PALLA MADHUSUDANA RAO,VISAKHAPATNAM vs. THE INCOME TAX OFFICER, WARD-1(2), VISAKHAPATNAM

This appeal is filed by the assessee against the order of the Commissioner of Income Tax [in short, [CIT(A)]-6, Hyderabad in Appeal No.10357/2018-19/A3 CIT(A)-6 dated 03.12.2018 for the Assessment Year (A.Y.) 2011-12.

Brief facts of the case are that the assessee is an individual, carrying on business in the sale of Indian Manufactured Foreign Liquor, filed his return of income for the A.Y.2011-12 on 25.09.2011, declaring a total income of Rs.3,28,950/-. The case was selected for scrutiny, accordingly, notices u/s 143(2) / 142(1) of the Income Tax Act, 1961 (in short ‘Act’) were issued and served on the assessee, calling for information. However, neither the assessee appeared nor filed information called for. Hence, the Assessing Officer (AO) completed the assessment as per the material available on record u/s 144 of the Act. During the year relevant to the A.Y.2011-12, the assessee had lifted stock of liquor worth Rs.79,04,022/- as per the information provided by APBC Ltd., IML Depot-1, Visakhapatnam, but the assessee failed to furnish any sources with proof for the purchases made, therefore, the AO proposed to add the amount of Rs.79,04,022/- as income of the assessee as unexplained investment and objections were called for. Since there was no response from the assessee, the AO added the amount of Rs.79,04,022/- as unexplained investment. It was further observed by the AO that the assessee introduced capital of Rs.13,12,299/- but has not furnished any sources with proof for the capital introduced, Hence, the AO made addition of Rs.13,12,299/- as unexplained investment. The assessee has also shown an amount of Rs.2,53,896/- as deposits under “Loans and Advances (Assets)’. However, the assessee has not furnished any sources with proof for the deposits made of Rs.2,53,896/-. Accordingly, the AO made the addition of Rs.2,53,896/- as unexplained investment. The AO assessed the total income at Rs.97,99,167/- after making the above additions to the income returned and passed assessment order u/s 144 of the Act on 20.03.2014.

Aggrieved by the order of the AO, the assessee preferred an appeal before the CIT(A) on 30.06.2016. The impugned order appealed against dated 20.03.2014 was served on the assessee on 30.03.2014 and the assessee ought to have filed appeal before the Ld.CIT(A) within 30 days of date of service of the demand notice along with assessment order / order appealed against on the assessee concerned. But the assessee filed appeal with the delay of 791 days. The Ld.CIT(A) stated that as per sub-section (3) of section 249 of the Act, CIT(A) has been empowered to admit an appeal which has been filed after the expiry of the stipulated period of 30 days, but subject to recording his satisfaction that the assessee had ‘sufficient cause’ for not filing the appeal within the said period. As such the CIT(A) is vested with the power of condonation of delay in filing the appeal. The Ld.CIT(A) observed that in the instant case, though the assessee has furnished certain grounds for delay in filing the appeal, he failed to file a formal petition for condonation of delay. Similarly, the assessee has not filed any affidavit along with supporting documentary evidence demonstrating ‘sufficient cause’ for 791 days delay in filing the appeal. The Ld.CIT(A) further observed that the assessee, even after lapse of 29 months from the date of filing the appeal till date i.e. from 30.06.2016 to 03.12.2018, the assessee has not filed the affidavit seeking condonation of delay. The assessee submitted before the Ld.CIT(A) in the grounds as contained in Form No.35 that the assessee is totally ignorant of the income tax matters, he entrusted all the matters to a tax practitioner, with the belief that he would take care of the income tax matters, but he failed to do so. The assessee submitted that the delay was neither intentional nor deliberate and it was only due to negligence and improper guidance of the tax practitioner, on whom the assessee totally relied upon for his tax matters. The Ld.CIT(A) observed that the adjudicating authority while condoning the delay has to keep in mind two important factors i.e.

Whether it is a minor delay of a few days or inordinate delay running into several months.

On being aggrieved, the assessee preferred an appeal before the Tribunal and raised the following grounds :

We have heard both the parties and perused the material placed on record. It is apparent from the records that the assessee filed the appeal before the Ld.CIT(A) with the delay of 791 days. The Ld.AR submitted that the reason for delay was neither intentional nor deliberate and it was only due to negligence and improper guidance of the tax practitioner, on whom the assessee totally relied upon for his tax matters. It is observed that though the assessee has not filed any affidavit separately for condonation of delay before the first appellate authority, the assessee pleaded before the Ld.CIT(A) by citing reasons in column 14 and 15 of Form 35 for condonation of delay. Therefore, keeping in view the principles of natural justice, we set aside the order passed by the Ld.CIT(A) and remit the matter back to the file of the Ld.CIT(A) with a direction to examine the reasons mentioned in column 14 and 15 of Form 35 and pass speaking order.

In the result, the appeal of the assessee is allowed for statistical purpose.