SAAG RR Infra Ltd., CHENNAI V. ACIT, CHENNAI

CO 21/CHNY/2012

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7386 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 27 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 13-07-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 19-06-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 16-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JR
• Keywords: Period of limitation; Bad and doubtful debts
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE SHRI ABRAHAM P.GEORGE, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NOS.1659/MDS/2011 & 693/MDS/2012 (ASSESSMENT YEAR: 2003-04 ) ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-VI (1), AAYAKAR BHAVAN, NEW BLOCK, 121 M.G.ROAD, 7 TH FLOOR, CHENNAI-600 034. VS. M/S. SAAG RR INFRA LTD., 51, R.K.MUTT ROAD, MYLAPORE, CHENNAI-600 004. PAN:AAACK2171M (APPELLANT) (RESPONDENT) CROSS OBJECTION NO.21/MDS/2012 (IN ITA NO.1659/MDS/2011 ) (ASSESSMENT YEAR: 2003-04 ) M/S. SAAG RR INFRA LTD., 51, R.K.MUTT ROAD, MYLAPORE, CHENNAI-600 004. PAN:AAACK2171M VS. ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-VI (1), AAYAKAR BHAVAN, NEW BLOCK, 121 M.G.ROAD, 7 TH FLOOR, CHENNAI-600 034. (CROSS OBJECTOR) (RESPONDENT) REVENUE BY : MR. K.E.B.RENGARAJAN, JR.STANDING COUNSEL ASSESSEE BY : MR. A NAND KUMAR, C.A DATE OF HEARING : 19 TH JUNE, 2012 DATE OF PRONOUNCEMENT : 13 TH JULY, 2012 O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE PRESENT SET OF APPEALS I.E. ITA NO.1659/MDS/2011 AND ITA NO.693/MDS/2012 HAVE BEEN FILED BY THE REV ENUE AGAINST THE COMMON ORDER OF THE CIT(A)-VI, CHENNAI DATED 28.07.2011. IN ITA NO.1659/MDS/2011 THE REVENUE HA S ITA NOS. 1659/MDS/2011 693/MDS/2012 & CO NO.21/MDS/2012 2 ASSAILED THE ORDER OF THE CIT(A) ON MERITS WHEREAS IN ITA NO.693/MDS/2012, THE REVENUE HAS ASSAILED THE ORDER OF THE CIT(A) ON ACCOUNT OF DELETION OF PENALTY LEVIED UND ER SECTION 271(1)(C) OF THE ACT. THE ASSESSEE HAS FILED CROSS OBJECTION TO THE APPEAL ITA NO.1659/MDS/2011 FILED BY THE REVENU E. HOWEVER, THERE IS A DELAY OF 94 DAYS IN FILING OF CROSS OBJECTION OF THE ASSESSEE. 2. THE ASSESSEE HAS FILED AN AFFIDAVIT FOR CONDON ATION OF DELAY IN FILING THE CROSS OBJECTION. WE HAVE GONE THROUGH THE AFFIDAVIT GIVING DETAILED REASONS FOR DELAY IN FILI NG CROSS OBJECTION . WE ARE SATISFIED THAT THE DELAY IS BONA FIDE AND NOT INTENTIONAL. THE DELAY IN FILING OF CROSS OBJECTION IS CONDONED IN THE INTEREST OF JUSTICE AND EQUITY. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND INFRAST RUCTURE DEVELOPMENT AND FILED ITS RETURN OF INCOME RELEVA NT TO THE ASSESSMENT YEAR 2003-04 ON 1.12.2003 ADMITTING INC OME OF ` 18,24,188/-. THE RETURN OF THE ASSESSEE WAS PROCES SED UNDER SECTION 143(1). THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 148 AND ASSESSED INCOME OF THE ASSESS EE AT ITA NOS. 1659/MDS/2011 693/MDS/2012 & CO NO.21/MDS/2012 3 ` 50,24,188/- BY DISALLOWING ` 32.00 LAKHS CLAIMED UNDER THE HEAD LOSS ON SALE OF ASSETS. AGGRIEVED AGAINST TH E DISALLOWANCE MADE BY THE ASSESSING OFFICER, THE ASS ESSEE PREFERRED AN APPEAL IMPUGNING THE ASSESSMENT ORDER DATED 21.12.2006 BEFORE THE CIT(A). THE ASSESSEE HAD FILE D APPEAL BEFORE THE CIT(A) WITH THE DELAY OF 458 DAYS. THE C IT(A), AFTER GOING THROUGH THE FACTS AND CIRCUMSTANCES IN FILING THE APPEAL AFTER THE PRESCRIBED PERIOD OF LIMITATION, C ONDONED THE DELAY OF 458 DAYS AND ALLOWED THE APPEAL OF THE ASS ESSEE ON MERITS. WHILE ALLOWING THE APPEAL, THE CIT(A) HAS OBSERVED AS UNDER:- ASSESSING OFFICER HAS NOT DISPUTED THE FACT THAT THE APPELLANT HAS WRITTEN OFF THE AMOUNT OF ` 32.00 LAKHS DURING THE RELEVANT ASSESSMENT YEAR AS CLAIMED BY THE APPELLANT IN LETTER DATED 8.12.2006 FILED BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS. AS CONFIRMED BY THE STATUTORY AUDITOR THE SAID SUM WAS OFFERED AS INCOME. THEREFORE THE REQUIREMENT OF SECTION 36(1)(VI) IS SATISFIED. THOUGH THE APPELLANT HAS WRONGLY GROUPED THE SUM UNDER LOSS ON SALE OF ASSET, IT IS IN FACT WRITE OFF OF DEBTS. THEREFORE , ITA NOS. 1659/MDS/2011 693/MDS/2012 & CO NO.21/MDS/2012 4 RESPECTFULLY FOLLOWING THE JUDGEMENT OF THE HONBLE SUPREME COURT OF INDIA CITED, I DIRECT THE ASSESSING OFFICER TO ALLOW THE BAD DEBTS CLAIMED. 4. AGGRIEVED AGAINST THE ORDER OF THE CIT(A), THE R EVENUE HAS PREFERRED SECOND APPEAL BEFORE THE TRIBUNAL ON THE GROUND THAT CIT(A) HAS ERRED IN CONDONING THE INORD INATE DELAY OF 458 DAYS IN FILING THE APPEAL AND THE CIT( A) HAS ALSO ERRED IN DELETING DISALLOWANCE MADE BY THE ASSESSIN G OFFICER ON THE CLAIM OF LOSS ON SALE OF ASSETS. 5. THE DR APPEARING ON BEHALF OF THE REVENUE SUBMIT TED THAT THE CIT(A) HAS CONDONED THE DELAY WITHOUT VALI D REASON. THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE DELAY AND WHATEVER REASONS SUBMITTED BY THE ASSESSEE ARE NOT VALID. THE D.R. FURTHER CONTENDED THAT THE CIT(A) HAS DELE TED DISALLOWANCE MADE BY THE ASSESSING OFFICER WITH NO CLARIFICATION/EXPLANATION IN THE ORDER. 6. ON THE OTHER HAND, THE A.R. APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ORDER OF THE CIT(A) IS A WELL- REASONED AND DETAILED ORDER. HE STRONGLY SUPPORTED THE ORDER ITA NOS. 1659/MDS/2011 693/MDS/2012 & CO NO.21/MDS/2012 5 OF THE CIT(A) AND PRAYED FOR DISMISSAL OF THE APPEA L OF THE REVENUE. HE FURTHER SUBMITTED THAT THE AMOUNT OF ` 6,77,55,441.50 WAS TO BE PAID BY M/S. SHRIRAM ENGIN EERING CONSTRUCTION COMPANY LTD. OUT OF WHICH PART PAYMENT WAS RECEIVED FROM M/S. SHRIRAM ENGINEERING CONSTRUCTION COMPANY LTD. AND REMAINING AMOUNT OF ` 32.00 LAKHS WAS NOT RECOVERABLE AND THEREFORE WAS WRITTEN OFF AS LOSS. THE AMOUNT OF ` 6,77,55,441.50 INCLUDES THE WRITTEN OFF AMOUNT OF ` 32,00,000/-. 7. WE HAVE HEARD THE SUBMISSIONS MADE BY THE RIVAL PARTIES AND HAVE ALSO GONE THROUGH THE DOCUMENTS ON RECORD. THE CIT(A) CONDONED THE DELAY OF 458 DAYS IN FILING THE APPEAL AFTER ACCEPTING THE REASONS SUBMITTED BY THE ASSESSEE. THE CIT(A) IN PARA 3 & 4 OF THE ORDER HAS GIVEN DETAILED REASONS FOR DELAY IN FILING OF THE APPEAL AS WELL AS THE REASONS FOR CONDONING THE SAME. THE HONBLE SU PREME COURT OF INDIA HAS HELD IN CATENA OF JUDGEMENTS THA T ACCEPTANCE OF EXPLANATION FURNISHED SHOULD BE THE RULE AND REFUSAL AN EXCEPTION MORE SO WHEN NO NEGLIGENCE OR INACTION OR WANT OF BONAFIDE CAN BE IMPUTED TO THE DEFAULTIN G PARTY. ITA NOS. 1659/MDS/2011 693/MDS/2012 & CO NO.21/MDS/2012 6 HOWEVER, BY TAKING A PEDANTIC AND HYPER-TECHNICAL V IEW OF THE MATTER THE EXPLANATION FURNISHED SHOULD NOT BE REJE CTED WHEN STAKES ARE HIGH AND /OR ARGUABLE POINTS OF FACTS AN D LAW ARE INVOLVED IN THE CASE , CAUSING ENORMOUS LOSS AND IR REPARABLE INJURY TO THE PARTY AGAINST WHOM THE LIS TERMINATES EITHER BY DEFAULT OR INACTION AND DEFEATING VALUABLE RIGHT O F SUCH A PARTY TO HAVE THE DECISION ON MERIT. IN VIEW OF THE LAW LAID DOWN BY THE HONBLE SUPREME COURT OF INDIA IN THE C ASE OF RAM NATH SAO & ORS VS. GOBARDHAN SAO & ORS. REPORTE D AS 2002(3) SCC 195, WE DISMISS THIS GROUND OF APPEAL O F THE REVENUE AND CONFIRM THE ORDER OF THE CIT(A) IN CON DONING THE DELAY IN FILING OF THE APPEAL BY THE ASSESSEE/A PPELLANT. 8. THE SECOND GROUND OF APPEAL OF THE REVENUE IS WI TH REGARD TO DELETION OF DISALLOWANCE MADE BY THE ASSE SSING OFFICER ON THE CLAIM OF LOSS ON SALE OF ASSETS AMOU NTING TO ` 32,00,000/-. A PERUSAL OF THE ASSESSMENT ORDER SHOW S THAT IN ORDER TO ASCERTAIN THE VERSION OF THE ASSESSEE, THE ASSESSEE HAD WRITTEN A LETTER TO M/S. SHRIRAM ENGINEERING CO NSTRUCTION COMPANY LTD. INVOKING THE PROVISIONS OF SECTION 133 (6) OF THE INCOME TAX ACT. IN REPLY TO THE SAME, THE COMPANY HAD ITA NOS. 1659/MDS/2011 693/MDS/2012 & CO NO.21/MDS/2012 7 FURNISHED BILL-WISE DETAILS WHICH AMOUNTED TO ` 6,77,55,441.50 AS MADE BY THE ASSESSEE. THE COMPAN Y HAD ALSO MENTIONED THEREIN THAT THE AMOUNT OF ` 6,21,51,858.20 HAS ALREADY BEEN PAID TO THE ASSESSE E ON VARIOUS DATES IN RESPONSE TO THE BILLS RAISED. THE ASSESSEE HAD ALSO CONFIRMED THAT REMAINING AMOUNT OF MORE TH AN ` 40.00 LAKHS WHICH WAS DUE WAS ALSO PAID BY M/S. SHR IRAM ENGINEERING CONSTRUCTION COMPANY LTD. IN JULY, 200 5. AS PER THE SUBMISSIONS MADE BY THE A.R., THE AMOUNT OF ` 32 LAKHS WHICH HAS BEEN CLAIMED AS BAD DEBTS IS INCLU DED IN THE AMOUNT OF ` 6,77,55,441.50 AND HAS NOT BEEN RECOVERED FROM M/S. SHRIRAM ENGINEERING CONSTRUCTION COMPANY LTD. TILL DATE. THIS FACT CANNOT BE VERIFIED IN THE ABSENCE O F DOCUMENTS ON RECORD. IN THE INTEREST OF JUSTICE, WE REMIT THE MATTER BACK TO THE ASSESSING OFFICER TO VERIFY WHET HER THE AMOUNT CLAIMED BY THE ASSESSEE IS PART OF THE BILLE D AMOUNT OF ` 6,77,55,441.50 OF M/S. SHRIRAM ENGINEERING CONSTR UCTION CO. LTD. THUS, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NOS. 1659/MDS/2011 693/MDS/2012 & CO NO.21/MDS/2012 8 9. IN VIEW OF OUR ABOVE FINDINGS, THE CROSS OBJECTI ON FILED BY THE ASSESSEE HAS BECOME INFRUCTUOUS AND THE SAME IS DISMISSED ACCORDINGLY. 10. ITA NO.693/MDS/2012 HAS BEEN FILED BY THE REVEN UE WHICH IS BARRED BY LIMITATION OF 39 DAYS. THE REVEN UE HAS FILED AN APPLICATION GIVING DETAILED REASONS FOR FI LING OF APPEAL WITH THE DELAY OF 39 DAYS . A PERUSAL OF THE SAME SHOWS THAT REASONS FOR THE DELAY IN FILING OF APPEAL ARE JUSTI FIED. THEREFORE, THE DELAY IN FILING OF APPEAL IS CONDONE D AND APPEAL IS ADMITTED FOR DISPOSAL ON MERITS. 11. THE APPEAL HAS BEEN FILED BY THE REVENUE IMPUGN ING THE ORDER OF THE CIT(A) DATED 30.11.2011 ON THE GRO UND THAT THE CIT(A) HAS DELETED THE PENALTY LEVIED BY THE AS SESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT ON ACCOU NT OF INACCURATE FURNISHING OF PARTICULARS OF INCOME. SIN CE THE MAIN GROUND OF APPEAL HAS ALREADY BEEN REMITTED BACK TO THE ASSESSING OFFICER FOR VERIFICATION, CONSEQUENTLY, P ENALTY HAS NO LEGS TO STAND AND THE SAME IS DELETED. THUS, TH E APPEAL OF THE REVENUE IS DISMISSED. ITA NOS. 1659/MDS/2011 693/MDS/2012 & CO NO.21/MDS/2012 9 12. IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO.1659/MDS/2011 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND ITA NO.693/MDS/2012 IS DISMISSED. THE CROSS OB JECTION FILED BY THE ASSESSEE IS DISMISSED AS INFRUCTUOUS. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY, THE 13 TH DAY OF JULY, 2012 AT CHENNAI. SD/- SD/- ( ABRAHAM P.GEORGE ) ( VIKAS AWASTHY ) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 13 TH JULY, 2012. SOMU COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F .