VENKATA SATYANARAYANA DASARI,VISAKHAPATNAM vs. INCOME TAX OFFICER, WARD-2(5), VISAKHAPATNAM
No AI summary yet for this case.
Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI DUVVURU RL REDDY, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
PER S. BALAKRISHNAN, Accountant Member :
This appeal is filed by the assessee against the order of the Ld. Principal Commissioner of Income Tax, Visakhapatnam-1 [Ld. Pr. CIT] in DIN & Order No. ITBA/REV/F/REV5/2021- 22/1042311006(1), 31/3/2022 arising out of the order passed
2 U/s. 143(3) of the Income Tax Act, 1961 [the Act] for the AY
2017-18.
Brief facts of the case are that the assessee is in individual
engaged in the business of wholesale trade in poultry birds, filed
his return of income for the AY 2017-18 on 17/10/2017
admitting a total income of Rs. 7,77,380/-. Subsequently, the
case was selected for complete scrutiny for the reason that
“abnormal increase in cash deposits during demonetization
period as compared to pre-demonetization period”. Thereafter,
statutory notice U/s. 143(2) dated 14/8/2018 and notice U/s.
142(1) dated 9/9/2019 were issued to the assessee. In response,
the assessee vide letter dated 29/11/2019 submitted that the
assessee mainly makes supplies to retailers and chicken centers
and hence transactions are in cash. The assessee also further
submitted that the entire cash deposits are nothing but receipts
out of the cash sales. Considering the above explanation of the
assessee, the Ld. AO accepted the same. Further, the Ld. AO
also observed that the assessee has introduced additional capital
of Rs. 32,58,940/- and sought explanation from the assessee.
The assessee explained that these amounts were receipts out of
earlier advances given to various suppliers and receipt of hand
3 loans given earlier to his friends and relatives. Rejecting the
explanation of the assessee, the Ld. AO sought to tax the entire
amount of Rs. 32,58,940/-. However, the assessee offered an
estimate @ 4% of profit on the said amount. The Ld. AO did not
accept the offer and deem it fit to tax @ 8% on the said amount of
Rs. 32,58,940/-. The Ld. Pr. CIT by invoking the powers vested
on him U/s. 263 of the Act considered the order of the Ld. AO as
erroneous and prejudicial to the interests of the Revenue.
Therefore, the Ld. Pr. CIT issued a show cause notice dated
16/3/2022 and again on 24/3/2022 through ITBA calling for
objections from the assessee. Since the assessee did not respond
to the show cause notices, the Ld. Pr. CIT directed the Ld. AO to
make additions for the cash deposits during the demonetization
period and for introduction of additional capital of Rs.
32,58,940/- after providing a reasonable opportunity of being
heard to the assessee before passing the consequential order.
Aggrieved by the order of the Ld. Pr. CIT, the assessee is in
appeal before us by raising the following Grounds of Appeal:
“1. On the facts and in the circumstances of the case and in law the assumption of jurisdiction by the Ld AO is bad in law as notice U/s. 143(2) was issued by Income Tax Officer, Ward-5(1), Visakhapatnam and not by the Income Tax Officer, Ward-4(3), Visakhapatnam who passed by the order U/s. 143(3). Therefore, the order passed by him U/s. 143(3) is null and void being
4 without jurisdiction consequently the order U/s. 263 passed by the Pr. CIT directing the Assessing Officer to revise an invalid order is also ab initio void.
The Ld. Pr. CIT is not justified in giving direction to the Assessing Officer to re-do the assessment by verifying the cash deposits in bank amounting to Rs. 66,79,000/- when the same have been recorded in the books of account as sales and offered to tax and the Ld. AO has taken a possible view.
The Ld. Pr. CIT is not justified in giving direction to the AO to re-do the assessment by verifying the fresh capital of Rs. 32,58,940/- introduced by the Assessee during the previous year relevant to the assessment year when the Assessing Officer after considering the reply furnished by the assessee estimated the income at 8% of the fresh capital introduced and enhanced the income returned.
The appellant craves leave to add to, amend, alter, delete all or any of the above grounds of appeal.”
Ground No.1 is with respect to assumption of jurisdiction
by the Ld. AO without issuing proper notice U/s. 143(2) of the
Act. At the outset, the Ld. AR argued that the Income Tax
Officer, Ward-5(1), Visakhapatnam has issued a notice U/s.
143(2) whereas the Income Tax Officer, Ward-4(3),
Visakhapatnam has passed an order U/s. 143(3) and therefore
the Ld.AR pleaded that the assessment order is passed without
proper jurisdiction and consequently the order passed U/s. 263
by the Ld. Pr. CIT is also void-ab-initio.
5 Per contra, the Ld. DR objected to the arguments of the Ld.
AR and submitted that the assessee has participated in the
proceedings before the Ld. ITO, Ward-4(3), Visakhapatnam and
has not raised any objection at the earliest. The Ld. DR also
relied on the decision of the Hon’ble Supreme Court of India in
the case of Deputy Commissioner of Income Tax (Exemption) vs.
Kalinga Institute of Industrial Technology reported in [2023] 151
taxmann.com 434 (SC).
We have heard the rival contentions and perused the
material available on record as well as the orders of the Ld.
Revenue Authorities. Admittedly, the assessee has participated
in the proceedings before the ITO, Ward-4(3), Visakhapatnam and
has not raised any objection before ITO, Ward-4(3),
Visakhapatnam as mandated U/s. 124(3)(a) of the Act. In the
judgment of the Hon’ble Supreme Court in the case of DCIT vs.
Kalinga Institute of Industrial Technology (supra) relied on by the
Ld. DR, the Hon’ble Apex Court has held as follows:
“1. The impugned order set asides the assessment for AY 2014-15 the ground that the jurisdictional officer had not adjudicated upon the returns. The jurisdiction had been changed after the returns were filed. However, the records also reveals that the assessee had participated pursuant to the notice issued U/s. 142(1) and had not questioned the jurisdiction of the Assessing Officer.
6 Section 124(3)(a) of the Income Tax Act precludes the assessee from questioning the jurisdiction of the Assessing Officer, if he does not do so within 30 days of receipt of notice U/s. 142(1).”
Respectfully following the decision of the Hon’ble Supreme
Court in the case of DCIT (E) vs. Kalinga Institute of Industrial
Technology (supra), the Ground No.1 raised by the assessee is
hereby dismissed.
With respect to Grounds No. 2 & 3 raised by the assessee,
we find from the order of the Ld. Pr. CIT that the assessee has
not responded to the show cause notices before the Ld. Pr. CIT.
Before us, the Ld. AR pleaded that the matter may be remitted
back to the file of the Ld. Pr. CIT for fresh consideration and
requested to provide one more opportunity to the assessee
following the principles of natural justice.
Per contra, the Ld. DR relied on the order of the Ld. Pr. CIT.
We have heard both the sides and perused the material
available on record and the orders of the Ld. Revenue
Authorities. We find from the order of the Ld. Pr. CIT that the
assessee has been provided various opportunities with respect to
the show cause notice dated 16/3/2022. However, the assessee
7 has failed to appear before the Ld. Pr. CIT. The Ld. AR while
arguing the matter has submitted that these notices were sent to
the email Id “sivarishik200@gmail.com”. Subsequent notice was
also sent to the same email Id. The submission of the Ld. AR is
that the assessee was aware of the proceedings U/s. 263 of the
Act only when the notice for recovery of demand dated 3/5/2023
was sent to the email Id “purushottamchintala@gmail.com" and
hence could not participate in the proceedings before the Ld. Pr.
CIT. Considering the above facts, we are of the opinion that the
assessee should be provided one more opportunity to represent
his case before the Ld. Pr. CIT and we deem it fit to remit the
matter back to the file of the Ld. Pr. CIT for fresh consideration.
Accordingly, Grounds No. 2 and 3 raised by the assessee are
disposed off and allowed for statistical purposes.
Ground No.4 raised by the assessee is general in nature and
therefore needs no adjudication.
In the result, appeal of the assessee is partly allowed for
statistical purposes.
8 Pronounced in the open Court on 22nd November, 2023.
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 :22.11.2023 OKK - SPS
आदेश क� ��त�ल�प अ�े�षत/Copy of the order forwarded to:- �नधा�रती/ The Assessee – Venkata Satyanarayana Dasari, Gullepalli 1. Village, Sabbavaram Mandal, Visakhapatnam, Andhra Pradesh – 531035. राज�व/The Revenue – Income 2. Tax Officer, Ward-2(5), Visakhapatnam. 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
