KARIMNAGAR MILK PRODUCER COMPANY LIMITED,HYDERABAD vs. DCIT, CIRCLE-1, KARIMNAGAR

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ITA 1388/HYD/2024Status: DisposedITAT Hyderabad22 May 2025AY 2017-1817 pages
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What did the Tribunal hold?

The Tribunal held that the CIT(A) erred in dismissing the appeal solely on the ground of delay without exercising his discretion judiciously under Section 249(3) of the Act. The Tribunal found the assessee's explanation for the 34-day delay (36 days as per grounds, 34 days as per CIT(A)'s observation) to be justifiable, citing the Chartered Accountant's father's medical treatment and the subsequent oversight of the penalty order. The Tribunal noted that the CIT(A) rejected the explanation for lack of documentary evidence without calling for it. Citing the Supreme Court's decision in Vidya Shankar Jaiswal vs. The Income Tax Officer, the Tribunal emphasized a justice-oriented and liberal approach to condoning delays. Therefore, the Tribunal set aside the CIT(A)'s order, directed him to condone the delay, and dispose of the appeal on its merits, affording the assessee an opportunity of being heard. The Tribunal refrained from adjudicating the merits of the penalty under Section 270A, as the matter was restored to the CIT(A). Grounds 3 and 4 were allowed, Ground 5 was dismissed as not pressed, and Grounds 1, 2, and 6 were dismissed as general.

What were the facts?

The assessee, Karimnagar Milk Producer Company Limited, filed its return of income for Assessment Year 2017-18 declaring Rs.18,00,490. The Assessing Officer (AO) selected the case for scrutiny and observed a lack of quantitative particulars regarding raw materials and finished goods in the trading account and Form 3CD. Despite directions, the assessee failed to provide these details, citing partial computerization and numerous products. The AO rejected the assessee's books of account under Section 145(3) and estimated the income at 1.5% of turnover, resulting in a net addition of Rs.3,56,18,636. Penalty proceedings under Section 270A were initiated. The Commissioner of Income-Tax (Appeals) [CIT(A)] partly allowed the quantum appeal, reducing the addition to Rs.32,12,480. Subsequently, the AO imposed a penalty of Rs.7,74,504 under Section 270A. The assessee appealed the penalty to the CIT(A), but the appeal was dismissed due to a 36-day delay, which the CIT(A) refused to condone.

What were the issues?

1. Whether the CIT(A) erred in law and on facts by not condoning the delay of 36 days in filing the appeal against the penalty order under Section 270A, thereby refusing to decide the appeal on merits? (Mixed question of law and fact, concerning Section 249(3) of the Income-tax Act, 1961). Assessee's contentions: - The delay of 36 days was due to the Chartered Accountant's preoccupation with his father's medical treatment, leading to a setback in office work and the penalty order escaping attention. - The delay was beyond the assessee's control and not intentional. - The CIT(A) ought to have condoned the delay and admitted the appeal, considering the reasons provided. - The CIT(A) ought to have considered that no penalty under Section 270A is leviable as the addition was made on an estimate basis. Revenue's contentions: - Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 270A,Section 143(2),Section 145(3),Section 249(3)

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Income Tax Appellate Tribunal, Hyderabad A‘ Bench, Hyderabad

Pronounced: 22/05/2025

आदेशकी �ितिलिप अ�ेिषत/ Copy of the order forwarded to:- 1. िनधा�रती/The Assessee : Karimnagar Milk Producer Company Limited, 9-9-1, Padmanagar, Karimnagar, Telangana-505002. 2. राज�/ The Revenue : DCIT, Circle-1, Karimnagar, Telangana. 3. The Principal Commissioner of Income Tax, Hyderabad. िवभागीय�ितिनिध, आयकर अपीलीय अिधकरण, हैदराबाद / DR, ITAT, Hyderabad 4. 5. The Commissioner of Income Tax 6. गाड�फ़ाईल / Guard file

17 Karimnagar Milk Producer Company Ltd vs. DCIT ITA 1388/Hyd/2024

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