MALLESWARA RAO ALAMURI (LATE), REP BY WIFE AND L/R ALAMURI LAKSHMI,VIJAYAWADA vs. INCOME TAX OFFICER, WARD-1(1), VIJAYAWADA

PER S. BALAKRISHNAN, Accountant Member :

This appeal filed by the assessee is against the order of the Ld. Principal Commissioner of Income Tax, Vijayawada [Pr. CIT]

in DIN & Order No. ITBA/REV/F/REV5/2021-22/1040916107(1),

dated 26/03/2022 for the AY 2017-18.

delay of 337 days in filing the appeal before the Tribunal. With

respect to belated filing of the appeal, the assessee filed a

petition for condonation of delay along with the affidavit and the

relevant contents of affidavit are extracted herein below for

reference:

“1. The petitioner is the wife and legal representative of Late Sri Malleswara Rao Alumuri. 2 ……

3 ……

4 …… 5 …..

set-aside to the file of the Ld. AO, the same can be represented before the Lower Authorities. 10. In this regard, the regular Chartered Accountant and assessee’s L/R requested the Sr. Counsel to prefer an appeal against the order passed U/s. 263 of the Act if required and if it is an appealable order to contest such order both legally and factually by explaining the delay under which appeal could not be filed within the due date. 11. The regular Chartered Accountant of the assessee has also given his consent that he would give an affidavit in this regard to say that he was not aware of the fact that order passed U/s. 263 of the Act is an appealable order before ITAT and missed the opportunity. 12. With this background the appeal against the impugned order passed U/s. 263 of the Act was filed on 17/4/2023 as against the due date of 15/03/2022 thus causing a delay of 337 days. Further, the affidavit of the regular Chartered Accountant is also enclosed which is self explanatory. ……” 13

filing the appeal before the Tribunal beyond the prescribed time

limit, we find that the assessee was prevented by a reasonable

and sufficient cause to file the appeal within the stipulated time.

Therefore, we hereby condone the delay of 337 days in filing the

appeal before the Tribunal and proceed to adjudicate the appeal

on merits.

an individual engaged in the business of perishable vegetable ie.,

Tomatoes on commission basis. The assessee filed his e-return

of income for AY 2017-18 on 17/12/2017 admitting a total

income of Rs. 3,20,860/-. The case was selected for limited

4 scrutiny under CASS to verify “cash deposit during the year”.

Accordingly, notice U/s. 143(2) was issued on 05/09/2018 and

duly served on the assessee. Further, during the e-assessment

proceedings, the Ld. AO issued notice U/s. 142(1) of the Act and

the assessee was asked to produce copy of return of income,

statement of total income, certified copies of all the bank

accounts in relation to credits appearing in bank accounts with

details of sources and evidences there for. Further, the Ld. AO

also issued notice U/s. 133(6) of the Act to the Branch Manager,

State Bank of India, VMC Campus, Vijayawada and called for the

statement of account of the assessee. However, the assessee

expired on 05/08/2018 and therefore his son / Legal

Representative Shi Chinna Rao has responded to the notices

issued by the Ld. AO and explained the sources along with the

supporting documentary evidences with regard to the business

activities of the assessee as well as the cash deposits made

during the FY 2016-17. After verifying the information submitted

by the son / L/R of the assessee as well as the supporting

documentary evidences, the Ld. AO completed the assessment

U/s. 143(3) of the Act accepting the income returned by the

assessee at Rs. 3,20,860/-. Later on, the Ld. Pr. CIT, Vijayawada

by exercising his powers vested U/s. 263 of the Act and on

5 verification of the assessment record, it was held that the

assessment order was passed without making enquiries or

verification which should have been made by the Ld. AO and

thereby treated the assessment order as erroneous insofar as it is

prejudicial to the interests of the Revenue. Accordingly, the Ld.

Pr. CIT issued show-cause notice U/s. 263 of the Act on

22/12/2021 and was served on the same date wherein the

assessee was called for certain information and his objections, if

any, against the proposed revision of the assessment. Since there

is no response, the Ld. Pr. CIT issued another notice on

7/1/2022 and in response the assessee filed his written

submissions. On verification of the submissions and the material

before him, the Ld. Pr. CIT held that there is no evidence brought

on record to prove that the entire cash deposits of Rs.

1,86,15,610/- were out of the business receipts. Further, the Ld.

Pr. CIT observed that the assessee has not furnished the details

of farmers from whom the amount was claimed to have

transferred after holding commission. Thus, the Ld. Pr. CIT

concluded that the assessment order passed U/s. 143(3), dated

17/12/2019 is required to be treated as an order which is

prejudicial to the interests of the revenue and accordingly,

directed the Ld. AO to re-do the assessment in accordance with

law after making necessary enquiries and verification of the

issues discussed in his order. Aggrieved by the order of the Ld.

Pr. CIT, the assessee is in appeal before the Tribunal by raising

the following grounds of appeal:

“1. That under the facts and circumstances of the case, the order passed by the Ld. Pr. CIT U/s. 263 of the Act is bad in law. 2. The order passed by the Ld. Pr. CIT U/s. 263 of the Act is not a valid order in the eyes of law as inasmuch as the order U/s. 143(3) of the Act that was subjected to review, is by itself is an invalid order since it was passed by the Ld. AO in the name of the deceased assessee. 3. The Ld. Pr. CIT is not correct in setting aside the order passed U/s. 143(3) inasmuch as such order is neither erroneous nor prejudicial to the interests of Revenue, in this view of the matter, the order passed U/s. 263 of the Act is liable to be set-aside. 4. For these and other grounds that are to be urged at the time of hearing of the case, the appellant prays that the revision order passed by Ld. Pr. CIT U/s. 263 be set-aside, in the interest of justice.”

passed by the Ld. Pr. CIT U/s. 263 of the Act is not in

accordance with law inasmuch as the order passed by the Ld. AO

is neither erroneous nor prejudicial to the interests of the

Revenue. The Ld. AR further submitted that the Ld. AO while

passing the assessment order has considered the submissions of

the Legal Representative of the assessee who has filed the

evidences in support of the cash deposits and has also explained

7 the sources for the cash deposits made by the assessee. The Ld.

AR further submitted that the Ld. AO has verified the information

furnished by the assessee’s son and the supporting evidences in

respect of the transactions entered into by the assessee and then

only the Ld. AO opined and found that the submissions of the LR

of the assessee are correct. However, the Ld. Pr. CIT by invoking

the provisions of section 263 of the Act considered the order of

the Ld. AO is erroneous and prejudicial to the interests of the

Revenue. Therefore, the Ld. AR pleaded that the order of the Ld.

Pr. CIT is bad in law as the Ld. AO has made enquiries as

evidences by the order of the Ld. AO. He therefore pleaded that

the order of the Ld. Pr. CIT be set-aside. Further, the Ld. AR also

argued that since the assessment order passed by the Ld. AO is

in the name of the deceased person, the assessment order itself

is not valid in the eyes of law and required to be quashed.

outset strongly relied on the order of the Ld. Pr. CIT and

supported the decision taken by the Ld. Pr. CIT. The Ld. DR

further submitted that during the course of scrutiny proceedings,

Sri Chinna Rao, son of the assessee (expired on 5/8/2018) has

explained that the entire cash deposits amounting to Rs.

8 1,86,15,610/- were out of the trading receipts and the Ld. AO

simply accepted the submission / explanation of the assessee

and treated the cash deposits as explained without causing any

enquiries. However, the Ld. Pr. CIT on verification of the return

of income filed by the assessee it is noticed that the gross

receipts were shown at Rs. 57,48,000/- only and also there is no

evidence on record to prove that the entire cash deposits of Rs.

1,86,15,610/- were made out of the business receipts. The Ld.

DR also submitted that during the revision proceedings, the

contention of the assessee is that the cash was received from

various parties towards sale proceeds and deposited in the bank

account and the assessee gets only commission. However, before

the Ld. Pr. CIT the assessee did not furnish any details of

persons to whom he sold Tomotos and received cash as well as

the details of the farmers to whom the amount was claimed to

have been transferred after holding the commission. Considering

all these facts, the Ld. Pr. CIT came to a conclusion that the Ld.

AO neither obtained & examined the primary evidences to prove

the genuineness of the sources for cash deposits nor the assessee

furnished the same in support of his claim. Even before the Ld.

Pr. CIT the assessee has not produced any documentary evidence

in support of his claim. The Ld. DR therefore pleaded that the

9 order passed by the Ld. Pr. CIT is in accordance with law and

prayed to uphold the same.

available on record as well as the orders of the Ld. Revenue

Authorities. The only issue involved in this appeal is whether the

order passed by the Ld. Pr. CIT U/s. 263 of the Act is bad in law

or not? It is noticed from the material before us that the during

the previous year relevant to the assessment year 2017-18, the

assessee made cash deposits amounting to Rs.1,86,15,610/- in

his SBI bank account. On being asked, since the assessee

expired on 5/8/2018, the assessee’s son Mr. Chinna Rao

explained that the entire cash deposits were out of trading

receipts. On careful perusal of the assessment order, we find that

the Ld. AO has simply accepted the explanation of the assessee

without bringing any evidence on record to prove that the entire

cash deposits were out of the business receipts as explained by

the assessee’s son Mr. Chinna Rao. However, it is apparent from

the return of income filed by the assessee, the assessee has

disclosed turnover of Rs. 57,48,000/- and admitted total income

@ 8% of the turnover. It is also noticed from the order of the Ld.

Pr. CIT that though the assessee claimed that the assessee had

10 received cash from various parties towards sale proceeds of

Tomotos and deposited the cash in the bank account, the

assessee did not produce any details of purchasers of Tomotos

and transactions made with them. The onus is on the assessee to

prove the genuineness of source for cash deposits along with the

documentary evidence. It is also apparent from the order of the

Ld. AO that the Ld. AO had not thoroughly examined the above

details nor obtained the relevant details / information / evidence

from the assessee before accepting the explanation of Mr. Chinna

Rao as well as the claim made by the assessee. We also observed

that even before the revisionary proceedings, the assessee did not

furnish any documentary evidence in support of his claim. Under

these circumstances, we find merit in the observation of the Ld.

Pr. CIT that the Ld. AO has passed the assessment order without

making inquiries or verification which should have been done

when the case is selected for scrutiny on the issue. Hence, in our

considered opinion the Ld. Pr. CIT has rightly invoked the

provisions of section 263 of the Act and thereby setting aside the

assessment order passed by the Ld. AO with a direction to re-do

the assessment in accordance with law after making all enquiries

and verification of the issues mentioned in his order passed U/s.

263 of the Act after providing a reasonable opportunity of being

11 heard to the assessee. Accordingly, we hereby sustain the order passed by the Ld. Pr. CIT. With respect to the Ld. AR’s contention that the order of the Ld. AO itself is not valid in the eyes of law because it is passed in the name of the deceased person, we find

that while invoking the revisionary powers, the Ld. Pr. CIT has rightly issued the notices to the Legal Representative of the assessee and also passed the order accordingly. Therefore, in our considered opinion, by simply mentioning the deceased assessee’s name in the assessment order which is merely a clerical error cannot invalidate the total assessment proceedings

and on this issue we rely on the decision of the Hon’ble Supreme Court on this issue in the case of Sky Light Hospitality LLP vs. ACIT reported in [2018] 254 Taxman 390 (SC). Thus, we hereby dismiss all the grounds raised by the assessee.

Pronounced in the open Court on 28th February, 2024.

Sd/- Sd/- (दु�वू� आर.एल रे�डी) (एस बालाकृ�णन) (DUVVURU RL REDDY) (S.BALAKRISHNAN) �या�यकसद�य/JUDICIAL MEMBER लेखा सद�य/ACCOUNTANT MEMBER

Dated : 28.02.2024 OKK - SPS

आदेश क� ��त�ल�प अ�े�षत/Copy of the order forwarded to:- �नधा�रती/ The Assessee – (Late) Malleswara Rao Alumuri, Rep. by 1. wife and L/R Alamuri Lakshmi, D.No. 10-14/2-32, Akulavari Street, Mallikharjunapet, One Town, Vijayawada, Andhra Pradesh – 520001. राज�व/The Revenue – Income Tax Officer, Ward-1(1), Revenue 2. Colony, Siddhartha Public School Road, Moglarajapuram, Vijayawada, Andhra Pradesh-533401. 3. The Principal Commissioner of Income Tax, आयकर आयु�त (अपील)/ The Commissioner of Income Tax 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, �वशाखापटणम/ DR, ITAT, 5. Visakhapatnam गाड� फ़ाईल / Guard file 6. आदेशानुसार / BY ORDER

Sr. Private Secretary ITAT, Visakhapatnam