Income Tax Appellate Tribunal - Hyderabad
Venkateshwara Brandy Shop, Karimnagar vs Assessee on 7 June, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD " B " BENCH, HYDERABAD
BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER
AND SHRI SAKTIJIT DAY, JUDICIAL MEMBER
ITA No. 844/HYD/2009
Assessment Year : 2001-02
M/s.Venkateswara Brandy Shop,
Karimnagar. ... Appellant
PAN: AAVFV 4214 J
Vs.
Income-tax Officer, ...Respondent
Ward-2, Karimnagar.
Appellant by : Shri A. Srinivas
Respondent by : Shri B.V. Prasad Reddy
Date of hearing : 07-06-2012
Date of Pronouncement : 20-07-2012
ORDER
PER SAKTIJIT DEY, J.M.:
This appeal filed by the assessee is directed against the order dated 12-10-2006 of CIT(A)-III, Hyderabad passed in ITA No.120/W-2,KRM/CIT(A)-III/06-07 and it pertains to the assessment year 2001-02.
2. There is a delay of 923 days in filing this appeal. The assessee has given the following reasons in its petition for condoning the said delay:-
"The appeal before CIT (A) was to be represented by M/s G. Ranga Chary & Co., Karimnagar.2 ITA No. 844/Hyd/2009
Venkateswara Brandy Shop, Karimnagar..
The said M/s Ranga Chary & Co., did not appear before the CIT [A] and as a consequence the appeal was disposed was on merits without the appellant being represented.
The said order of CIT (A) was passed on 12-10- 2006 and the same was served on 2-11-2006 of which the appellant had not idea.
That the penalty appeal was entrusted to Mr. V. Rama Krishna, Nizamabad, whose firm had represented the appellant in the quantum appeal.
Having entrusted the same to Mr. Rama Krishna, the appellant presumed that the said appeal would be pressured by the said professional firm.
Unfortunately from December, 2006, Mr. V. Rama Krishna fell sick and ultimately expired in the month of July, 2007 It was only in June, 2009 that the appellant on receipt of notice, for payment of taxes, had come to know that the said appeal for 2001-02 was not filed by Mr. Rama Krishna.
Immediately the appellant collected the relevant papers and the appeal was filed before ITAT with a delay of 923 days."
3. The assessee also submitted a certificate of Sri V. Ramakrishna who expired on 14-7-2007. The learned AR for the assessee contended that due to extraordinary situation as mentioned in the affidavit, the delay was caused in filing the appeal. The learned AR contended that there is neither any negligence or malafide intention of the assessee in not filing the appeal within prescribed time. The learned AR further contended 3 ITA No. 844/Hyd/2009 Venkateswara Brandy Shop, Karimnagar..
that the assessee has avery good case so far as the merit of the appeal is concerned, the entire addition u/s 69 on the basis of which penalty was imposed u/s 271(1)(c) has been deleted by the ITAT in the quantum appeal.
4. The learned DR seriously objecting to the contentions put forward by the ld. Counsel for the assessee submitted that the delay should not be condoned.
5. We have heard rival contentions and perused the material on record. After going through the reasons mentioned by the ld. Counsel for the assessee, we find that there is sufficient cause on the part of the assessee in not filing the appeal within the prescribed time. It is also pertinent to note that the addition on the basis of which penalty was imposed u/s 271(1)(c) has been deleted by the ITAT in quantum appeal. The Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji and Others reported in 167 ITR 471 had held that when substantial justice and legal considerations are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have a vested right in injustice being done because of a non-deliberate delay. Ordinarily, a litigant does not stand to benefit by resorting to delay. Therefore, refusing to condone the delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. Keeping in view the aforesaid principle of law laid down by the Hon'ble Supreme Court and considering the fact that the additions made in the assessment have been deleted in the quantum appeal, in our opinion, refusal to condone the delay will 4 ITA No. 844/Hyd/2009 Venkateswara Brandy Shop, Karimnagar..
result in injustice being meted out to the assessee. We therefore condone the delay of 923 days and admit the appeal for disposal.
6. Now, coming to the merits of the case, the assessee challenged imposition of penalty u/s 271(1)(c ) of the Act. Briefly, the facts are the assessee for the assessment year under consideration, filed a return declaring a total income of Rs.5,910/- under the status of partnership firm. Assessment order u/s 143(3) was passed on 28-1-2004 by treating the status of the firm as AOP. In course of assessment proceedings, the AO found that the assessee has made purchases to the tune of Rs.1,00,38,471/- against which sales were shown at Rs.1,07,41,180/- and gross profit of Rs.6,24,350/- was declared. After verifying month-wise quantitative details furnished by the assessee, the AO obtained details of purchases from AP Beverages Corporation Limited according to which the purchases made by the assessee amounted to Rs.1,01,48,624/-. The AO found the purchases shown by the assessee in the trading account less by Rs.1,10,153/- than what has been actually purchased as per the figures obtained from AP Beverages Corporation Ltd. The AO after examining month wise trading results found that closing stock for the months of April, August, September, December and January were at a negative figure of Rs.6.76 lakh. On the basis of aforesaid facts, the AO came to a conclusion that the negative stock appearing at the end of the aforesaid five months reveals that the assessee made purchases outside books of accounts. On the aforesaid conclusion, the AO treated the purchases to the tune of Rs.6.76 lakhs as unexplained investment u/s 69 of the Act. The assessee being aggrieved of the assessment order, filed an appeal before the CIT (A). On appeal, the CIT (A) confirmed the addition made by the AO.
5 ITA No. 844/Hyd/2009Venkateswara Brandy Shop, Karimnagar..
7. Further aggrieved by the order of the CIT (A), the assessee preferred an appeal before the ITAT, Hyderabad. As a consequence of addition made, proceedings were initiated for imposition of penalty u/s 271(1)(c ) of the Act. In course of proceedings though the assessee furnished explanation for not imposing penalty, the AO rejected the same and imposed penalty of Rs.2,53,612. The assessee preferred an appeal against the order passed u/s 271 (1)( c) before the CIT (A). The CIT (A) upheld the imposition of penalty.
8. The learned AR for the assessee contended before us that the addition on the basis of which penalty was imposed has been deleted by the ITAT, Hyderabad Bench in ITA No.321/Hyd/05 dated 10-2-2012, a copy of the order was also produced before us. After going through the order of the ITAT (supra), we find that the addition on the basis of which penalty was imposed, has been deleted by ITAT, Hyderabad Bench (supra). Therefore, when addition on the basis of which penalty u/s 271(1)(c ) was imposed, has been deleted by the ITAT, imposition of penalty cannot be sustained. In aforesaid view of the matter, we allow the grounds raised by the assessee and annul the order passed u/s 271(1)(c) of the Act.
9. In the result, the appeal filed by the assessee is allowed.
Order pronounced in the court on 20-7-2012.
Sd/- sd/- (CHANDRA POOJARI) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad, Dated 20 th July, 2012. 6 ITA No. 844/Hyd/2009 Venkateswara Brandy Shop, Karimnagar.. Copy to:- 1) M/s. Venkatgeswara Brandy Shop, Asifnagar, Baopet Mandal, Karimnagar. 2) ITO, Ward-2, Karimnagar. 3) The CIT (A)-III, Hyderabad 4) The CIT Concerned, Hyderabad
5) The Departmental Representative, I.T.A.T., Hyderabad.
Jmr*