ANDHRA PRADESH INDUSTRIAL DEVELOPMENT CORPORATION LIMITED,HYDERABAD vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1(1), HYDERABAD

First, we take up ITA 618/Hyd/2023. The grounds raised by the assessee read as under:

Facts of the case, in brief, are that the assessee did not file the return of income due to bifurcation Andhra Pradesh and Telangana for the impugned A.Y. which was beyond the control of the assessee company.

The learned AR drew our attention to the order passed by the learned CIT (A) NFAC whereby the contention of the learned AR is that the assessee had made a request for admitting additional evidences filed by the assessee in the form of copy of audited financial statement, computation of income and copy of Form 26AS. However, the learned CIT (A) NFAC dismissed the appeal of the assessee vide observation made in Para 7.1 which is to the following effect:

It was the contention of the learned AR that the matter may kindly be remitted back to the file of the learned CIT (A) NFAC/Assessing Officer for passing a fresh order.

The learned DR had relied upon the order passed by the lower authorities.

We have heard the rival arguments made by both the sides, perused the orders of the lower authorities and the material available on record. We find as per the order of the Assessing Officer, the assessee being statutory organization have not filed the return of income for the A.Y 2015-16 on account of bifurcation of the State of Telangana and A.P. and the financials have not been separately prepared. It was submitted by the assessee before the Assessing Officer that the assessee had worked out the tax liability for the financial years 2015-16 to 2020-21 after considering the TDS and paid the advance taxes for each of the financial year. The learned Assessing Officer had rejected the contention of the assessee after relying upon the fact that it is the duty cast on the assessee to file the return of income u/s 139 of the Act and as the assessee failed to file the return of income, therefore, the Assessing Officer had no option but to estimate the income u/s 144 of the Act. In appeal, the learned CIT (A) NFAC had confirmed the order passed by the Assessing Officer as no return of income was filed by the assessee company. We have examined and considered the submissions made by the assessee. Undoubtedly, every person (including the assessee) whose income is more than the threshold fixed by the Act, is duty bound to file the return of income u/s 139(1) of the Act. Even in the case of the succession to the business other than death, the successor is also under an obligation to file the return of income as contemplated under section 170 of the I.T. Act r.w. other provisions of the Act. In the present case, the assessee chose not to file the return of income, on the basis of the financials available with it, on the pretext that on account of bifurcation of the State, the financials of the two separate entities of the two States have not been finalized. In our view, the I.T. Act has not contemplated any such eventuality under the Act. The assessee is also a person within the meaning of the I.T. Act and was liable to file of the return of income as required u/s 139 r.w.s. 170 of the I.T. Act. Since the needful has not been done by the assessee, therefore, for the violation the Act, assessee had to face the consequences as contemplated under the I.T. Act.

Although the assessee in the appellate proceedings filed an application for admission of additional evidences under rule 46A of the Act, however, the learned CIT (A) NFAC brushed aside the documents filed by the assessee on the pretext that once the assessee has not filed the return of income, the documents cannot be considered. In our opinion, the documents are in the nature of the audit report, TDS certificate and other documents, which are contemporious documents and were required to be considered for the purpose of arriving at the net income of the assessee dehors the fact that the assessee has not filed the return of income. In the light of the above observations and finding, we deem it proper to remand the issue to the file of the learned CIT (A) NFAC to adjudicate the issue afresh considering the documents filed by the assessee during the appellate proceedings. Needless to mention that the assessee shall be given adequate opportunity of being heard. The learned CIT (A) NFAC shall adjudicate the issue afresh and pass a speaking order. We hold and direct accordingly.

In the result, appeal filed by the assessee in A.Y 2015-16 is allowed for statistical purposes.

Since identical issues have been raised by the assessee in the remaining two appeals i.e. & 620/Hyd/2023 for the A.Ys 2016-17 & 2017-18 respectively, following the reasonings given in para 8 of this order, these two appeals are also remanded back to the file of the learned CIT (A) NFAC for fresh adjudication with similar directions.

In the result, three appeals filed by the assessee are allowed for statistical purposes.