Koripalli Venkata Srinivas Vs ITO (ITAT Visakhapatnam)
The Visakhapatnam ITAT dismissed the assessee’s appeal against the order of the National Faceless Appeal Centre for Assessment Year 2017-18, both on the ground of a 691-day delay in filing the appeal and on merits. The assessee, engaged in aquaculture, had filed a return declaring net income of ₹10,12,920/-. The case was selected for limited scrutiny to examine large cash deposits in the bank account. During assessment proceedings under Sections 143(2) and 142(1), the Assessing Officer (AO) sought information and obtained bank statements under Section 133(6).
The assessee stated that aquaculture was carried on over land owned by his parents, that no regular books of account were maintained due to practical difficulties in dealing with small farmers, and that income had been estimated under Section 44AD. While the assessee claimed gross aquaculture receipts of ₹1.90 crore, the AO found bank credits of ₹2.36 crore from prawn processing units. Observing that gross receipts exceeded ₹2 crore, the AO held that the assessee was required to maintain books of account and obtain an audit under Section 44AB. The AO adopted ₹2.36 crore as gross receipts and estimated income at 8%, resulting in income of ₹18.93 lakh before allowing Chapter VI-A deductions.
The first appellate authority issued four hearing notices over nearly two years. As the assessee did not respond or furnish supporting material, the additions were confirmed. Before the ITAT, the assessee contended that profit should have been estimated at 6% instead of 8% and that actual gross receipts were ₹2.15 crore rather than ₹2.36 crore.
To explain the 691-day delay in filing the appeal, the assessee submitted that he was not computer literate, that login credentials had been created by the Income Tax Practitioner (ITP), that communications were handled through the ITP’s email, that the matter was not pursued by the ITP, and that his father’s death required him to perform the last rites. Affidavits from the Chartered Accountant and the assessee were also filed.
The Department opposed condonation of delay, contending that the explanations were vague and unsupported by evidence, and argued that the assessee had not rebutted the findings of the AO.
The Tribunal held that the reasons offered did not constitute sufficient cause for condoning an inordinate delay of nearly 700 days. It observed that the failure of the Chartered Accountant to file the appeal could not justify condonation because it remained the assessee’s responsibility to pursue the matter. While a short delay in a rural setting could be understood, the Tribunal found that the delay of almost 700 days was unsupported by convincing reasons. Accordingly, the appeal was not admitted.
On merits, the Tribunal noted that no fresh evidence or supporting material had been produced to challenge the assessment. It observed that the AO had obtained the bank statements under Section 133(6), provided an opportunity to explain the discrepancy between the turnover declared and the bank credits, and that the assessee had failed to rebut the AO’s reasoning before either the AO or the appellate authorities. Since the assessee had opted for Section 44AD, the Tribunal held that the profit percentage adopted by the AO was correct and found no reason to interfere with the assessment. The appeal was dismissed.
FULL TEXT OF THE ORDER OF ITAT VISAKHAPATNAM
This appeal is filed by the Assessee against the order of Ld. National Faceless Appeal Center, Delhi vide DIN: ITBA/AST/S/143(3)/2019-20/1023017433(1) dated 08-Jan-2024 for the Assessment Year 2017-18 arising out of the order passed by the Ld.AO u/s 143(3) of the Income Tax Act, 1961 (“the Act”) for the A.Y.2017-18.
2. In the above cited appeal, the assessee is deriving income from aqua culture and filed return of income admitting net income of Rs.10,12,920/- and the case was selected for Limited Scrutiny for examining the issue of “Large cash deposits” in the bank account during the year. After taking up the case for scrutiny, the Ld.AO issued notice u/s 143(2)/142(1) of the Act and required the assessee to file certain information including production of required books of accounts. The Ld.AO has also written to the banks of the appellant and obtained the bank statements as per the provisions of section 133(6) of the Act. During the scrutiny proceedings, the assessee has stated that his only source of income is from aqua culture and the same is done on the land owned by his parents. Before the Ld.AO, the assessee has submitted that no regular books of accounts were maintained as there are certain practical difficulties while dealing with small farmers. Hence, estimated his income by opting for the provisions of section 44AD of the Act. The assessee has stated that the gross aqua culture receipts during the year are to the extent of Rs.1.9 crores and a total net income of Rs.1.41 lakhs was admitted by opting for the provisions of section 44AD of the Act. As mentioned above, the Ld.AO has obtained the bank statements of the assessee during the year under consideration for the period from 01.04.2016 to 31.03.2017 and total credits in the bank account from various prawn processing units was found to be Rs.2.36 crores as against the receipts admitted by the assessee of Rs.1.90 crores. As mentioned above, the assessee stated that no books of accounts were maintained and hence opted for the provisions of section 44AD of the Act. While concluding the assessment order, the Ld.AO has observed that gross aqua receipts found to be more than Rs.2 crore and hence the assessee under statutory obligation to maintain books of account and get them audited as per the provisions of section 44AB of the Act. It is an admitted fact that the assessee has not maintained the books of account and hence opted for estimation of gross aqua receipts. After obtaining the statements of bank account from the concerned bank, the Ld.AO found gross aqua receipts are Rs.2.36 crores and the same were taken as total receipts from the aqua culture income. While completing the scrutiny assessment, ITO, Ward-1, Palakole has estimated the income of the assessee by taking 8% of the gross receipts, which comes to Rs.18.93 lakhs. After giving deduction under Chapter VI-A, the net income of the assessee was taken into account while raising the tax demand.
3. Aggrieved by the addition made, an appeal was filed before Addl/JCIT(A)-4, Delhi and the case was posted by this First Appellate Authority. This First Appellate Authority had sent 4 notices of hearing on various dates over a period of two years and since there was no response from the appellant, addition was confirmed by the Appellate Authority, stating that proper opportunity was given to the appellant and still the appellant has not filed any supporting material for his appeal. As the appellant has not countered the detailed findings and reasons given by the Ld.AO, the Ld.CIT(A) upheld the additions made by the Ld.AO and decided the issue against the appellant and the grounds of appeal were dismissed accordingly.
4. Aggrieved by this order of the Ld.CIT(A), the appellant filed an appeal before the ITAT stating that the Ld.Addl.CIT(A) ought to have held the income of the appellant at 6% of the total turnover and not at 8% as adopted by the Ld.AO. The disputed amount is Rs.4.73 laks in this regard. The second ground of appeal before ITAT is that the actual gross receipts from sales of prawn was only Rs.2.15 crore, but not 2.36 crores as taken by the Ld.AO.
5. At the outset, it is observed that the appeal was filed before ITAT with the delay of 691 days. The Ld.AR of the appellant has stated the reasons for the delay in filing the appeal are that the appellant is not a computer literate and hence, the Income Tax Practitioner (“ITP”) has created his login credentials for the purpose of e-filing of the return and used their email for online communication. Since the ITP is looking after the communication from Income Tax Department, he has not pursued the matters with the ITP. Moreover, his father passed away during this period and he had to perform the last rites. The Ld.AR of the appellant has relied on certain cases law and finally mentioned that there are no latches or malafides or negligence on the part of the appellant in filing the appeal with the delay and hence the delay may be condoned. An affidavit was filed by the CA (for ITP) who is practicing at Palakole, West Godavari Dist and most of the clients are from rural areas, who are not well versed with the computer operations. At the instance of the appellant, certain login credentials were created by his office staff and the office staff of the Chartered Accountant has somehow missed taking up the appeal with ITAT and hence the delay of 691 days occurred. An affidavit was also filed by the appellant, where similar reasons were mentioned.
6. As far as the merits are concerned, no fresh evidence was filed nor any supporting material was found to counter the arguments of Ld.AO in his assessment order. In other words, no mistakes were found from the order of Ld.AO except stating that the percentage of total profit ought to have been estimated at 6% and not at 8%. There is no argument by the Ld.AR of the appellant with regard to the discrepancies in the turnovers mentioned in the assessment order.
7. The Ld.DR relied on the orders of the lower authorities and stated that since the Ld.AR of the appellant did not counter any of the arguments and reasoning given by the Ld.AO, the additions made in the assessment should be upheld. Since there is inordinate delay in filing the appeal, the Ld.DR opposed admission of the appeal itself by stating that the reasons mentioned in the affidavit are very vague and there is no evidence with regard to the averments made in the affidavits.
8. After hearing both the sides and perusing the material on record, the Bench decides to dismiss the appeal of the assessee on both counts – delay in filing of appeal and on merits. The appellant has filed the appeal with the delay of almost 700 days and the reasons mentioned were death of father of the appellant and also the CA has not taken proper care in filing the appeal. The failure of the CA to file an appeal is not the correct reason to condone the delay, because, it is the duty of the appellant to pursue with his CA and see that the appeal is filed within time limits. Since, it is rural area, it can be understood, if there is small delay of a month or two in filing the appeal, but in this case, the delay is almost 700 days and there is no sufficient reason for such inordinate delay. The reasons given in the affidavits are not convincing, because negligence on the part of the appellant to take up his appeal proceedings does not come under sufficient cause for condoning the delay. Hence, the appeal is not admitted and dismissed.
9. Coming to the merits also, there is no convincing reason as to why the additions made by the Ld.AO are incorrect. From the assessment order, it is seen that the Ld.AO wrote to the banks and obtained copies of bank statements u/s 133(6) of the Act and gave an opportunity to the assessee to explain the reasons for discrepancy with respect to the turnover and the total credits mentioned in the bank account. The appellant could not counter the reasoning given by the Ld.AO either before the ld.AO or before the appellate forum. As the appellant himself is opting for the provisions of section 44AD, profit percentage estimated by the Ld.AO is correct and there is no need to disturb the findings of the Ld.AO. Appeal of the assessee is dismissed for filing the appeal with the delay and on merits too.
10. In the result, appeal of the assessee is dismissed.
Order pronounced under rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1962 by placing the details on the notice board on 10th July, 2026.
