Manas Promoters & Developers Pvt Ltd, Pune V. DCIT, Pune

ITA 1731/PUN/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 2263 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 24-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B; RAVI PRAKASH JAIN
• Keywords: Opportunity of being heard; Bonafide belief; Reasonable cause

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . . , , ' # BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1731/PN/2012 '% % / ASSESSMENT YEAR : 2003-04 MANAS PROMOTERS AND DEVELOPERS PVT. LTD., C/O. SHRIPAL VIMALCHAND MEHTA, 1106, BUDHWAR PETH, RAMESHWAR CHOWK, PUNE -2. PAN NO.AABCM1765G . / APPELLANT V/S DCIT, CIRCLE-11(2), PUNE . / RESPONDENT / APPELLANT BY : SHRI NIKHIL PATHAK / RESPONDENT BY : SHRI RAVI PRAKASH JAIN & B / ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 25-01-2012 OF THE CIT(A)-I, PUNE RELATING TO ASS ESSMENT YEAR 2003-04. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF PROMOTERS AND BUILDERS. A SUR VEY ACTION U/S.133A OF THE ACT WAS CARRIED OUT ON 19-12-2002 IN TH E CASE OF THE ASSESSEE. DURING THE SAID SURVEY THE STATEMENT OF ONE OF THE DIRECTOR OF THE ASSESSEE COMPANY WAS RECORDED WHEREIN HE HAS ADM ITTED THE TOTAL WIP AT RS.5,05,60,000/-. HOWEVER, ON PHYSICAL VERIFICATION THE ACTUAL WIP WAS WORKED OUT AT RS.5,43,90,000/-. THE DIFFERENCE OF RS.38 LAKH S / DATE OF HEARING :14.12.2015 / DATE OF PRONOUNCEMENT:16.12.2015 2 ITA NO.1731/PN/2012 APPROXIMATELY WAS POINTED OUT TO THE DIRECTOR WHO ADMIT TED THE DIFFERENCE IN WIP AND DECLARED ADDITIONAL INCOME OF RS.40 LAKHS TO COVER UP ANY OTHER DISCREPANCY. HOWEVER, WHILE FILING THE R ETURN OF INCOME, THE ASSESSEE COMPANY DECLARED TOTAL LOSS OF RS.77 ,07,134/-. SINCE NONE APPEARED DURING THE COURSE OF ASSESSMENT P ROCEEDINGS, EXPARTE ORDER WAS PASSED BY THE AO U/S.144 OF THE I.T . ACT. THE AO DISALLOWED THE TOTAL LOSS DECLARED AT RS.77,07,134/- AND FURT HER DETERMINED THE TOTAL INCOME AT RS.40 LAKHS. 3. SUBSEQUENTLY, THE AO ISSUED PENALTY NOTICE U/S.271(1)(C ) OF THE I.T. ACT. AGAIN THERE WAS NO RESPONSE FROM THE SIDE OF T HE ASSESSEE FOR WHICH THE AO LEVIED PENALTY OF RS.43,02,372/- BEING THE MINIM UM PENALTY LEVIABLE ON THE INCOME OF RS.1,17,07,134/-, I.E. (RS.77,07,13 4/- + RS.40,00,000/-). SINCE NONE APPEARED BEFORE THE CIT(A) AN D THE APPEAL WAS FILED LATE BY 4 YEARS THE LD.CIT(A) DISMISSED THE APPEAL FILED BY THE ASSESSEE BY OBSERVING AS UNDER : 3. I HAVE CAREFULLY PERUSED MATERIAL ON RECORD. IT IS A FACT THAT THE SHOW CAUSE NOTICE WAS SERVED ON THE APPELLANT ON 06.01.2012 . THE APPELLANT HAS FAILED TO APPEAR BEFORE THE CIT (APPEAL)-I, PUNE ON 18.01.2012 AND ADDUCE ANY REASONABLE CAUSE BY WHICH IT WAS, PREVENTED IN PRE FERRING APPEAL WITHIN THE PRESCRIBED TIME LIMIT. I AM AWARE, OF THE DECISION OF HON SUPREME COURT THAT, IN SUCH CASES A LIBERAL APPROACH, SHOULD BE ADOPTED IN CONDONING THE DELAY BECAUSE APPEAL IS SUBSTANTIVE RIGHT AND DELAY IS PROCEDURAL IN NATURE AND THE APPELLANT DOES NOT DERI VE ANY BENEFIT BY DELAYING THE APPEAL, BUT AT THE SAME TIME THE FACT O F THE MATTER IS, THAT A TIME LIMIT IS PRESCRIBED UNDER THE ACT FOR PREFERRING APPEAL. WHEREVER THIS TIME LIMIT IS NOT ADHERED, EXISTENCE OF REASONABLE CAU SE BECAUSE OF WHICH APPEAL CANNOT BE PREFERRED HAS GOT TO BE BROUGHT ON RECORD. IN CASE OF THE APPELLANT, ON FACTS OF THE CASE IT IS HELD THAT THIS HA S NOT BEEN DONE. THEREFORE, I AM OF THE CONSIDERED VIEW THAT THIS IS NO T A FIT CASE FOR CONDONING THE DELAY. FURTHERMORE, FROM THE CONDUCT OF THE APPELLANT AS DESCRIBED IN PARA 2 ABOVE, IT IS CLEAR THAT THE APP ELLANT HAS DISPLAYED DISINCLINATION TO PROSECUTE ITS APPEAL, MAY BE FOR THE REASON STATED IN THE AFFIDAVIT THAT THE QUANTUM ADDITION HAS BEEN SET-AS IDE BY THE HON'BLE ITAT, PUNE. WHATEVER MAY BE THE REASON, BUT FOR THE REASONS OF NOT HOLDING ANY BONAFIDE REASON FOR THE INORDINATE DELA Y COMMITTED IN FILING THE APPEAL AND THE NON-COMPLIANCES MADE TO THE VARI OUS OPPORTUNITIES GIVEN TO PRESENT THEIR CASE, THE DELAY IS NOT CONDO NED. 3 ITA NO.1731/PN/2012 4. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : ON FACTS AND IN LAW, 1. THE LEARNED CIT(A) ERRED IN NOT ADMITTING THE AP PEAL FILED AGAINST THE PENALTY ORDER PASSED BY THE LEARNED ASSESSING OFFICE R (HEREINAFTER 'AO') IN CASE OF THE APPELLANT LEVYING A PENALTY AMO UNTING TO RS. 43,02,372/- WHICH WAS PATENTLY ILLEGAL, ARBITRARY AN D HENCE DESERVES TO BE DELETED. 2. THE LEARNED CIT (A) OUGHT TO HAVE CONDONED THE D ELAY IN FILING THE APPEAL AND OUGHT TO HAVE DECIDED THE APPEAL ON MERI TS. 2.1) THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THERE WAS REASONABLE CAUSE FOR DELAY IN FILING OF APPEAL DUE TO THE DISPU TE AMONG THE DIRECTORS OF COMPANY WHICH HAS LED TO TOTAL CLOSURE OF BUSINESS OF TH E COMPANY. THIS IS REASON THE WHY THE APPELLANT WAS UNABLE TO ENGAGE ANY CONSULTANT IMMEDIATELY FOR FILING THE APPEALS AS WELL AS TO APPEA R BEFORE THE LD. CIT. 2.2) THE LEARNED CIT(A) AS WELL AS AO FAILED TO GIVE SUFFICIENT OPPORTUNITY OF BEING HEARD. THE LEARNED CIT(A) ERRE D IN NOT GIVING THE SECOND / ANOTHER OPPORTUNITY AND ERRED IN DISPOSING O FF THE APPEAL WITHIN VERY SHORT SPAN OF TIME. 3. WITHOUT PREJUDICE, THE LEARNED AO FAILED TO APPR ECIATE THAT THE BOOKS OF ACCOUNTS WERE AUDITED AND THE ALLEGED DECLAR ATION OF RS. 40 LAKHS IN RESPECT OF DIFFERENCE IN WIP GIVEN AT THE TIME OF SURVEY WAS ALREADY TAKEN INTO CONSIDERATION WHILE FINALISING THE ACCOUNT S FOR THE YEAR. 4. THE APPELLANT CRAVES THE PERMISSION TO ADD, AMEND, MODIFY, ALTER, REVISE, SUBSTITUTE, DELETE ANY OR ALL GROUNDS OF APPEAL , IF DEEMED NECESSARY AT THE TIME OF HEARING OF THE APPEAL. 5. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUB MITTED THAT BECAUSE OF THE CONFRONTATION BETWEEN THE TWO GROUP OF DIRECTORS THE COMPANY HAS COME TO A HALT. EVEN AGAINST THE SAME PEN ALTY ORDER OF THE CIT(A) 2 DIRECTORS HAD FILED 2 SEPARATE APPEALS BEFORE THE TRIBUNAL. IN ONE APPEAL THE TRIBUNAL HAS DISMISSED THE SAME WHERE AS IN ANOTHER APPEAL FILED BY THE ASSESSEE AGAINST THE SAME ORDER, THE TRIBUNAL HAD RESTORED THE ISSUE TO THE FILE OF THE CIT(A). HE SUBMITTED T HAT IN THE MEANTIME THE ASSESSEE FILED A MISCELLANEOUS APPLICATION BEFORE THE TRIBUNAL AND THE TRIBUNAL RECALLED BOTH THE ORDERS. HE SUBMITTED THAT THE ASSESSEE HAS WITHDRAWN ONE APPEAL AND THIS IS THE O NLY APPEAL THAT 4 ITA NO.1731/PN/2012 IS PENDING BEFORE THE TRIBUNAL AGAINST THE ORDER OF CIT(A) SUSTAINING THE PENALTY LEVIED U/S.271(1)(C) OF THE I.T. ACT. HE SUBMITTED THAT THE DELAY IN FILING OF APPEAL BEFORE THE CIT(A) WAS NOT INTENTIONAL AND NEITHER THE COMPANY NOR ITS DIRECTORS HAD ANY MALAFIDE INT ENTION IN NOT PRESENTING THE APPEAL WITHIN THE STATUTORY PRESCRIBED TIM E LIMIT. THE DELAY IN FILING OF APPEAL WAS DUE TO ERRONEOUS BONAFIDE BELIEF ENTERTAINED BY THE DIRECTORS ABOUT THE PROVISIONS IN RES PECT OF APPEAL AGAINST THE PENALTY ORDER AND FURTHER MORE DUE TO SEVE RE DISPUTES BETWEEN DIRECTORS THERE WERE VIRTUALLY NO FUNDS WITH THE SAID COMPANY TO PAY EVEN THE FEES OF THE TAX CONSULTANT. 5.1 REFERRING TO THE AFFIDAVIT FILED BY THE ASSESSEE COMPANY ALONGWITH THE APPEAL MEMO FOR CONDONING THE DELAY IN FILING OF THE APP EAL BEFORE THE LD.CIT(A) HE SUBMITTED THAT THE MATTER MAY KINDLY B E RESTORED TO THE FILE OF THE CIT(A) WITH A DIRECTION TO CONDONE THE DELAY AND DECIDE THE ISSUE ON MERIT. 6. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HA ND HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE SUBMITTED THAT THE DELAY OF ABOUT 4 YEARS IN FILING OF THE APPEAL BEFORE THE CIT(A) SHOULD NOT BE CONDONED AS THERE IS NO JUSTIFIABLE REASONS FOR SUCH DELAY IN FILING OF THE APPEAL. THE ASSESSEE IS A RECALCITRANT ONE WHO HAS SCANT REGAR DS FOR THE LAW OF THE LAND ESPECIALLY TO THE INCOME-TAX PROCEEDINGS. HE AC CORDINGLY SUBMITTED THAT THE ORDER OF THE CIT(A) BE UPHELD AND THE GROUNDS RAISED BY THE ASSESSEE SHOULD BE DISMISSED. 7. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIO US DECISIONS CITED BEFORE US. THERE IS NO DISPUTE TO THE FACT THAT TH E ASSESSEE IN THE 5 ITA NO.1731/PN/2012 INSTANT CASE HAS FILED THE APPEAL BEFORE THE CIT(A) WITH A DELAY OF ABOUT 4 YEARS AND THERE WAS NO COMPLIANCE TO THE STATUTORY NOTICE ISSUED BY THE CIT(A) FOR WHICH THE CIT(A) WAS CONSTRAINED TO DISMISS T HE APPEAL FILED BY THE ASSESSEE. THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THERE WERE SEVERE DISPUTES BETWEEN THE TWO WARRING GROUP OF DIRECTORS IS ALSO BORNE OUT OF RECORD SINCE 2 D IRECTORS HAD FILED 2 SEPARATE APPEALS AGAINST THE ORDER OF THE CIT(A) CONFIRM ING THE PENALTY LEVIED BY THE AO. THIS SHOWS THAT THERE WAS NO UNITY AMONG DIRECTORS. WE FIND THE TRIBUNAL IN ASSESSEES OWN CASE IN THE QUANTUM PROCEEDINGS HAS ALSO CONDONED THE DELAY IN FILING OF THE APP EAL BEFORE THE CIT(A) AND RESTORED THE ISSUE TO THE FILE OF THE CIT(A ) WITH A DIRECTION TO DECIDE THE ISSUE ON MERIT. THE RELEVANT OBSE RVATION OF THE TRIBUNAL AT PARA 4 OF THE ORDER IN ITA NO.914/PN/2008 ORDER DATED 2 3- 07-2010 FOR A.Y. 2003-04 READS AS UNDER : 4. AFTER HAVING GONE THROUGH THE ORDERS OF THE LOWE R AUTHORITIES UNDER THE ABOVE STATED FACTS AND CIRCUMSTANCES OF THE CASE, WE HAVE NO REASON TO DOUBT THE SUBMISSION OF THE LEARNED AR THAT DUE TO ONG OING DISPUTE BETWEEN THE DIRECTORS THE CASE WAS NOT PROPERLY REPRESE NTED BEFORE THE LOWER AUTHORITIES INCLUDING NON FILING OF FIRST APPEA L BEFORE THE LEARNED CIT (APPEALS) IN TIME. IN OUR VIEW THE REASONS EXPLAINED BY THE LEARNED AR FOR NOT PREFERRING FIRST APPEAL IN TIME DUE TO ONGOING D ISPUTE BETWEEN THE DIRECTORS AND CLOSURE OF THE OFFICE OF THE ASSESSEE COMPA NY WAS SUFFICIENT FOR THE DELAY IN FILING THE FIRST APPEAL. THE SITUAT ION AS NARRATED WAS BEYOND POWER AND CONTROL OF THE ASSESSEE TO FILE THE FI RST APPEAL IN TIME. TAKING ALL THESE FACTS AND CIRCUMSTANCES INTO ACCOUNT, WE ARE SATISFIED THAT THERE WAS SUFFICIENT REASON FOR THE DELAY IN PREFERRIN G THE FIRST APPEAL IN PRESCRIBED TIME LIMIT. THE SAME IS CONDONED AND MATTE R IS REMANDED TO THE FILE OF THE LEARNED CIT (APPEALS) WITH DIRECTION TO HIM/HER TO DECIDE THE APPEAL ON ITS MERITS AFTER AFFORDING ADEQUATE OPP ORTUNITY OF BEING HEARD TO THE ASSESSEE AND IF SO REQUIRED THE CLAIM OF TH E ASSESSEE MAY ALSO BE GOT VERIFIED BY THE AO KEEPING IN MIND THAT ASSESSME NT ORDER WAS FRAMED U/S.144 OF THE ACT. THE GROUND IS THUS ALLOWED FOR STATISTICAL PURPOSES. 8. FACTS BEING SIMILAR, THEREFORE, WE RESTORE THE ISSUE TO THE FILE OF THE LD.CIT(A) WITH A DIRECTION TO CONDONE THE DELAY IN FILING OF THE APPEAL BY THE ASSESSEE AND DECIDE THE ISSUE ON MERITS AND AS PER LAW 6 ITA NO.1731/PN/2012 AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. WE HOLD AND DIRECT ACCORDINGLY. GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16-12-2015. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) ' / JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE ; DATED : 16 TH DECEMBER, 2015. ( )'+ , / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A) - I, PUNE 4. 5. THE CIT-I, PUNE % ((), ), / DR, ITAT, A PUNE; . / GUARD FILE. / BY ORDER , % ( //TRUE C % ( //TRUE COPY// 01 ( ) / SR. PRIVATE SECRETARY ), / ITAT, PUNE