M/s. S. Narayanan(HUF), Karaikudi V. Deputy Commissioner of Income tax, Central Circle, Mysore

ITA 1018/BANG/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2812 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 25-10-2021
• Assessment Year: 2013-2014
• Appeal Filed On: 10-05-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRADEEP KUMAR CIT BENGALURU
• Assessee Lawyers: T VASUDEVAN
• Keywords: Assessment record; Condonation of delay; Set aside
• Section: 201; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI , JUDICIAL MEMBER IT A NO. 1018/BANG/2019 ASSESSMENT YEAR: 201 3 - 14 M/S. S. NARAYANA (HUF), NO.122, M.M. STREET, KARAIKUDI 630 001. TN. PAN: AAEHS 4621R VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, MYSURU. APPELLANT RESPONDENT APPELLANT BY : S HRI T. VASUDEVAN, ADVOCATE RESPONDENT BY : SHRI PRADEEP KUMAR, CI T(DR)(ITAT), B ENGALURU. DATE OF HEARING : 25 . 1 0 .202 1 DATE OF PRONOUNCEMENT : 25 . 1 0 .202 1 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE PRINCIPAL COMMISSIONER OF INCOME-TAX, MADURAI-2, M ADURAI [PR. CIT] DATED 15.2.2018 ON THE FOLLOWING GROUNDS:- 1. THE ORDER OF THE PR. COMMISSIONER OF INCOME-TAX PASSED UNDER SEC.263 DATED 15.2.18 IS CONTRARY TO LAW, ERR ONEOUS AND UNSUSTAINABLE ON THE FACTS OF THE CASE. 2. THE PR. CIT ERRED IN DIRECTING THE OFFICER TO RE -DO THE ASSESSMENT FOR VERIFYING THE AGRICULTURAL ACTIVITIE S OF THE ASSESSEE, THAT HAVE BEEN EXAMINED AND CONCLUDED IN THE PROCEE DINGS UNDER SEC.143(3) OF THE ACT. ITA NO. 1018/BANG/2019 PAGE 2 OF 7 3. THE PR. CIT FAILED TO APPRECIATE THAT THE ORDER OF THE ASSESSING OFFICER PASSED U/S.143(3) DATED 01.10.15 IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTERESTS OF THE R EVENUE AND HIS DIRECTION TO EXAMINE THE ISSUE AFRESH IS UNTENABLE IN LAW. 4. THE PR. CIT FURTHER FAILED TO APPRECIATE THAT TH E OFFICER HAD CONSIDERED THE CULTIVATION OF SILVER OAK IN THE MID ST OF THE COFFEE PLANTATIONS BY ASSESSEE AND HENCE THE OBSERVATIONS OF THE CIT ON THE ABSENCE OF VERIFICATION BY THE OFFICER IS WHOLL Y MISPLACED, ARBITRARY AND UNJUSTIFIED ON THE FACTS OF THE CASE. 5. THE PR. CIT FURTHER FAILED TO APPRECIATE THAT TH E OFFICER HAVING GONE THROUGH THE BOOKS, THE DETAILS OF CULTI VATION OF SILVER OAK OVER THE LAST MANY YEARS AND THUS ACCEPTED THE AGRICULTURAL INCOME RETURNED AND HENCE THE ORDER OF OFFICER DOES NOT SUFFER FROM ANY ERROR OR PREJUDICE AND HENCE THE IMPUGNED PROCEEDINGS ARE UNTENABLE IN LAW. 6. THE PR. CIT FURTHER FAILED TO APPRECIATE THAT HI S OBSERVATIONS AND DIRECTIONS ARE ON ASSUMPTIONS AND HENCE THERE IS NO BASIS FOR HIS CONCLUSION REGARDING THE LACK OF E NQUIRY ON THESE ISSUES BY THE OFFICER WARRANTING ACTION UNDER SEC.2 63. 7. THE CIT FURTHER FAILED TO APPRECIATE THAT THE IM PUGNED PROCEEDINGS U/S.263 ARE WITHOUT JURISDICTION SINCE ADMITTEDLY IT WAS NOT A CASE OF LACK OF ENQUIRY AND THAT EXAMINAT ION OF THE CULTIVATION OF SILVER OAK FROM THE EARLIER YEARS HA D BEEN CONDUCTED BY THE OFFICER IN THE ASSESSMENT, THERE I S NO CASE FOR REVISION AS THE TWIN CONDITIONS FOR ACTION UNDER SE C. 263 ARE NOT SATISFIED. 8. THE CIT FAILED TO APPRECIATE UNDER SEC.263 IS NO T PERMISSIBLE MERELY BECAUSE THERE WAS NO DISCUSSION IN THE ASSESSMENT ORDER AND HE DISAGREES WITH THE CONCLUSI ON REACHED BY THE OFFICER AND THEREFORE THE DIRECTIONS GIVEN TO T HE OFFICER TO RE- EXAMINE THE ISSUE IS CONTRARY TO THE SPIRIT OF COMP LETION OF ASSESSMENT UNDER SEC.143(3) OF THE ACT. 9. THE CIT, IN ANY EVENT, OUGHT TO HAVE DULY CONSID ERED THE CATENA OF DECISIONS BY VARIOUS COURTS HOLDING THAT THE OFFICER HAVING CONSIDERED THE ISSUE AND REACHED A CONCLUSIO N IN THE COURSE OF ASSESSMENT, ACTION U/S.263 IS NOT PERMISS IBLE MERELY ITA NO. 1018/BANG/2019 PAGE 3 OF 7 BECAUSE HE ENTERTAINS A DIFFERENT VIEW AND HENCE TH E IMPUGNED ORDER IS LIABLE TO BE SET ASIDE. 10. THE CIT, IN ANY VIEW OF THE MATTER, OUGHT TO HA VE SEEN THAT THE TWIN CONDITIONS, NAMELY, THAT THE ORDER OF THE OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVEN UE ARE NOT SATISFIED AND HENCE THE ORDER U/S.263 NEEDS TO BE C ANCELLED. 2. THE PR.CIT OBSERVED FROM THE ASSESSMENT RECORDS , THAT THE ASSESSEE HAD ADMITTED TIMBER RECEIPTS IN THE INCOME AND EXPENDITURE ACCOUNT PERTAINING TO M/S. GROVE 'A' ESTATE, POLLIB ETTA AND M/S. SRI NARAYANA ESTATE, CHETALLOI RESPECTIVELY. ALSO IT IS NOTICED FROM THE INCOME & EXPENDITURE ACCOUNT THAT NO EXPENSES WERE INCURRE D FOR GROWING OF SILVER OAK TREES AND THEY ARE FOREST TREES BEING SPONTANEO USLY GROWN WITHOUT ANY HUMAN EFFORT OF CULTIVATION. HENCE, THE INCOME DERI VED FROM THE SALE OF TIMBERS SHOULD NOT BE TREATED AS AGRICULTURAL INCOM E AS PER SEC 2(1A) OF THE INCOME-TAX ACT, 1961 [THE ACT]. ACCORDINGLY, H E INVOKED THE PROVISIONS OF SECTION 263 OF THE ACT AND AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, HE HELD AS UNDER:- THE ABOVE SUBMISSION OF THE ASSESSEE HAVE BEEN CAR EFULLY CONSIDERED WITH THE FACTS AND OTHER CIRCUMSTANCES O F THE CASE AND THE ASSESSEE'S REQUEST FOR DROPPING THE PROCEEDINGS UNDER SECTION 263 IS NOT ACCEPTABLE, SINCE THE ASSESSEE'S CLAIM O F PLANTATION AND CULTIVATION OF TIMBER TREES AS ONE OF THE ASSESSEE' S REGULAR AGRICULTURAL ACTIVITIES, NEEDS THOROUGH VERIFICATIO N BY WAY OF FIELD INQUIRES, REQUIREMENT OF GOVT. AUTHORITIES PERMISSI ON FOR CULTIVATION, ETC. IN THE INSTANT CASE, THIS ASPECT HAS NOT BEEN EXAMINED BY THE AO WHILE COMPLETING THE ASSESSMENT. NO ENQUIRES HAVE BEEN CONDUCTED ON THIS ASPECT. IN VIE W OF THE ABOVE, THE ISSUES ARE REMITTED BACK TO FILE OF A.O, WITH A DIRECTION TO RE-EXAMINE THE ISSUES IN ACCORDANCE WITH LAW AFT ER CAUSING NECESSARY ENQUIRIES AND AFTER AFFORDING ADEQUATE OP PORTUNITIES TO THE ASSESSEE. ITA NO. 1018/BANG/2019 PAGE 4 OF 7 3. AGAINST THE IMPUGNED ORDER OF THE PR.CIT, THE AS SESSEE IS IN APPEAL BEFORE US. 4. AT THE OUTSET, THERE IS A DELAY OF 353 DAYS IN F ILING THIS APPEAL BEFORE THE TRIBUNAL. THE ASSESSEE HAS FILED PETITION FOR CONDONATION OF DELAY AS FOLLOWS:- THE PETITIONER SUBMITS THAT THE ORDER OF THE PR. COMMISSIONER OF INCOME-TAX-2, MADURAI DATED 15.02.2 018 WAS RECEIVED ON 26.03.2018. THE APPEAL TO THE APPELLATE TRIBUNAL OUGHT TO HAVE BEEN FILED ON OR BEFORE 25.05.2018 IN STEAD, THE APPEAL WAS FILED ON 08.05.2019 RESULTING IN A DELAY OF 353 DAYS. THE PETITIONER SUBMITS THAT AFTER THE ORDER OF THE PR. CIT WAS SERVED, THERE WAS A MARRIAGE FUNCTION IN THE HO USE. LATER, THE ASSESSEE FELL SICK FOR A BRIEF PERIOD. THE AUDITOR WHO HAD BEEN ATTENDING TO THE TAX MATTERS OF ASSESSEE ALSO DID N OT INFORM THE ASSESSEE OF THE NEED TO FILE AN APPEAL. IN THE COMM OTION OF THESE HAPPENINGS, THE ASSESSEE FAILED TO BRING TO THE NOT ICE OF THE CHARTERED ACCOUNTANT ABOUT THE RECEIPT OF THE ORDER OF CIT. THE RECEIPT OF THE ORDER WAS BROUGHT TO LIGHT ONLY WHEN THE ASSESSING OFFICER TOOK UP THE MATTER TO GIVE EFFECT TO THAT O RDER IN THE MONTH OF DECEMBER. BY THAT TIME, THE ASSESSEE HAD APPOINT ED A NEW AUDITOR, MR.S.GURUMURTHY, TO TAKE CARE OF HIS TAX M ATTERS. AT THAT POINT OF TIME, THE ASSESSEE WAS ADVISED TO FILE AN APPEAL CHALLENGING THE ORDER PASSED UNDER SEC.263. THEN, T HE ASSESSEE RECOVERED THE ORDER AND HANDED IT OVER TO THE CHART ERED ACCOUNTANT FOR PREPARATION AND FILING OF APPEAL. TH EREAFTER, MY AUDITOR TOOK STEPS TO DRAFT THE APPEAL AND SEND IT ACROSS FOR MY SIGNATURE. THE APPEAL WAS EVENTUALLY FILED ON 08.05 .2019 WITH A RESULTANT DELAY OF 353 DAYS. THE PETITIONER SUBMITS THAT THE DELAY WAS NEITHER W ILFUL NOR WANTON BUT DUE TO CIRCUMSTANCES BEYOND THE CONT ROL OF THE ASSESSEE. IF THE DELAY IS NOT CONDONED AND THE APPE AL DISPOSED OF ON MERITS, THE ASSESSEE WOULD BE PUT TO CONSIDERABL E HARDSHIP AND INJURY. THE CONDONATION OF DELAY AND DISPOSAL OF TH E APPEAL ON MERITS WOULD GIVE AN OPPORTUNITY TO THE ASSESSEE TO ADDRESS THE ISSUE ON MERITS AND CANCEL THE ADDITION, WHICH OTHE RWISE WOULD BE FASTENED ON THE ASSESSEE. ITA NO. 1018/BANG/2019 PAGE 5 OF 7 IT IS THEREFORE PRAYED THAT THE HON'BLE TRIBUNAL MA Y BE PLEASED TO CONDONE THE DELAY OF 353 DAYS IN FILING THE APPEAL, ADMIT THE SAME, HEAR AND DISPOSE IT OFF ON MERITS A ND THUS RENDER JUSTICE. 5. THE LD. AR PRAYED FOR CONDONATION OF DELAY FOR T HE REASONS MENTIONED IN THE PETITION. 6. THE LD. DR STRONGLY OPPOSED THE SAME AND SUBMITT ED THAT THE DELAY WAS NOT EXPLAINED BY THE ASSESSEE PROPERLY AND THER E IS NO SUFFICIENT AND GOOD REASON TO CONDONE THE DELAY. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. IN THIS CASE, THE PR. CIT PASSED THE ORDER ON 15.2. 2018 RECEIVED BY THE ASSESSEE ON 26.3.2018. THE APPEAL OUGHT TO HAVE BE EN FILED BY THE ASSESSEE ON OR BEFORE 25.5.2018 BEFORE THIS TRIBUNA L. HOWEVER, THE APPEAL WAS FILED ON 8.5.2019. THUS THERE WAS A DEL AY OF 353 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL. THE ASSESSEE EXPLA INED THAT THE ASSESSEE FELL SICK DURING THE PERIOD. ALSO, THE AUDITOR ATT ENDING THE TAX MATTERS OF THE ASSESSEE DID NOT INFORM THE ASSESSEE OF THE NEED TO FILE AN APPEAL AGAINST THE IMPUGNED ORDER U/S. 263 OF THE ACT. AT THE SA ME TIME, IT IS MENTIONED BY THE ASSESSEE THAT IT FAILED TO BRING TO THE NOTI CE OF THE CA ABOUT THE RECEIPT OF THE IMPUGNED ORDER. THIS WAS INFORMED T O THE CA ONLY AFTER THE AO TOOK UP THE MATTER TO GIVE EFFECT TO THE ORDER O F THE PR.CIT. AT THAT TIME, THE ASSESSEE APPOINTED A NEW AUDITOR TO TAKE CARE O F THIS MATTER. THE SUBMISSIONS OF THE ASSESSEE HEREIN ARE VERY CONTRAD ICTORY IN NATURE AND ALSO NOT BASED ON ANY MATERIAL BROUGHT ON RECORD. FIRST OF ALL, THERE IS NO MEDICAL CERTIFICATE TO SHOW THAT THE ASSESSEE FELL SICK. THE ASSESSEE HAS ALLEGED THAT THE AUDITOR HAS NOT BROUGHT THE MATTER TO THE KNOWLEDGE OF ASSESSEE ABOUT THE NEED TO FILE APPEAL. IN THE SAM E BREATH, THE ASSESSEE STATED THAT IT FAILED TO BRING IT TO THE NOTICE OF THE CA ABOUT THE RECEIPT OF THE IMPUGNED ORDER. OUT OF THESE REASONS, WHICH IS THE CORRECT ONE, WE DO NOT ITA NO. 1018/BANG/2019 PAGE 6 OF 7 KNOW. IN OUR OPINION, THE ASSESSEE HAS NOT COME UP WITH CLEAN HANDS AND ITS ACTION CANNOT BE SAID TO BE BONA FIDE. THERE I S NO REASON AS TO WHY THE ASSESSEE OUGHT NOT TO HAVE FILED THE APPEAL BEFORE THIS TRIBUNAL IN TIME UPON COMING TO KNOW OF THE PASSING OF THE IMPUGNED ORDER OF THE PR. CIT U/S. 263 OF THE ACT. 8. THE SUBMISSIONS OF THE ASSESSEE DO NOT INSPIRE A NY CONFIDENCE OF EXISTENCE OF A BONA FIDE REASON. FIRSTLY, THE VERY FACT THAT THE ASSESSEE DID NOT EXPLAIN THE REASON FOR DELAY IN FILING THE APPE AL BEFORE THIS TRIBUNAL ON ACCOUNT OF MEDICAL REASON AS THERE IS NO SUPPORTING DOCUMENT TO SAY THAT THE ASSESSEE FELL SICK. SECONDLY, THE ASSESSEE SUB MITTED THAT IT FAILED TO BRING TO THE NOTICE OF THE AUDITOR WHO HAD BEEN ATT ENDING THE TAX MATTERS OF ASSESSEE ALSO DID NOT INFORM THE ASSESSEE OF THE NE ED TO FILE APPEAL BEFORE THE TRIBUNAL. EVEN HERE, THE ASSESSEE HAS NOT MENT IONED THE NAME OF THE AUDITOR WHO ATTENDED BEFORE THE PR.CIT DURING THE C OURSE OF PROCEEDINGS U/S. 263 OF THE ACT. THIRDLY, IT WAS STATED THERE WAS A MARRIAGE IN THE FAMILY DURING THE TIME WHEN IT RECEIVED THE IMPUGNE D ORDER OF PR.CIT. EVEN HERE, THE ASSESSEE HAS NOT MENTIONED WHICH FAMILY M EMBERS MARRIAGE WAS HELD DURING THIS PERIOD. EACH AND EVERY INFORM ATION IS NOT DISCLOSED BY THE ASSESSEE. IN SUCH CIRCUMSTANCES, IN OUR OPINIO N, THE ASSESSEE HAS NOT EXPLAINED THE REASON FOR DELAY IN FILING THE APPEAL BEFORE THIS TRIBUNAL SUFFICIENTLY AND THERE WAS INORDINATE DELAY IN FILI NG THE APPEAL. LAW ASSISTS THOSE WHO ARE VIGILANT, NOT THOSE WHO SLEEP OVER TH EIR RIGHTS. THE DELAY CANNOT BE CONDONED SIMPLY BECAUSE THE ASSESSEES CA SE IS HARD AND CALLS FOR SYMPATHY OR MERELY OUT OF BENEVOLENCE TO THE PA RTY SEEKING RELIEF. IN GRANTING THE INDULGENCE AND CONDONING THE DELAY IT MUST BE PROVED BEYOND THE SHADOW OF DOUBT THAT THE APPELLANT WAS DILIGENT AND WAS NOT GUILTY OF NEGLIGENCE WHATSOEVER. THE SUFFICIENT CAUSE WITHI N THE CONTEMPLATION OF THE LIMITATION PROVISION MUST BE A CAUSE WHICH IS B EYOND THE CONTROL OF THE PARTY INVOKING THE AID OF THE PROVISIONS. THE CAUSE FOR THE DELAY IN FILING THE ITA NO. 1018/BANG/2019 PAGE 7 OF 7 APPEAL WHICH BY DUE CARE AND ATTENTION COULD HAVE B EEN AVOIDED CANNOT BE A SUFFICIENT CAUSE WITHIN THE MEANING OF THE LIM ITATION PROVISION. WHERE NO NEGLIGENCE, NOR INACTION, OR WANT OF BONA FIDES CAN BE IMPUTED TO THE APPELLANT A LIBERAL CONSTRUCTION OF THE PROVISIONS HAS TO BE MADE IN ORDER TO ADVANCE SUBSTANTIAL JUSTICE. IN THE PRESENT CASE, THE REASONS FOR DELAY IN FILING THE APPEAL IS NOT SUFFICIENTLY EXPLAINED BY THE ASSESSEE AND IT SHOWS THAT THE DELAY WAS DUE TO NEGLIGENCE AND INACTION O N THE PART OF ASSESSEE WHICH CANNOT BE CONDONED. THEREFORE, WE DISMISS TH E PETITION FOR CONDONATION OF DELAY AND ACCORDINGLY THE APPEAL IS UNADMITTED. 9. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS DIS MISSED. PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF OCTOBER, 2021. SD/- SD/- ( BEENA PILLAI ) ( CHANDRA POOJARI ) JUDICIAL MEMBER AC COUNTANT ME MBER BANGALORE, DATED, THE 25 TH OCTOBER, 2021. / DESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.