected to the seeking of the condonation of the delay. The Ld. DR submitted that as the delay involved in the present appeal is inordinate, therefore, the same does not merit to be condoned. 11. We have thoughtfully considered the reasons leading to the delay in filing of the present appeal in the backdrop of the contentions advanced by the Ld. ARs for both parties. 12. Admittedly, it is a matter of fact discernible from the record that the assessee in the Memorandum of Appeal, i.e., “Form No. 35”, had specifically exercised the option that was provided and had opted out of receipt of notices/communications from the office of CIT(A) through e- Printed from counselvise.com 13 ITA No.326/Viz/2025 Santoshi Subba Laxmi Mandala mail. We further find that the assessee had, at Column No.”17” of Form No.35, further provided her address at which notices/ communications may be served upon her. We find on a perusal of the order of CIT(A), that all the four notices intimating the fixation of the appeal i.e. dated 27.01.2021, 12.09.2022, 25.01.2024 and 06.05.2024 were dropped at the e-mail account of the assessee and were not physically served upon her. We thus, considering the aforesaid facts, concur with the Ld. AR that the assessee had, for no fault of her own, remained divested of any opportunity to participate in the proceedings before the CIT(A) and put up her defence against the impugned addition made in her case. 13. Also, we find that as the assessee had specifically opted out of receipt of notices/communications from the office of CIT(A) through e- mail, therefore, in the backdrop of the said option therein made available it was incumbent upon the authorities to have specifically served upon her a copy of the order whereby her appeal was dismissed by the Additional/JCIT (Appeal)-9, Delhi. Apart from that, we have perused the medical certificate of the assessee dated 19.05.2025, which reveals that she had remained bedridden during the period from 05.07.2024 to 25.02.2025, i.e., the relevant period during which the present appeal ought to have been filed. Printed from counselvise.com 14 ITA No.326/Viz/2025 Santoshi Subba Laxmi Mandala 14. We thus, in the backdrop of the aforesaid facts, are of a firm conviction that as the assessee, for no default on her part, had remained divested of an opportunity to participate in the proceedings before the CIT(A), which thus, had resulted in an ex parte order leading to the dismissal of her appeal, therefore, the same, in all fairness, and in the interest of justice, cannot be sustained. We, accordingly, herein, set aside the order passed by the CIT(A) and restore the matter to his file with a direction to re-adjudicate the same. Needless to say, the CIT(A) shall, in the course of the set aside proceedings afford a reasonable opportunity of being heard to the assessee. 15. Resultantly, the appeal filed by the assessee is allowed for statistical purposes in terms of our aforesaid observations. Order pronounced in the Open Court on 20th August, 2025. Sd/- (एस. बालक ृष्णन) (S. BALAKRISHNAN) लेखा सदस्य/ACCOUNTANT MEMBER Sd/- (रिीश सूद) (RAVISH SOOD) न्यायिक सदस्य/JUDICIAL MEMBER Sd/- Hyderabad, dated 20.08.2025. TYNM/sps Printed from counselvise.com 15 ITA No.326/Viz/2025 Santoshi Subba Laxmi Mandala आदेशकी प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:- 1. निर्धाररती/The Assessee : Santoshi Subba Laxmi Mandala, 11-60, Near Saibaba Temple Madugula, Visakhapatnam – 531027. 2. रधजस्व/ The Revenue : The Income Tax Officer, Ward – 1, Anakapalli 3. The Principal Commissioner of Income Tax, Visakhapatnam. 4. नवभधगीयप्रनतनिनर्, आयकर अपीलीय अनर्करण, / DR, ITAT, Visakhapatnam. 5. गधर्ाफ़धईल / Guard file आदेशधिुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam Printed from counselvise.com "