AI Insights
The case involves M/s. Apollo Design Apparel Parks Limited appealing against the order of the CIT(A)/NFAC Delhi, which had dismissed their appeal as time-barred without considering the merits. The primary issues in dispute included the alleged mismatch of income under Form 26AS, disallowance of repairs and maintenance expenses, and addition of unpaid gratuity under section 43B of the Income Tax Act. The Tribunal noted procedural discrepancies in the dismissal of the appeal and the application of the extended deadline for electronic filing of appeals as per the CBDT circular, leading to the decision to set aside the CIT(A)'s order and remand the case for a fresh decision on the merits.
Appeal Details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 124686 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
2 month(s) 22 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
11-07-2023
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Next Hearing Date
05-07-2023
Assessment Year
2013-2014
Appeal Filed On
19-04-2023
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH MUMBAI BEFORE SHRI BR BASKARAN, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA No. 1339/Mum/2023 (Assessment Year: 2013-14) M/s. Apollo Design Apparel Parks Limited, 382, N.M.Joshi Marg, Chinchpokli, Mumbai-400011. बनाम/ Vs. ACIT Circle 6(3)(1), Room No.506,5 thFlr, Aayakar Bhavan, M.K.Road, Mumbai-400020. ा लेखा सं./ज आइआर सं./PAN/ GIR No. : AAHCA0613 R ( /Appellant) ( / Respondent) / Appellant by : Ms.Simoni Chouhan.AR Respondent by Mr.Manoj Kumar Sinha. DR ुनव ई त ख / D a t e o f H e a r i n g 06/07/2023 घोषण त ख /D a t e o f P r o n o u n c e m e n t 10/07/2023 आद श / ORDER PER PAVAN KUMAR GADALE - JM: The assessee has filed the appeal against the order of CIT(A)/NFAC Delhi passed under section 250 of the Income Tax Act, 1961 (“the Act”). 2. The assessee has raised the following grounds of appeal: 1. NO DELAY IN F ILING THE APPEAL The Learned Commissioner of Income tax (Appeals), National Faceless Appeal Centre (NFAC) ["Ld. CIT (A)"] ITA No. 1339/Mum/2023 AY 2013-14 M/s Apollo Design Apparel Parks 2 erred in dismissing the appeal simply on the ground that the appeal was time barred by 35 days without reasonable cause without considering the Circular No. 20/2016 dated 26.05.2016. 1.2 While doing so, the Ld. CIT (A) failed to appreciate that: (i) Basing his action only on surmises, suspicion and conjecture; (ii)Taking into account irrelevant and extraneous considerations; and (iii) Ignoring relevant material and considerations as submitted by the Appellant. 1.3 It is submitted that in the f acts and the circumstances of the case, and in law, there was no such delay in filing the appeal f or which an application for condonation of delay was required and the appeal was required to be admitted to be decided on merit. WITHOUT PREJUDICE TO THE ABOVE 2. THE ORDER BAD, ILLEGAL AND WITHOUT JURISDICT ION 2.1 In the f acts and the circumstances of the case, and in law, the appellate order framed by the Ld. CIT (A) be held as bad and illegal, as: (1) The same is framed in breach of the statutory provisions and the scheme; (ii) The same is perverse and passed without any application of mind to the f acts on record; and (iii) The same is passed in flagrant breach of the principle of natural justice. WITHOUT FURTHER PREJUDICE TO THE ABOVE ITA No. 1339/Mum/2023 AY 2013-14 M/s Apollo Design Apparel Parks 3 3. ALLEGED MISMATCH OF INCOME UNDER 26AS OF RS. 2,86,553/- 3.1 The Ld. CIT (A) erred in confirming the action of the A.O. in making an addition of Rs. 2,86,553/- on account of "mismatch of income under 26AS" merely on the basis of the information received under the Annual Inf ormation Report (A.LR.). 3.2 While doing so, the Ld. CIT (A) erred in: (i) Basing his action only on surmises, suspicion and conjecture; (ii) Taking into account irrelevant and extraneous considerations; and (iii) Ignoring relevant material and considerations as submitted by the Appellant. 3.3 It is submitted that in the f acts and circumstances of the case, and in law, no such addition was called for. 4. DISALLOWANCE OF REPAIRS & MAINTENANCE EXPENSES OF RS. 17,20,054/- 4.1 The Ld. CIT (A) erred in confirming the action of the A.O. in making disallowance of Rs. 17,20,054/- claimed as expenses under the head ‘Repairs & Maintenance' by treating the same as capital expenditure 4.2 While doing so, the Ld. CIT (A) erred in: (i) Basing his action only on surmises, suspicion and conjecture. (ii) Taking into account irrelevant and extraneous considerations, and ITA No. 1339/Mum/2023 AY 2013-14 M/s Apollo Design Apparel Parks 4 (iii) Ignoring relevant material and considerations as submitted by the Appellant. 4.3 It is submitted that in the f acts and the circumstances of the case, and in law, no such disallowance was called f or. 4.4 Without prejudice to the above, assuming- but not admitting that some disallo wance was called f or, it is submitted that the computation of the disallowance made by the A.O. is arbitrary, excessive and not in accordance with the law. 5. ADDIT ION OF RS. 4,80,312/- U/S 43B OF THE ACT ON ACCOUNT OF UNPAID GRATUITY 5.1 The Ld. CIT (A) erred in confirming the action of the A.O. in making the disallowance of Rs. 4,80,312/- u/s 43B of the Act on account of unpaid gratuity stated under Tax Audit Report. 5.2 While doing so, the Ld. CIT (A) erred in: (i) Basing his action only on surmises, suspicion and conjecture; (ii) Taking into account irrelevant and extraneous considerations; and (ii) Ignoring relevant material and considerations as submitted by the Appellant. 5.3 It is submitted that in the f acts and the circumstances of the case, and in law, no such disallowance was called f or. 5.4 Without prejudice to the above, in the alternative, assuming admitting - that some disallowance was called for, the computation of the but not same is not in accordance with the law, is arbitrary and excessive. ITA No. 1339/Mum/2023 AY 2013-14 M/s Apollo Design Apparel Parks 5 3. The brief facts of the case are that, the assessee company is engaged in the business of manufacturing & trading of textiles and filed the return of income for the A.Y.2013-14 on 29.09.2013 disclosing a total income of Rs.7,86,85,280/- and the return of income was processed u/s 143(1) of the Act. Subsequently, the case was selected for scrutiny and notice u/sec143(2)&U/sec142(1) of the Act along with questionnaire was issued. In response to notice, the Ld. AR of the assessee appeared from time to time and filed the details. The Assessing Officer (A.O) on perusal the information, found that the there is mismatch of income as per Form No.26AS and the income offered as per books of accounts. Since the assessee could not file explanations/ reconcile the difference, the AO has made an addition of Rs.2,86,553/-. 4. On the second disputed issue, the A.O found that the assessee has debited a sum of Rs.19,14,817/- in the profit and loss account being repairs and maintenance (building). The assessee was called to submit the bifurcation and details of expenditure. Whereas, the assessee vide letter dated 17- 02-2016 has filed the details of expenditure incurred towards interior, civil and allied works of building all aggregated to Rs.17,20,054/-The Assessing Officer has dealt on the information and details at Para 5.1& 5.2 of the order and observed that the claim of expenditure is in the nature of capital expenses and has enduring benefits and the A.O. ITA No. 1339/Mum/2023 AY 2013-14 M/s Apollo Design Apparel Parks 6 has allowed depreciation @10% on capital expenditure and disallowed the balance amount of Rs.15,48,049/-.On the last disputed issue, the A.O on perusal of the tax audit report found that the assessee has disclosed unpaid gratuity at the end of the year at Rs. 4,83,211/-. Whereas the assessee has disallowed Rs. 2899/- only in the computation of income. The A.O has asked the assessee to submit the proof of payment of gratuity and there was no response. The A.O in the absence of proof of payment has disallowed U/sec43B of the Act of Rs. 4,80,312/- and has assessed the total income of Rs.8,10,00,190/- and passed the order u/s 143(3) of the Act dated 29.03.2016. 5. Aggrieved by the order, the assessee has filed an appeal before the CIT(A). Whereas, the CIT(A) has considered the grounds of appeal, statement of facts and submissions and find that there is a delay of 35 days in filing the appeal against the order U/sec143(3) of the Act dated 29.03.2016 and which was served on the asseesse on 04.04.2016. Whereas the assessee has filed the Form-no.35 electronically on 09.06.2016 and the assessee has also filed the submissions and evidences. The CIT(A) observed that the assessee has not explained the reasons for delay in filling the appeal and without going into the merits of the appeal has dismissed the assessee appeal in limine. Aggrieved by the ITA No. 1339/Mum/2023 AY 2013-14 M/s Apollo Design Apparel Parks 7 CIT(A) order, the assessee has filed an appeal before the Hon'ble Tribunal. 6. At the time of hearing, the Ld.AR of the assessee submitted that the CIT(A) has dismissed the assessee’s appeal, because the assessee has not filed appeal as per the procedure laid down under Rule 45 & 46 of Income Tax Rules, 1962. Whereas, the assessee has filed the appeal manually on 11.04.2016 and again the assessee has filed Form.no 35 electronically on 09-06-2016 as per CBDT circular no.20/2016 dated 26-05-2016 extending the e filling of appeal up to 15-06-2016. The amendment in filling the appeal electronically is w.e.f 1-3-2016 and due to technical issues it was extended. Whereas, the appeal was filed electronically by the assessee within the extended time limit. The Ld.AR prayed that the assessee be provided an opportunity to substantiate the delay and relied on the CBDT Circular. Per contra, the Ld.DR supported the order of the CIT(A). 7. We have heard the rival submissions and perused the material available on record. The sole crux of the disputed issue that the assessee has filed the appeal manually on 11.04.2016. We find as per the amendment and procedure laid down under Rule 45 & 46 of the Income Tax Rules, 1962 w.e.f. 01.03.2016. The appeal in Form No. 35 has to be filed electronically, whereas the assessee has e- filed the appeal ITA No. 1339/Mum/2023 AY 2013-14 M/s Apollo Design Apparel Parks 8 on 09-06-2016 due to technical issues. We have considered the facts of technicalities in filing the appeal electronically and the amendment effective from 01.03.2016 and the CBDT circular extending time limit for e-filling of appeal up to 15- 06-2016. On the identical issue, the Honble Tribunal in the case of Ashraf Aziz Kasmani vs ITO [2018] 92 taxmann.com 293 (Mumbai-Trib.) has dealt on the facts, provisions of law and CBDT circular and granted the relief observing at Para 4 to 12 of the order read as under: 4. “Thereafter, the Id. Commissioner of Income Tax (Appeals) considered the admissibility of appeal filed in manual form on 30.6.2016. In this regard, he referred to be CBDT Notification No. SO 637(E) [No. 11/2016 dated 01.03.2016] and has referred as under: "In exercise of the powers conferred by sub-section (1) of section 249, read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely 1. (1) These rules may be called the Income-tax (3rd Amendment) Rules, 2016. (2) They shall come into force on the date of their publication in the Official Gazette. ITA No. 1339/Mum/2023 AY 2013-14 M/s Apollo Design Apparel Parks 9 2. In the Income-tax Rules, 1962 (herein after referred to as the said rules), for rule 45, the following rule shall be substituted, namely:- 45. Form of appeal to Commissioner (Appeals).- (1) An appeal to the Commissioner (Appeals) shall be made in Form No. 35. (2) Form No. 35 shall be furnished in the following manner, namely:- (a) in the case of a person who is required to furnish return of income electronically under sub-rule(3) of rule 12,- (i) by furnishing the form electronically under digital signature, if the return of income is furnished under digital signature; (ii) by furnishing the form electronically through electronic verification code in a case not covered under sub-clause (1); (b) in a case where the assessee has the option to furnish the return of income in paper form, by furnishing the form electronically in accordance with clause (a) of sub rule(2) or in paper form. (3) The form of appeal referred to in sub-rule (1), shall be verified by the person who is authorized to verify the return of income under section 140 of the Act, as applicable to the assesses, (4) Any document ITA No. 1339/Mum/2023 AY 2013-14 M/s Apollo Design Apparel Parks 10 accompanying Form No. 35 shall be furnished in the manner in which the said form is furnished. (5) The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, shall- (1) specify the procedure for electronic filing of Form No. 35 and documents; (i) specify the data structure, standards and manner of generation of electronic verification code, referred to in sub- rule(2), for the purpose of verification of the person furnishing the said form, and (iii) be responsible for formulating and implementing appropriate security, archival and retrieval of policies in relation to the said form so furnished." 5. Thereafter, be referred to the amendment to Rule 2(3) of the Income Tax Act, 1962 where the mode of filing of the return income in electronically form is specified. Thereafter, the ld. Commissioner of Income Tax (Appeals) referred to another CBDT Circular whereby the CBDT has subsequently extended the period of filing of appeal electronically till 15.06.2016, the said CBDT Circular No. 20 dated 26.5.2016 reads as under: "Rule 45 of the Income Tax Rules, 1962 mandates compulsory e-filing of appeals before ld. Commissioner of Income Tax (Appeals) with effect from 01.03.2016 in ITA No. 1339/Mum/2023 AY 2013-14 M/s Apollo Design Apparel Parks 11 respect of persons who are required to furnish return of income electronically. It has come to the notice of the Central Board of Direct Taxes (hereinafter referred 1 as the Board) that in some cases the taxpayers who were required to e-file Form 35, were unable to do so due to lack of knowledge about e-filing procedure and/or technical issues in e-filing. Also, the EVC functionality for verification of e-appeals was made operational from 12.05.2016 for individuals and from 19.05.2016 for other persons. Word limit for filing grounds of appeal and mapping of jurisdiction of Commissioners of Income Tax (Appeals) were also a cause of grievance in some cases. 2. The matter has been examined by the Board. While the underlying issues relating to e-filing of appeals have since been addressed and resolved, in order to mitigate any inconvenience caused to the taxpayers on account of the new requirement of mandatory e-filing appeals, it has been decided to extend the time limit for filing of such e- appeals. E-appeals which were due to be filed by 15.05.2016 can be filed upto 15.06.2016. All e-appeal's filed within this extended period would be treated as appeals filed in time. 3. In view of the extended window for filing e-appeals, taxpayers who could not successfully e-file their appeal and had filed paper appeals and required to file an e- ITA No. 1339/Mum/2023 AY 2013-14 M/s Apollo Design Apparel Parks 12 appeal in accordance with Rule 45 before the extended period i.e. 15.06.2016. Such e-appeals would also be treated as appeals filed within time." 6. From the above, the Id. Commissioner of Income Tax (Appeals) noted that the assessee was required to file this appeal only in electronic form latest by 15.06.2016. However, since the appeal was filed manually as a paper appeal, the ld. Commissioner of Income Tax (Appeals) held that since the same was not electronically filed, he treated the appeal is not maintainable. 7. Against the above order, the assessee is in appeal before the ITAT. 8. I have heard the Id. Departmental Representative. None appeared on behalf of the assessee. The notice for hearing has also returned unserved. Hence, I proceeded to adjudicate the case by hearing the Id. Departmental Representative and perusing the records. From the grounds of appeal in this case, it transpires that the assessee has raised a ground that the CBDT Circular which mandated appeals before the Id. Commissioner of Income Tax (Appeals) to be filed electronically was dated 01.3.2016 and, hence, it is the plea of the assessee that the appeals against the assessment order passed on or before 01.03.2016 can be filed manually and all the appeals in respect of assessment order passed on or after ITA No. 1339/Mum/2023 AY 2013-14 M/s Apollo Design Apparel Parks 13 01.3.2016 to be filed electronically. 9. First of all I note that the ld. Commissioner of Income Tax (Appeals) has himself noted in the first paragraph of his order that the appeal is "well within time". Thereafter, the ld. Commissioner of Income Tax (Appeals) has opined that the assessee should have filed the appeal electronically by referring the CDBT Circular. 10. I find that there is no clarification in the said CBDT Circular, regarding the applicability of the same with regard to the date of assessment order passed. In the present case, admittedly the assessment order has been passed before 01.03.2016, so the claim of the assessee that the said Circular is applicable to assessment orders passed after 01.03.2016, cannot be brushed aside summarily. When this question was put to the ld. Departmental Representative, she replied that since the assessment order has been served to the assessee after 01.03.2016, the assessee's ground taken cannot be sustained. 11. Upon careful consideration, I find that in the above CBDT Circular, admittedly there is no discussion about the date of assessment order, with respect to which the said Circular is applicable. A construction that the said Circular is not applicable to assessment orders passed prior to 01.3.2016, cannot be said to be totally unsustainable. The ITA No. 1339/Mum/2023 AY 2013-14 M/s Apollo Design Apparel Parks 14 Hon'ble Apex Court in the case of CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 has expounded that if two constructions are possible, one in favour of the assessee should be applied. On the facts of the present case, and on the touch stone of the above said Hon'ble Apex Court decision, I am of the considered opinion that the assessee's plea that the appeal filed manually for assessment order passed prior to 01.03.2016, should be admitted by the ld. Commissioner of Income Tax (Appeals), is cogent. More so, when the ld. Commissioner of Income Tax (Appeals) in his earlier paragraph has accepted that the appeal is well within time. Accordingly I direct the ld. Commissioner of Income Tax (Appeals) to admit the aforesaid appeal of the assessee and pass an order on the merits of the case. Needless to add, the assessee should be granted adequate opportunity of being heard. 12. In the result, the appeal by the assessee stands allowed for statistical purpose.” 8. We find the facts in the present case, are similar and identical as discussed in the above judicial decision and the amendment and procedure laid down under Rule 45 & 46 of the Income Tax Rules, 1962 mandated compulsory e-filling of appeal before the CIT(A) w.e.f. 01.03.2016 and further as per the CBDT circular no.20/2016 dated 26-05-2016 considering the technical issues/lack of knowledge of e- ITA No. 1339/Mum/2023 AY 2013-14 M/s Apollo Design Apparel Parks 15 filling procedures has extended the e filling of appeal up to 15-06-2016. Whereas, the assessee has e-filed the appeal on 9-06-2016 i.e within the extended time limit. Hence to meet the ends of justice, we set aside the order of the CIT(A) and restore the disputed issues to the file of the CIT(A) to adjudicate afresh on merits and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information and comply with appeal filling rules. Accordingly, we allow the grounds of appeal of the assessee for statistical purposes. 9. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 10.07.2023. /- Sd/- Sd/- Sd/-sss (BR BASKARAN) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 10/07/2023 Shubham Lohar आदेश की ितिलिप अ ेिषत/Copy of the Order forwarded to : 1. / The Appellant 2. / The Respondent. 3. ( ) / Concerned CIT 4. ! ", " ण, हमद ब द / DR, ITAT, Mumbai 5. ! &' ( / Guard file. आदेशानुसार/ BY ORDER, //True Copy// 1. उप/सहायक पंजीकार ( Asst. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Mumba
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Income Tax Act, 1961
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