SOLIDITY DEVELOPERS PVT LTD., MUMBAI V. DCIT-11(2)(2), MUMBAI

ITA 1787/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3236 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Appeal Filed On: 27-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI
• Keywords: Opportunity of being heard; Reasonable cause; TDS
• Section: 143(3); 40(a)(ia); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , G BENCH MUMBAI BEFORE : SHRI SAKTIJIT DEY, JUDICIAL MEMBER & SHRI M.BALAGANESH, A CCOUNTANT MEMBER ITA NO. 1787/ MUM/ 20 19 ( ASSESSMENT YEAR : 2012 - 13 ) M/S. SOLIDITY DEVELOPERS PVT. LTD ., MARATHA MANDIR ANNEX MARATHA MANDIR MARG BABASAHEB GAWDE CHOWK MUMBAI CENTRAL MUMBAI 400 008 VS. DCIT - 11(2)(2) 421, AAYAKAR BHAVAN 4 TH FLOOR, M.K. ROAD MUMBAI 400 020 PAN/GIR NO. AAOCS0518G (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI PAVAN VED REVENUE BY SHRI PANKAJ KUMAR DATE OF HEARING 0 5 / 10 /2021 DATE OF PRONOUNCEMENT 08 / 1 0 /202 1 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL IN ITA NO. 1787/MUM/2019 FOR A.Y. 2012 - 13 ARISES OUT OF THE ORDER BY THE LD. COMMISSIONE R OF INCOME TAX (APPEALS) - 18, MUMBAI IN APPEAL NO. CIT(A) - 18/IT - 10219/DCIT - 11(2)(2)/17 - 18 DATED 05/03/2019 (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 10/02/2015 BY THE LD. DY. COMMISSIONER OF INCOME TAX - 11(2)(2), MUMBAI (HEREINAFTER REFERRED TO AS LD. AO). ITA NO . 1787/MUM/2019 M/S. SOLIDITY DEVELOPMENT PVT. LTD., 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - BEING AGGRIEVED BY THE APPEAL ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 18 (HEREINAFTER REFERRED TO AS THE 'CIT(A) - 18') WITH REGARDS THE ASSESSMENT ORDER U/S 143(3) OF THE ACT OF THE DEPUTY COMMISSIONER OF INCOME TAX - 11 (2) (2), MUMBAI, (HEREINAFTER REFERRED TO AS THE 'LAO'), THIS APPEAL PETITION IS SUBMITTED ON THE FOLLOWING GROUNDS: - 1 . O N THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) - 18 HAS ERRED IN UPHOLDING THE ORDER OF THE LEARNED ASSESSING OFFICER ('LAO') ASSESSED U/S 143(3) OF THE INCOME TAX ACT, ON THE FOLLOWING; A. THE ID. CIT(A) - 18 ERRED IN NOT CON DONING DELAY IN FILING APPEAL BEFORE HIM. B. THE ID. CIT(A) - 18 ERRED IN NOT CONSIDERING THE STRONG MERITS OF THE CASE WHICH IS BASED ON HON'BLE SC DECISION AND THIS ALL THE MORE JUSTIFIES CONDONING THE DELAY C. DISALLOWANCE OF INTEREST EXPE NSE FOR NON - PAYMENT OF TAX DEDUCTED AT SOURCE U/S 40(A)(IA) OF THE ACT, AMOUNTING TO RS.3,74,28,580/ - . D. DISALLOWANCE OF INTEREST PAID ON DELAYED PROFESSION TAX AMOUNTING TO RS.2,500/ - . E. DISALLOWANCE OF INTEREST PAID ON DELAYED PAYMENT OF TAX DEDUCTED AT SOURCE (TDS) AMOUNTING TO RS.37,909/ - . 2. THE ORDER UNDER APPEAL IS NOT ONLY BAD IN LAW AND INVALID, BUT ALSO AGAINST THE NATURAL LAW OF EQUITY AND JUSTICE. 3. THAT THE APPELLANT RESERVES ITS RIGHTS TO AMEND, ALTER OR RAI SE ANY OTHER ADDITIONAL GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF APPELLATE PROCEEDINGS. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAD FILED ITS RETURN OF INCOME FOR THE A.Y.2012 - 13 ON 28/09/2012 DECLARING LOSS OF RS.3,76,24,237/ - . THIS RETURN WAS PROCESSED U/S.143(1) OF THE ACT. LATER IN THE SCRUTINY ASSESSMENT PROCEEDINGS COMPLETED U/S.143(3) OF THE ACT ON 10/02/2015 A SUM OF RS. 3,74,28,580/ - REPRESENTING INTEREST TO CITY GOLD INV ESTMENT PVT. LTD. WAS DISALLOWED U/S.43B OF THE ACT. THE LD. AO OBSERVED THAT THE ASSESSEE HAS ADVANCED LOANS TO THE TUNE OF RS.37.05 CRORES TO W ELL - G ROOMED J OINT V ENTURE WITHOUT CHARGING ANY INTEREST ON ITA NO . 1787/MUM/2019 M/S. SOLIDITY DEVELOPMENT PVT. LTD., 3 ONE HAND , WHEREAS ON THE OTHER HAND , IT HAD PAID IN TEREST ON ITS BORROWINGS. WE FIND THAT THE LD. AO HAD MADE THE DISALLOWANCE OF INTEREST U/S.43B OF THE ACT. HE ALSO OBSERVED THAT THE SAID INTEREST WAS SUBJECTED TO DEDUCTION OF TAX AT SOURCE BUT THE TDS WAS NOT REMITTED, HENCE, THE INTEREST EXPENDITURE BE COMES ALTERNATIVELY DISALLOWABLE FOR VIOLATION OF PROVISIONS OF CHAPTER XVIIB OF THE ACT. APART FROM THIS, THE LD. AO ALSO MADE DISALLOWANCE OF DELAYED INTEREST ON PROFESSIONAL TAX OF RS.2500/ - AND DELAYED INTEREST OF TDS OF RS.37,909 / - IN THE ASSESSMENT. 3.1. THE ASSESSEE COMPANY BASED ON THE ADVICE GIVEN BY THE IN - HOUSE CHARTERED ACCOUNTANT SOUGHT NOT TO PREFER ANY APPEAL BEFORE THE LD. CIT(A) AGAINST THIS ASSESSMENT ORDER. THE LD. AR POINTED OUT THAT THEREAFTER, WHEN PENALTY WAS LEVIED BY THE LD. AO AND THAT PENALTY WAS CONFIRMED BY THE LD. CIT(A), PROSECUTION PROCEEDINGS WERE INITIATED ON THE ASSESSEE COMPANY. THIS PROM P TED THE ASSESSEE COMPANY TO SEEK A SECOND OPINION FROM A LEGAL EXPERT, WHO HAD ADVISED THE ASSESSEE COMPANY TO PREFER AN APPEAL BEFORE THE LD. CIT(A) ALONG WITH DELAY CONDONATION PETITION. HENCE, THE APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A) WITH A DELAY OF 1081 DAYS. THE LD. CIT(A) DID NOT CONDONE THE DELAY AND DISMISSED THE APPEAL OF THE ASSESSEE AS ACCORDING TO HIM THE DELAY WAS NOT PROPERLY EXPLAINED BY THE ASSESSEE. 4. BEING AGGRIEVED, THE ASSESSEE HAS PREFERRED APPEAL BEFORE US ON THE GROUNDS MENTIONED HEREINABOVE. 5. AT THE OUTSET, WE FIND THAT THE LD. CIT(A) HAD NOT ADJUDICATED THE ISSUE ON MERITS OF THE ADDITI ONS. THE APPEAL HAS BEEN DISMISSED BY THE LD. CIT(A) ONLY ON THE GROUND OF NOT CONDONING THE DELAY THEREON. IT IS NOT IN DISPUTE THAT THERE WAS A DELAY IN FILING OF APPEAL BY THE ASSESSEE ITA NO . 1787/MUM/2019 M/S. SOLIDITY DEVELOPMENT PVT. LTD., 4 BY 1081 DAYS. BUT WE FIND THAT ASSESSEE HAS DULY EXPLAINED THE CIRCU MSTANCES UNDER WHICH A DECISION WAS TAKEN FOR NOT PREFERRING ANY APPEAL. WE ALSO FIND THAT THE CHARTERED ACCOUNTANT WHO ADVISED THE ASSESSEE HAS ALSO FILED AN AFFIDAVIT CONFIRMING THE AFORESAID FACTS WHICH IS ENCLOSED IN PAGE 13 OF THE PAPER BOOK. SUBSEQUE NTLY, WHEN THE PENALTY AND PROSECUTION PROCEEDINGS WERE LAUNCHED ON THE ASSESSEE, THE ASSESSEE BASED ON AN EXPERT ADVICE (SECOND OPINION) , DECIDED TO FILE AN APPEAL BEFORE THE LD. CIT(A). THIS, IN OUR CONSIDERED OPINION, CONSTITUTE A REASONABLE CAUSE , AS T HE LAW IS VERY WELL SETTLED THAT MISTAKE OF THE COUNSEL IN NOT SUGGESTING THE ASSESSEE TO PREFER AN APPEAL SHOULD NOT RESULT IN ASSESSEE GETTING FASTENED WITH PENAL DAMAGES TOGETHER WITH TAX AND INTEREST LIABILITY THEREON. BEFORE US, THE LD. AR VEHEMENTLY ARGUED THAT THE ASSESSEE HAD GOT A GOOD CASE ON MERITS AND THAT THE SAID DISALLOWANCE OF INTEREST, AMONG OTHERS , CANNOT BE MADE AT ALL IN THE HANDS OF THE ASSESSEE COMPANY. BUT WE ARE NOT INCLINED TO GET INTO THE MERITS OF THE ADDITIONS IN THIS APPEAL AS THE LD. CIT(A) HAD NOT ADDRESSED THE MERITS AT ALL. CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES, WE DIRECT THE LD. CIT(A) TO CONDONE THE DELAY IN FILING OF THE APPEAL BY THE ASSESSEE, ADMIT THE APPEAL OF THE ASSESSEE FOR ADJUDICATION AND ADJUDICATE THE ISSUES ON MERITS. NEEDLESS TO MENTION THAT ASSESSEE BE GIVEN REASONABLE OPPORTUNITY OF BEING HEARD. THE ASSESSEE IS ALSO DIRECTED TO CO - OPERATE WITH THE LD. CIT(A) FOR EXPEDITIOUS DISPOSAL OF THIS APPEAL AND NOT TO TAKE ANY ADJOURNMENT EXCEPT DUE TO U NAVOIDABLE OR EXCEPTIONAL CIRCUMSTANCES. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ITA NO . 1787/MUM/2019 M/S. SOLIDITY DEVELOPMENT PVT. LTD., 5 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 08 / 10 /202 1 BY WAY OF PROPER MENTIONING IN THE NOTICE BOARD. SD/ - ( SAKTIJIT DEY ) SD/ - (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 08 / 10 / 2021 KARUNA , SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//