CHANDRAKANTH PASUMARTHI,KODADA vs. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, GUNTUR

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ITA 27/VIZ/2022Status: DisposedITAT Visakhapatnam11 May 2022AY 2017-185 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal, while acknowledging the assessee's failure to appear before the CIT(A), decided to provide one more opportunity to ensure natural justice. The matter was remitted back to the CIT(A) for fresh adjudication.

What were the facts?

A search operation led to the discovery of cash at the assessee's residence, which was admitted as income. The Assessing Officer initially taxed it at 30% but later rectified it to 60% under Section 115BBE. The CIT(A) dismissed the assessee's appeal ex-parte due to non-appearance.

What were the issues?

Whether the CIT(A) erred in dismissing the appeal ex-parte and whether the assessment and subsequent rectification were legally valid.

Which sections of the Income-tax Act were involved?

Section 132,Section 143(2),Section 142(1),Section 69A,Section 154,Section 115BBE,Section 143(3),Section 153B(1)(B),Section 234B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM

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

Hearing: 04.05.2022Pronounced: 11.05.2022

अपीलधथी की ओर से/ Appellant by : None प्रत्यधथी की ओर से / Respondent by : Shri M.N.Murthy Naik, CIT, DR सुनवधई की तधरीख / Date of Hearing : 04.05.2022 घोर्णध की तधरीख/Date of Pronouncement : 11.05.2022 O R D E R

Per Shri Duvvuru RL Reddy, Judicial Member :

1.

This appeal is filed by assessee against the order of the Commissioner of Income Tax (Appeals) [ in short, “CIT(A)”]-12, Hyderabad in Appeal No.10082/2019-20 dated 31.01.2022 for the Assessment Year (A.Y.) 2017-18.

2.

Brief facts of the case are that search and seizure operation u/s 132 of the Income Tax Act, 1961 (in short ‘Act’) was conducted in the group

Chandrakanth Pasumarthi, Kodad cases of Sri Arunacvhalam Manickavel, Guntur, who is the proprietor of M/s Bharathi Soap Works and the Managing Director of M/s Bharathi Consumer Care Products Ltd. The distributors and suppliers of the raw material of these concerns were also covered in the search operation. The assessee being distributor of detergent products, notices u/s 143(2) and 142(1) were also issued and served on the assessee. The assessee had filed his return of income on 29.10.2017 admitting total income of Rs.14,93,080/-. The AO completed the assessment by making an addition of Rs.11,00,000/- u/s 69A as cash of Rs.11,57,000/- was found during search operation at the residential premises of the assessee and the assessee admitted an amount of Rs.11,00,000/- as income from other sources in the return filed. The AO had mentioned that 60% tax rate would be applied but he had inadvertently taxed the income at 30%. Therefore, the AO invoked the rectification proceedings u/s 154 of the Act and brought to tax the unexplained income of Rs.11,00,000/- u/s 115BBE at 60% tax rate. The Ld.CIT(A) held that the AO has rightly invoked 143(3) r.w.s. 153B(1)(B) of the Act while passing the assessment order. None appeared on behalf of the assessee before the Ld.CIT(A) or there was no representation or written submission filed by the assessee. Therefore, the Ld.CIT(A) dismissed the appeal ex-parte based on the material available on record.

Chandrakanth Pasumarthi, Kodad

3.

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

1. On the facts and the circumstances of the case, the orders passed by Ld.CIT(A)-12, Hyderabad is erroneous and bad in law.

2. On the facts and circumstances of the case, the Ld.CIT(A) ought to have considered the ground raised

by the Assessee / Appellant that the order passed by the Ld.AO u/s 143(3) r.w.s. 153B(1)(b) is bad in law. The assessment ought to have been made u/s 143(3) not u/s 153B(1)(b) as the Assessee / Appellant issued notice u/s 142(1) not just u/s 153A or 153C.

3. On the facts and the circumstances of the case, the Ld.CIT(A) ought to have considered the contention of the Assessee / Appellant that passing order u/s 154 and levying tax of Rs.7,03,390/- u/s 115BBE is bad in law and thus erred by upholding the order passed u/s 154.

4. On the facts and circumstances of the case, the Ld.CIT(A) erred by not considering the submission / contention of the Assessee / Appellant that without the prejudice to the above contentions, the Assessee had admitted Rs.11,00,000/- as additional income for covering the deficiencies in business income of the Assessee / Appellant which is evident from declaration given from the statement recorded on 03.11.2016 and not under section 69A. Hence, tax ought not to have been levied u/s 115BBE.

5. Interest levied u/s 234B needs to be recomputed.

6. The Assessee / Appellant craves leave to alter, amend or delete any of the above grounds of appeal and / or to add any fresh ground(s) of appeal at or before hearing of the appeal. None appeared on behalf of the assessee, inspite of notices being served on the assessee.

Chandrakanth Pasumarthi, Kodad

4.

The Ld.DR submitted that the assessee was given sufficient opportunities, but he did not appear before the Ld.CIT(A). Thereafter, the CIT(A) passed the order on merits. Hence, the order passed by the Ld.CIT(A) is to be confirmed.

5.

We have heard the Ld.DR and perused the material placed on record. The Ld.CIT(A) had given sufficient opportunity to the assessee, but he failed to appear before the Ld.CIT(A). Therefore, the Ld.CIT(A) passed the orders based on the material available on record. However, in order to maintain the principles of natural justice, we are of the view that it is a fit case to provide one more opportunity to the assessee to substantiate his case. Hence, we remit the matter back to the file of the Ld.CIT(A) for fresh adjudication after providing a reasonable opportunity of being heard to the assessee. The assessee is also directed to cooperate and comply with the notices of Ld.CIT(A), failing which, the Ld.CIT(A) is at liberty to pass appropriate order in accordance with law.

6.

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

Chandrakanth Pasumarthi, Kodad

Order Pronounced in open Court on 11th May, 2022.

Sd/- Sd/- (एस बालाकृष्णन) (दुव्वूरु आर.एल रेड्डी) (S.BALAKRISHNAN) (DUVVURU RL REDDY) लेखा सदस्य/ACCOUNTANT MEMBER न्याधयकसदस्य/JUDICIAL MEMBER Dated : 11.05.2022 L.Rama, SPS आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. ननधधाऩरती/ The Assessee - Shri Chandrakanth Pasumarthi, H.No.1-29/A, Suryapet Road, Kodad, Nalgonda 2. रधजस्व/The Revenue –Dy.Commissioner of Income Tax, Central Circle-1, Guntur 3. प्रधान आयकर आयुक्त / The Pr.Commissioner of Income Tax (Central), Visakhapatnam 4. आयकर आयुक्त (अपील) / Commissioner of Income Tax (Appeals)-12, Hyderabad 5. नवभधगीय प्रनतनननध, आयकर अपीलीय अनधकरण, नवशधखधपटणम/ DR,ITAT, Visakhapatnam 6.गधर्ा फ़धईल / Guard file आदेशधनुसधर / BY ORDER

Sr. Private Secretary ITAT, Visakhapatnam

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