SHV Energy Private Limited., Hyderabad. V. Dy. Commissioner of Income Tax, Circle-3(1)., Hyderabad.

ITA 1316/Hyd/2017

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 3555 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-B
• Assessment Year: 2009-2010
• Appeal Filed On: 26-07-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: Y.V.S.T. SAI
• Keywords: Transfer pricing; Assessment record; Condonation of delay; Ignorance of law
• Section: 263; 143(3)

Judgement Text

आयकर अपीलीय अिधकरण, हैदराबाद पीठ म IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “B”, HYDERABAD BEFORE SHRI RAMA KANTA PANDA, ACCOUNTANT MEMBER & SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER आ.अपी.सं / ITA No. 1316/Hyd/2017 (िनधा रण वष / Assessment Year: 2009-10) SHV Energy Private Limited, Hyderabad [PAN No. AACCS8676D] Vs. Deputy Commissioner of Income Tax, Circle-3(1), Hyderabad अपीलाथ / Appellant यथ / Respondent िनधा रती ारा / Assessee by: Shri Aliasgar Rampurwala, AR राज व ारा / Revenue by: Shri Y.V.S.T.Sai, CIT-DR सुनवाई की तारीख/Date of hearing: 29/06/2022 घोषणा की तारीख/Pronouncement on: 25/07/2022 आदेश / ORDER PER K. NARASIMHA CHARY, JM: Aggrieved by the order dated 09/11/2015, passed by the Learned Principal Commissioner of Income Tax-3, Hyderabad (“Ld. PCIT”) in the case of M/s.SHV Energy Pvt. Ltd., (“the assessee”) for the AY.2009-10, under section 263 of the Income Tax Act, 1961 (for short “the Act”), assessee filed this appeal. ITA No. 1316/Hyd/2017 Page 2 of 11 2. Brief facts of the case are that the assessee is a company engaged in the business of import, bottling and distribution of liquefied petroleum gas and related items. For the assessment year 2009-10 they have filed their return of income on 30/09/2009 declaring an income of Rs.13,09,36,598/- and after set off of brought forward business losses declared nil income. Assessment under section 143(3) read with section 144C (5) and 144C(13) of the Act was complete by order dated 01/11/2013 where under the learned Assessing Officer made transfer pricing adjustment to the tune of Rs.2,64,46,046/-, against which the assessee filed an appeal before the Tribunal, and the Tribunal by order dated 24/12/2014 directed the Learned Transfer Pricing Officer (TPO) to assess the transfer pricing study report afresh. 3. Subsequently, Ld. PCIT, having gone through the assessment record proposed to revise the same by notice under section 263 of the Act on the ground that the assessment order is erroneous and prejudicial to the interest of Revenue. After hearing the assessee, by order dated 09/11/2015 the Ld. PCIT directed the learned Assessing Officer to revise the income of the assessee and pass an order under section 143(3) of the Act after allowing an opportunity of being heard to the assessee. Consequently learned Assessing Officer passed an order dated 30/12/2016 under section 143(3) read with section 254 and 263 of the Act. Assessee preferred an appeal against this order dated 30/12/2016 before the Ld. CIT(A). 4. As the matters stood thus, assessee claims to have been advised by an external consultant to prefer an appeal against the order dated 09/11/2015 passed by the Ld. PCIT before the Tribunal. By the time the ITA No. 1316/Hyd/2017 Page 3 of 11 time period to prefer appeal before the Tribunal was expired. Such an appeal against the order passed under section 263 of the Act was to be preferred on or before 08/01/2016. Since such time expired, assessee preferred this appeal against the order under section 263 of the Act with a delay of 566 days. The reason attributed for such delay is that the assessee was labouring under a bona fide belief that no appeal need be preferred against the order under section 263 of the Act, but it is only on the advice of the external consultant they preferred the same. He placed reliance on the decisions of the Hon’ble Apex Court reported in Collector, Land Acquisition, Anantnag Vs. Katiji, 167 ITR 471 and Motilal Padampat Sugar Mills Vs. State of UP [AIR 1979 SC 621]. 5. Per contra, Ld. DR submitted that the assessee is a well-established multinational company assisted by a battery of in-house tax professionals and they also hire the tax professionals for tax audit and the TP audit works on regular basis. Further that, althrough this time the assessee has been preferring appeals before the Tribunal and also the High Court, and for example for the assessment year 2008-09 they preferred appeal before the Tribunal in ITA No. 1632/Hyd/2012 and also filed appeal before the Hon’ble High Court for the same year in ITTA No. 406/2014. Even against the assessment order passed pursuant to the directions in section 263 of the Act the assessee preferred appeal before the Ld. CIT(A) and the Tribunal. Ld. DR further submitted that the assessee did not establish any bona fides in their favour by explaining the specific details like name of the external consultant, the date of consultation, the date of advice and the relevant correspondence etc. according to him the internal correspondence of the assessee in the form of emails are not throwing any ITA No. 1316/Hyd/2017 Page 4 of 11 light on this aspect. He placed reliance on the decision of the Hon’ble Apex Court reported in Spinacom India (P) Ltd. 258 Taxman 128 (SC), and Esha Bhattacharjee vs Mg. Committee Of Raghunathpur Nafar (2013) 12 SCC 649 in support of his contentions. 6. We have gone through the record in the light of the submissions made on either side. There is no denial of the fact that the assessee is a multinational company engaged in the business of import, storage, blending, bottling and the sale of liquefied petroleum gas for domestic, commercial and industrial use. In the affidavit filed in support of the petition to condone the delay, the deponent clearly stated that the assessee has been representing their case for the assessment year 2009- 10 before the learned Assessing Officer and the Ld. PCIT with its in-house the finance team and there was no external consultant advised for filing the appeals before the ITAT. According to the assessee, they have appointed the external consultant on 25/04/2017. It is an admitted fact that there was representation before the Ld. PCIT on behalf of the assessee during the proceedings under section 263 of the Act. An order under section 263 was passed on 09/11/2015 and the consequential order was passed by the learned Assessing Officer on 30/12/2016. Against this order dated 30/12/2016 the assessee preferred an appeal before the Ld. CIT(A). 7. There is no denial of the fact that all through this time the assessee has been preferring appeals before the Tribunal and also the Hon’ble High Court, and by way of example Ld. DR mentioned the ITA No. 1632/Hyd/ 2012 before the Tribunal and ITTA No. 406/2014 before the Hon’ble High Court. It’s not the case of the assessee that at any point of time before 25/04/2017 they felt the need to engage any external consultant for ITA No. 1316/Hyd/2017 Page 5 of 11 various tax matters. It is also not known for what purposes they have engaged the external consultants for the first time on 25/04/2017. The occasion to feel the necessity of appointing the external consultant to go through this particular order under section 263 of the Act is not known. It is also not known in how many matters the external consultants suggested the assessee to file appeals. 8. As stated above, the assessee is not an individual to say that they are not well conversant with the law or to plead that they do not know that an appeal could be preferred against the order passed in section 263 of the Act. Each case turns on its own facts and the assessee cannot have the benefit of ignorance of law, which could perhaps be available to an individual who had no recourse to the expert advice. Here the assessee has been conducting their tax audit in the TP audit works on regular basis, they have a battery of experts at their disposal. Assessee has been conducting the cases before the Ld. CIT(A), Tribunal and also the Hon'ble High Courts. They have been preferring the appeals regularly before these forums. It is not the case of the assessee that at any point of time, they felt the need to appoint an external consultant to seek advice as to filing of appeals before any of these fora. Assessee does not give us any details as to the purpose of engaging the external consultant, other than to un-earth this particular appeal to be preferred against the time barred Ld. PCIT passed under section 263 of the Act. It is not open for a multi-national company with a battery of experts at their disposal to contend that they do not know the law of the land. The views expressed in Motilal Padampat Sugar Mills (supra) are not helpful to the case of the assessee. ITA No. 1316/Hyd/2017 Page 6 of 11 9. Assessee does not give us any details as to when exactly the external consultant gave them the advice to prefer an appeal before this Tribunal against the order of the Ld. PCIT. Absolutely, there is no evidence to establish that the advice to prefer an appeal against the order of the Ld. PCIT under section 263 of the Act emanated from the external consultant. The e-mail record produced before us does not show the external consultant as the source of this idea. It only shows that they have prepared the necessary papers and demanded the deposit of Rs. 10,000/-. It is imperative for the assessee, who happens to be a multi-national company, with all its paraphernalia to conduct the legal matters in-house to establish that they were wanting to be instructed by an external consultant and that too bona fidely, and it is only at the advice of the external consultant, they realised the possibility of preferring appeal. At the cost of repetition, we observe that there is no evidence what-so-ever to show that such an advice really emanated from the external consultant. Even according to the assessee at no point of time, they felt the necessity to engage an external consultant before 25/04/2017. It is sheer negligence on the part of the assessee not to engage such experts, when they have been dealing day in and day out with the tax matters. Volenti Non Fit Injuria. If a multi- national company is allowed to plead ignorance of law of the land and to take shelter under Motilal Padampat Sugar Mills and Katiji (supra), there will be no meaning to the public policy laid by the legislature. We cannot attribute any redundancy to the public policy involved in this matter. 10. At this juncture, it is just and necessary to refer to the observations of the Hon'ble Apex Court on this aspect. In Esha Bhattacharjee vs Mg.Commit.Of Raghunathpur Nafar (2013) 12 SCC 649, wherein the ITA No. 1316/Hyd/2017 Page 7 of 11 Hon'ble Apex court, after the review of the entire case law on this aspect including the view taken in the case of Katiji (supra), held that,- 15. From the aforesaid authorities the principles that can broadly be culled out are: i) There should be a liberal, pragmatic, justice-oriented, non- pedantic approach while dealing with an application for condonation of delay, for the courts are not supposed to legalise injustice but are obliged to remove injustice. ii) The terms “sufficient cause” should be understood in their proper spirit, philosophy and purpose regard being had to the fact that these terms are basically elastic and are to be applied in proper perspective to the obtaining fact- situation. iii) Substantial justice being paramount and pivotal the technical considerations should not be given undue and uncalled for emphasis. iv) No presumption can be attached to deliberate causation of delay but, gross negligence on the part of the counsel or litigant is to be taken note of. v) Lack of bona fides imputable to a party seeking condonation of delay is a significant and relevant fact. vi) It is to be kept in mind that adherence to strict proof should not affect public justice and cause public mischief because the courts are required to be vigilant so that in the ultimate eventuate there is no real failure of justice. vii) The concept of liberal approach has to encapsule the conception of reasonableness and it cannot be allowed a totally unfettered free play. viii) There is a distinction between inordinate delay and a delay of short duration or few days, for to the former doctrine of prejudice is attracted whereas to the latter it may not be attracted. That apart, the first one warrants strict approach whereas the second calls for a liberal delineation. ix) The conduct, behaviour and attitude of a party relating to its inaction or negligence are relevant factors to be taken into consideration. It is so as the fundamental principle is that the courts are required to weigh the scale of balance of justice in respect of both parties and the said principle cannot be given a total go by in the name of liberal approach. ITA No. 1316/Hyd/2017 Page 8 of 11 x) If the explanation offered is concocted or the grounds urged in the application are fanciful, the courts should be vigilant not to expose the other side unnecessarily to face such a litigation. xi) It is to be borne in mind that no one gets away with fraud, misrepresentation or interpolation by taking recourse to the technicalities of law of limitation. xii) The entire gamut of facts are to be carefully scrutinized and the approach should be based on the paradigm of judicial discretion which is founded on objective reasoning and not on individual perception. xiii) The State or a public body or an entity representing a collective cause should be given some acceptable latitude. 16. To the aforesaid principles we may add some more guidelines taking note of the present day scenario. They are: - a) An application for condonation of delay should be drafted with careful concern and not in a half hazard manner harbouring the notion that the courts are required to condone delay on the bedrock of the principle that adjudication of a lis on merits is seminal to justice dispensation system. b) An application for condonation of delay should not be dealt with in a routine manner on the base of individual philosophy which is basically subjective. c) Though no precise formula can be laid down regard being had to the concept of judicial discretion, yet a conscious effort for achieving consistency and collegiality of the adjudicatory system should be made as that is the ultimate institutional motto. d) The increasing tendency to perceive delay as a non- serious matter and, hence, lackadaisical propensity can be exhibited in a non-challant manner requires to be curbed, of course, within legal parameters. ... ... ... ... ... ... ......It should have kept itself alive to the following passage from N. Balakrishnan (supra): - “The law of limitation fixes a lifespan for such legal remedy for the redress of the legal injury so suffered. Time is precious and wasted time would never revisit. During the efflux of time, newer causes would sprout up necessitating newer persons to seek ITA No. 1316/Hyd/2017 Page 9 of 11 legal remedy by approaching the courts. So a lifespan must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. The law of limitation is thus founded on public policy. It is enshrined in the maxim interest reipublicae up sit finis litium (it is for the general welfare that a period be put to litigation). Rules of limitation are not meant to destroy the rights of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time.” We have painfully re-stated the same. 11. No one prevented the assessee from using the experts for their service. Merely because the assessee did so, at their pleasure, at a later point of time that does not mean that such a reason will constitute sufficient cause in all the matters barred by limitation. If we condone the delay in this matter, perhaps there will not be any other matter in which the section 5 of the limitation Act has any application. In our considered opinion, the cause pleaded by the assessee does not constitute sufficient cause. It is a case of sheer negligence or an afterthought to pre-empt the appeal proceedings against the order dated 30/04/2016 passed by the learned Assessing Officer giving effect to the order passed under section 263 of the Act. Section 5 is not meant for such purposes. With this view of the matter, we do not find any sufficient cause to condone the delay, and the decision in Katiji (supra) has no application to the facts of this case. We, therefore, declined to condone the delay and reject the appeal on that ground. ITA No. 1316/Hyd/2017 Page 10 of 11 12. Since we decline to condone the delay, adjudication of the appeal on merits does not arise. 13. In the result, appeal of the assessee is dismissed. Order pronounced in the open court on this the 25 th day of July, 2022 Sd/- Sd/- (RAMA KANTA PANDA) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad, Dated: 25/07/2022 TNMM ITA No. 1316/Hyd/2017 Page 11 of 11 Copy forwarded to: 1. SHV Energy Private Limited, 8-2-334, SDE Serene Chambers, Road No.7, Banjara Hills, Hyderabad. 2. Deputy Commissioner of Income Tax, Circle-3(1), Hyderabad. 3. The Pr.CIT-3, Hyderabad. 4. The Addl.CIT, Range-3, Hyderabad. 5. DR, ITAT, Hyderabad. 6. GUARD FILE TRUE COPY ASSISTANT REGISTRAR ITAT, HYDERABAD