NATIONAL PHARMACEUTICALS, THANE V. ITO WD 1, PALGHAR

ITA 1649/MUM/2013

• Counselvise Citation: 164919914 RSA 2013
• Duration Of Justice: 2 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 25-05-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 28-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Condonation of delay

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.1649/M/2013 ASSESSMENT YEAR: 2004-05 M/S. NATIONAL PHARMACEUTICALS, G 18/1, MIDC TARAPUR, BOISAR, TAL PALGHAR, DIST THANE. PAN: AAEFN 6878M VS. ITO WARD (1), PALGHAR. (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : NONE REVENUE BY : SHRI JITENDRA KUMAR, D.R. DATE OF HEARING : 25.05.2015 DATE OF PRONOUNCEMENT : 08.07.2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 08.11.2012 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [(HEREINAFTER REFERRED TO AS THE CIT(A)] IN RELATION TO LEVY OF P ENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT. 2. THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS VIDE LETTER DATED 21.05.2015 AND IT HAS BEEN REQUESTED THAT THE MATTER BE DISPOS ED OF AFTER CONSIDERING THE WRITTEN SUBMISSIONS OF THE ASSESSEE. HENCE, WE PRO CEED TO DISPOSE OF THE MATTER AFTER HEARING THE LD. D.R. AND GOING THROUGH THE WRITTEN SUBMISSIONS OF THE ASSESSEE. ITA NO.1649/M/2013 M/S. NATIONAL PHARMACEUTICALS 2 3. THE LD. CIT(A), VIDE IMPUGNED ORDER, HAS DECLINE D THE REQUEST OF THE ASSESSEE TO CONDONE THE DELAY OF EIGHT MONTHS AND F IVE DAYS IN PREFERRING THE APPEAL BY THE ASSESSEE BEFORE HIM. IN ITS WRITTEN SUBMISSIONS, THE ASSESSEE HAS PLEADED THAT IT HAS FILED AN APPEAL IN THE QUANTUM PROCEEDINGS BEFORE THE ITAT. IN THE PENALTY PROCEEDINGS, IT WAS REQUESTED TO THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) THAT THE PENALT Y PROCEEDINGS BE KEPT IN ABEYANCE TILL THE DISPOSAL OF THE QUANTUM APPEAL OF THE ASSESSEE BEFORE THE ITAT. THEREAFTER, THE ASSESSEE DID NOT RECEIVE ANY NOTICE FROM THE AO IN THE PENALTY APPEAL. THE ASSESSEE WAS UNDER BONAFIDE BE LIEF THAT THE PENALTY PROCEEDINGS HAVE BEEN KEPT IN ABEYANCE. HOWEVER, L ATER ON IT WAS REVEALED THAT THE PENALTY ORDER WAS PASSED BY THE AO WHICH W AS ALSO SENT ON THE ADDRESS OF THE ASSESSEE. THE ASSESSEE HAS PLEADED THAT THE ASSESSEE IS A SMALL PHARMACEUTICAL UNIT AND DO NOT HAVE MUCH ADMINISTRA TIVE STAFF. THE ASSESSEE CAME TO THE KNOWLEDGE OF PASSING OF THE PENALTY ORD ER WHEN THE DEPARTMENT STARTED PRESSING FOR THE RECOVERY OF THE PENALTY AM OUNT. IT HAS BEEN SUBMITTED THAT THE PENALTY ORDER MIGHT HAVE BEEN RECEIVED BY SOME CASUAL WORKER OF THE ASSESSEE FIRM. THE PERSON WHO MIGHT HAVE RECEIVED THE PENALTY ORDER WOULD HAVE LEFT THE EMPLOYMENT OF THE ASSESSEE FIRM THAT IS WHY THE ASSESSEE COULD NOT GET THE KNOWLEDGE OF THE SERVICE OF THE PENALTY ORDER UPON THE ASSESSEE. IT HAS BEEN SUBMITTED THAT DELAY IN FILING THE APPEAL BEFORE THE LD. CIT(A) WAS BECAUSE OF THE REASON THAT THE ASSESSEE WAS NOT AWA RE OF THE PASSING OF THE PENALTY ORDER. THERE WAS NO INTENTIONAL DELAY ON T HE PART OF THE ASSESSEE IN FILING THE APPEAL BEFORE THE LD. CIT(A). 4. THE LD. CIT(A), HOWEVER, HAS NOT BELIEVED THE VE RSION OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS NOT DISCLOSED T HE NAME OF THE SPECIFIC EMPLOYEE WHO HAD RECEIVED THE PENALTY ORDER AND ALS O THAT THE ASSESSEE HAS NOT DISCLOSED THE EXACT DATE OF LEAVING OF THE JOB BY T HE SAID EMPLOYEE. ITA NO.1649/M/2013 M/S. NATIONAL PHARMACEUTICALS 3 5. AFTER CONSIDERING THE WRITTEN SUBMISSIONS OF THE ASSESSEE AND HEARING THE LD. D.R., WE FIND THAT THE ASSESSEE HAS SUBMITT ED THAT IT WAS NOT AWARE OF THE SERVICE OF PENALTY ORDER. IT IS THE BELIEF OF THE ASSESSEE THAT IT MIGHT HAVE BEEN RECEIVED BY SOME CASUAL WORKER OF THE ASSESSEE . WHEN THE ASSESSEE ITSELF WAS NOT AWARE THAT WHO ACTUALLY HAD RECEIVED THE NO TICE, THEN THE LD. CIT(A) SHOULD NOT HAVE EXPECTED FROM THE ASSESSEE THE NAME OF THE EMPLOYEE WHO ACTUALLY RECEIVED PENALTY ORDER. HAD THE ASSESSEE BEEN IN KNOWLEDGE AS TO WHO HAD RECEIVED THE NOTICE, THEN IN THAT CASE THE ASSE SSEE MIGHT HAVE BEEN AWARE OF THE RECEIPT OF THE PENALTY ORDER. HENCE, THE RE JECTION OF THE APPLICATION OF THE ASSESSEE ON THIS GROUND CANNOT BE JUSTIFIED. M OREOVER, WE FIND THAT PRESENT IS A PENALTY APPEAL AND NOT A QUANTUM APPEAL. THE LEVY OF PENALTY IN COMPARISON TO THE LEVY OF TAX IS DIFFERENT AS THE F ORMER HAS SOME CHARACTERISTIC OF PENAL CONSEQUENCE AS THE VERY NAME OF IT SUGGEST S. UNDER SUCH CIRCUMSTANCES, WITHOUT HEARING THE ASSESSEE ON MERI TS, THE CONSEQUENCES OF LEVY OF PENALTY CAN BE SAID TO BE HARSH. THE HONB LE SUPREME COURT IN THE CASE OF G. RAMEGOWDA, MAJOR AND OTHERS V. SPECIAL LAND ACQUISITION OFFICER, BANGALORE (1988) 2 SCC 142, WHILE RELYING UPON VARIOUS OTHER DECISIONS OF THE HONBLE SUPREME COURT ITSELF VIZ. RAMLAL, MOTILAL AND CHHOTELAL V. REWA COALFIELD LTD. (1962) 2 SCR 762; SHAKUNTALA DEVI JAIN V. KUNTAL KUMARI(1969) 1 SCR 1006 ; CONCORD OF INDIA INSURANCE CO. LTD. V. NIRMALA DEVI(1979) 3 SCR 694; LALA MATA DIN V. A. N ARAYANAN(1970) 2 SCR 90 ; COLLECTOR, LAND ACQUISITION V. KATIJI ETC. (19 87) 2 SCC 107, HAS HELD THAT THERE IS, IT IS TRUE, NO GENERAL PRINCIPLE SAVING THE PARTY FROM ALL MISTAKES OF ITS COUNSEL. IF THERE IS NEGLIGENCE, DELIBERATE OR GROSS INACTION OR LACK OF BONA FIDE ON THE PART OF THE PARTY OR ITS COUNSEL THERE IS NO REASON WHY THE OPPOSITE SIDE SHOULD BE EXPOSED TO A TIME-BARRED APPEAL. EAC H CASE WILL HAVE TO BE CONSIDERED ON THE PARTICULARITIES OF ITS OWN SPECIA L FACTS. HOWEVER, THE ITA NO.1649/M/2013 M/S. NATIONAL PHARMACEUTICALS 4 EXPRESSION SUFFICIENT CAUSE IN SECTION 5 MUST REC EIVE A LIBERAL CONSTRUCTION SO AS TO ADVANCE SUBSTANTIAL JUSTICE AND GENERALLY DEL AYS IN PREFERRING APPEALS ARE REQUIRED TO BE CONDONED IN THE INTEREST OF JUST ICE WHERE NO GROSS NEGLIGENCE OR DELIBERATE INACTION OR LACK OF BONA F IDES IS IMPUTABLE TO THE PARTY SEEKING CONDONATION OF THE DELAY. IN STATE OF NAGALAND V. LIPOK AO AND OTHERS (2005) 3 SCC 752, THE HOBLE SUPREME COURT, AFTER REFERRING TO NEW INDIA INSURANCE CO. LTD. V. SHANTI MISRA(1975) 2 SCC 840, N. BALAKRISHNAN V. M. KRISHNAMURTHY AIR 1998 SC 3222, STATE OF HARYANA V. CHANDRA MANI(1996 ) 3 SCC 132 AND SPECIAL TEHSILDAR, LAND ACQUISITION V. K.V. AYISUMM A (1996) 10 SCC 634, CAME TO HOLD THAT ADOPTION OF STRICT STANDARD OF PR OOF SOMETIMES FAILS TO PROTECT PUBLIC JUSTICE AND IT MAY RESULT IN PUBLIC MISCHIEF . IN IMPROVEMENT TRUST, LUDHIANA V. UJAGAR SINGH AND OTHERS(2010) 6 SCC 786 , IT HAS BEEN HELD THAT WHILE CONSIDERING AN APPLICATION FOR CONDONATION OF DELAY NO STRAITJACKET FORMULA IS PRESCRIBED TO COME TO THE CONCLUSION IF SUFFICIENT AND GOOD GROUNDS HAVE BEEN MADE OUT OR NOT. IT HAS BEEN FURTHER STAT ED THEREIN THAT EACH CASE HAS TO BE WEIGHED FROM ITS FACTS AND THE CIRCUMSTANCES IN WHICH THE PARTY ACTS AND BEHAVES. 6. IN VIEW OF ABOVE LAW, WE ARE OF THE VIEW THAT TH E REASONS FOR DELAY IN FILING THE APPEAL BY THE ASSESSEE CONSTITUTE SUFFIC IENT CAUSE FOR CONDONATION OF DELAY. THE DELAY IN FILING THE APPEAL IS THEREFORE CONDONED AND THE IMPUGNED ORDER OF THE LD. CIT(A) IS ACCORDINGLY SET ASIDE AN D THE MATTER IS RESTORED TO THE FILE OF THE LD. CIT(A) TO DECIDE THE APPEAL OF THE ASSESSEE ON MERITS AFTER GIVING PROPER OPPORTUNITY OF HEARING TO THE ASSESSE E. ITA NO.1649/M/2013 M/S. NATIONAL PHARMACEUTICALS 5 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 08.07.2015. SD/- SD/- (G.S. PANNU) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 08.07.2015. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.