Itta/4/2003 Of Commissioner Of Income Tax Vijayawada v. L. Narsa Redy

THE HON’BLE SRI JUSTICE L.NARASIMHA REDDYANDTHE HON’BLE SRI JUSTICE CHALLA KODANDA RAMI.T.T.A.No.4 of 2003 JUDGMENT: (Per LNR,J) The respondent is a proprietary concern and isassessed to tax. For the assessment year 1981-82, it hasdeclared the loss at Rs.71,760/-. The same was dealtwith under Section 143-(1)(a) of the Income Tax Act, 1961(for short ‘the Act’) and no liability as such was fastenedupon the respondent. The returns for the assessment years 1984-85 and1985-86 were processed and some statements withregard to claims as to credits were disbelieved. That inturn resulted in the respondent approaching theSettlement Commission, not only in respect of those twoyears, but also in relation to assessment years 1986-87and 1987-88. The respondent is said to have admittedthat some of the credits shown in the assessment are nottrue and they can be treated as his income. Treating thesaid fact as the basis, the appellant issued a show causenotice under Section 148 of the Act, proposing to re-assess the respondent for the assessment year 1981-82. It was stated that some of the credits mentionedtherein are not true. Thereafter, an order of re-assessmentwas passed. Aggrieved by the order of re-assessment, therespondent filed an appeal before the Commissioner. Theappeal was rejected by the Commissioner, on the groundthat the respondent did not pursue the proceedings. Thereupon, the respondent filed I.T.A.No.1030/Hyd/95and batch before the Hyderbaad Bench of the IncomeTax Appellate Tribunal. I.T.A.No.1031/Hyd/95 was in relation to assessment year 1981-82. The Tribunalallowed the batch of appeals through common order,dated 22.02.1999. It has permitted the respondent toraise an additional ground by accepting the plea that theproprietor was seriously ill, when the appeal was beingheard by the Commissioner and that the ground could notbe raised. This appeal is preferred by the Revenue, underSection 260-A of the Act against the said common order,insofar as it relates to the assessment year 1981-82. Heard learned counsel for the appellant and learnedcounsel for the respondent. So far as the first ground is concerned, we are at aloss to understand as to how the Tribunal can be said tohave committed any error, in permitting an additionalground to be raised. The relevant provision, that conferspower upon the Tribunal, permits such a course. Further,a sufficient factual foundation was laid for raising theadditional ground. It is not disputed that the respondent was sufferingfrom kidney problem, when the appeal was pendingbefore the Commissioner and on account of the same, hecould not concentrate on the matter. The Commissionerproceeded as though a human being, who is assessed totax, has to dedicate his entire life and energy for theassessment and other proceedings before the IncomeTax Officer and he has no other aspect in the life. TheTribunal has exhibited some human approach andunderstood the problem of the assessee. We are totally inagreement with the view taken by the Tribunal. Coming to the other two questions, we find that therespondent himself was so truthful that in the subsequentyears, when the creditors backed out, it has approachedthe Settlement Commissioner and offered that the corresponding amount can be treated as its income. Hereagain, the Tribunal has gone to the root of the matter andtook the view that whenever the creditor of an assesseebacks out during the course of verification, the onlyalternative for the assessee is to treat the correspondingamount as its income and that no exception can be takento it. Further, the mere fact that the creditor of anassessee, for a particular year has backed out, it does notby itself constitute the basis to suspect every credit, whichwas shown in the returns of the earlier assessment years. The Tribunal was objective in its approach and we do notfind any basis to interfere with its well-considered order. Therefore, the I.T.T.A. is dismissed. corresponding amount can be treated as its income. Hereagain, the Tribunal has gone to the root of the matter andtook the view that whenever the creditor of an assesseebacks out during the course of verification, the onlyalternative for the assessee is to treat the correspondingamount as its income and that no exception can be takento it. Further, the mere fact that the creditor of anassessee, for a particular year has backed out, it does notby itself constitute the basis to suspect every credit, whichwas shown in the returns of the earlier assessment years. The Tribunal was objective in its approach and we do notfind any basis to interfere with its well-considered order. Therefore, the I.T.T.A. is dismissed. The miscellaneous petition filed in this appeal shallalso stand disposed of. There shall be no order as tocosts. ____________________ L.NARASIMHA REDDY, J ________________________ CHALLA KODANDA RAM, J Date: 21.08.2014JSU THE HON’BLE SRI JUSTICE L.NARASIMHA REDDYAND THE HON’BLE SRI JUSTICE CHALLA KODANDA RAM JSU I.T.T.A.No.4 of 2003 Date: 21.08.2014