SRINIVAS EMMADI,HYDERABAD vs. INCOME TAX OFFICER, WARD-1, SANGAREDDY

The assessee has raised the following grounds of appeal :

2. The Hon'ble CIT(A) ought to have observed that the assessing officer without allowing proper opportunity proceeded to complete the assessment u/s.144 of the IT Act and therefore, the same cannot be held as valid.

The Hon'ble CIT(A) ought to have observed that the assessing officer erred in making disallowance of 25% expenditure of Rs.5,94,202/- towards transport charges and hamali charges are without property verification and therefore the same is liable to be deleted.

Any other ground will be raised at the time of hearing.”

At the outset, it was observed that, there is a delay of 144 days in filing of the appeal before the Tribunal. In support of the same, the assessee has filed condonation petition along with a copy of Affidavit explaining the reasons for such delay.

3.1 The Learned Authorised Representative (“Ld. AR”) of the assessee submitted that, the order of Ld. CIT(A) was communicated through e-mail ID i.e. mbpathiacc@gmail.com and akjukanti@yahoo.com. These e-mails were created / operated by the counsel of the assessee who had filed the appeal. The assessee had appointed one new counsel for the tax matters and could not consult with the earlier counsel regarding development of appeal before Ld. CIT(A). Therefore, the assessee was unaware of the communication and only came to know about the disposal of order of Ld. CIT(A) much later, when after advise of new counsel, the assessee went to the old counsel and enquired about the appellate proceedings. The Ld. AR also submitted that, there were marriages in the family of assessee which also caused some delay in filing of the appeal. As soon as the assessee came to know about the disposal of appeal by Ld. CIT(A), the assessee took steps to file the present appeal. In the meantime, the appeal got delayed by 144 days. The Ld. AR submitted that, the delay in filing of the appeal is not deliberate and was due to the reasons beyond the control of the assessee. Finally, the Ld. AR prayed before the bench to condone the delay in filing of the appeal.

The brief facts of the case are that, the assessee is an individual running the business in the name and style of M/s. Sri Dwarka Gas Agencies. He filed his return of income for the assessment year 2014– 15 on 29.11.2014 declaring total income of Rs.4,67,740/-. The case of the assessee was selected for scrutiny and statutory notice under section 143(2) of the Income Tax Act, 1961 (“the Act”) was issued on 03.09.2015. Since the assessee did not fully comply with the said notices, the learned Assessing Officer (“Ld. AO”) completed the assessment under section 144 of the Act on 30.06.2016, determining the total income at Rs.94,43,344/- by making total additions of Rs.89,75,604/- under various heads.

Aggrieved by the order of Ld. AO, the assessee filed an appeal before the Ld. CIT(A), who partly allowed the appeal of the assessee.

We have heard the rival submissions and also gone through the record in the light of the submissions made on either side. As far as the first issue is concerned, on perusal of profit and loss account of the assessee for the year ended 31.03.2014 placed at page no.3 of the paper book, we found that the actual turnover of the assessee is Rs.911,79,686/-. However, while calculating the amount of unexplained cash credits, the Ld. AO has taken the turnover at Rs.930,14,938/-. Hence, we found that the Ld. AO has committed a factual error in adopting the turnover of the assessee resulting in a incorrect quantification of the alleged difference and consequent addition. Further, the addition of Rs.77,78,368/- sustained by the Ld. CIT(A) consist of two parts, one is, on account on unexplained fixed deposit of Rs.30 lakhs which was not reflecting in the balance sheet of the assessee as on 31.03.2024 and the balance addition of Rs.47,78,368/- is on account of unexplained credit entry in the bank accounts of the assessee. As far as the amount of fixed deposit of Rs.30 lakhs is concerned, we have gone through the bank statement of Andhra Bank placed at page no.183 of the paper book and found that two fixed deposits of Rs.15 lakhs each has been made from the bank on 28.09.2013 and 19.10.2013 respectively. We have also gone through the balance sheet of the assessee as on 31.03.2024 placed at page no.4 of the paper book and found that these fixed deposits are not reflected in the balance sheet of the assessee. While making addition of Rs.80,81,404/- the Ld. AO had considered the credit in the bank accounts of SBI, ICICI Bank and Andhra Bank, the closing balances of which as on 31.03.2014 are Rs.14,231.72; Rs.9,27,834.53 and Rs.1,14,052.50 respectively. However, on perusal of balance sheet of the assessee as on 31.03.2024 placed at page no.4 of the paper book, we found that the closing balance of only SBI is reflected in the balance sheet of the assessee, however, the closing balances of ICICI Bank and Andhra Bank are not reflected in the balance sheet of the assessee. The same discrepancy has not been noticed by the revenue authorities nor taken effect by them while passing the assessment order. Therefore, in a case where the bank accounts which have been considered for making addition, not reflected in the balance sheet of the assessee, the same is required to be reverified from the books of account of the assessee. Therefore, we remand the first issue to the file of Ld. AO for re-adjudication on merits.

As far as the second issue with regard to disallowance of Rs.5,94,202/- is concerned, the same could not be adjudicated on merits by the Ld. AO due to non-response of the assessee. However, in the interest of justice, we are of the considered view that, one more opportunity may be granted to the assessee to present their case on merits. Accordingly, we set aside the second issue also to the file of Ld. AO for de novo adjudication.

Finally, both the issues of the assessee are set aside to the file of Ld . AO for de novo adjudication on merits. The Ld. AO is directed to provide adequate opportunity of being heard to the assessee, to file necessary documents / explanation in support of their claim. The assessee is also directed to co-operate with the Ld. AO by filing their submissions in time without taking unnecessary adjournments.

In the result, the appeal of the assessee is allowed for statistical purposes.