NELCO LIMITED, MUMBAI V. THE DY.C.I.T. RANGE 8(2), MUMBAI

ITA 1379/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49418 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 07-07-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 02-03-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P C MAURYA
• Keywords: Reasonable cause; Tax effect; Condonation of delay
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SHRI V.DURGA RAO, JM ITA NO.1379/MUM/2009 : ASST.YEAR 2002-2003 M/S.NELCO LIMITED FRANCYSTERS CYBERNETICS CENTRE EUCHARISTIC CONGRESS BUILDING NO.III 5 CONVENT STREET, COLABA MUMBAI 400 039 PAN :AAACT1983C. VS. THE DY.COMMISSIONER OF INCOME-TAX RANGE 8(2) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NISHANT THAKKAR RESPONDENT BY : SHRI P.C.MAURYA O R D E R PER R.S.SYAL, AM : THIS APPEAL BY THE ASSESSEE IS DIRECT ED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 11.08.2008 IN RELATI ON TO THE ASSESSMENT YEAR 2002-2003. 2. THIS APPEAL IS TIME BARRED BY 113 DA YS. AN AFFIDAVIT BY SHRI R.B.UPADHYAY, CFO & SENIOR V.P. (FINANCE) OF THE ASS ESSEE-COMPANY HAS BEEN PLACED ON RECORD INDICATING THE REASONS FOR DELAY. IT HAS B EEN MENTIONED IN THIS AFFIDAVIT THAT THE COMPANY RECEIVED ORDER PASSED BY THE LEARNED CIT(A) ON 8 TH SEPTEMBER, 2008 AND THE DELAY IN PRESENTING THE APPEAL OCCURRED DUE TO THE REASON THAT THE COMPANY, ON RECEIPT OF THE ORDER, DECIDED TO PLACE THE MATTER BEFORE TH E FORTHCOMING AUDIT COMMITTEE MEETING WHICH WAS SCHEDULED ON 22 .10.2008 FOR ITS CONSIDERATION AS TO WHETHER FURTHER APPEAL NEEDED TO BE FILED BEFORE THE ITAT IN VIEW OF THE LITIGATION COST INVOLVED VIS--VIS THE TAX EFFECT. TH E AUDIT COMMITTEE, AS PER THIS AFFIDAVIT, ADVISED NOT TO FILE ANY FURTHER APPEAL AND TO PREPARE A BRIEF NOT E ON THE MATTER TO BE PLACED BEFORE THE NEXT AUDIT COMMITTE E. THE NEXT AUDIT COMMITTEE MEETING TOOK PLACE ON 22.01.2009 IN WHICH THE ISSUE WAS AGAIN DISCU SSED AND IT WAS DECIDED TO FILE APPEAL BEFORE THE TRI BUNAL. IN VIEW OF THESE CONT ENTS OF THE AFFIDAVIT, THE ITA NO.1379/MUM/2009 M/S.NELCO LIMITED. 2 LEARNED A.R. CONTENDED THAT THE DELAY BE CONDONED AND THE APPEAL BE ADMITTED FOR HEARING. IN SUPPORT OF HIS CONTENTION HE RELIED ON THE JUDGEME NT OF THE HONBLE SUPREME COURT IN THE CASE OF COLLECTOR, LAND ACQUISITION VS. MST. KATIJI AND OTHERS [(1987) 167 ITR 471 (SC)] AND ALSO IMPROVEMENT TRUS T, LUDHIANA VS. UJGAR SINGH & ORS. DATED JUNE, 09, 2010. HE RELIED ON CERTAIN TRIBUNAL ORDERS IN SUPPORT OF THE CONTENTION THAT THE APPEAL BE CONDONED. 3. THE LEARNED A.R. WAS DIRECTED TO PRODUCE DOCUMENTS IN SUPPORT OF THE ASSERTIONS MADE IN THE AFFIDAVIT, SUCH AS, CERTIFIED COPY OF EXTRACTS OF THE MINUTES OF THE AUDIT COMMITTEE MEETING HELD ON 22.10.2008 AND ALSO DATED 22.01.2009, WHICH HAVE BEEN PLACED ON RECORD. IT WILL BE INTERESTING TO NOTE THE MINUTES OF THE AUDIT COMMITTEE MEETING HELD ON 22 ND OCTOBER, 2008, AS UNDER:- MR.R.B.UPADHYAY INFORMED THE CO MMITTEE THAT REVISED FORMAT FOR REPORTING EXPOSURE LIST WAS ANNEXED TO THE REPORT. AFTER SCRUTINY OF THE SAID FORMAT, THE COMMITTEE OBSERVED THAT THERE WAS NO CHANGE IN THE CONTINGENT LIABILITY EXCEPT THE CONTINGENT LIABILITY IN RESPECT OF INCOME TAX APPEAL FOR THE YEAR 2005-06 WHICH HAD BEEN REDUCED FROM RS.58.79 LAKHS TO RS.2.39 LAKHS AT THE END OF THE CURRENT QUARTER. MR.R.B.UPADHYAY BRIEFLY NARRATED THE FACTS OF THE CASE INCLUDING THE ETHICAL ISSUE & THE COMMITTEE THEREAFTER ADVISED MR.R.B.UPADHYAY NOT TO PROCEED WITH APPEAL AGAINST THE IMPUGNED ORDER. THE COMMITTEE ALSO REQUEST ED MR.R.B.UPADHYAY TO SUBMIT A BRIEF NOTE ON THIS ISSUE & PLACE BEFO RE THE AUDIT COMMITTEE AT ITS NEXT MEETING. 4. FURTHER MINUTES OF THE AUDIT COMMITTEE MEETING HELD ON 22 ND JANUARY 2009 READS AS UNDER:- A SUMMARY LIST OF EXPOSURES QUANTIFY ING THE EXPOSURES RELATING TO EACH OF THE ITEM REPORTED THEREIN AS ON 31 ST DECEMBER 2008 ALONG WITH A STATEMENT CONTAINING EXPOSURE ITEMS TO BE TA KEN UP WITH THE AUDIT COMMITTEE AT ITS MEETING, PREVIOUSLY CIRCULATED WAS TABLED. ITA NO.1379/MUM/2009 M/S.NELCO LIMITED. 3 THE ATTENTION OF THE COMMITTEE WA S DRAWN TO THE NOTES NAMELY (I) ARBITRATION BETWEEN THE COMPANY AND MALANPUR STEEL LIMITED (MSL) AND (II) A NOTE ON REOPENING OF INCOME TAX ASS ESSMENT OF THE COMPANY UNDER SECTION 147 OF THE IN COME TAX ACT FOR THE ASSESSMENT YEAR 2002-03 BY WAY OF DISALLOWANCE OF BROKERAGE PAID TO JALKANTA TECHNICAL & FINANCIAL SERVICES PVT. LTD. ETHICAL ISSUE INVOLVED. MR.K.A.MAHASHUR BRIEFED THE COMM ITTEE CONTENTS OF NOTE (I) AND STATED THAT A COPY OF THE FINAL AWAR D IN TERMS OF THE MOU ENTERED INTO BETWEEN THE COMPANY AND MSL IS EXPECTED FROM MR.R.C.LAHOTI (RETD.), CHIEF JUSTICE OF INDIA, ARBITRATOR SHORTLY. MR.R.B.UPADHYAY BRIEFED THE COMMITTEE C ONTENTS OF NOTE (II) AS STATED ABOVE. 5. IN THE AFFIDAVIT IT HAS BEEN AVERRE D THAT IN THE MEETING OF THE AUDIT COMMITTEE HELD ON 22 ND OCTOBER, 2008 THE ISSUE OF FILING ANY APPEAL BEFORE THE TRIBUNAL WAS CONSIDERED AND IT WAS DECIDED NOT TO FILE ANY FURTHER APPEAL. IT HAS ALSO BEEN MENTIONED IN THE AF FIDAVIT THAT A BRIEF NOTE WAS REQUIRED TO BE PREPARED TO PLACE BEFORE THE NEXT AUD IT COMMITTEE MEETING. FROM THE MINUTES OF THE AUDIT COMMITTEE MEETING HELD ON 22 ND OCTOBER, 2008 AS REPRODUCED ABOVE IT IS PALPABLE THAT THERE IS REFERENCE WH ATSOEVER OF APPEAL FOR AS SESSMENT YEAR 2005-2006 ONLY. WE ARE DEALING WITH APPEAL FOR ASSESSMEN T YEAR 2002-2003. THERE IS NO MENTION, LEAST TO SAY, OF APPEAL FOR THE A.Y. 2002- 03, WHAT TO TALK OF ANY DISCUSSION TAKING PLACE LEADING TO THE CONCLUSI ON THAT NO APPEAL WAS REQUIRE D TO BE FILED AND FURTHER OF PREPARING ANY NOTE FOR CONSIDERATION IN THE NEXT AUDIT COMMITTEE MEETING. NOW WE TURN TO THE MINUTES OF THE A UDIT COMMITTEE MEETING HELD ON 22 ND JANUARY, 2009 IN WHICH THERE IS A REFERENCE TO THE APP EAL FOR ASSESSMENT YEAR 2002-2003. IN THESE MINUTES AGAIN THERE IS NO REFERENCE TO A NY DISCUSSION ON THE APPEAL FOR ASSESSMENT YEAR 2002-2003 IN THE MEETING OF THE AUDIT COMMITTEE MEETING HELD ON 22 ND OCTOBER, 2008. THUS IT CAN BE SEEN THAT THE CONTENTION RAI SED THROUGH THE AFFIDAVIT THAT THERE WAS A DISCUSSION IN THE AUDIT CO MMITTEE MEETING HELD ON 22 ND OCTOBER, 2008 ABOUT THE ITA NO.1379/MUM/2009 M/S.NELCO LIMITED. 4 FILING OF THE APPEAL AND IT WAS DECIDED NOT TO FILE ANY FURTHER APPEAL AND FURTHER ABOUT PREPARING NOTE ON THE MATTER TO BE PLACED BEFORE THE NEXT AUDIT COMMITTEE MEETING, IS NOT BORNE OUT FROM THE MI NUTES OF THE AUDIT COMMITTEE MEETING HELD ON 22 ND OCTOBER, 2008 AND 22 ND JANUARY, 2009. AS SUCH THE ONLY REASON GIVEN IN SUPPORT OF THE DELAY DOES NOT STAND. 6. IT IS FURTHER IMPORTANT TO NOTE THAT THE AUDIT COMMITTEE MEETING HELD ON 22 ND JANUARY, 2009 RECOMMENDED THE FILING OF A PPEAL FOR ASSESSMENT YEAR 2002-2003. AS AGAINST THAT, THE APPEAL ACTUALLY CAME TO BE FILED BY THE ASSESSEE ON 02.03.2009. IT WAS VERY WELL KNOWN TO THE ASSESSEE ON 22 ND JANUARY, 2009 THAT THE TIME FOR PRESENTING THE APPEAL BEFORE THE TRIBUNAL HAD ALREADY EXPIRED AND STILL AFTER THE RECEIPT OF APPROVAL FOR FILING THE APPEAL ON 22 ND JANUARY, 2009 TH E ASSESSEE ACTUALLY FILED APPEAL ON 2 ND MARCH, 2009. IT SHOWS INACTION ON THE PART OF THE ASSESSEE AT EVERY STEP. DELAY CAN BE C ONDONED IF THERE IS A REASONABLE CAUSE. HOWEVER IT IS NECESSARY FOR THE PARTY PRAYING FOR THE CONDONATION OF DELAY TO PROVE THAT IT WAS ACTING DILIGENTLY AND WAS NOT GUILTY OF ANY NEGLIGENCE WH ATSOEVER. IF THE DELAY IS CAUSED DUE TO ANY REASON BEYOND THE CONTROL OF THE ASSESSEE, THAT WOULD MERIT ITS CONDONATION. IF HOWEVER THE ASSESSEE FAILS TO EXERCISE DUE CARE REQUIRED FOR THE PURPOSE, HE CANNOT BE ALLOWED TO ARGUE SUBSEQUENTLY TH AT THERE WAS A REASONABLE CAUSE IN DELAY. HERE IS A CASE IN WHIC H THERE HAS BEEN A DELAY OF 113 DAYS AND EXCEPT FOR INACTION ON THE PART OF THE ASSESSEE, THERE IS NO OTHER REASONABLE CAUSE, WHICH LED TO THE FILING OF THE APPEAL BELATE DLY. LAW ASSISTS THOSE WHO ARE VIGILANT OF THEIR RIGHTS AND NOT THOSE WHO SLEEP OVER IT. IN OUR CONSIDERED OPINION, THE ASSESSEE HAD FAILED TO DEMONSTRATE THE REASONABLEN ESS OF CAUSE IN PRESENTING THE APPEAL BELATEDLY. WE, THEREFORE, REFUSE TO COND ONE THE DELAY. OUR VIEW IS FORTIFIED BY SURINDER KUMAR BOVEJA VS. CW T (2006) 287 ITR 52 (DEL) AND THE THIRD MEMBER ORDER PASSED IN JCIT VS. TAFE LT D. (2007) 104 IT D 149 (CHENNAI)(TM ) . THE CASE LAW RELIED ON BY THE LD. AR ARE NOT RELEVANT TO THE FACTUAL POSITI ON PREVAILING IN THE INSTANT CASE. UNDER THESE CI RCUMSTANCES WE ARE NOT INCLIN ED TO CONDONE THE DELAY. ITA NO.1379/MUM/2009 M/S.NELCO LIMITED. 5 THE APPEAL IS DISMISSED AS TIME BARRED AND IN SUCH A SITUATION, THERE IS NO NEED FOR TAKING UP THE GROUND RAISED BY THE ASSESSEE ON MERITS. 7. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS 13 TH DAY OF JULY, 2011. SD/- SD/- ( V.DURGA RAO ) ( R.S.SYAL ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 13 TH JULY, 2011. DEVDAS*` COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) - VIII, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.