M/S.DEDHIA HOUSING CORPORATION, MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX 22(1), MUMBAI

ITA 1274/MUM/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7087 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 05-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Assessee Lawyers: DR P DANIEL
• Keywords: Right to appeal
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER & SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.1274/MUM/2018 ASSESSMENT YEAR : 2010-11 M/S DEDHIA HOUSING CORPORATION PLOT NO.231/6, 1 ST FLOOR, MANJU APPT., R B MEHTA MARG, GHATKOPAR (E), MUMBAI 400 077. PAN AAAFD2512Q VS. THE DCIT CIRCLE 22(1), MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : DR P DANIEL RESPONDENT BY : SHRI RAM TIWARI DATE OF HEARING : 1 6 .0 4 .201 8 DATE OF PRONOUNCEMENT : 31.05.2018 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSE E AGAINST THE IMPUGNED ORDER DATED 02.09.2013, PASSED BY THE CIT( A)- 33, MUMBAI, FOR THE ASSESSMENT YEAR 2010-11. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED C.I.T. (A) ERRED IN LAW AND ON FAC TS IN CONFIRMING THE DISALLOWANCES OF PURCHASES OF RS. 29,47,054/- O UT OF THE TOTAL PURCHASES. 2. THE LEARNED C.I.T. (A) ERRED IN LAW AND IN FACT S IN DISALLOWING THE GENUINE PURCHASES WHICH WERE USED IN THE CONSTR UCTION WORK AND THE PAYMENTS WERE MADE BY A/C PAYEE CHEQUES. 3. THE LEARNED C.I.T. (A) ERRED IN LAW AND ON FACT S CONFIRMING THE AVERMENTS MADE BY THE A.O. IN THE ASSESSMENT ORDER. 4. THE ORDER PASSED BY THE LEARNED C.I.T. (A) IS B AD IN LAW. ITA NO.1274/MUM/2018 DEDHIA HOUSING CORPORATION 2 3. AT THE OUTSET, THE BENCH RAISED A QUERY ON THE C OUNSEL OF THE ASSESSEE QUA THE APPEAL OF THE ASSESSEE BEING TIME BARRED BY 1085 DAYS, TO WHICH THE LEARNED AR ADMITTED AND TRIED TO EXPLAIN THE SAID D ELAY BY REFERRING TO THE COPY OF THE AFFIDAVIT AND OTHER EVIDENCES FILED FOR EXPLAINING THE SAID DELAY. THE LEARNED AR SUBMITTED THAT THE ORDER PASSED BY T HE CIT(A) DATED 02.09.2013 WAS RECEIVED BY THE ASSESSEE ON 15.01.20 15, FOR WHICH THE DUE DATE FOR FILING THE APPEAL BEFORE THE TRIBUNAL WAS 16.03.2015, WHEREAS THE APPEAL WAS FILED ON 07.03.2018 THEREBY DELAYED BY A PERIOD OF 1087 DAYS. THE LEARNED AR SUBMITTED THAT WHEN THE APPELLATE OR DER WAS RECEIVED, THE THEN PARTNER SHRI JAYESH DEDHIA WAS NOT KEEPING WEL L, HE HAD SUFFERED HEART ATTACK AND, HENCE, ADVISED COMPLETE BED REST FOR TW O WEEKS. IN THE MEAN TIME, THE ORDER OF THE CIT(A) WAS LYING WITH THE TH EN ACCOUNTANT OF THE ASSESSEE, WHO LEFT THE JOB IN APRIL 2015 AND, THERE AFTER, A NEW ACCOUNTANT WAS APPOINTED. THE ASSESSEE CAME TO KNOW ABOUT THE NON-FILING OF APPEAL ONLY WHEN THE PENALTY APPEAL WAS LISTED FOR HEARING AND IT WAS FOUND THAT NO QUANTUM APPEAL WAS FILED AGAINST THE ORDER OF THE C IT(A). THEREAFTER, THE APPEAL WAS FILED IMMEDIATELY. THE LEARNED AR SUBMI TTED THAT THE DELAY IN FILING THE APPEAL WAS UNINTENTIONAL, NOT DELIBERATE AND IT OCCURRED DUE TO THE THINGS WHICH WERE BEYOND THE CONTROL OF THE ASSESSE E. THE LEARNED AR FURTHER SUBMITTED THAT THE REASONS FOR DELAY BEING GENUINE, THE ASSESSEE MAY BE PARDONED AND THE DELAY BE CONDONED. HE FURTHER PLACED RELIANCE ON THE DECISIONS OF THE APEX COURT IN THE CASE OF N BALAKR ISHNAN VS. M KRISHNAMOORTHY (AIR 1998 SC 3222) AND THAT OF NATIO NAL THERMAL POWER COMPANY LTD. VS. CIT 229 ITR 383 (SC). DURING THE COURSE OF HEARING, THE ASSESSEE ALSO FILED COPIES OF THE PRESCRIPTION OF T HE DOCTOR ADVISING THE PARTNER SHRI JAYESH DEDHIA, COMPLETE BED REST FROM TIME TO TIME. ITA NO.1274/MUM/2018 DEDHIA HOUSING CORPORATION 3 4. THE LEARNED DR, ON THE OTHER HAND, STRONGLY OBJE CTED TO THE ADMISSION OF APPEAL AS THE SAME IS DELAYED EXTRAORDINARILY BY 1087 DAYS AND, MOREOVER, THE ASSESSEE HAS FAILED MISERABLY TO EXPLAIN THE DE LAY IN FILING THE APPEAL. HE THEREFORE, CONTENDED THAT THE APPEAL OF THE ASSESSE E SHOULD BE DISMISSED AS BEING TIME BARRED. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND HAVE CAREFUL LY PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE APPEAL OF THE ASSESSEE IS DELAYED BY 1087 DAYS, WHICH HAS BEEN SUBMITTED TO BE ON ACC OUNT OF POOR HEALTH OF THE THEN PARTNER SHRI JAYESH M DEDHIA, WHO SUFFERED A HEART ATTACK AND HAD BEEN ADVISED COMPLETE BED REST. THE DELAY IS ALSO STATED TO BE ATTRIBUTED TO THE RESIGNATION OF THE ACCOUNTANT OF THE ASSESSEE, WHO LEFT THE JOB AND IN PLACE A NEW PERSON WAS RECRUITED. THE NEW RECRUIT WAS COMPLETELY UNAWARE OF ANY SUCH APPEAL. THE ASSESSEE FINALLY CAME TO K NOW ABOUT NON FILING OF THE APPEAL ONLY WHEN THE PENALTY APPEAL WAS LISTED FOR HEARING. HAVING EXAMINED THE FACTS IN TOTAL AND WEIGHING THE SAME I N THE LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS, ESPECIALLY THAT OF HON'BLE APEX COURT IN THE CASE OF N BALAKRISHNAN VS. M KRISHNAMOORTHY AND NATIONAL TH ERMAL POWER COMPANY LTD. VS. CIT (SUPRA), WE ARE OF THE VIEW THAT THE R ULES OF LIMITATION ARE NOT MEANT TO DESTROY THE RIGHT OF THE PARTIES. THEY AR E MEANT TO SEE THAT PARTIES DO NOT RESORT TO DILATORY TACTICS, THEIR REMEDY PRO MPTLY. THE OBJECT OF PROVIDING LEGAL REMEDY IS TO REPAIR THE DAMAGE CAUS ED BY REASON OF LEGAL INJURY. THE LAW OF LIMITATION FIXES A LIFE SPAN FO R SUCH LEGAL REMEDY FOR THE REDRESS OF THE LEGAL INJURY SO SUFFERED. TIME IS P RECIOUS AND THE WASTED TIME WOULD NEVER BE RECALLED. THE HON'BLE SUPREME COURT ALSO NOTED THAT SUFFICIENT CAUSE UNDER SECTION 5 OF THE LIMITATION ACT SHOULD RECEIVE A LIBERAL CONSTRUCTION SO AS TO ADVANCE SUBSTANTIAL JUSTICE T O THE AGGRIEVED PARTIES. WE, THEREFORE, KEEPING IN THE VIEW THE RATIO LAID D OWN BY THE APEX COURT IN BOTH THE ABOVE CASES, ARE INCLINED TO CONDONE THE D ELAY AND ADMIT THE APPEAL FOR ADJUDICATION IN THE FOREGOING PARAS. ITA NO.1274/MUM/2018 DEDHIA HOUSING CORPORATION 4 6. THE ONLY ISSUE RAISED IN THE APPEAL IS AGAINST T HE CONFIRMATION OF THE DISALLOWANCE OF PURCHASES OF RS 29,47,054/- BY THE CIT(A) IGNORING THE FACT THAT ALL THESE PURCHASES WERE GENUINE AND THE MATER IAL PURCHASED WERE USED IN THE CONSTRUCTION ACTIVITY AND THE PAYMENT TO THE PARTIES WERE MADE BY ACCOUNT PAYEE CHEQUES. 7. THE FACTS IN BRIEF ARE THAT THE AO DURING THE CO URSE OF ASSESSMENT PROCEEDINGS ISSUED NOTICES U/S. 133(6) OF THE ACT T O THE PARTIES TO VERIFY THE PURCHASES BY THE ASSESSEE. HOWEVER, THE NOTICES IN RESPECT OF THREE PARTIES, VIZ. M/S. RATNADEEP TUBES, VEER INDUSTRIES AND CHET NA ENTERPRISES FROM WHOM PURCHASES TOTALLING TO RS 29,47,054/- WERE MAD E, RETURNED UN-SERVED BY THE POSTAL AUTHORITIES. THE ASSESSEE WAS ASKED TO PRODUCE THESE PARTIES IN ORDER TO VERIFY THEM AND PROVE THE GENUINENESS O F THE TRANSACTIONS. HOWEVER, THE ASSESSEE VIDE LETTER DATED 14.02.2013 SUBMITTED THAT THE PARTIES WERE NOT TRACEABLE AND, THEREFORE, IT WAS N OT IN A POSITION TO PRODUCE THE SAID PARTIES. THE ASSESSEE ALSO ADMITTED THAT IN ORDER TO BUY PEACE OF MIND IT VOLUNTARILY OFFERED TO ADD THE SAID PURCHAS ES TO ITS TOTAL INCOME SUBJECT TO NO FURTHER ACTION. 8. HOWEVER, THE ASSESSEE BEING AGGRIEVED BY THE SAI D ADDITION FILED APPEAL BEFORE THE CIT(A) ON THE GROUND THAT THE MAT ERIAL PURCHASED WERE USED IN THE CONSTRUCTION ACTIVITY AND THE PAYMENT T O THE PARTIES WERE MADE BY ACCOUNT PAYEE CHEQUES. IT WAS ALSO PLEADED THAT THE MERE FACT THAT THE PARTIES ARE NOT TRACEABLE CANNOT BE THE SOLE GROUND FOR MAKING THE ADDITION IN THE HANDS OF THE ASSESSEE. IT WAS ALSO CONTENDED B EFORE THE CIT(A) THAT THE SUBMISSIONS BEFORE THE ASSESSING OFFICER VIDE LETTE R DATED 14.02.2013 WAS WITHOUT PREJUDICE TO THE ADDITIONS OFFERED AND RESE RVING THE RIGHT TO APPEAL AND NO ADVERSE ACTION ON THE ASSESSEE. HOWEVER, WH EN THE SAME WAS NOT FOLLOWED AND COMPLIED WITH BY THE DEPARTMENT, THE A SSESSEE HAS FILED THE APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE S UBMISSIONS OF THE ASSESSEE ITA NO.1274/MUM/2018 DEDHIA HOUSING CORPORATION 5 DID NOT FIND FAVOUR OF THE CIT(A), WHO UPHELD THE A DDITION MADE BY THE ASSESSING OFFICER BY OBSERVING AS UNDER: '9. I HAVE PERUSED THE CONTENTS OF THE LETTER DATED 14.02.2013 WHICH THE APPELLANT HAS FILED BEFORE THE A.O. IN AS SESSMENT PROCEEDINGS WHEREIN IT HAD CATEGORICALLY BEEN SUBMI TTED THAT IF ITS CONTENTIONS WITH REGARD TO THE GENUINENESS OF PURCH ASES WERE NOT ACCEPTED BY THE A.O., THEN IN ORDER TO BUY PEACE OF MIND, THE APPELLANT WOULD OFFER TO ADD VALUE OF PURCHASES AMO UNTING TO RS 29,47,054/-. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF RAMESH CHANDRA & CO. VS. CIT (35 TAXMANN 153) (BOM )168 ITR 375, HELD THAT WHERE AN ASSESSEE HAS MADE A STATEME NT OF FACTS, HE CAN HAVE NO GRIEVANCE IF THE TAXING AUTHORITY TA XES HIM IN ACCORDANCE WITH THE STATEMENT. IN THE PRESENT CASE , THE APPELLANT HAD VOLUNTARILY OFFERED THE VALUE OF PURCHASES TO B E ADDED TO HIS TOTAL INCOME AND THERE IS NOTHING ON RECORD TO SUGG EST THAT THE APPELLANT WAS FORCED OR COERCED OR INFLUENCED IN FI LING A LETTER BEFORE THE A.O. EVEN ON THIS ACCOUNT, I DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE A.O. THE ACTION OF THE A.O. IN TREATING THE PURCHASES OF RS 29,47,054/- AS BOGUS P URCHASES IS UPHELD. THIS GROUND IS DISMISSED.' 9. WE HAVE HEARD RIVAL SUBMISSIONS AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE, A PARTNERSHIP FIRM, IS ENGAGED IN THE BUSINESS OF CONSTRUCTION. D URING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER COULD NOT VERIFY PURCHASES FROM THREE PARTIES AS STATED HEREIN ABOVE, AMOUNTING TO RS.29, 47,054/-. THE NOTICES ISSUED U/S. 133(6) OF THE ACT WERE RETURNED UN-SERV ED BY THE POSTAL AUTHORITIES. THE LEARNED CIT(A) DISMISSED THE APPEA L OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE ITSELF HAD VOLUNTARILY OFF ERED THE VALUE OF PURCHASES TO BE ADDED TO HIS TOTAL INCOME WHEN IT WAS CONFRON TED WITH THE FACT OF NON SERVICE OF NOTICES ISSUED UNDER SECTION 133(6). THE ASSESSEE ALSO COULD NOT PRODUCE THE SAID PARTIES BEFORE THE ASSESSING OFFIC ER. WE FIND MERIT IN THE CONTENTION OF THE LEARNED AR THAT THE PURCHASES IN THE PRESENT CASE ARE NOT BOGUS AND THE PARTIES INVOLVED ARE NOT DECLARED AS HAWALA PARTIES BY THE SALES TAX DEPARTMENT OF GOVERNMENT OF MAHARASHTRA. THE LEARNED AR ALSO ITA NO.1274/MUM/2018 DEDHIA HOUSING CORPORATION 6 CONTENTED BEFORE US THAT THE ASSESSING OFFICER HAS NOT DISPUTED THE CORRESPONDING CONSUMPTION IN THE CONSTRUCTION AND S ALES OF THE ASSESSEE. AFTER CAREFULLY ANALYZING THE FACTS ON RECORD AND S UBMISSIONS OF THE RIVAL PARTIES, WE FIND THAT IN SIMILAR CASE THE CO- ORDIN ATE BENCH OF THE TRIBUNAL HAS BEEN TAKING A CONSISTENT VIEW THAT EVEN IF THE PURC HASES ARE NOT GENUINE OR ARE BOGUS THE ENTIRE ADDITION TO THE INCOME OF THE ASSESSEE IS UNCALLED FOR AND WRONG. THE PURPOSE OF THE STATUTE IS ONLY TO TA X THE INCOME OF THE ASSESSEE, WHICH IS ONLY A FRACTION OF THE TOTAL PUR CHASES. UNDER THESE CIRCUMSTANCES WE ARE OF THE CONSIDERED VIEW THAT TH E TOTAL ADDITION TO THE INCOME OF THE ASSESSEE ON ACCOUNT OF PURCHASES FROM THREE PARTIES IS NOT JUSTIFIED AND CANNOT BE SUSTAINED. WE, THEREFORE, D EEM IT FIT AND PROPER TO APPLY A GROSS PROFIT RATE OF 4% AND SET ASIDE THE O RDER OF THE CIT(A). THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY. 10. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 31 ST MAY,2018 SD/- SD/- (SAKTIJIT DEY) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 31 ST MAY 2018 SA COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. THE CIT 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER, //TRUE COPY// (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAIZ