GEETHIKA ENTERPRISES,HYDERABAD vs. INCOME TAX OFFICER, WARD 11(4), HYDERABAD, HYDERABAD

3. At the time of hearing, the learned AR of the assessee has submitted that the learned CIT (A) has dismissed the appeals of the assessee in limine, after declining condonation of delay of 638 days in filing the appeal against the assessment order and 457 days in filing appeal against the penalty order u/s 271(1)(c) of the I.T. Act, 1961. He has referred to the affidavit of the Ex Managing Partner of the assessee firm dated 10th June and 20th June, 2019 respectively and submitted that the assessee partnership came into existence on 6/11/2013 with 2 partners. The assessee carried on business of purchase and sale of vegetable oil. The assessee has carried out the transactions of vegetable oil in bulk manner and tanker-wise purchase as well as sale without taking the delivery by the assessee, the sales were Page 5 of 19 made tanker-wise at the same time by endorsement of consignment to the buyer M/s. Southern Oil Biotechnologies Ltd. He has pointed out that the Assessing Officer has made addition of Rs.38,10,000/- based on the mistake of date on the purchase voucher by treating this purchase of oil as unexplained investment being undisclosed income. However, the assessee has duly recorded all the transactions of purchase and sale in the books of account. He has referred to the confirmation of the supplier i.e. M/s. Haritha Shakthi India (P) Ltd as well as the revised invoices to show that in the original invoices there was a mistake in writing the date in the delivery challan as 28/11/2013 instead of 27/11/2013 which has led to the addition made by the Assessing Officer for the entire purchase transactions, though the assessee has shown the said transaction in the books on 27/11/2013.

The learned AR has further submitted that the assessee firm discontinued the business in the month of July, 2015 due to lack of business opportunities and difference among the partners and consequently the office of the firm located at Hyderabad was closed and both the partners left Hyderabad to their native places. Thus, the learned AR has contended that, due to closure of the partnership firm office and non-availability of partners at Hyderabad, the assessment order passed by the Assessing Officer was not received and served upon the assessee causing the delay in filing the appeals before the learned CIT (A). It is only when a notice u/s 221(1) of the I.T. Act, 1961 was served on one of the partners of the assessee firm Shri V. Purnachandra Page 6 of 19 Rao on 14/09/2018 by post, the assessee came to know about the assessment order passed by the Assessing Officer. Thereafter, the assessee immediately filed the appeals before the learned CIT (A) on 05/11/2018. The learned AR has further submitted that in the meantime, the Assessing Officer has passed order u/s 271(1)(c) of the Act ex-parte on 27/06/2017 and the assessee also filed the appeal against the said order on 5/11/2018 itself. Thus, he has pleaded that the delay in filing the appeals before the learned CIT (A) was due to sufficient and reasonable cause of having no knowledge of the assessment order as well as the penalty order passed by the Assessing Officer prior to the service of the notice issued u/s 221(1) of the I.T. Act, 1961. He has thus, pleaded that the delay in filing the appeals before the learned CIT (A) may be condoned and the appeals of the assessee may be taken up for adjudication on merits. In support of his contentions, he has relied upon the following decisions: i) Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. MST Katiji & Others (167 ITR 471)(S.C) ii) Hon'ble Gujarat High Court in the case of Shailesh Vitthalbhai Patel vs. CCIT (451 ITR 501)(Guj). iii) Hon'ble Delhi High Court in the case of Lemon Tree Hotels Ltd vs. NFAC (Delhi) (2021) 437 ITR 111 (Del.) iv) Mumbai Bench of the Tribunal in the case of Dhanesh Jyotindra Kothari vs. Income Tax Officer (IT) in & 2951/Mumbai/2023.

On the other hand, the learned DR has submitted that there is an inordinate delay in filing the appeals before the learned Page 7 of 19 CIT (A) and the assessee was required to explain the delay of each and every day. The learned CIT (A) has duly considered the cause of delay explained by the assessee but the same was not found to be a reasonable cause. Thus, a negligence on the part of the assessee cannot be considered as a reasonable cause for delay of 638 days in filing the appeal against the assessment order and 457 days against the penalty order. He has relied upon the impugned order of the learned CIT (A).

We have considered the rival submissions and carefully perused the reasons explained by the assessee for delay in filing the appeals before the learned CIT (A) in the affidavit furnished before the learned CIT (A). We have also gone through the impugned order of the learned CIT (A) whereby the appeals of the assessee were dismissed being barred by limitation. The Assessing Officer has made the addition by considering the purchase vouchers/delivery challans of purchase and sales of the vegetable oil wherein the assessee has shown the sale of oil to the tune of Rs.38,09,524/- on 27/11/2013 whereas the purchase invoice bears the date as 28/11/2013. Accordingly, the Assessing Officer held that the sale of Rs.38,09,524/- was made by the assessee by making the purchases on or before 27/11/2016 out of books and amounts to unexplained investment. Challenging the said assessment order, the assessee filed the belated appeals before the learned CIT (A) after the delay of 638 days. The assessee explained the delay by narrating the background and subsequent development regarding the business activity of the assessee. The learned CIT (A) has reproduced the contends of the Page 8 of 19 affidavit in the impugned order and for the sake of completeness, the same are again reproduced as under:

A similar affidavit was also filed in respect of the appeal against the penalty order u/s 271(1)(c) of the I.T. Act, 1961. Thus, the assessee in the affidavit explained the delay of 638 days, due to non-receipt of the assessment order passed by the Assessing Officer as business of the assessee firm was discontinued in the month of July, 2015 and consequently, the office of the firm at Hyderabad was closed and both the partners left Hyderabad to their native places. The assessee has clearly explained that one of the partners of the assessee firm namely, Shri V. Purnachandra Rao at Goothy, Anantapur District received the notice u/s 221(1) of the I.T. Act, 1961 dated 12/09/2018 on 14/09/2018 by post and thereafter, another letter dated 27/09/2018 for payment of demand was received by the partner on 12/10/2018 by post. Thus, the assessee has stated in the affidavit that prior to these notices of the Assessing Officer u/s 221(1) as well as the subsequent demand, the partners of the defunct assessee firm were not aware of the additions made by the Assessing Officer while framing the assessment. The assessee has also pleaded that the Assessing Officer has made an arbitrary addition, only on account of a mistake in the delivery challan by the supplier who has rectified the said mistake by issuing the revised invoices and also furnished the confirmation of the sale transaction with correct date as 27/11/2013. A copy of the confirmation is placed at page No.12 of the Paper Book and revised invoice are hereby reproduced as under:

Once this fact has been brought on record by the assessee that the addition was made by the Assessing Officer only due to a mistake in the invoice/delivery challan in writing the date as 28/11/2013 instead of 27/11/2013 then dismissing the appeal on technical ground would result a gross injustice. The Assessing Officer has not found any discrepancy in the purchase and sale of the quantity, as the said transactions were done tanker-wise, by endorsement of the consignment to the buyer. From the facts and circumstances of the case, as well as by considering the confirmation as well as revised invoice furnished by the suppliers, prima facie, it appears that, addition made by the Assessing Officer without considering the possibility of mistake in the date of delivery challan is not justified. Even the Assessing Officer did not confront the same to the assessee before making the addition. The learned CIT (A) after reproducing the explanations of the assessee for the cause of delay from page No.3 to 5 of the impugned order has declined to condone the delay as under:

We find that the reason for not accepting the reasons explained by the assessee by the learned CIT (A) is that, the Chartered Accountant of the assessee has participated in the assessement proceedings and, therefore, the assessee was very much aware about the ongoing assessement proceedings. However, the participation of the assessement proceedings by the CA of the assessee does not mean that, the assessee was aware about the outcome of the assessment order passed by the Assessing Officer and particularly, the addition, in question, made by the Assessing Officer requires further action on the part of the assessee to challenge the same. Therefore, once the assessee has explained the reasons for delay in filing the appeals that the assessee was not aware about the impugned order due to the development and circumstances under which the assessee partnership firm closed its business and the partners parted their ways and left the place of business at Hyderabad to shift to their native places, the reasons explained by the assessee cannot be disbelieved as all the factual events, as explained by the assessee are not disputed and, therefore, we find no reason to disbelieve the cause of delay explained by the assessee before the learned CIT (A). Thus, the assessee has explained the cause of delay having no knowledge of the assessment order passed by the Assessing Officer which is further supported by the fact that, in the penalty proceedings, there was no representation on behalf of the assessee due to the reason that, the notices issued by the Assessing Officer could not be served to the assessee. Therefore, in the facts and circumstances of the case, we are satisfied that the assessee was having a sufficient cause for the delay in filing Page 17 of 19 the appeal before the learned CIT (A). Accordingly, in the interest of justice, the delay of filing the appeals before the learned CIT (A) against the assessment order as well as the penalty order is hereby condoned. Since the learned CIT (A) has dismissed the appeal of the assessee by treating the same as not maintainable being barred by limitation and therefore, the grounds raised by the assessee were not adjudicated on merits. Accordingly, the impugned order of the learned CIT (A) is set aside and the matter is remanded to the record of the Assessing Officer for proper verification and examination of the relevant record and particularly, the confirmation filed by the assessee along with the revised invoices and then pass fresh order as per law after giving an opportunity of hearing to the assessee. Since the matter in quantum appeal is set aside to the record of the Assessing Officer, therefore, the penalty levied u/s 271(1)(c) of the I.T. Act, 1961 is consequential and accordingly, set aside to the record of the Assessing Officer for fresh adjudication, if need arises.