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Income Tax Appellate Tribunal, HYDERABAD BENCH “A”, HYDERABAD
Before: V. DURGA RAO & SHRI S. RIFAUR RAHMAN
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH “A”, HYDERABAD BEFORE V. DURGA RAO, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA No. 1523/Hyd/2018 Assessment Year: 2007-08 Panduranga Rao Vs. Income Tax Officer, Choudary, Ward-11(3), Hyderabad. Hyderabad. PAN: ACSPC 2029 B (Appellant) (Respondent) Assessee by: Sri A.V. Raghuram Revenue by: Smt. Komali Krishn, DR Date of hearing: 05/03/2019 Date of pronouncement: 15/03/2019 ORDER PER V. DURGA RAO, J.M.:
This appeal filed by the assessee is directed against the order of the CIT(A)-5, Hyderabad dated 28/12/2016 for the assessment year 2007-08.
At the outset, it is noticed that there is a delay of 493 days in filing the appeal before the Tribunal within the prescribed time limit. In this regard, Learned Counsel for the Assessee brought our attention to the affidavit dated 06/02/2019 filed by the assessee and read out the reasons for not filing the appeal within the stipulated time. For the sake
of ready reference, relevant paragraphs 3 to 5 of the assessee’s affidavit are extracted as under:-
“3. On receipt of the order of CIT(A), in the month of January 2017, I approached Sri M. Sivarama Krishna, Chartered Accountant with the order of CIT(A), who was guiding me with accounting and tax matters. He collected my Vakalat and copy of the order and advised me that he will have the appeal filed through the Counsel who handled the first appeal. I am informed by Sri M. Sivarama Krishna that he gave appellate order to our present Counsel to file appeal along with Vakalat. It appears from the informed received by my Counsel that they prepared the appeal and had sent soft copy of appeal to Sri M. Sivarama Krishna, CA, on 15/02/2017 over email for signatures and duly instructing as to mode of payment of challan of Rs. 10,000/-. This mail according to the information given by Sri M. Sivarama Krishna went to his junk mail folder and got deleted. My Counsel was waiting for the signed papers and later lost sight of as they did not keep tract of the matter as the appeal was assigned to my Counsel and was preoccupied with his own work. I was under bona fide belief that appeal would have been filed as I have signed Vakalat and handed it over to Sri M. Sivarama Krishna along with appeal order. 4. Later in the month of July, 2018 when I approached Sri M. Sivarama Krishna for the accounting work and the returns that are to be filed for A.Y. 2018-19, I enquired about the status of the appeal filed for A.Y. 2007-08. Sri M. Sivarama Krishna enquired with our Counsel and found that the appeal was prepared and was sent to him and was not filed for want of action from out end. We immediately took steps to approach our Counsel’s office, sign required appeal documents, paid challan and filed appeal before the Hon’ble Tribunal on dated 12/07/2018 with delay of 493 days. 5. It is submitted that the delay in filing the appeal is not willful but is on account of the reasons aforesaid. It is submitted that the appellant was under bonafide belief that appeal would have been filed as he had signed Vakalat and handed over appellate order. It is submitted that the appellant did not stand to gain in any manner on account of the delay in filing the appeal and on the contrary, he is at the risk of losing a valuable right to have the appeal adjudicated. The inadvertent mistake happened at the office of Sri M. Sivarama Krishna which is not willful. As a matter of fact he had no role but was only helping me to have the appeal filed. In the aforesaid circumstances, it is prayed that the Hon’ble Tribunal may be pleased to condone the delay of 493 days in filing the appeal in the interest of justice.” 3. Learned Counsel for the Assessee submitted that the delay is caused due to the reasons beyond the control of the assessee and there
is neither willful nor intentional reasons caused the delay. He further submitted that the assessee is a small-time business man and uneducated and since the delay is caused due to lack of sufficient knowledge regarding the intricate provisions of the Income Tax Act as well as considering the above genuine reasons explained by the assessee, the delay may be condoned. He also submitted that the core issue involved in this appeal is the estimation of income where the assessee is involved in the liquor business and this issue is squarely covered in favour of the assessee by various decisions of the ITAT and therefore, he prayed that the delay may be condoned and the appeal be decided on merits without going to the technicalities of the matter.
On the other hand, Learned Departmental Representative submitted that there is a huge delay of 493 days in such case, the onus is on the assessee to explain the sufficient reason for each day of delay caused.
We have heard both the parties and gone through the contents of affidavit filed by the assessee. A perusal of the affidavit shows that the assessee is carrying on the business of trading in retail sale of wines. As per the reasons explained in the affidavit, the delay of 493 days is on the part of the Chartered Accountant, who guide the assessee in tax matters and the same cannot be said to be attributable to the assessee and we find there is a reasonable and sufficient cause for not filing the
appeal before the Tribunal within the prescribed time limit. Further, while condoning the delay, the facts and circumstances of each case are to taken into account separately. Thus, considering the peculiar facts and circumstances of the instant case, in our opinion there is a reasonable cause and sufficient reason in filing the appeal with a delay of 493 days and therefore, the delay is condoned and the appeal is being disposed of on merits.
Brief facts of the case are that the assessee, an individual, is engaged in the business of trading in retail sale of wines. Assessee filed the return of income declaring total income of Rs. 4,62,075/-. Assessment was completed u/s 143(3) r.w.s 147 of the Act and the assessed income was determined at Rs. 15,27,542/-. During the scrutiny assessment proceedings, A.O rejected the assessee’s books of account in the absence of any documentary evidence to support the receipts and estimated the income @ 3% on gross receipts which worked out to 5,27,542/- and brought it to tax. Further, A.O made another addition of Rs. 10 lakhs being the difference in gross purchases debited to the P&L Account.
Aggrieved, assessee preferred an appeal before the CIT(A), who dismissed the appeal and enhanced the quantum of taxable income and directed the Assessing Officer to adopt the estimated income @ 5% at
Rs. 29,30,790/-. Further aggrieved, assessee is appeal before us by raising the following grounds of appeal:-
“1. The order of the Ld. CIT(A) is not only erroneous both on facts and in law but is contrary to accept principles of law. 2. The Ld. CIT(A) erred in enhancing the income determined by the A.O. by directing to estimate income @ 5% relying on some decisions of the ITAT when it is settled principle that an opinion of the Assessing Officer cannot be replaced by another opinion of another officer. 3. The Ld. CIT(A) though opined that once books of account is rejected no addition could be made with regard to sources for purchases erred in not giving a decision finally and dismissing the appeal stating the income is enhanced.” At the time of hearing, Learned Counsel for the Assessee 8. submitted that the issue involved in this appeal is covered in favour of the assessee by the decision of this Tribunal in a number of cases, wherein the Tribunal has estimated the profit from sale of liquor @ 3% of the stock put to sale. He therefore prayed that similar direction may be given to the A.O. 9. Learned Departmental Representative, however, supported the orders of the authorities below.
Having regard to the rival contentions and the material on record, we find that the assessee is involved in retail business of liquor and therefore, could not furnish the relevant books of account properly. Therefore, A.O. has estimated the income @3% at Rs. 5,27,542/- and on appeal the CIT(A) has enhanced the income determined by the A.O. and directed him to estimate the income @ 5%. In similar circumstances, this Tribunal, in the case
of Sri Venkateswara Wines, Secunderabad in ITA No.1206/Hyd/2015 has held as under:
“5. Having regard to the rival contentions and the material on record, we find that the assessee has not maintained any books of account and therefore, the estimation of income is justified. It is only the rate at which the income is to be estimated is before us. A.O. has estimated the income at 5% of the cost of goods sold, while the assessee is seeking the estimation at 3% of the cost of goods sold. We find that in the case of Venkateswara Wines, Nizamabad (supra), the Coordinate Bench of this Tribunal has taken note of the decision of Hon'ble High Court of Telangana and Andhra Pradesh in the case of CIT vs. Kamlekar Shankar Lal (supra) to hold as under : "6. Having regard to the rival contentions and the material on record, we find that the AO has called for books of account of the assessee but the assessee had failed to produce the same. Therefore, AO had estimated the income of the' assessee at 2.5% of the turnover. The CIT wants the same to be estimated at 5% of the total turnover because the Tribunal in the case of an assessee carrying on the same business of sale of IMFL has estimated the income at 5% of the turnover. This, in our view, is not justified as held by the Coordinate Bench of this Tribunal. The ITA.No.1206/Hyd/2015 Sai Venkateswara Wines, Secunderabad uniform net profit cannot be adopted in each and every case of similar business. Estimation of net profit must be on the basis of facts involved in each and every case. Therefore, in our view, there is no error committed by the AU in estimating the profit at 2.5% of the total turnover. Thus grounds of appeal No.2 & 3 are allowed." 5.1. In the case before us, the assessee is agreeable to the estimation of income at 3% of the cost of goods sold. As the facts before us are similar to the facts before the Tribunal in the case of Venkateswara Wines, Nizamabad (supra) and the uniform rate of profit cannot be adopted in the case of every assessee in similar business, we allow ground No.2 of the assessee”. 11. Respectfully following the decision of the Coordinate Bench, the AO is directed to estimate the net profit at 3% of the cost of goods put to sale. Accordingly, Grounds no. 1 and 2 are raised by the assessee are allowed. As regards Ground no.3 is concerned the same is not discussed before us by the Learned Counsel for the Assessee as the same is decided in favour of the assessee by the Ld. CIT(A) and therefore, this ground is dismissed. 12. In the result, appeal filed by the assessee is partly allowed.
Pronounced in the open Court on 15th March, 2019.
Sd/- Sd/- (S. RIFAUR RAHMAN) (V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad, Dated: 15th March, 2019 OKK
Copy to:- 1) Sri Panduranga Rao Choudary, C/o. K. Vasantkumar, A.G. Raghuram & P. Vinod, Advocates, 610, Babukhan Estate, Basheerbagh, Hyderabad-1. 2) Income Tax Officer, Ward-11(3),10th Floor, Signature Towers, Kondapur, Hyderabd. 3) The CIT(A)-5, Hyderabad 4) The Pr. CIT-5, Hyderabad 5) The DR, ITAT, Hyderabad 6) Guard File