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Income Tax Appellate Tribunal, HYDERABAD BENCH “A”, HYDERABAD
Before: SMT P. MADHAVI DEVI & SHRI S. RIFAUR RAHMAN
PER S. RIFAUR RAHMAN, A.M.:
Assessee preferred an appeal against the order of ld. CIT(A) – 5, Hyderabad, dated 30/10/2015 relating to assessment u/s 143(3) and cross appeals are filed by the assessee and revenue against the order of ld. CIT(A) – II, Hyderabad, dtd. 21/03/2014, relating to penalty u/s 271(1)(c) of the Act, for the AY 2009-10.
2 ITA No. 76 /Hyd/2016 and others M/s Deepika Infratech Pvt. Ltd.
ITA No. 76/Hyd/2016
This appeal is directed against the order of CIT(A) – 5, Hyderabad, dated 30/10/2015 for the AY 2009-10 wherein the assessee has raised the following grounds of appeal: 1. On the facts and in the circumstances of the case, the order of the learned Commissioner of Income Tax (Appeals)-5, Hyderabad, dismissing the appeal of the Appellant is erroneous, illegal and unsustainable in law.
The Commissioner of Income Tax (Appeals) erred in not condoning the delay in filing the appeal and in not admitting the appeal. The Commissioner of Income Tax (Appeals) failed to appreciate that the mistake was bonafide in as much as the addition of unexplained creditors (which is the major addition) in the previous year relevant assessment year under consideration are the balances of the earlier year which was also taken up for scrutiny simultaneously and had a bearing for the present year.
On the facts and in the circumstances of the case, the Commissioner of Income Tax (Appeals) failed to appreciate that the Appellant had given proper and cogent reasons for the delay of 653 days in filing the appeal and that the mistake was bona fide. The Commissioner (Appeals) erred in applying the judgements which could not have been applied to the facts of the present case.
For these and other grounds that may be urged at the time of hearing, it is prayed that the Hon'ble Tribunal may be pleased to allow the appeal.”
Briefly the facts of the case are that the assessee is in the business of construction of irrigation projects, canals, roads and related work. The works are taken on contract and also on sub- contract basis. A survey operation u/s 133A was conducted in the business premises of the assessee on 25/03/2010. The assessment was completed u/s 143(3) on 30/12/2011 determining the taxable income at Rs. 20,77,51,740/- against the returned income of Rs. 14,75,55,600/- by making various additions.
3 ITA No. 76 /Hyd/2016 and others M/s Deepika Infratech Pvt. Ltd. 4. Aggrieved by the order of AO, the assessee preferred an appeal before the CIT(A), filed the appeal before the CIT(A) with a delay of 653 days, as the assessee ought to have filed the appeal on or before 31/01/2012, but the same was filed on 21/10/2013, resulting into a delay of 653 days.
4.1 The assessee filed condonation petition stating the reasons for the said delay, which was extracted by CIT(A) at page 2 of his order.
4.2 The CIT(A) observed that it is obvious from the contents of condonation petition that there is no reason for delay in filing the appeal and the assessee is only narrating the proceedings of AY 2008-09 but did not give any reason for the delay in filing the appeal. The CIT(A) referring various case law on the issue of delay, dismissed the appeal of the assessee by holding that in the present case the cause of substantial justice would not be served by condoning the inordinate delay of 653 days, for which no cogent reason has been given.
Aggrieved by the order of CIT(A), the assessee is in appeal before us.
Considered the rival submissions and perused the material facts on record. The assessee has pleaded before the CIT(A) and before us that he has filed appeal before the first appellate authority for the AY 2008-09 and believed that it has bearing on the following AY i.e. 2009-10. He chose not to appeal for the AY 2009-10 with the mistaken belief. Ld. AR also submitted before us the relevant order of CIT(A) for the AY 2008-09, in which ld. CIT(A) has analysed/verified the books of account for both the AYs i.e. 2008-09 and 2009-10 and gave findings, which have effect on both the AYs. Considering the above facts and misunderstanding on the part of the assessee and for the sake of justice, we are of the view that though it is important as to
4 ITA No. 76 /Hyd/2016 and others M/s Deepika Infratech Pvt. Ltd. why the assessee took time to file the appeal belatedly with a delay of 653 days before the authorities, but, it is relevant that by adopting technical reasons, one should not be deprived off its legal right of appeal. Moreover, ld. CIT(A) has applied his energy to justify how the assessee cannot file the appeal, rather than, extending helping hand in rendering proper justice. In our considered view, assessee should be given another opportunity to put forth its case considering the fact that in the earlier AY, it has a favourable case before the CIT(A) and ITAT. Therefore, we remit this case back to the file of CIT(A) to adjudicate the issue in hand on merits by giving proper opportunity of being heard to the assessee.
ITA No. 1155/Hyd/2014 7. This appeal is directed against the order of CIT(A) – II, Hyderabad dated 21/03/2014 whereby he confirmed the penalty levied by the AO u/s 271(1)(c) of the Act.
Briefly, the facts of the case are that in the quantum assessment u/s 143(3), the AO made the following additions:
a. Disallowance of cash payments u/s 40A(3) Rs. 1,73,00,000/- b. Disallowance of hire charges on tractors u/s 40(a)(ia) Rs. 50,85,000/- c. Disallowance of sundry creditors Rs. 2,43,36,140/- d. Unexplained credits Rs. 1,31,50,000/- e. Disallowance of unexplained expenditure Rs. 3,25,000/-
No appeal was filed against the quantum assessment order. Thereafter, AO initiated penalty proceedings u/s 271(1)(c) by observing that the assessee failed to disclose full and true particulars. Accordingly, he levied penalty of Rs. 2,04,60,668/- /is 271(1)(c) of the Act.
Aggrieved, the assessee preferred an appeal before the CIT(A).
5 ITA No. 76 /Hyd/2016 and others M/s Deepika Infratech Pvt. Ltd. 10. The CIT(A) sustained the penalty levied with reference to disallowance u/s 40A(3) of Rs. 1.73 crores, 40(a)(ia) disallowance of Rs. 50,85,000/- and cash credits of Rs. 2,43,36,143/-.
Aggrieved the assessee is in appeal before us raising the following grounds of appeal: 1.The learned Commissioner of Income Tax-(Appeals)-II, erred in confirming Penalty U/s.271(1)(c) of the Income Tax Act, 1961, in respect of disallowance of Unexplained credits amounting to Rs.1,31,50,000/- based on the facts and circumstances of the case.
2.The learned Commissioner of Income Tax-(Appeals)-II ought to have made a speaking order regarding the confirmation of penalty u/s.271(1)(c) of the Income Tax Act, 1961, in respect of the disallowance of Rs.1,31,50,000/-.
3.The learned Commissioner of Income Tax-(Appeals)-II, erred in confirming Penalty U/s.271 (1)(c) regarding disallowance of cash payments u/s 40A(3) amounting to Rs.1,73,00,000/-.
4.The learned Commissioner of Income Tax-(Appeals)-II, erred in confirming Penalty U/s.271(1)(c ) regarding disallowance of hire charges on Tractors, u/s 40(a)(ia) amounting to Rs.50,85,000/-.
11.1 The assessee has also raised the following additional ground relying on the decision of the Hon’ble Supreme Court in the case of CIT Vs. NTPC, 229 ITR 393.:
“On the facts and circumstances of the case) the penalty order passed by the Assessing Officer and partly upheld by CIT(A) is unsustainable on the facts of the present case and also in law for non-application of mind on part of Assessing Officer as the very basis i.e., penalty show cause notice does not specify whether the notice was for concealment of income or for furnishing of inaccurate particulars of income. “ 12. As the said additional grounds are legal grounds, wherein, the facts are on record and facts do not require fresh investigation, following the decision of Hon’ble Supreme Court in the case of
6 ITA No. 76 /Hyd/2016 and others M/s Deepika Infratech Pvt. Ltd. National Thermal Power Co., Limited Vs. CIT 229 ITR 383 (SC), we admit the said additional ground of assessee.
The ld. AR of the assessee submitted that the Assessing Officer initiated the penalty proceedings by issue of a notice u/s 274 r.w.s. 271(1)(c) on 30.12.2011. He submitted that while issuing the said notice, the Assessing Officer did not mention whether the notice is issued for concealment of income or for furnishing of inaccurate particulars of income. Therefore, the notice is not validly issued. Consequently, the order passed u/s 271(1)(c) also is not valid. For this proposition, he relied on the decision of the Hon’ble Supreme Court in the case of CIT Vs. SSA’s Emerald Meadows, [2016] 73 taxmann.com 248 (SC).
The Learned Departmental Representative on the other hand relied on the orders of revenue authorities.
Considered the rival submissions and perused the material facts on record. The issue in dispute is squarely covered by the decision of the Hon’ble Supreme Court in the case of CIT Vs. SSA’s Emerald Meadows, [2016] 73 Taxmann.com 248 (SC) wherein the Apex Court upheld the decision of the Hon’ble High Court, in which, the Hon’ble High Court confirmed the order of the Tribunal and dismissed the appeal of the revenue, who came in appeal against the order of the Tribunal. The Tribunal relying on a decision of Karnataka High Court in case of CIT Vs. Manjunatha Cotton & Ginning Factory, [2013] 359 ITR 565/210 allowed the appeal of the assessee holding that notice issued by Assessing Officer u/s 274 read with section 271(1)(c) was bad in law, as it did not specify under which limb of section 271(1)(c) penalty proceedings had been initiated, i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income.
7 ITA No. 76 /Hyd/2016 and others M/s Deepika Infratech Pvt. Ltd. 15.1 In the case under consideration, on perusal of the show cause notices issued by the Assessing Officer u/s 274 r.w.s. 271 of the IT Act, 1961, dated 30/12/2011, which is placed on record, it is seen that the Assessing Officer did not mention whether the notice is issued for concealment of income or for furnishing of inaccurate particulars of income. Therefore, as per the ratio laid down by the Hon’ble Supreme Court in the case of SSA’s Emerald Meadows, the notice issued by the Assessing Officer is not valid and consequently, the order passed u/s 271(1)(c) is also not valid. Hence, we set aside the order of the CIT(A) and quash the order passed by the Assessing Officer u/s 271(1)(c) of the Act. Accordingly, the appeal of the assessee is allowed.
ITA No. 1156/Hyd/2014 by revenue
In this appeal, the revenue has raised the following effective grounds:
“2. The ld. CIT(A) erred in deleting the penalty relating to addition made towards disallowance of sundry creditors amounting to Rs. 2,43,36,140/- and disallowance of unexplained expenditure of Rs. 3,25,000/-. 3. The ld. CIT(A) ought to have confirmed the levy of penalty as the addition was accepted by the assessee.” 17. Considered the rival submissions and perused the material facts on record. As we have quashed the penalty order on the ground that the notice issued by the AO u/s 274 r.w.s. 271 of the IT Act, 1961, dated 30/12/2011 is not valid, the grounds raised by the revenue becomes infructuous and therefore, the appeal of the revenue is dismissed as infructuous.
8 ITA No. 76 /Hyd/2016 and others M/s Deepika Infratech Pvt. Ltd. 18. In the result, appeal in ITA No. 76/Hyd/2016 is allowed for statistical purposes, appeal in ITA No. 1155/Hyd/2014 is allowed and appeal in ITA No. 1156/Hyd/2014 is dismissed.
Pronounced in the open court on 12th January, 2018.
Sd/- Sd/- (P. MADHAVI DEVI) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, Dated:12th January, 2018. kv Copy to:-
1) M/s Deepika Infratech Pvt. Ltd., C/o S/Shri K. Vasantkumar, AV Raghuram, P. Vinod & M. Neelima Devi, Advocates, 610 Babukhan Estate, Basheerbagh, Hyderabad – 500 001. 2) ACIT/DCIT, Circle – 1(2), Hyd. 3) CIT(A) – 5, Hyd. 4) Pr. CIT – 5, Hyd. 5) The Departmental Representative, I.T.A.T., Hyderabad. 6) Guard File