KALLA VISWANADHA BABU,VISAKHAPATNAM vs. THE INCOME TAX OFFICER, WARD-1(2), VISAKHAPATNAM

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ITA 249/VIZ/2020Status: DisposedITAT Visakhapatnam08 July 2022AY 2011-1211 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal condoned the inordinate delay in filing the appeal, considering the peculiar circumstances and the pandemic. On merits, the Tribunal directed the AO to estimate net profit at 5% of the purchase price and allowed the disallowance of license fee, stating that the revenue authorities erred in disallowing it.

What were the facts?

The assessee filed an appeal before the ITAT with a significant delay of 1528 days, citing non-receipt of the CIT(A) order and subsequent COVID-19 pandemic. The Assessing Officer had made additions to the income based on low net profit offered and disallowance of license fee, which was partly upheld by the CIT(A).

What were the issues?

Whether the delay in filing the appeal should be condoned and whether the estimation of net profit and disallowance of license fee by the lower authorities were justified.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 250(6),Section 143(1),Section 143(2),Section 142(1)

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Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM

Before: SHRI DUVVURU RL REDDY, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE

Hearing: 13/06/2022

Per contra, the ld. DR argued that the Ld. CIT(A) has given substantial relief of 10%. The Ld. DR also submitted that the assessee has not submitted any proof of payment of license fee and hence the Ld. AO has rightly disallowed the portion of the License fee. The Ld. DR relied on the order of the Revenue Authorities. The Ld. DR also relied on the following case laws:

1.

Decision of the Supreme Court in the case of Balwant Sing (Dead) vs. Jagdish Singh & Ors, dated 8/7/2010.

2.

Judgment of the Hon’ble High Court of Delhi in the case of Kamal Jewellers vs. ITO, dated 22/5/1995. 3. Decision of the ITAT, Mumbai in the case of M/s. Five Vision vs. ACIT dated 22/7/2016. 4. Decision of the ITAT, Cochin in the case of Catholic Syrian Bank Ltd vs. DCIT (TDS) CPC, Ghaziabad, dated 22/7/2016.

9.

We have heard the rival contentions and perused the materials on record and the orders of the Authorities below. Admitted facts are that the assessee failed to produce any evidence in support of sales made and hence the Ld. AO rejected the books of account and estimated the income @ 20% of the stock put to sale. The reliance placed by the Ld. AR in the 9 decision of the Coordinate Bench of the Tribunal in the case of Majji Naga (supra) and Tangadu Jogisetty in (supra) deserves consideration. Respectfully following the decisions of the Coordinate Bench of the Tribunal we hereby direct the AO to estimate the net profit @ 5% of the purchase price of the stock which was put to sale which is net of deductions. Accordingly, ground no.3 raised by the assessee is partly allowed.

10.

With respect to Ground No.4 on payment of license fee of 53,35,450/- the Ld. AO has disallowed 1/3rd of the license fee amounting to Rs. 17,78,483/-. The Ld. AO disallowed the same based on the facts that no receipt was provided by the assessee. The assessee has produced the receipt, payment account etc., before the Ld. CIT (A) and the Ld. CIT(A) forward the same to the AO for verification. Ld. AO in his remand report did not consider the additional evidence placed by the assessee before the Ld. CIT(A). The assessee also did not file any objections for the remand report by the Ld. AO. We note here that for running an IMFL shop any person needs to pay license fee to the Government on annual basis. The Ld. AO has not disputed the fact that the assessee is in the business of running a wine shop and whereby

10 the License fee is required to be paid in accordance with the guidelines of the respective State Government. Merely on the basis of absence of evidence in respect of the payment of license fee it cannot be said that the assessee has not paid any license fee for running the business. Therefore we are of the considered view that the Revenue Authorities erred in disallowing the same. Accordingly, the relevant ground raised by the assessee is allowed.

11.

In the result appeal of the assessee is partly allowed.

Pronounced in the open Court on the 08th July, 2022.

Sd/- Sd/- (दुव्िूरु आर.एऱ रेड्डी) (एस बाऱाकृष्णन) (DUVVURU RL REDDY) (S.BALAKRISHNAN) न्याययकसदस्य/JUDICIAL MEMBER ऱेखा सदस्य/ACCOUNTANT MEMBER Dated : 08.07.2022 OKK - SPS

आदेश की प्रतिलिपि अग्रेपिि/Copy of the order forwarded to:- ननधधाररती/ The Assessee – Kalla Viswanadha Babu, D.No.58-1-

1. 1. 234/88, Meridian Towers, NAD Kotha Road, Visakhapatnam. रधजस्व/The Revenue – The Income Tax Officer, Ward-4(2), 2. Pratyakshkar Bhavan, MVP Colony, Visakhapatnam.

3. The Principal Commissioner of Income Tax-2, Visakhapatnam.

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