Chandak Krishna Gopal Motilal, Ahmednagar V. DCIT, Ahmednagar

ITA 1721/PUN/2012

• Counselvise Citation: 172124514 RSA 2012
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 21-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K OJHA
• Assessee Lawyers: S N DOSHI
• Keywords: Business income; Bonafide belief; Condonation of delay
• Section: 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.1721/PN/2012 (ASSESSMENT YEAR : 2006-07) CHANDAK KRISHNAGOPAL MOTILAL 3302, ADAT BAZAR, AHMEDNAGAR 414 001. PAN : ABAPC7514Q . APPELLANT VS. DY. COMMISSIONER OF INCOME TAX, AHMEDNAGAR CIRCLE, AHMEDNAGAR. . RESPONDENT APPELLANT BY : MR. S. N. DOSHI RESPONDENT BY : MR. K. K. OJHA DATE OF HEARING : 01-10-2013 DATE OF PRONOUNCEMENT : 28-10-2013 ORDER PER G. S. PANNU, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, PUNE DATED 04.11.2009 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 04.12.2008 PAS SED BY THE ASSESSING OFFICER, UNDER SECTION 143(3) OF THE INCOME TAX ACT , 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESSMENT YEAR 2006-07. 2. IN THIS CASE, THE BRIEF FACTS ARE THAT ASSESSEE IS AN INDIVIDUAL FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2006 -07 DECLARING TOTAL INCOME OF RS.6,27,99,405/- WHICH INTER-ALIA COMPRISED OF SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL GAIN ON SALE/PURCHASE OF SHARES & SECURITIES, ETC. AT RS.4,73,30,889/- AND R S.1,53,11,448/- RESPECTIVELY. IN THE SCRUTINY ASSESSMENT FINALIZED UNDER SECTION 143(3) OF THE ACT DATED 04.12.2008 THE TOTAL INCOME HAS BEEN DETERMINED AT THE SAME FIGURE WHICH WAS RETURNED. S O, HOWEVER, THE CAPITAL GAIN DECLARED BY THE ASSESSEE ON SALE/PUR CHASE OF SHARES & ITA NO.1721/PN/2012 A.Y. 2006-07 SECURITIES, ETC. WAS TREATED AS BUSINESS INCOME. AS A RESULT THE TOTAL TAX PAYABLE WAS DETERMINED AT RS.3,19,30,835/ -, INCLUSIVE OF INTEREST UNDER SECTIONS 234A, 234B & 234C OF THE AC T OF RS.1,19,58,232/-. THE ASSESSEE CARRIED THE MATTER I N APPEAL BEFORE THE CIT(A) CHALLENGING THE ACTION OF THE ASSESSING OFFICER IN TREATING THE TRANSACTIONS ON SALE/PURCHASE OF SHARES & SECUR ITIES, ETC. AS BUSINESS INCOME INSTEAD OF CAPITAL GAINS. 3. THE CIT(A) HAS DISMISSED THE APPEAL OF THE ASSES SEE AS NOT MAINTAINABLE IN VIEW OF SECTION 249(4)(A) OF THE A CT ON THE GROUND THAT THE TAX ON THE RETURNED INCOME WAS NOT PAID BY THE ASSESSEE IN FULL BEFORE FILING THE APPEAL. AGAINST THE AFORESAI D, ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE AT THE OUTSET REFERRED TO A DETAILED AFFIDAVIT OF THE ASSESSEE DATED 17.08.2012 EXPLAINING THE REASONS AND CIRCUMSTANCES IN WHICH THE PRESENT APPEAL FILED BEFORE THE TRIBUNAL IS DELAYED BY 939 DAYS. BY REFERRING TO THE CIRCUMSTANCES AVERRED IN THE AFFID AVIT, WHICH IS ON RECORD, THE LEARNED COUNSEL SUBMITTED THAT ASSESSEE WAS UNDER A BONAFIDE BELIEF THAT THE APPEAL BEFORE THE TRIBUNAL COULD NOT BE FILED UNLESS THE TAX ON THE RETURNED INCOME WAS PAID. LEA RNED COUNSEL POINTED OUT THAT AT THE TIME OF PROCEEDINGS BEFORE THE CIT(A), ASSESSEE WAS UNDER TREMENDOUS FINANCIAL HARDSHIP AN D IT WAS ONLY BY RAISING AN UNSECURED LOAN FROM ASSOCIATES THE SE LF-ASSESSMENT TAXES WERE GRADUALLY PAID UPTO 22.07.2012 AND THERE FORE, THE PRESENT APPEAL WAS FILED ON 21.08.2012, WHICH WAS B ELATED BY 939 DAYS. THE LEARNED COUNSEL SUBMITTED THAT THE DELAY IN FILING OF APPEAL WAS UNDER A BONAFIDE BELIEF AND FOR REASONS BEYOND THE CONTROL OF THE ASSESSEE. ITA NO.1721/PN/2012 A.Y. 2006-07 5. WE HAVE CONSIDERED THE REASONS ADVANCED BY THE A SSESSEE FOR THE DELAY IN FILING OF THE PRESENT APPEAL AND T HE SAME HAVE ALSO BEEN DETAILED IN THE AFFIDAVIT DATED 17.08.2012, WH ICH IS ON RECORD. THE LEARNED DEPARTMENTAL REPRESENTATIVE OPPOSED THE PRAYER OF THE ASSESSEE FOR CONDONATION OF DELAY IN FILING OF THE PRESENT APPEAL YET NO FAULT HAS BEEN POINTED OUT BY HIM WITH REGARD TO THE BONAFIDES OF THE REASONS EXPLAINED BY THE ASSESSEE FOR THE DELAY IN FILING OF THE APPEAL. AS THE BONAFIDES OF THE REASONS ADVANCED BY THE ASSESSEE FOR THE DELAY ARE NOT ASSAILED, WE DEEM IT FIT AND PROPER TO CONDONE THE DELAY IN FILING OF THE PRESENT APPEAL. IN COMIN G TO SUCH CONCLUSION, WE HAVE ALSO BORNE-IN-MIND THE JUDGEMEN T OF THE HONBLE SUPREME COURT IN THE CASE OF COLLECTOR, LAN D ACQUISITION VS. MST. KATIJI & OTHERS, (1987) 167 ITR 471 (SC) WHERE IN IT HAS BEEN OBSERVED THAT A LIBERAL APPROACH SHOULD BE ADOPTED WHILE EXERCISING DISCRETION IN MATTERS OF CONDONATION OF DELAY IN FI LING OF AN APPEAL. IN TERMS OF THE HONBLE SUPREME COURT, WHEN SUBSTANTIA L JUSTICE AND TECHNICAL CONSIDERATIONS ARE PITTED AGAINST EACH OT HER, THE CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRED FOR TH E OTHER SIDE CANNOT CLAIM TO HAVE A VESTED RIGHT IN INJUSTICE BEING DON E ON ACCOUNT OF NON-DELIBERATE DELAY. KEEPING IN MIND THE RATIO LAI D DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF MST. KATIJI AN D OTHERS (SUPRA) AND NOTICING THAT THE BONAFIDES OF THE REASONS FOR DELAY EXPLAINED BY THE ASSESSEE IN THE PRESENT CASE ARE NOT IN DOUBT, WE CONDONE THE DELAY IN FILING OF THE PRESENT APPEAL. 6. THE AFORESAID DECISION OF CONDONATION OF DELAY I N FILING OF THE APPEAL WAS PRONOUNCED IN THE COURSE OF HEARING AND THEREAFTER PARTIES ADVANCED FURTHER ARGUMENTS IN RELATION TO T HE GROUNDS OF APPEAL PRESSED BY THE ASSESSEE. ITA NO.1721/PN/2012 A.Y. 2006-07 7. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT SUBSEQUENT TO THE ORDER OF THE CIT(A) DISMISSING TH E APPEAL OF THE ASSESSEE, ASSESSEE MADE EFFORTS AND DEPOSITED THE E NTIRE AMOUNT OF TAXES DUE ON THE RETURNED INCOME AND IN SUPPORT HE REFERRED TO PAGE 19 OF THE PAPER BOOK WHEREIN IS PLACED THE DETAILS OF SUCH TAXES PAID. ON THAT BASIS IT IS SOUGHT TO BE SUBMITTED TH AT THE ENTIRE ADMITTED TAXES AS PER THE RETURN STANDS PAID AND TH ERE IS NO VIOLATION OF SECTION 249(4)(A) OF THE ACT AT PRESENT AND THUS THE ASSESSEE WOULD BE SATISFIED IF THE ORDER OF THE CIT(A) DATED 04.11.20009 IS SET-ASIDE AND THE APPEAL RESTORED TO HIS FILE FOR A DJUDICATION ON MERITS OF THE CONTROVERSY RELATING TO THE TAXABILIT Y OF INCOME FROM TRANSACTIONS ON SALE/PURCHASE OF SHARES & SECURITIE S, ETC. IN SUPPORT OF HIS PLEA, RELIANCE HAS BEEN PLACED ON THE FOLLOW ING DECISIONS : (I) HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT-III VS. K. SATISH KUMAR SINGH (2012) 209 TAXMAN 502 (KARNATAKA); (II) PUNE BENCH OF THE TRIBUNAL IN THE CASE OF MAY FAIR BUILDERS & DEVELOPERS VS. DCIT, (2008) 114 ITD 147 (PUNE); AND , (III) HYDERABAD BENCH OF TRIBUNAL IN THE CASE OF SH AMRAJ MOORJANI VS. DCIT, (2005) 93 TTJ 927 (HYD). 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE APPEARIN G FOR THE REVENUE CONTENDED THAT THE ADMITTED TAX LIABILITY W AS NOT PAID WHEN THE APPEAL WAS PREFERRED BEFORE THE CIT(A), AND THE REFORE THE CIT(A) HAD RIGHTLY DISMISSED THE APPEAL IN-LIMINE AND PAYM ENT OF ADMITTED TAX SUBSEQUENT TO SUCH DISMISSAL, IS NOT A GROUND F OR SETTING-ASIDE THE ORDER OF THE CIT(A). 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. IT IS QUITE CLEAR FROM PERUSAL OF SECTION 249(4)(A) OF THE ACT THAT UNLESS ASSESSEE PAYS THE TAX DUE ON THE INCOME RETURNED BY HIM, THE ITA NO.1721/PN/2012 A.Y. 2006-07 CIT(A) IS NOT VESTED WITH ANY POWER TO ENTERTAIN TH E APPEAL. IN THE PRESENT CASE, AT THE TIME OF FILING OF APPEAL BEFOR E THE CIT(A), ASSESSEE HAD NOT PAID THE TAX DUE ON THE INCOME RET URNED BY HIM AND THUS NO FAULT CAN BE FOUND WITH THE ORDER OF TH E CIT(A) IN DISMISSING THE APPEAL OF THE ASSESSEE IN-LIMINE. HO WEVER, THE POSITION SOUGHT TO BE CANVASSED BY THE ASSESSEE IS THAT AFTER THE ORDER OF THE CIT(A), HE HAS PAID THE REQUISITE TAX DUE ON THE INCOME RETURNED BY HIM AND THEREFORE THE CIT(A) OUGHT TO E NTERTAIN AND ADMIT ASSESSEES APPEAL FOR ADJUDICATION ON MERITS. THE REVENUE HAS OPPOSED THE SAID PRAYER ON THE GROUND THAT PAYM ENT OF ADMITTED TAX SUBSEQUENT TO THE ORDER OF THE CIT(A) DISMISSIN G THE APPEAL, CANNOT BE A GROUND FOR SETTING-ASIDE THE ORDER OF T HE CIT(A). ON THIS ASPECT, IN OUR VIEW, THE JUDGEMENT OF THE HONBLE K ARNATAKA HIGH COURT IN THE CASE OF K. SATISH KUMAR SINGH (SUPRA) CLEARLY COVERS THE CONTROVERSY. AS PER THE HONBLE HIGH COURT, AFT ER THE DISMISSAL OF THE APPEAL BY THE CIT(A) ON ACCOUNT OF A DEFAULT UN DER SECTION 249(4)(A) OF THE ACT, IF THE ASSESSEE PAYS THE ADMI TTED TAX, THE CIT(A) OUGHT TO RECALL THE EARLIER ORDER DISMISSING THE APPEAL IN-LIMINE AND TO CONSIDER THE APPEAL ON MERITS. 10. CONSIDERING THE JUDGEMENT OF THE HONBLE KARNAT AKA HIGH COURT IN THE CASE OF K. SATISH KUMAR SINGH (SUPRA), WE DEEM IT FIT AND PROPER TO SET-ASIDE THE IMPUGNED ORDER OF THE C IT(A) WITH DIRECTIONS TO CONSIDER THE PLEA OF THE ASSESSEE OF HAVING PAID THE TAX DUE ON THE RETURNED INCOME AND UPON HIS BEING SATIS FIED THAT THE REQUIREMENT OF SECTION 249(4)(A) OF THE ACT HAS BEE N COMPLIED WITH, HE SHALL ADMIT AND DISPOSE-OFF THE APPEAL ON MERITS . NEEDLESS TO SAY THE CIT(A) SHALL ALLOW A REASONABLE OPPORTUNITY TO THE ASSESSEE OF BEING HEARD AND THEREAFTER HE SHALL PASS AN APPROPR IATE ORDER IN ACCORDANCE WITH LAW. ITA NO.1721/PN/2012 A.Y. 2006-07 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH OCTOBER, 2013. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED : 28 TH OCTOBER, 2013 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-I, PUNE; 4) THE CIT-I, PUNE; 5) THE DR, B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE.