RAJESH MEHTA, MUMBAI V. I.T.O. 13(3)(2), MUMBAI

ITA 1677/MUM/2011

• Counselvise Citation: 167719914 RSA 2011
• Duration Of Justice: 2 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 28-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: RAHUL R SARDA
• Keywords: Salary income; Earning of tax free income; Period of limitation; Condonation of delay
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 1677/MUM/2011 ASSESSMENT YEAR: 2007-08 SHRI RAJESH MEHTA 105-106, SANGAM ARCADE BLDG. 1 ST FLOOR V.P. ROAD, OPP. RLY STATION, VILE PARLE (W) MUMBAI- 400 056 VS. ITO 13(3)(2) MUMBAI (APPELLANT) (RESPONDENT) PERMANENT ACCOUNT NO. :-AGMPM 0925 A APPELLANT BY : SHRI RAHUL R. SARDA RESPONDENT BY : SHRI SANJEEV JAIN DATE OF HEARING : 19.02.2014 DATE OF PRONOUNCEMENT : 26.02.2014 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE LD.CIT(A) -24, MUMBAI DATED 28.10.2010 FOR THE ASSE SSMENT YEAR 2007-08. 2. AT THE OUTSET, IT IS NOTED THAT THERE IS A DELAY OF 44 DAYS IN FILING THE APPEAL. THE ASSESSEE HAS FILED A PETITION OF CONDONATION OF DELAY IN THE SHAPE OF AN AFFIDAVIT. THE ASSESSEE HAS EXPLAINED THE REASONS FOR NOT FILI NG THE APPEAL WITHIN THE TIME PERIOD OF LIMITATION AS HE FELL ILL AND WAS SUFFERI NG FROM ENTERIC FIVER THEREBY THE DOCTOR ADVISED THE ASSESSEE FOR A BED REST DURING T HE PERIOD. IN SUPPORT OF THE SAID REASON, THE ASSESSEE HAS FILED THE MEDICAL CERTIFIC ATE ALSO. THUS, THE DELAY HAS BEEN OCCURRED DUE TO THE REASON WHICH IS A BONA FIDE ONE AND NOT INTENTIONAL OR DELIBERATE. AFTER CONSIDERING THE RELEVANT RECORDS, AVERMENT IN THE AFFIDAVIT AND THE MEDICAL CERTIFICATE PRODUCED, WE FIND THAT THE ASSE SSEE HAS EXPLAINED THE SUFFICIENT REASONS FOR NOT FILING THE APPEAL WITHIN TIME. IT I S SETTLED LAW THAT WHILE CONDONING THE DELAY, THE COURT SHOULD TAKE A LENIENT VIEW. IT IS ALWAYS A QUESTION WHETHER THE ITA NO. 1677/MUM/2011 SHRI RAJESH MEHTA ASSESSMENT YEAR: 2007-08 2 EXPLANATIONS AND REASONS FOR DELAY IS BONA FIDE OR MERELY A DEVICE TO COVER AN ULTERIOR PURPOSE SUCH AS LACHES ON THE PART OF THE LITIGANT OR AN ATTEMPT TO SAVE LIMITATION IN AN UNDER HAND WAY. WHEN IT IS FOUND O N RECORD THAT THE PARTY HAS NOT ACTED IN MALA FIDE BUT THE REASONS EXPLAINED ARE FA CTUALLY CORRECT, THEN THE COURT SHOULD BE LIBERAL IN CONSTRUING THE SUFFICIENT CAUS E AND SHOULD LEAN IN FAVOUR OF SUCH PARTY. WHENEVER SUBSTANTIAL JUSTICE AND TECHNICAL C ONSIDERATION ARE OPPOSED TO EACH OTHER, CAUSE OF SUBSTANTIAL JUSTICE HAS TO BE PREFE RRED. IN VIEW OF THIS LEGAL AND FACTUAL POSITION, WE CONDONE THE DELAY OF 44 DAYS I N FILING THE APPEAL BEFORE THE TRIBUNAL AND TAKE UP THE MATTER FOR ADJUDICATION ON MERITS. 3. IN THIS APPEAL, THE ASSESSEE HAS AGITATED THE AC TION OF THE LD.CIT(A) IN CONFIRMING THE DISALLOWANCE MADE BY THE AO U/S 14A OF THE INCOME-TAX ACT. BRIEFLY STATED, THE RELEVANT FACTS ARE THAT THE ASSESSEE AN INDIVIDUAL WHO DERIVES SALARY INCOME, DURING THE YEAR UNDER CONSIDERATION, HAS DE CLARED INTEREST INCOMES OF RS.8,55,909/- COMPRISING EXEMPT INCOME OF RS.3,27,5 35/- AND THE DIVIDEND INCOME OF RS.25,546/-. IN THE ASSESSMENT FRAMED U/S 143(3) OF THE ACT, THE AO DISALLOWED AN AMOUNT OF RS.2,86,901/- BY INVOKING SECTION 14A OF THE INCOME-TAX ACT READ WITH RULE 8D. ON APPEAL, THE LD.CIT(A) CONFIRMED THE DIS ALLOWANCE BY DIRECTING THE AO TO MAKE THE DISALLOWANCE IN CONSONANCE WITH THE DECISI ON OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE COMPANY LTD. AG GRIEVED BY THE IMPUGNED ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 4. HAVING HEARD BOTH THE SIDES AND PERUSED THE MATE RIAL ON RECORD, IT IS A FACT THAT THE RELEVANT ASSESSMENT YEAR 2007-08 UNDER CON SIDERATION IS OUTSIDE THE SCOPE OF PROVISIONS OF RULE 8D. THE SAID PROVISIONS CANNO T BE TREATED AS APPLICABLE TO THE A.Y.2007-08 UNDER CONSIDERATION INDIRECTLY WHEN THE SAME IS PRECLUDED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. VS. DCIT , REPORTED IN (2010) 328 ITR 81(BOM). THE HON'BLE BOM BAY HIGH COURT, ALSO IN THE CASE OF CIT VS. M/S. GODREJ AGROVET LTD VIDE INCOME TAX APPEAL NO. 934 OF 2011, DATED 8.1.2013, HAS HELD THAT PERCENTAGE OF THE EXE MPT INCOME CAN CONSTITUTE A REASONABLE ESTIMATE FOR MAKING DISALLOWANCE IN THE YEARS EARLIER TO THE ASSESSMENT ITA NO. 1677/MUM/2011 SHRI RAJESH MEHTA ASSESSMENT YEAR: 2007-08 3 YEAR 2008-09. THE RELEVANT PORTION OF THE SAID JUDG MENT OF THE BOMBAY HIGH COURT (SUPRA) READS AS UNDER: 'SO FAR AS QUESTION (B) IS CONCERNED, THE TRIBUNAL IN ITS IMPUGNED ORDER DATED 17.9.2010 WHILE APPLYING THE DECISION OF THIS COURT IN THE MATTER OF GODREJ (SUPRA) HAS DISALLOWED THE EXPENDITURE ONLY TO THE EXTENT OF 2% OF THE TOTAL EXEMPT INCOME EARNED BY THE RESPONDENT-ASSESSEE ON THE BASIS ITS ORDER DATED 27.2.2009 FOR THE ASSESSMENT YEAR 2002-2003 A ND ORDER DATED 10.9.2009 FOR THE ASSESSMENT YEARS 2003-2004 AND 20 04-2005 WHEREIN DISALLOWANCE WAS RESTRICTED TO 2% OF THE EXEMPT INC OME. FURTHER; THE TRIBUNAL HAS REMANDED THE MATTER TO THE AO TO VERIF Y THE DISALLOWANCE CLAIMED AND RESTRICT THE DISALLOWANCE ONLY TO THE E XTENT TO 2% OF THE TOTAL EXEMPT INCOME. WE FIND NO FAULT WITH THE ORDER OF T HE TRIBUNAL. ' CONSIDERING THE SAID DECISION, WE DIRECT THE AO TO QUANTIFY THE DISALLOWANCE IN THE LIGHT OF THE AFORESAID JUDGMENTS OF THE HON'BLE HIG H COURT. ACCORDINGLY, THE ISSUE RAISED IN GROUNDS NO.1 TO 3 STANDS PARTLY ALLOWED. 5. THE OTHER ISSUE RAISED IN GROUND NO 4 AS REGARDS THE DENIAL LIABILITY BY THE ASSESSEE TO THE LEVY OF PENAL INTEREST U/S 234A, 23 4B, 234C AND 234D, IN OUR VIEW IS CONSEQUENTIAL IN NATURE AND HENCE THE SAME DOES NOT REQUIRE ADJUDICATION. 6. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26 TH DAY OF FEBRUARY, 2014. SD/- SD/- (RAJENDRA) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 26.02.2014. *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR D BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.