NALANDA ENTERRAINMENT & RESORTS PVT LTD, MUMBAI V. I.T.O. WARD-2(2)(3), MUMBAI

ITA 1802/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7628 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 04-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P C MAURYA
• Keywords: Deemed dividend; Condonation of delay
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B , MUMBAI BEFORE SHIRI G. E. VEERABHADRAPPA, HON'BLE PRESIDEN T AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO. : 1802/MUM/2011 ASSESSMENT YEARS : 2007-08 M/S. NALANDA ENTERTAINMENT & RESORTS PVT. LTD. C/O. SHRI PRAKASH JHUNJHUNWALA, CHARTERED ACCOUNTANT, 5, JOLLY BHAWAN NO.2, GROUND FLOOR, 7 NEW MARINE LINES, CHURCHGATE, MUMBAI-400 020 PAN NO: AABCN 2013 Q VS. INCOME TAX OFFICER, WARD-2(2)(3), MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHR I PRAKASH JHUNJHUNWALA & SHRI SATISH GUPTA RESPONDENT BY : SHRI P. C. MAURYA DATE OF HEARING : 06.03.2012 DATE OF PRONOUNCEMENT : 28 .03.2012 ORDER PER AMIT SHUKLA (J.M.) : THIS APPEAL HAS BEEN PREFERRED BY THE APPELLANT AG AINST ORDER DATED 18.01.2011 PASSED BY THE CIT (APPEALS)-5, MUMBAI FO R THE QUANTUM OF ASSESSMENT FOR THE ASSESSMENT YEAR 2007-08. THE AP PEAL HAS BEEN PREFERRED MAINLY ON THE FOLLOWING GROUNDS : 1.0 ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN NOT CONDONING THE DELAY IN FILING O F THE 1 ST APPEAL BY 148 DAYS ON IGNORING GROSSLY THE UNINTENT IONAL ITA NO: 1802/MUM/2011 M/S. NALANDA ENTERTAINMENT & RESORTS PVT. LTD. 2 DELAY CAUSED UNDER BONAFIDE AND COMPELLING CIRCUMST ANCES BEYOND CONTROL OF THE APPELLANT; 1.1 THE LD. CIT(A), BEFORE REJECTING APPELLANTS PR AYER OF CONDONATION OF DELAY, OUGHT TO HAVE CONSIDERED THE AFFIDAVIT AND MEDICAL CERTIFICATES EVIDENCING SERIOUS ILLNESS OF APPELLANTS MANAGING DIRECTOR; 2.0 ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, LD.A.O. ERRED IN MAKING AN ADDITION OF `. 25,88,013/- U/S.2(22)(E) OF THE ACT; 3.0 THE LD. A.O., BEFORE MAKING ADDITION AS DEEMED DIVIDEND U/S.2(22)(E), OUGHT TO HAVE APPRECIATED TH E UNDERSTATED FACTS:- A) THE APPELLANT IS NOT A REGISTERED SHARE HOLDER NOR A BENEFICIAL SHARE HOLDER OF THE LENDING COMPANY; B) THE AMOUNT RECEIVED DURING THE YEAR PERTAINS TO REN T RECEIPTS, RENTAL DEPOSIT IN NORMAL COURSE OF THE BU SINESS; C) THE PROVISION OF SEC.2(22)(E) DOES NOT APPLY IN RES PECT OF THE SUM RECEIVED AS A DEPOSIT. 2. THE PRELIMINARY ISSUE HERE IN THIS APPEAL IS THA T THE CIT(APPEALS) HAS ERRED IN NOT CONDONING THE DELAY OF 148 DAYS IN FILING OF FIRST APPEAL. ALONG WITH THE APPEAL, A PETITION FOR CONDONATION O F DELAY ACCOMPANIED BY AN AFFIDAVIT WAS FILED BY SHRI SURESH GORADIA, THE MANAGING DIRECTOR OF THE APPELLANT COMPANY STATING THAT HE WAS SUFFERING FROM SERIOUS ILLNESS DUE TO HYPERTENSION AND DIABETES. AS A RESULT OF W HICH, HE COULD NOT CONTACT THE CHARTERED ACCOUNTANT TO FILE THE APPEAL . IT WAS ALSO SUBMITTED THAT THERE WAS NO OTHER ACTIVE DIRECTOR T O PURSUE THE MATTER OF FILING OF THE APPEAL IN HIS ABSENCE. 3. THE CIT (APPEALS) REJECTED THE PETITION FOR COND ONATION OF DELAY AND CONSEQUENTLY DISMISSED THE APPEAL AFTER OBSERVING A ND HOLDING AS UNDER:- ITA NO: 1802/MUM/2011 M/S. NALANDA ENTERTAINMENT & RESORTS PVT. LTD. 3 I HAVE CONSIDERED THE DIFFICULTIES BROUGHT TO NOTI CE BY THE APPELLANT AND DO NOT FIND THEM CONVINCING TO JUSTIF Y THE DELAY OF AS LONG AS A DURATION OF 148 DAYS. TO THIS END, FROM THE MEDICAL CERTIFICATE DT. 22.06.2010 SUBMITTED, I FIN D THAT MR. SURESH GORADIA WAS SUFFERING FROM HYPERTENSION AND DIABETES WHICH ARE CHRONIC DISEASES AND THERE IS NOTHING IN THE CERTIFICATE TO INDICATE THAT THE DISEASE WAS SERIOU S ENOUGH DURING THE RELEVANT PERIOD TO CALL FOR HOSPITALIZAT ION. THE APPELLANT WAS INSTEAD ONLY ADVISED REST AND ACCORDI NGLY, THERE WAS NOTHING TO PREVENT THE APPELLANT FROM CON TACTING HIS CHARTERED ACCOUNTANT. IN THIS AGE OF FAST AND EASY COMMUNICATION, ABSENCE FROM MUMBAI ALSO CANNOT BE A VALID GROUND FOR NOT BEING ABLE TO CONTACT THE CHARTERED ACCOUNTANT. FURTHER, VERY SIGNIFICANTLY, I NOTE THAT THE ASSESS MENT ORDER WAS RECEIVED BY THE APPELLANT ON 01.12.2009, I.E. P RIOR TO THE PERIOD OF THE ADVICE OF REST FROM 15.03.2010. IN V IEW OF THIS, I FIND THAT THERE WAS NOTHING WRONG WITH THE APPELLAN T FOR ABOUT TWO AND A HALD MONTHS FOLLOWING THE RECEIPT OF THE ASSESSMENT ORDER DURING WHICH HE DID NOT HAVE ANY PROBLEM. AC CORDINGLY, IN TERMS OF SECTION 249(3), I DO NOT FIND THAT THE APPELLANT HAD SUFFICIENT CAUSE FOR NOT PRESENTING THE APPEAL IN T IME. THE DELAY IS ALSO INORDINATE. BESIDES, I ALSO NOTICE THAT THIS APPEAL WAS FILED JUST BEFORE PASSING OF A PENALTY O RDER DT. 29.05.2010 U/S. 271(1) ON LEVYING PENALTY ON THE A DDITION MADE IN THE ASSESSMENT. THIS WOULD INDICATE THAT T HE APPELLANT WAS DRIVEN TO FILE THE APPEAL WHEN IT FOU ND THAT IT WOULD FACE LEVY OF PENALTY U/S.271(1)(C) ON THE ADD ITION MADE. THE REAL REASON WAS THUS JUST TO CREATE A FAADE OF CONTESTING THE ADDITION. ACCORDINGLY, CLUED INTO THESE FACTS AND CIRCUMSTANCES, I AM UNABLE TO CONDONE THE DELAY. 3.1 THE CIT(APPEALS) HOWEVER DID NOT GAVE ANY FINDI NG ON MERITS OF THE ADDITIONS FOR SUM OF `. 25,88,013/- ON ACCOUNT OF DEEMED DIVIDEND MADE BY THE ASSESSING OFFICER AFTER INVOKING THE DEEMING PROVISIONS OF SECTION 2(22)(E) OF THE ACT. 4. THE LEARNED AR APPEARING ON BEHALF OF THE APPELL ANT CONTENTED THAT IN THE AFFIDAVIT ITSELF THE APPELLANT HAS GIVEN THE DETAIL REASONING STATING THAT THE MANAGING DIRECTOR WAS A SENIOR CITIZEN SUF FERING FROM ACUTE ITA NO: 1802/MUM/2011 M/S. NALANDA ENTERTAINMENT & RESORTS PVT. LTD. 4 DIABETES AND HYPERTENSION AND COULD NOT CONTACT HIS CHARTERED ACCOUNTANT AT MUMBAI, AS AT THAT TIME HE WAS RESIDI NG AT HIS PLACE OF THE BUSINESS AT SHIRDI. IN SUPPORT OF THE AFFIDAVIT, M EDICAL CERTIFICATE OF HOSPITAL AND DOCTOR WAS ALSO PLACED BEFORE THE CIT( APPEALS). ON THESE FACTS AND CIRCUMSTANCES, HE PLEADED THAT THE DELAY SHOULD HAVE BEEN CONDONED BY THE CIT(APPEALS) AND THE APPEAL SHOULD HAVE BEEN DECIDED ON MERITS. 5. ON THE OTHER HAND, THE LEARNED SR. DR VEHEMENTLY OPPOSED THE SUBMISSIONS OF THE LEARNED AR AND CONTENTED THAT TH E APPEAL WAS FILED ONLY WHEN THE ASSESSING OFFICER INITIATED THE PENAL TY PROCEEDINGS U/S.271(1)(C) OF THE I.T. ACT AND, THEREFORE, THE R EASONS GIVEN BY THE APPELLANT SHOULD BE REJECTED. HE RELIED UPON THE R EASONINGS GIVEN BY THE CIT(APPEALS) IN PARA 2.2 AND CONTENTED THAT THE FIN DINGS ARE QUITE REASONABLE AND JUSTIFIED. 6. WE HAVE GONE THROUGH THE FINDINGS GIVEN BY THE C IT(APPEALS) FOR REJECTING THE CONDONATION OF DELAY IN FILING OF APP EAL AND ALSO CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES. FROM THE PER USAL OF THE AFFIDAVIT AND MEDICAL CERTIFICATE IT CANNOT BE DOUBTED THAT THE M ANAGING DIRECTOR WAS SUFFERING FROM ILLNESS DURING THE RELEVANT PERIOD. EVEN, THE CIT(APPEALS) HAS ACKNOWLEDGED THIS FACT BUT HIS MAIN REASONING I S THAT THE ASSESSMENT ORDER WAS RECEIVED BY THE APPELLANT ON 31.09.2010 I .E. PRIOR TO THE PERIOD OF MEDICAL REST FROM 15.03.2010. HENCE THERE WAS A SUFFICIENT TIME FOR FILING OF APPEAL WHEN HE DID NOT HAD ANY PROBLEM. HOWEVER ONCE IT HAS BEEN ACCEPTED BY THE CIT(APPEALS) THAT THE MANAGING DIRECTOR WHO WAS THE MAIN DIRECTOR LOOKING AFTER THE AFFAIRS OF THE COMPANY WAS ILL, THEN FOR A PART PERIOD IT CANNOT BE HELD THAT HE WAS GUILTY OF LATCHES FOR NOT FILING OF THE APPEAL IN TIME. THUS LOOKING TO THE FACTS A ND CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF SUBSTANTIAL JUSTICE WE FEEL THAT DELAY SHOULD ITA NO: 1802/MUM/2011 M/S. NALANDA ENTERTAINMENT & RESORTS PVT. LTD. 5 HAVE BEEN CONDONED BY THE CIT(APPEALS) AND SHOULD H AVE DECIDED THE APPEAL ON MERITS. ACCORDINGLY, WE DIRECT THE CIT(A PPEALS) TO CONDONE THE DELAY AND ENTERTAIN THE APPEAL ON MERITS AND THEN D ECIDE THE ISSUES RAISED IN THE FIRST APPEAL ON MERITS AND IN ACCORDA NCE WITH THE LAW. 7. IN THE RESULT, THE APPEAL FILED BY THE APPELLANT IS RESTORED BACK TO THE FILE OF THE CIT(APPEALS) WHO WILL DECIDE THE IS SUE AFRESH AFTER GIVING DUE OPPORTUNITY TO THE APPELLANT TO BE HEARD ON MER ITS. THE APPEAL FILED BY THE APPELLANT IS ALLOWED FOR STATISTICAL PURPOSE S. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 28 TH DAY OF MARCH, 2012. S D/ - S D/ - ( G. E. VEERABHADRAPPA ) ( AMIT SHUKLA ) PRESIDENT JUDICIAL MEMBER MUMBAI, DT: 28.03.2012 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, B - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI