RINA S. MEHTA, MUMBAI V. DCIT CC 23, MUMBAI

ITA 140/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2787 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: J
• Assessment Year: 1992-1993
• Appeal Filed On: 08-01-2015
• Court: TRIBUNAL
• Department Lawyers: P DANIEL SR
• Keywords: Unexplained investment; Opportunity of being heard; Right to appeal; Condonation of delay

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER I.T.A. NO.140/M/2015 (ASSESSMENT YEAR: 1992 - 1993 ) SMT. RINA S. MEHTA, 32, MADHULI, DR. A.B. ROAD, WORLI, MUMBAI 400 018. / VS. DCIT, CENTRAL CIRCLE - 23, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. ./ PAN : ABNPM8222C ( / APPELLANT) .. ( / RESPONDENT ) I.T.A. NO. 333/M/2015 (ASSESSMENT YEAR: 2008 - 2009 ) SHRI SUDHIR S. MEHTA, 32, MADHULI, DR. A.B. ROAD, WORLI, MUMBAI 400 018. / VS. ACIT, CENTRAL CIRCLE - 23, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 20. ./ PAN : ABAPM4496R ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI DHARMESH SHAH / RESPONDENT BY : SHRI P. DANIEL, SR. COUNSEL / DATE OF HEARING : 27.07 .2016 / DATE OF PRONOUNCEMENT : 23 .09.2016 / O R D E R PER D. KARUNAKARA RAO, AM: THERE ARE TWO APPEALS UNDER CONSIDERATION. BOTH THE APPEALS ARE FILED BY THE ASSESSEES INVOLVING THE ASSESSMENT YEARS 1992 - 93 AND 2008 - 2009. SINCE, THE ISSUES INVOLVED IN THESE APPEALS ARE IDENTICAL, THEREFORE, FOR THE SAKE OF CONVENIENCE, THEY ARE CLUBBED, HEARD COMBINEDLY AND DISPOSED OFF IN THIS CONSOLIDATED ORDER. APPEAL WISE ADJUDICATION IS GIVEN IN THE FOLLOWING PARAS OF THIS ORDER. ITA NO.140/M/2015 (AY 1992 - 93) (IN THE CASE OF SMT. RINA S. MEHTA) 2. THIS APPEAL FILED BY THE ASSESSEE ON 8.1.2015 IS AGAINST THE ORDER OF THE CIT (A) - 40, MUMBAI DATED 24.12.2007. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: - 2 THE FOLLOWING GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER: 1. THE LD CIT (A) HAS ERRED IN LAW AND IN FACTS IN DISMISSING THE APPEAL OF THE APPELLANT WITHOUT ADMITTING THE SAME. 2. THE LD CIT (A) ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT THERE WAS NO DELAY IN FILING THE APPEAL AND THAT THE APPEAL OUGHT TO HAVE BEEN DECIDED ON MERITS. 3. THE LD CIT (A) HAS ERRED IN LAW AND IN F ACTS IN NOT CONDONING THE DELAY IN FILING THE APPEAL. 4. THE LD CIT (A) OUGHT TO HAVE DELETED THE PENALTY OF RS. 17,04,16,201/ - LEVIED U/S 271(1)(C) OF THE ACT LEVIED BY THE AO. 3. THE MAIN ISSUE RAISED IN THIS APPEAL RELATES TO THE LEVY OF PENALTY U/S 271( 1)(C) OF THE ACT. AO LEVIED THE PENALTY ON 26.9.2003 AMOUNTING TO RS. 17 CRS (ROUNDED OFF) @ 150% OF THE TAX SOUGHT TO BE EVADED. IN THE ASSESSMENT, AO DETERMINED THE ASSESSED INCOME AT RS. 20.29 CRS AGAINST THE RETURNED INCOME OF RS. NIL. AO MADE ADDIT IONS ON ACCOUNT OF UNEXPLAINED INVESTMENT; UNEXPLAINED RECEIPTS AND INTEREST INCOME. IN THE QUANTUM APPEALS, ADDITIONS ARE REDUCED BY THE CIT (A) PARTLY AND THE QUANTUM APPEALS ARE PENDING BEFORE THE TRIBUNAL FOR FINAL ADJUDICATION. ON THE PENALTIES LEVI ED BY THE AO, ASSESSEE FILED AN APPEAL BEFORE THE CIT (A) WITH THE DELAY OF 1517 DAYS (AROUND 4 YEARS). BEFORE THE CIT (A), ASSESSEE SUBMITTED THAT THE PENALTY ORDER OF THE AO WAS NEVER SERVED ON THE ASSESSEE AND THE THEREFORE, THE ASSESSEE SOUGHT CERTIFI ED COPY FROM THE OFFICE OF THE AO. THE LETTERS DATED 7.12.2007; 13.12.2007; AND 20.12.2007 ARE RELEVANT. LETTER DATED 13.12.2007 RELATES TO THE ASKING OF CERTIFIED COPIES, WHICH IS MANDATORY FOR FILING OF THE APPEAL BEFORE THE CIT (A). LETTER DATED 20.1 2.2007 RELATES TO THE ACKNOWLEDGEMENT OF THE ASSESSEE RECEIVING COPIES FROM THE OFFICE OF THE ASSESSING OFFICER. FROM THE REVENUES SIDE, THEY HAVE TAKEN A STAND THAT THE PENALTY ORDER DATED 26.9.2003 WAS DULY S E R V E D ON THE ASSESSEE. IN SUPPORT OF THE SAME, REVENUE RELIED ON THE COPY OF THE ACKNOWLEDGEMENT EVIDENCING THE SERVICE OF THE SAID PENALTY ORDER ON A PERSON NAMED SHRI CHANDRAKANT JADHAV. HOWEVER, IT DOES NOT REFLECT THE RELATIONSHIP OF THE ASSESSEE THAT THE SAID PERSON MR. JADHAV. FURTHER, A SSESSEE NARRATING THE VARIOUS DEVELOPMENTS IE 132 ACTION, THE NOTIFICATION ISSUED UNDER THE SPECIAL COURTS ACT, APPOINTING OF THE CUSTODIAN ETC , SUBMITTED THAT THESE EVENTS CONTRIBUTED TO THE DELAY IN FILING THE APPEAL BEFORE THE CIT (A). CIT (A) CONSI DERED THE MAIN REASON AS WELL AS THE ADDITIONAL REASONS AND EVENTUALLY DISMISSED THE APPEAL OF THE ASSESSEE SAYING THAT THERE IS NO FORMAL APPLICATION WITH A 3 REQUEST FOR CONDONATION OF DELAY. THUS, THE APPEAL OF THE ASSESSEE WAS DISMISSED AND THE DELAY WA S NOT CONDONED. 4. DURING THE PROCEEDINGS BEFORE US, LD COUNSEL FOR THE ASSESSEE EXPLAINED THAT THE ASSESSEE NEVER RECEIVED A COPY OF THE PENALTY ORDER. EXPLAINING THE IDENTITY OF SHRI JADHAV, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SAID PERSON IS NEVER CONNECTED TO THE ASSESSEE IN ANY FORM AND IS NOT EVEN RELATED TO THE ASSESSEE. IT IS NOT KNOWN AS TO WHY THE DEPARTMENT SERV E D S U C H IMPORTANT ORDER LIKE PENALTY ORDER, WHICH IS HAVING IMPACT O F AROUND RS. 17.04 CRS. ASSESSEE WOULD HAVE IMMEDIATELY FI LED THE APPEALS HAD SHE BEEN S E R V E D THE SAME. SHE HAS NO REASON TO NOT TO FILE THE APPEAL IF SHE IS R E A L L Y IN POSSESSION OF THE SAID PENALTY ORDER. HE ALSO SUBMITTED THAT THE ASSESSEE DULY MADE ALL EFFORTS TO PROCURE THE CERTIFIED COPY OF THE PENALTY ORDER AN D GOT A COPY ONLY ON 18.12.2007. IMMEDIATELY , ON 24.12.2007 , T H E APPEALS WERE DULY FILED BEFORE THE CIT (A). THIS REFLECTS THE DILIGENCE AND WILLING TO PURSUE THE APPEALS FROM THE ASSESSEES SIDE. FURTHER, EXPLAINING THE OTHER REASONS, RAISED WITHOUT PREJUDIC E, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT ON SIMILAR GROUNDS, THE TRIBUNAL DIRECTED THE CIT (A) TO CONDONE THE DELAY. IN THIS REGARD, HE BROUGHT OUR ATTENTION TO THE DECISION OF THE TRIBUNAL IN THE CASE OF JYOTI MEHTA & ORS VS. ACIT IN ITA NO. 7973/M/ 1995, DATED 13.12.2007 (DELAY IN THE CASE IS 1319 DAYS) AS WELL AS THE DECISION IN THE CASE OF GROWMORE RESEARCH AND ASSETS MANAGEMENT LTD & ORS VS. ACIT IN ITA NO. 3576/M/2007, DATED 17.12.2007 ARE RELIED. FURTHER, HE BROUGHT OUR ATTENTION TO THE CONTENT S OF PARA 9 OF THE TRIBUNALS ORDER IN THE CASE OF GROWMORE RESEARCH AND ASSETS MANAGEMENT LTD (SUPRA) (PAGE 45 OF THE PAPER BOOK IS RELEVANT) AND MENTIONED THAT THE DELAY IN THESE CASES IS ALSO IN THE MAGNITUDE VARYING FROM 300 TO 500 DAYS. FURTHER, HE S UBMITTED THAT BY NOT CONDONING THE DELAY IN THE PRESENT CASE, CIT (A) / ITAT MAY GIVE RISE TO A SITUATION WHERE PENALTY IS LEVIED WHILE THE RELATABLE QUANTUM ADDITION IS DELETED VIDE THE ORDER OF TH E CIT (A) ON MERITS DATED 13.3.2003. 5. ON THE OTHER HAND, LD DR FOR THE REVENUE ARGUED VEHEMENTLY STATING THAT THE SERVICE OF NOTICE IS VALID AND THE OTHER REASONS GIVEN BY THE ASSESSEE ARE AFTER THOUGHTS. 6. WE HAVE HEARD BOTH THE PARTIES ON THIS PRELIMINARY ISSUE OF THE CIT (A)S DECISION IN NOT CONDONING TH E DELAY. THE CIT (A) DID NOT APPRECIATE THE ASSESSEES 4 ARGUMENT THAT THE DELAY IS ATTRIBUTABLE TO THE AVAILABILITY OF THE PENALTY ORDER WITH THE ASSESSEE. HE HAS CONSIDERED THE FACT THAT THE SERVICE IS COMPLETE IN AL RESPECT AND THEREFORE, THE ASSESSEE W ILL NOT GET RELIEF ON THAT ACCOUNT OF SERVICE OF NOTICE ON SHRI CHANDRAKANT JADHAV. REGARDING THE OTHER REASONS IE COMPLETE BREAKDOWN OF THE ASSESSEES STRUCTURE RELATING TO THE TAX MATTER AND ON THE GROUND OF NON - AVAILABILITY OF THE FORMAL APPLICATION FO R CONDONING THE DELAY WAS SAID TO BE THE REASON FOR REJECTION OF THE ASSESSEES REQUEST. WE FIND, THERE IS A FORMAL APPLICATION FOR CONDONATION OF DELAY AND THE LETTER DATED 11.1.2008 IS ON RECORD (PAGE 65 OF THE PAPER BOOK IS RELEVANT IN THIS REGARD). W E HAVE ALSO NOTICED THAT THERE ARE FORMAL REQUESTS FROM THE ASSESSEE FOR WANT OF CERTIFIED COPY OF THE ORDER OF THE PENALTY AND THE DETAILS OF THE LETTERS ARE ALREADY CITED IN THE ABOVE PARAS OF THIS ORDER. REGARDING THE COMMUNICATION OF SHRI CHANDRAKANT JADHAV, WE FIND, THE REVENUE COULD NOT ESTABLISH THE FACT THAT MR. JADH AV IS RIGHT PERSON OR AUTHORISED PERSON QUA RECEIVING THE IMPORTANT DOCUMENTS LIKE THE ORDER OF PENALTY WHICH IS AN IMPACT OF RS. 17.04 CRS. FURTHER, CONSIDERING THE OTHER FACTORS NARRATED BY THE LD COUNSEL FOR THE ASSESSEE, WE FIND, ALL THESE FACTS ARE RELEVANT AND CANNOT BE BRUSHED ASIDE. 7. FURTHER, WE HAVE ALSO GONE THROUGH THE PRECEDENTS CITED BY THE ASSESSEE IE THE DECISION OF THE TRIBUNAL IN THE CASE OF JYOTI MEHTA & ORS (SUP RA) AND GROWMORE RESEARCH AND ASSETS MANAGEMENT LTD & ORS (SUPRA) AND FIND THE SAID COMPANIES ARE ALSO PERTAINED TO THE HARSH MEHTA GROUP OF COMPANIES. CONSIDERING THE ABOVE NARRATED FACTS SPECIFICALLY TO THIS CASE, WE FIND, NO REASON WHY THE ASSESSEE CO ULD NOT HAVE FILED APPEAL AGAINST THE ORDER OF THE PENALTY WHICH HAS HUGE TAX IMPLICATIONS. RIGHT OF APPEAL IS A PRECIOUS ONE FRAMED BY THE LEGISLATORS ON THE TAX PAYERS. ASSESSEE WOULD NOT HAVE DEPRIVED WITH THAT RIGHTS WITHOUT ANY SUBSTANTIAL REASONS. THEREFORE, IN OUR CONSIDERED VIEW, THE SERVICE OF ORDER OF THE PENALTY ON THE ASSESSEE IS NOT PROPER AND THE SAME CONSTITUTES A REASONABLE AND SUFFICIENT CAUSE. FURTHER, WE HAVE ALSO EXAMINED THE RELEVANT PARAS FROM THE CITED ORDERS OF THE TRIBUNAL (SUPR A) AND FOR THE SAKE OF COMPLETENESS OF THIS ORDER, PARA 9 FROM THE SAID TRIBUNALS ORDER IN THE CASE OF GROWMORE RESEARCH AND ASSETS MANAGEMENT LTD & ORS (SUPRA) IS EXTRACTED AS UNDER: - 9. KEEPING IN MIND THE ABOVE AUTHORITATIVE PRONOUNCEMENTS OF HONBLE SUPREME COURT, IF WE ADVERT TO THE FACTS OF THE PRESENT APPEALS THEN IT WOULD REVEAL THAT EXPLANATION OF THE ASSESSEE DO NOT SMACK MALA FIDE OR DO NOT PUT FORTH AS A DILATORY 5 STRATEGY. IT MUST BE REMEMBERS THAT IN EVERY CASE OF DELAY THERE CAN BE SOME LAP S ON THE PART OF THE LITIGANT ALSO BUT THAT ALONE IS NOT ENOUGH TO TURN DOWN THE PLEA AND SHUT THE DOOR AGAINST HIM. AS OBSERVED BY HONBLE SUPREME COURT IN THE CASE OF N. BALAKRISHNAN (SUPRA) THE LENGTH OF DELAY IS IMMATERIAL. IT IS THE ACCEPTABILITY OF THE EXPLANATION THAT IS THE ONLY CRITERIA FOR CONDONING THE DELAY. THE LD COUNSEL FOR THE ASSESSEES HAS DEMONSTRATED THE CIRCUMSTANCES THAT BUSINESS PREMISES HAS TO BE VACATED, BANK ACCOUNTS HAVE BEEN ATTACHED, BUSINESS PREMISES AS WELL AS RESIDENTIAL PR EMISES WERE PUT ON SALE. THERE WERE NO FUNDS WITH THE ASSESSEE; EMPLOYEES HAVE LEFT THE JOB; PROFESSIONALS IN THE ABSENCE OF FEES REFUND TO RENDER SERVICES. ALL THESE CIRCUMSTANCES IN THEIR SETTING AS A WHOLE DO NO INDICATE THAT SITUATION WAS OUT OF ASSE SSEES CONTROL. THEY HAVE NOT DELAYED THE APPEALS INTENTIONALLY. THEREFORE, WE CONDONE THE DELAY AND PROCEED TO DECIDE THE APPEALS ON MERIT. 8. FURTHER, PARA 3 OF THE ORDER OF THE TRIBUNAL IN THE CASE OF SMT. JYOTI H. MEHTA (SUPRA) WAS ALSO RELIED BY THE ASSESSEE IN CONDONING THE S I M I L A R DELAY OF 1517 DAYS IN THE INSTANT CASE. ON PERUSAL OF ABOVE CITED DECISIONS OF THE TRIBUNAL (SUPRA) AND RESPECTFULLY FOLLOWING THE SAME, WE DIRECT THE CIT (A) TO CONDONE TH E DELAY AND ADMIT THE APPEAL AND ADJUDICATE THE ISSUES ON MERITS. CIT (A) IS DIRECTED TO DECIDE THE QUANTUM APPEAL IN THE CASE OF THE ASSESSEE WHILE DECIDING THE PENALTY QUANTITATIVELY. FURTHER, CIT (A) IS ALSO DIRECTED TO ADJUDICATE THE MERIT RELATED GR OUNDS OF APPEAL AFRESH AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, MERIT RELATED ISSUES RAISED BY THE ASSESSEE ARE ALSO ALLOWED FOR STATISTICAL PURPOSES AND THE ISSUE OF CONDONATION OF DELAY IS ALLOWED IN FAVOUR O F THE ASSESSEE. 9. IN THE RESULT, AP PEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.333/M/2015 (AY 2008 - 2009) (IN THE CASE OF SUDHIR S. MEHTA) 10. THIS APPEAL FILED BY THE ASSESSEE ON 13.1.2015 IS AGAINST THE ORDER OF THE CIT (A) - 40, MUMBAI DATED 31.10.2014 FOR THE ASSESSMENT YEAR 2008 - 2009. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: - 1. THE LD CIT (A) HAS ERRED IN L AW AND IN FACTS IN DISMISSING THE APPEAL OF THE ASSESSEE WITHOUT ADMITTING THE SAME. 2. THE LD CIT (A) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT THERE WAS NO DELAY IN FILING THE APPEAL AND THAT THE APPEAL OUGHT TO HAVE BEEN DECIDED ON MERITS. 3. THE LD CIT (A) HAS ERRED IN LAW AND IN FACTS IN NOT CONDONING THE DELAY IN FILING THE APPEAL. 4. THE LD CIT (A) OUGHT TO HAVE DELETED THE PENALTY OF RS. 4,45,83,080/ - LEVIED U/S 271(1)(C) OF THE ACT LEVIED BY THE ASSESSING OFFICER. 11. THIS IS THE CA SE WHERE THE ASSESSING OFFICER LEVIED THE PENALTY AMOUNTING TO RS. 4,45,83,080/ - . THIS PENALTY IS RELATABLE TO THE SCRUTINY ADDITION OF RS. 6 13,11,65,287/ - ON ACCOUNT OF CLAIM INTEREST EXPENSES. THE PENALTY AGAINST THE QUANTUM ADDITIONS IS THE SUBJECT MAT TER OF APPEAL PENDING BEFORE THE TRIBUNAL. MEANWHILE, ASSESSEE WANTED TO FILE THE APPEAL AGAINST THE PENALTY ORDER AND THE ASSESSEE GOT THE COPY OF THE SAID ORDER OF THE TRIBUNAL ON 20.4.2012 ONLY ON THE REQUEST MADE BY THE ASSESSEE TO THE AO ON 17.3.201 2 AND 22.3.2012. CIT (A), DISMISSED THE APPEAL OF THE ASSESSEE ON PENALTY VIDE HIS ORDER DATED 31.10.2014 STATING THAT THE DELAY CANNOT BE CONDONED AS THE DELAY IS ABOVE 10 MONTHS. HOWEVER, HE DID NOT APPRECIATE THE FACT THAT ON THE SIMILAR REASONS, THE T RIBUNAL GRANTED RELIEF TO THE ASSESSEE IN VARIOUS CASES OF THE SAME GROUP OF HARSH MEHTA (SUPRA) LIKE THE ONES ALREADY DECIDED BY US IN THE ABOVE PARAGRAPHS OF THIS ORDER. 12. ON THE OTHER HAND, LD DR FOR THE REVENUE RELIED ON THE ORDERS OF THE REVENUE AUT HORITIES. 13. ON HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE DECISIONS OF THE TRIBUNAL ALREADY CITED ABOVE (SUPRA) AND ALSO THE RELEVANT MATERIAL PLACED BEFORE US, WE ARE OF THE OPINION THAT IN TUNE WITH THE EXISTING DECISION TAKEN BY THE ITAT IN THE CASE OF SMT. RINA S. MEHTA (SUPRA) , THE DELAY IN THE INSTANT CASE SHOULD ALSO BE CONDONED. WE ORDER ACCORDINGLY AND DIRECT THE CIT (A) TO CONDONE THE DELAY AND ADMIT THE APPEAL AND ADJUDICATE THE APPEAL ON MERITS. FURTHER, CIT (A) IS ALSO DIRECTED TO ADJUDICATE THE MERIT RELATED GROUNDS OF APPEAL AFRESH AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, MERIT RELATED ISSUES RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTIC AL PURPOSES AND THE ISSUE OF CONDONATION OF DELAY IS ALLOWED IN FAVOUR OF THE ASSESSEE. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 15. CONCLUSIVELY, BOTH THE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOU NCED IN THE OPEN COURT ON 2 3 R D SEPTEMBER, 2016. S D / - S D / - ( SANJAY GARG ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 2 3 .09.2016 . . ./ OKK , SR. PS 7 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI