M/s Mahalaxmi Investment and Trading Private Limited, Ratlam V. Deputy Commissioner of Income Tax, Ratlam

ITA 173/Ind/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0539 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 12-12-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 27-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PUNEET KUMAR
• Assessee Lawyers: S N AGRAWAL
• Keywords: Reasonable cause; Capital receipt; Ignorance of law
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.173 & 174/IND/2018 ASSESSMENT YEARS: 2013-14 & 2014-15 ASSESSEE BY SHRI S.N. AGRAWAL, CA REVENUE BY SHRI PUNEET KUMAR, SR. DR DATE OF HEARING 1 2 . 1 2 .2019 DATE OF PRONOUNCEMENT 18 . 1 2 .2019 O R D E R PER MANISH BORAD, AM THE ABOVE CAPTIONED APPEALS FILED AT THE INSTANCE O F THE ASSESSEE PERTAINING TO ASSESSMENT YEARS 2013-14 & 2 014-15 ARE DIRECTED AGAINST THE ORDERS OF COMMISSIONER OF INCO ME TAX(APPEALS), (IN SHORT CIT(A)] UJJAIN DATED 19.1 2.2017 WHICH ARE ARISING OUT OF THE ORDER U/S 143(3) OF THE INCOME TAX ACT 1961(IN SHORT THE ACT) DATED 30.03.2016 FRAMED BY DCIT, R ATLAM. 2. ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEALS ; M/S MAHALAXMI INVESTMENT AND TRADING PRIVATE LIMITED, C/O SV AGRAWAL & ASSOCIATES DADI DHAM, 24 JOY BUILDERS COLONY, OLD PALASIA, NEAR REFEAL TOWER, INDORE VS. D CIT RATLAM (APPELLANT) (RESPONDENT ) PAN NO.AADCM9703G MAHALAXMI INVESTMENT AND TRADING P. LTD. ITA NOS.173 & 174 /IND/18 2 ITA NO.173/IND/2018 FOR A.Y. 2013-14 1.1 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) GROSSLY ERRED IN NOT CONDONING THE DELAY IN FILING OF APPEAL BY THE APPELLANT TO EXCLUDE THE AMOUNT OF SALES TAX SUBSID Y FROM ITS TOTAL INCOME EVEN WHEN THE AMOUNT OF SALES TAX SUBSIDY WAS EXEMPT AS CAPITAL RECEIPT IN VIEW O F THE DIRECT DECISION OF HON'BLE APEX COURT WITHOUT PROPERLY APPRECIATING THE REASON FOR DELAY IN FILIN G OF THE APPEAL. 1.2] THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) GROSSLY ERRED IN NOT CONDONING THE DELAY IN FILING OF APPEAL BY THE APPELLANT TO EXCLUDE THE AMOUNT OF SALES TAX SUBSID Y FROM ITS TOTAL INCOME EVEN WHEN CIRCULAR NO 14 ISSUED BY HON'BLE CBDT CLEARLY STATES THAT OFFICERS OF THE DEPARTMENT MUST NOT TAKE ADVANTAGE OF IGNORANCE OF THE ASSESSEE AS TO HIS RIGHTS. IN THE FACTS OF THE PRESENT CASE, THE LD CIT (A) GROSSLY ERRED I N NOT CONDONING THE DELAY IN FILING OF APPEAL EVEN WH EN THE APPELLANT INADVERTENTLY AND IN IGNORANCE OF LAW OFFERED SALES TAX SUBSIDY AS ITS INCOME WHICH WAS HOWEVER EXEMPT FROM TAX AS IT WAS A CAPITAL RECEIPT . 2) THAT ,ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) ERRED IN NOT DECIDING THE GROUND OF APPEAL AS TAKEN FOR CHALLENGING THE ADDITION OF AN AMOUNT OF RS'7,296/TO THE TOTAL INCO ME OF THE APPELLANT ON ACCOUNT OF EMPLOYEES CONTRIBUTION TO THE PROVIDENT FUND EVEN WHEN THE SAID AMOUNT WAS PAID DURING THE PREVIOUS YEAR AND IN ANY CASE BEFORE THE DUE DATE OF FILING OF THE, R ETURN OF TOTAL INCOME. 3] THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD CIT(A) ERRED IN NOT DECIDING THE GROUND OF APPEAL AS TAKEN FOR CHALLENGING THE MAHALAXMI INVESTMENT AND TRADING P. LTD. ITA NOS.173 & 174 /IND/18 3 DISALLOWANCE OF AN AMOUNT OF RS 1,00,000/- OUT OF PURCHASE EXPENSES PURELY ON AD-HOC BASIS WITHOUT POINTING OUT ANY DEFECTS IN THE BOOKS OF ACCOUNTS A S MAINTAINED BY THE APPELLANT. 4.1] THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) GROSSLY ERRED IN NOT EXCLUDING THE AMOUNT OF SALES TAX SUBSIDY OF RS 50,47,045/- FROM THE TOTAL INCOME OF THE APPELLANT EVEN WHEN THE SAME IS EXEMPT FROM TAX BEING CAPITAL IN NATURE AND THUS, IS NOT CHARGEABLE TO TAX UNDER THE INCOME TAX ACT. 4.2] THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) ERRED IN NOT ENTERTAINING THE CLAIM OF THE APPELLANT TO EXCLUDE THE AMOUNT OF SALES TAX SUBSIDY FROM THE TOTAL INCOME O F THE APPELLANT MERELY FOR THE REASON THAT THE AMOUNT OF SALES TAX SUBSIDY WAS VOLUNTARILY OFFERED BY THE APPELLANT AS ITS INCOME EVEN WHEN THE SAID AMOUNT OF SALES TAX SUBSIDY WAS NOT LIABLE TO TAX AS INCOM E AND THE AMOUNT OF SALES TAX SUBSIDY WAS ALSO TREATED BY THE LD CIT(A) HIMSELF AS A CAPITAL RECEI PT IN EARLIER YEARS. 5. THE APPELLANT RESERVE ITS RIGHT TO ADD, ALTER, M ODIFY OR DELETE ANY GROUNDS OF APPEAL ON OR BEFORE THE DA TE OF FINAL HEARING. ITA NO.174/IND/2018 FOR A.Y. 2014-15 1.1 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) GROSSLY ERRED IN NOT CONDONING THE DELAY IN FILING OF APPEAL BY THE APPELLANT TO EXCLUDE THE AMOUNT OF SALES TAX SUBSID Y FROM ITS TOTAL INCOME EVEN WHEN THE AMOUNT OF SALES TAX SUBSIDY WAS EXEMPT AS CAPITAL RECEIPT IN VIEW O F THE DIRECT DECISION OF HON'BLE APEX COURT WITHOUT PROPERLY APPRECIATING THE REASON FOR DELAY IN FILIN G OF MAHALAXMI INVESTMENT AND TRADING P. LTD. ITA NOS.173 & 174 /IND/18 4 THE APPEAL. 1.2] THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) GROSSLY ERRED IN NOT CONDONING THE DELAY IN FILING OF APPEAL BY THE APPELLANT TO EXCLUDE THE AMOUNT OF SALES TAX SUBSID Y FROM ITS TOTAL INCOME EVEN WHEN CIRCULAR NO 14 ISSUED BY HON'BLE CBDT CLEARLY STATES THAT OFFICERS OF THE DEPARTMENT MUST NOT TAKE ADVANTAGE OF IGNORANCE OF THE ASSESSEE AS TO HIS RIGHTS. IN THE FACTS OF THE PRESENT CASE, THE LD CIT (A) GROSSLY ERRED I N NOT CONDONING THE DELAY IN FILING OF APPEAL EVEN WH EN THE APPELLANT INADVERTENTLY AND IN IGNORANCE OF LAW OFFERED SALES TAX SUBSIDY AS ITS INCOME WHICH WAS HOWEVER EXEMPT FROM TAX AS IT WAS A CAPITAL RECEIPT . 2.1] THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) GROSSLY ERRED IN NOT EXCLUDING THE AMOUNT OF SALES TAX SUBSIDY OF RS 93,81,078/- FROM THE TOTAL INCOME OF THE APPELLANT EVEN WHEN THE SAME IS EXEMPT FROM TAX BEING CAPITAL IN NATURE AND THUS, IS NOT CHARGEABLE TO TAX UNDER THE INCOME TAX ACT. 2.2] THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) ERRED IN NOT ENTERTAINING THE CLAIM OF THE APPELLANT TO EXCLUDE THE AMOUNT OF SALES TAX SUBSIDY FROM THE TOTAL INCOME O F THE APPELLANT MERELY FOR THE REASON THAT THE AMOUNT OF SALES TAX SUBSIDY WAS VOLUNTARILY OFFERED BY THE APPELLANT AS ITS INCOME EVEN WHEN THE SAID AMOUNT OF SALES TAX SUBSIDY WAS NOT LIABLE TO TAX AS INCOM E AND THE AMOUNT OF SALES TAX SUBSIDY WAS ALSO TREATED BY THE LD CIT(A) HIMSELF AS A CAPITAL RECEI PT IN EARLIER YEARS. 3. THE APPELLANT RESERVE ITS RIGHT TO ADD, ALTER, M ODIFY OR DELETE ANY GROUNDS OF APPEAL ON OR BEFORE THE DA TE OF FINAL HEARING. MAHALAXMI INVESTMENT AND TRADING P. LTD. ITA NOS.173 & 174 /IND/18 5 3. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT FOR BOTH THE ASSESSMENT YEARS I.E. A.Y.2013-14 & 2014-1 5, LD. CIT(A) HAS DISMISSED ASSESSEES APPEALS ON ACCOUNT OF DELA Y IN FILING THE APPEAL AND THERE IS NO FINDING ON MERITS OF THE CAS E. HE FURTHER SUBMITTED THAT THERE WAS A REASONABLE CAUSE DUE TO WHICH THERE WAS A DELAY FOR FILING THE APPEAL BEFORE THE LD. CI T(A) AND IF THE SAME HAD BEEN CONDONED, THE ASSESSEE HAD FAIR CHANC E IN SUCCEEDING IN THE APPEALS. HE FURTHER PRAYED FOR CO NDONING THE DELAY BEFORE THE LD. CIT(A) AND RESTORING ALL THE I SSUE RAISED ON MERITS IN THIS APPEAL TO LD. CIT(A) FOR AFRESH ADJ UDICATION. 4. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE (DR) OPPOSED TO THE REQUEST MADE BY THE LD. COUNSEL FOR THE ASSESSEE. 5. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. THOUGH THE ASSESSEE HAS RAISED VARIOUS G ROUNDS ON MERITS FOR A.YS. 2013-14 & 2014-15 CHALLENGING THE ADDITION MADE BY THE LD. AO, WE, OBSERVE THAT DUE TO THE TECHNICA L REASON I.E. FOR DELAY IN FILING THE APPEAL BEFORE THE LD. CIT(A), A SSESSEES CASE WAS NOT DECIDED ON MERITS AND THE APPEALS WERE DISMISSE D. 6. BEFORE US, LD. COUNSEL FOR THE ASSESSEE REQUESTE D FOR CONDONING THE DELAY MADE IN FILING APPEAL BEFORE LD. CIT(A). PERUSAL ON RECORDS SHOWS THAT DUE TO THE MISTAKE ON THE PART OF THE AC COUNTANT OF THE ASSESSEE WHO DID NOT INFORM ABOUT THE ASSESSMENT OR DER PASSED U/S 143(3) OF THE ACT TO THE MANAGEMENT OF THE COMP ANY, RESULTED IN DELAY OF ONE YEAR IN FILING THE APPEAL. MAHALAXMI INVESTMENT AND TRADING P. LTD. ITA NOS.173 & 174 /IND/18 6 7. AN AFFIDAVIT IN SUPPORT OF THIS CONTENTION IS PL ACED ON RECORD WHEREIN IT HAS BEEN SUBMITTED THAT THE ACCOUNTANT, MR. PARAS JAIN DID NOT HAND OVER THE ASSESSMENT ORDER U/S 143(3) O F THE ACT TO THE MANAGEMENT OF THE COMPANY WITH A BONA FIDE BELIEF THAT THERE IS A MEAGER ADDITION OF RS.1,40,956/-. IT IS ALSO CONTEN DED BEFORE US THAT THE ASSESSEE HAD FAIR CHANCES OF SUCCEEDING IF THE GROUNDS RAISED ON MERITS HAD BEEN ADJUDICATED. 8.WE, THEREFORE, IN THE LARGER INTEREST OF JUSTICE AND BEING FAIR TO BOTH THE PARTIES CONDONE THE DELAY IN FILING THE AP PEALS BEFORE THE LD. CIT(A) AND RESTORE ALL THE ISSUES RAISED ON MER ITS FOR BOTH ASSESSMENT YEARS I.E. 2013-14 & 2014-15 TO LD. CIT( A) FOR AFRESH ADJUDICATION. NEEDLESS TO MENTION THAT PROPER OPPOR TUNITY OF BEING HEARD TO BE PROVIDED TO THE ASSESSEE AND ASSESSEE I S ALSO DIRECTED TO BE COMPLIANT TO NOTICES AND SHOULD NOT TAKE ADJOUR NMENT UNLESS OTHERWISE REQUIRED FOR REASONABLE CAUSE. 9. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE FOR A.YS. 2013-14 & 2014-15 ARE ALLOWED FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 18.12.201 9. SD/- SD/- ( KUL BHARAT) (MANISH BOR AD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 18 TH DECEMBER, 2019 PATEL/PS MAHALAXMI INVESTMENT AND TRADING P. LTD. ITA NOS.173 & 174 /IND/18 7 COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE