SRI SAI KRISHNA RICE INDUSTRY,KHAMMAM V. ITO., WARD-1, KHAMMAM

ITA 1135/HYD/2024

AI Insights

The case involves Sri Sai Krishna Rice Industry, a partnership firm, which was identified as a non-filer with potential tax liabilities for the assessment year 2015-16. The firm did not respond to notices under Section 148 of the Income Tax Act, 1961, leading to an assessment order that added Rs. 1,15,77,211 to the firm's income under Section 69A read with Section 115BBE. The firm appealed to the Commissioner of Income Tax (Appeals), which was dismissed ex-parte. The Tribunal found that the partner of the firm was facing legal issues during the relevant period, which prevented the firm from responding to the notices. Consequently, the Tribunal remitted the matter back to the Assessing Officer for a fresh assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 36093 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Assessment Year: 2015-2016
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SACHIN KUMAR
• Assessee Lawyers: Y.V. BHANU NARAYAN RAO
• Keywords: Opportunity of being heard
• Section: 147; 148; 271(1)(c); 69A

Judgement Text

"आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ मɅ IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “B”, HYDERABAD BEFORE SHRI MANJUNATHA. G, ACCOUNTANT MEMBER & SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER आ.अपी.सं / ITA No. 1135/Hyd/2024 (Ǔनधा[रण वष[ / Assessment Year: 2015-16) Sri Sai Krishna Rice Industry, Khammam. [PAN : ABDFS6805R] Vs. Income Tax Officer, Ward-(1), Khammam. अपीलाथȸ / Appellant Ĥ× यथȸ / Respondent Ǔनधा[ǐरती ɮवारा/Assessee by: Shri Y.V. Bhanu Narayan Rao, AR राजè व ɮवारा/Revenue by: Dr. Sachin Kumar, Sr. AR सुनवाई कȧ तारȣख/Date of hearing: 22/01/2025 घोषणा कȧ तारȣख/Pronouncement on: 23/01/2025 आदेश / ORDER PER K. NARASIMHA CHARY, J.M: Aggrieved by the order dated 29/08/2024 passed by the learned Commissioner of Income Tax (Appeals), NaƟonal Faceless Appeal Centre, Delhi (“Ld. CIT(A)”), in the case of Sri Sai Krishna Rice Industry, Khammam (“the assessee”), assessee preferred this appeal for the AY 2015-16. 2. Brief facts of the case are that as per the informaƟon available with the Department, the assessee is a partnership firm and has been ITA No. 1135/Hyd/2024 Sri Sai Krishna Rice Industry vs. ITO Page 2 of 6 idenƟfied as non-filer with potenƟal tax liabiliƟes and made certain transacƟons during the assessment year under consideraƟon. Subsequently, the assessee’s case was reopened and a noƟce U/s. 148 of the Income Tax Act, 1961 (“the Act”) was issued. Assessee, however, did not file return of income for the assessment year 2015-16 in response to the said noƟce. 3. ThereaŌer, learned Assessing Officer based on the material available on record issued show-cause noƟces on various dates and called for the complete details of transacƟons along with documentary evidence. However, the assessee did not respond to the show cause noƟces issued and therefore, in the absence of any explanaƟon / documentary evidence in support of the source of such transacƟons, the learned Assessing Officer proceeded to made addiƟons aggregaƟng to Rs. 1,15,77,211/- on account of variaƟon in the accounts as discussed in assessment order and brought to tax U/s. 69A read with secƟon 115BBE of the Act. 4. Thus, learned Assessing Officer determined the assessed income of the assessee at Rs. 1,15,77,211/- and passed assessment order U/s. 147 read with secƟon 147 of the Act, dated 01/12/2023. Further, learned Assessing Officer has also iniƟated penalty proceedings U/s 271(1)(c) of the Act while passing the assessment order. Aggrieved, assessee preferred an appeal before the learned CIT(A). 5. During the First Appellate Proceedings, assessee made various submissions however, the learned CIT(A) did not consider the same and dismissed the appeal of the assessee ex-parte by holding that assessee had failed to refute the findings and evidence presented by the learned Assessing Officer in the assessment order and hence, the learned ITA No. 1135/Hyd/2024 Sri Sai Krishna Rice Industry vs. ITO Page 3 of 6 Assessing Officer’s acƟon is upheld. Aggrieved by the order of the learned CIT(A), the assessee is in appeal before the Tribunal. 6. Learned Authorized RepresentaƟve (“learned AR”) submiƩed that the assessee, M/s. Sri Sai Krishna Rice Industry, is a partnership firm, whose business is manufacturing and sale of rice. It was submiƩed that Mr. Seemakurthi Narasimha Rao, who is a partner of the assessee-firm was arrested on 17/07/2014 by the Circle Inspector of Aswaraopet and booked a criminal case on the ground that he failed to deliver rice worth Rs. 2,48,90,870/- (1,185.193 MTs) to the Food CorporaƟon of India, Khammam as per the agreement entered with District Manager, APSCSCL, Khammam for custom milling operaƟons. Learned AR further submiƩed that loan recovery process to recover a secured debt of Rs. 1,13,92,402/- by aucƟoning the rice mill, plant & machinery and equipment of the rice mill and house property of the partner was also iniƟated on 13/11/2014. Under these circumstances, the assessee-firm could not file the details / documentary evidence in support of the source of certain transacƟons as sought by the learned Revenue AuthoriƟes. Without considering these submissions, learned CIT(A) sustained the addiƟons made by the learned Assessing Officer and dismissed the appeal of the assessee ex-parte. Learned AR further submiƩed that now, Mr. Seemakurthi Narasimha Rao, partner of the assessee-firm, is released and to some extent the legal issues involved are subsided. Therefore, learned AR prayed that the assessee may be given one more opportunity before the learned Assessing Officer to substanƟate its case. 7. Learned Departmental RepresentaƟve (“learned DR”) vehemently supported the orders of the lower authoriƟes and submiƩed that even though the assessee has been granted sufficient opportuniƟes, the assessee failed to substanƟate its case along with supporƟng ITA No. 1135/Hyd/2024 Sri Sai Krishna Rice Industry vs. ITO Page 4 of 6 documentary evidence therefore, the order of the lower authoriƟes need not be interfered with. 8. We have gone through the record in the light of the submissions made on either side. It is a fact that the assessee did not respond to the noƟces / show cause noƟces issued during the assessment proceedings as well as in First Appellate Proceedings. However, on a perusal of the submissions made by the assessee and on verificaƟon of the documents filed before us, we find that Mr. Seemakurthi Narasimha Rao, who is a partner of the assessee-firm was arrested on 17/07/2014, whatsoever the reason may be, and was facing certain unavoidable legal issues during the relevant period of Ɵme before the learned Assessing Officer as well as during First Appellate Proceedings. Since the assessee does not stand to gain by allowing the appeal to be dismissed exparte, we find merit in the argument of the learned AR that because of the said reasons, the assessee could not respond / file the submissions before the learned Revenue AuthoriƟes. 9. As submiƩed by the learned AR, Mr. Seemakurthi Narasimha Rao, got released from the custody and the legal issues that were being faced by the assessee-firm were also subsided to some extent. Therefore, considering the facts and circumstance of the case and also the prayer of the learned AR, we are of the considered view that the maƩer needs to be revisited to the file of the learned jurisdicƟonal Assessing Officer in order to take a fresh look into the issues involved and decide the case afresh aŌer affording a reasonable opportunity of being heard to the assessee. 10. In view of the above, we hereby remit the maƩer to the file of the leaned jurisdicƟonal AO to decide the case on merits and in accordance with law. Grounds are answered accordingly. ITA No. 1135/Hyd/2024 Sri Sai Krishna Rice Industry vs. ITO Page 5 of 6 11. In the result, appeal of the assessee is allowed for staƟsƟcal purposes as indicated herein above. Order pronounced in the open court on the 23rd January, 2025. Sd/- Sd/- (MANJUNATHA. G) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad, Dated:23/01/2025 OKK/sps ITA No. 1135/Hyd/2024 Sri Sai Krishna Rice Industry vs. ITO Page 6 of 6 Copy forwarded to: 1. Sri Sai Krishna Rice Industry, 1-1/1, Vaddira Bazar, Aswaraopet, Khammam, Telangana-507301. 2. Income Tax Officer, Ward-(1), Rajeev Gunj, Rajiv Chowk, Near Kinnerasani Theatre, Khammam, Telangana-507001. 3. Pr. CIT, Hyderabad. 4. DR, ITAT, Hyderabad. 5. GUARD FILE. TRUE COPY ASSISTANT REGISTRAR ITAT, HYDERABAD "