Pepperl & Fuchs (India) Private Limited, Bangalore V. DCIT, Bangalore

ITA 1282/BANG/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5655 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 31-07-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 27-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR P V PRADEEP KUMAR ACIT
• Keywords: Depreciation; Opportunity of being heard; Reasonable cause; Condonation of delay; Revised return
• Section: 143(3); 115JB; 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH C BEFORE SHRI JASON P BOAZ , ACCOUNTANT MEMBER AND SHRI LALIT KUMAR, JUDICIAL MEMBER I.T . A. NO. 1282 /BANG/20 16 (ASSESSMENT YEAR : 20 04 - 05 ) M/S. PEPPERL & FUCHS (INDIA) PVT. LTD., NO.546/1, 7 TH MAIN, 4 TH PHASE, PEENYA INDL. ESTATE, BANGALORE - 560 058 . . APPELLANT. VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE 5(1)(2), BANGALORE. .. RESPONDE NT. APPELLANT BY : SHRI S. P. CHIDAMBARAM, ADVOCATE. R E SPONDENT BY : DR. P. V. PRADEEP KUMAR, ACIT (D.R) DATE OF H EARING : 14.12.2017. DATE OF P RONOUNCEMENT : 17.01.2018 . O R D E R PER SHRI JASON P BOAZ, A .M . : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 5 , BANGALORE DT. 3/3/2016 FOR THE ASSESSMENT YEAR 20 04 - 05. 2. BRIEFLY STATED, THE FACTS RELEVANT FOR DISPOSAL OF THIS APPEAL ARE AS UNDER : - 2 IT A NO. 1282 /BANG/201 6 2.1 THE ASSESSEE , A COMPANY ENGAGED IN THE MANUFACTURE AND TRADING OF ELECTRONIC ITEMS AND SOFTWARE DEVELOPMENT, FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2004 - 05 ON 1.11.2004 DECLARING NIL INCOME AFTER SETTING OFF BROUGHT FORWARD UNABSORBED LOSSES AND DEPRECIATION. BOOK PROFITS WERE COMPUTED UNDER SECTION 115JB OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') AT NIL. ON 31.3.2006, THE ASSESSEE FILED A REVISED RETURN OF INCOME DECLARING NIL INCOME, CLAIMING DEDUCTION OF RS.34,08,890 UNDER SECTION 10B OF THE ACT BEFORE SET OFF OF BROUGHT FORWARD LOSS AND DEPRECIATION. BOOK PROFITS UNDER SECTION 115JB OF THE ACT WERE COMPUTED AT RS. 28,61,369. THE CA SE WAS TAKEN UP FOR SCRUTINY AND THE ASSESSMENT WAS CONCLUDED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DT.28.09.2006, WHEREIN THE ASSESSEE'S INCOME WAS DETERMINED AT RS.2,35,016 AND BOOK PROFITS UNDER SECTION 115JB OF THE ACT AT RS.56,07,310. 2.2 A GGRIEVED BY THE ORDER OF ASSESSMENT DT.28.09.2006 FOR ASSESSMENT YEAR 2004 - 05, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT (APPEALS) 5, BANGALORE, WHICH WAS FILED BELATEDLY BY 183 DAYS. THE LEARNED CIT (APPEALS) DISMISSED THE ASSESSEE'S APPEAL, IN LIMIN E, VIDE ORDER DT.3.3.2016 BY N OT CONDONING THE AFORESAID DELAY IN FILING THE APPEAL AND WITHOUT ADJUDICATING THE GROUNDS RAISED BY THE ASSESSEE ON MERITS, ON THE VARIOUS ADDITIONS / DISALLWOANCES MADE BY THE ASSESSING OFFICER IN THE ORDER OF ASSESSMENT FOR ASSESSMENT YEAR 2004 - 05. 3 IT A NO. 1282 /BANG/201 6 3. THE ASSESSEE, BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT (APPEALS) DT.3.3.2016 HAS FILED THIS APPEAL BEFORE THE TRIBUNAL, RAISING THE FOLLOWING GROUNDS : - 4 IT A NO. 1282 /BANG/201 6 4. GROUND NO. 1 (1.1 AND 1.2) CONDONATION OF DELAY IN FILING APPEAL BEFORE THE CIT (APPEALS) . 4.1 AT THE OUTSET, THE LEARNED AUTHORISED REPRESENTATIVE FO R THE ASSESSEE URGED GROUND NO.1 (1.1 AND 1.2) ASSAILING THE IMPUGNED ORDER OF THE LEARNED CIT (APPEALS), WHEREIN THE ASSESSEE'S APPEAL WAS DISMISSED IN LIMINE BY NOT CONDONING THE DELAY OF 183 DAYS IN FILING THE APPEAL BEFORE THE CIT (APPEALS), INSPITE OF THERE BEING SUFFICIENT AND REASONABLE CAUSE FOR SUCH DELAY. IT IS AN UNDISPUTED FACT THAT THE ORDER OF ASSESSMENT DT.28.9.2006 FOR ASSESSMENT YEAR 20 04 - 05 WAS SERVED ON THE ASSESSEE ONLY ON 6.11.2012, MORE THAN 6 YEARS AFTER THE ORDER WAS PASSED. ACCORDING TO THE LEARNED AUTHORISED REPRESENTATIVE, THE ASSESSEE FILED A PETITION DT.1 8.05.2016 REQUESTING FOR CONDONATION OF DELAY ACCOMPANIED BY AN AFFIDAVI T DT. 18.05.2016 SWORN TO BY THE AUTHORIZED SIGNATORY OF THE ASSESSEE. IN THE AFFIDAVIT, IT WAS SUBMITTED THAT THE AFORESAID DELAY OF 183 DAYS WAS DUE TO THE SHIFTING OF THE ASSESSEE'S OFFICE DUE TO WHICH IT HAD TAKEN THE ASSESSEE SOME TIME TO SEARCH THE RECORDS. IT IS SUBMITTED THAT AS SOON AS THE RECORDS WERE LOCATED, THE ASSESSEE TOOK STEPS TO FILE THE APPEAL FOR ASSESSMENT YEAR 5 IT A NO. 1282 /BANG/201 6 2004 - 05 WHICH RESULTED IN THE AFORESAID DELAY IN FILING THE APPEAL. ACCORDING TO THE LEARNED AUTHORISED REPRESENTATIVE, THE ASSESSEE HAS NOT FILED THE APPEAL BELATEDLY BEFORE THE CIT (APPEALS) WILLFULLY OR WITH MALA FIDE INTENTION AS THAT WOULD JEOPARDIZE HIS OWN CASE, WHICH NO NORMAL PERSON WOULD DO; MORE SO, WHEN THE ASSESSMENT ORDER RESULTED IN HUGE ADDITIONS RESULTING IN T HE RAISING OF DEMAND OF RS. 2,87,997 AS AGAINST NIL RETURNED INCOME. THE LEARNED AUTHORISED REPRESENTATIVE CONTENDS THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS NARRATED ABOVE, IT CANNOT BE SAID THAT THERE WAS ANY MALA FIDE INTENTION ON THE PART OF THE ASSESSEE NOT TO FILE THE APPEAL ON TIME. IT IS SUBMITTED THAT IT IS SETTLED POSITION THAT LEGITIMATE TAXES ALONE SHOULD BE COLLECTED. THEREFORE, IF THE ASSESSEE'S DELAY IN FILING THE APPEAL IS NOT CONDONED, TH E ASSESSEE WOULD BE PUT TO FINANCIAL DIF FICULTY AND HARDSHIP. W HEREAS IF THE DELAY IS CONDONED AND THE APPEAL IS HEARD ON MERITS , THERE WILL BE NO LOSS TO REVENUE AS LEGITIMATE TAXES DUE ONLY WILL BE COLLECTED. IT WAS PRAYED BY THE LEARNED AUTHORISED REPRESENTATIVE THAT IN THE FACTS AND CIRCUMS TANCES OF THE CASE AND IN THE INTEREST OF JUSTICE, THE DELAY OF 183 DAYS IN FILING THE APPEAL BEFORE THE LEARNED CIT (APPEALS) BE CONDONED AND THE LEARNED CIT (APPEALS) BE DIRECTED TO HEAR AND DISPOSE OFF THE ASSESSEE'S APPEAL ON MERITS. IN SUPPORT OF THE ASSESSEE'S CASE, RELIANCE WAS PLACED ON THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF MST. KATIJI & OTHERS (1987) 167 ITR 471 (SC) WHEREIN THE PRINCIPLES FOR DEALING WITH MATTERS FOR CONDONATION OF DELAY HAVE BEEN LAID DOWN. 6 IT A NO. 1282 /BANG/201 6 4.2 PER CONTRA, T HE LEARNED DEPARTMENTAL REPRESENTATIVE FOR REVENUE OPPOSED THE ASSESSEE'S GRO UNDS FOR CONDONATION OF DELAY. HE SUPPORTED THE IMPUGNED ORDER, STATING THAT THE LEARNED CIT (APPEALS) HAD RIGHTLY DECLINED CONDONATION OF DELAY OF 183 DAYS FOR LACK OF SUFFICIEN T CAUSE FOR THE ASSESSEE'S DEFAULT. 4.3.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. WE FIND THAT WHILE THE REASONS PUT FORTH BY THE ASSESSEE FOR THE DELAY OF 183 DAYS IN FILING THE APPEAL BEFORE T HE LD CIT(A) FIND MENTION IN THE IMPUGNED ORDER, THE LD CIT(A) HAS REJECTED THE ASSESSEE S EXPLANATIONS FOR THE SAID DELAY BASICALLY ON GROUNDS OF LACK OF SUFFICIENT CAUSE. IT APPEARS TO US, FROM A CAREFUL PERUSAL OF THE ASSESSEE S SUBMISSIONS IN RESPECT OF THE DELAY IN FILING THE APPEAL BEFORE THE CIT(A), THAT THE DELAY IN FILING THE APPEAL IS ATTRIBUTABLE TO THE SHIFTING OF THE ASSESSEE'S BUSINESS PREMISES, DURING WHICH THE SAID RECORDS PERTAINING TO ASSESSEE'S ASSESSMENT WERE MISPLACED. IT DOES NOT S TAND TO REASON THAT ANY PERSON WOULD INTENTIONALLY JEOPARDIZE ITS OWN CASE BY DELIBERATELY FILING THE APPEAL BELATEDLY; MORE SO WHEN HIS TAXABLE INCOME UNDER SECTION 115JB OF THE ACT WAS DETERMINED AT RS.5 6,07,310 , A S AGAINST NIL INCOME RETURNED, RESULTING IN TAX DEMAND OF RS.2,87,997 BEING RAISED ON ACCOUNT OF ADDITIONS / DISALLOWANCES MADE BY THE ASSESSING OFFICER IN THE ORDER OF ASSESSMENT FOR ASSESSMENT YEAR 20 04 - 05 . FURTHER, AS SEEN FROM THE ORDER OF ASSESSMENT AND AS CONTENDED BY THE ASSESSEE, THE ADD ITIONS/D ISALLOWANCES MADE BY THE AO ARE BASICALL Y FACTUAL IN NATURE AND NEED TO BE EXAMINED AND VERIFIED. ON APPEAL ALSO, 7 IT A NO. 1282 /BANG/201 6 THE LD CIT(A) WITHOUT GOING INTO AND EXAMINING THE MERITS OF THE GROUNDS RAISED BY THE ASSESSEE ON THE AFORESAID DISALLOWANCES/ADD ITIONS HAS DISMISSED THE ASSESSEE S APPEAL IN LIMINE BY DECLINING TO CONDONE THE DELAY IN FILING THE APPEAL. 4. 3 .2 THE HON BLE APEX COURT IN THE CASE OF MST. KATIJI AND OTHERS (SUPRA) HAS LAID DOWN THE PRINCIPLES FOR EXAMINING PETITIONS FOR CONDONATION OF DELAY IN FILING APPEALS, I.E, THAT SUBSTANTIAL JUSTICE SHOULD PREVAIL OVER TECHNICAL CONSIDERATIONS. IT IS SETTLED POSITION THAT WHILE CON SIDERING SUFFICIENT CAUSE THE COURT SHOULD TAKE A LIBERAL VIEW IN THE INTEREST OF SUBSTANTIAL JUSTICE, ESPECIALLY W HERE IT IS FOUND THAT THE PARTIES HAVE NOT ACTED WITH MALAFIDE INTENTIONS AND THE REASONS/EXPLANATIONS PUT FORTH ARE SATISFACTORY. IN THE CASE ON HAND, THE FACTUAL EXPLANATION PUT FORTH BY THE ASSESSEE AS THE REASONS FOR DELAY IN FILING THE APPEAL HAVE NOT BEEN CONTROVERTED BEFORE US BY REVENUE, THOUGH THE LD CIT(A) DID NOT FIND THAT SAME SUFFICIENT ENOUGH TO CONDONE THE DELAY. IN OUR VIEW, AFTER A CAREFUL PERUSAL OF THE EXPLANATIONS PUT FORTH FOR DELAY IN FILING THE APPEAL, WE FIND THAT THE ASSESSEE S DEF AULT IS NEITHER INTENTIONAL NOR MALAFIDE, AS BY FILING THE APPEAL BELATEDLY THE AS SESSEE DID NOT STAND TO BENEFIT . THE ASSESSEE'S DEFAULT HAS HAPPENED ADMITTEDLY DUE TO THE MISPLACING OF RECORDS WHILE SHIFTING OF ITS OFFICE. IN THE FACTUAL AND LEGAL MAT RIX OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSE S EXPLANATION PUT FORTH ESTABLISHES SUFFICIENT CAUSE FOR THE DELAY OF 183 DAYS IN FILING THE APPEAL BEFORE THE CIT(A). 8 IT A NO. 1282 /BANG/201 6 4. 3.3 AS MENTIONED AND DISCUSSED AT PARA 4. 3 .2 (SUPRA), THE HON B LE APEX COURT IN THE CASE OF MST. KATIJI & OTHERS (SUPRA), HAS EXPLAINED AND LAID DOWN THE PRINCIPLES TO BE KEPT IN MIND WHILE CONSIDERING AN APPLICATION FOR CONDONATION OF DELAY. THE HON BLE APEX COURT HAS EMPHASIZED THAT SUBSTANTIAL JUSTICE SHOULD PREVAI L OVER TECHNICAL CONSIDERATIONS. THE HON BLE COURT EXPLAINED THAT EVERY DAYS DELAY MUST BE EXPLAINED DOES NOT MEAN THAT A PEDANTIC APPROACH SHOULD BE TAKEN. THE DOCTRINE MUST BE APPLIED IN A RATIONAL, COMMON SENSE AND PRAGMATIC MATTER. KEEPING IN MIND THE AFORESAID PRINCIPLES LAID DOWN BY THE HON BLE APEX COURT; THE FACT THAT A LITIGANT DOES NOT STAND TO BENEFIT BY LODGING THE APPEAL LATE AND ALSO THE FACT THAT THE CONDONATION OF THE DELAY AND DIRECTING THAT THE APPEAL BE ADJUDICATED ON MERITS WOULD CAUSE N O LOSS TO REVENUE AS LEGITIMATE TAXES PAYABLE IN ACCORDANCE WITH LAW ALONE WILL BE COLLECTED, WE FIND THAT THIS IS A FIT CASE FOR CONDONATION OF DELAY OF 183 DAYS IN FILING THE APPEAL BEFORE THE LD CIT(A) AND DO SO. WE ACCORDINGLY SET ASIDE THE IMPUGNED OR DER OF THE LD CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE LD CIT(A) FOR CONSIDERATION AND ADJUDICATION ON MERITS OF THE GROUNDS RAISED BY THE ASSESSEE BEFORE HIM. NEEDLESS TO ADD, THE LD CIT(A) WILL AFFORD THE ASSESSEE AND THE AO ADEQUATE OPPORTUNITY OF BEING HEARD ON ALL ISSUES RAISED BY THE ASSESSEE IN THE APPEAL BEFORE HIM BEFORE ADJUDICATING THEREON IN ACCORDANCE WITH LAW. WE HOLD AND DIRECT ACCORDINGLY. CONSEQUENTLY, GROUND NO. 1 (1.1 AND 1.2) OF ASSESSEE'S APPEAL IS ALLOWED. 9 IT A NO. 1282 /BANG/201 6 5. IN VIEW OF OU R ORDER SETTING ASIDE THE IMPUGNED ORDER OF THE LD CIT(A) AND RESTORING THE ASSESSE S APPEAL BEFORE THE LD CIT(A) FOR ADJUDICATION ON MERITS, WE DECLINE TO ADJUDICATE ON THE GROUNDS RAISED BY THE ASESSEE AT S.NOS. 2 (2.1 & 2.2) TO 4 (4.1 TO 4.3) (SUPRA) ON VARIOUS ISSUES ON MERITS AS THE SAME HA S NOT BEEN CONSIDERED BY THE LEARNED CIT (APPEALS). 6. IN THE RESULT, THE ASSESSEE S APPEAL FOR ASST. YEAR 20 04 - 05 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPE N COURT ON THE 17TH DAY OF JAN.,2018 . SD/ - ( LALIET KUMAR ) JUDICIAL MEMBER SD/ - ( JASON P BOAZ ) ACCOUNTANT MEMBER BANGALORE, DT. 1 7.01.2018. *REDDY GP COPY TO : 1 APPELLANT 4 CIT(A) 2 RESPONDENT 5 DR. ITAT, BANGALORE 3 CIT 6 GUARD FILE SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL BANGALORE.