Bripranil Industries Ltd., Kolkata V. CIT, Kolkata - II, Kolkata, Kolkata

ITA 1844/KOL/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7647 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2012
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 18-07-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 30-09-2010
• Result in Favour of: Set Aside
• Court: TRIBUNAL
• Department Lawyers: M S MEENA
• Assessee Lawyers: R K BAUL
• Keywords: Charitable institution; Principle of natural justice; Assessment record; Condonation of delay
• Section: 148; 263; 143(3)

Judgement Text

1 , B , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- B, KOL KATA [ , . .. . ! ! ! !. .. . , , , , '# ] BEFORE SRI N.VIJAYAKUMARAN, JUDICIAL MEMBER & SRI C.D. RAO, AC COUNTANT MEMBER $ $ $ $ / ITA NO. 1844 (KOL) OF 2010 %& '( / ASSESSMENT YEAR 2000-01 BRIPRANIL INDUSTRIES LTD., KOLKATA, (PAN-AABCB1666K) COMMISSIONER OF INCOME-TAX, KOLKATA-II, KOLKATA. (+, / APPELLANT ) - - - VERSUS - (/0+,/ RESPONDENT ) +, 1 2 '/ FOR THE APPELLANT: / SRI SOMNATH GHOSH & SRI R.K.BAUL /0+, 1 2 ' / FOR THE RESPONDENT: / SRI M.S. MEENA 3 1 !# / DATE OF HEARING : 29/12/2011 4' 1 !# / DATE OF PRONOUNCEMENT : 06/01/2012 '5 / ORDER ( . .. . ! ! ! !. .. . ), '# (C.D. RAO), ACCOUNTANT MEMBER : THE APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 19.05.2008 OF LD. C.I.T., KOLKATA-II PASSED U/S. 263 OF THE ACT FOR A SSESSMENT YEAR 2000-01. THE ASSESSEE HAS RAISED SEVERAL GROUNDS, WHICH ARE ALL DIRECTED AGAINST SETTING ASIDE THE ASSESSMENT ORDER DATED 22/12/2006 PASSED U/S. 147/144 OF THE A CT BY THE LD. C.I.T. BY INVOKING JURISDICTION U/S. 263 OF THE ACT WITH A DIRECTION T O REFRAME THE ASSESSMENT BY CORRECTING THE ERRORS STATED IN THE IMPUGNED ORDER PASSED U/S. 263 OF THE ACT. 2. THE APPEAL OF THE ASSESSEE IS DELAYED BY 788 DA YS. THE ASSESSEE HAS FILED A PETITION SEEKING CONDONATION OF THE SAID DELAY AND EXPLAINED THE CAUSE OF SUCH DELAY. ACCORDING TO THE ASSESSEE, ALL THE INCOME-TAX RELAT ED MATTERS WERE ENTRUSTED AND BEING LOOKED AFTER BY A TAX CONSULTANT, SRI B.M. BAJAJ AN D ALL THE PAPERS RELATED TO TAX MATTERS WERE IN HIS CUSTODY. IT WAS FURTHER STATED THAT SR I BAJAJ UNILATERALLY DISASSOCIATED HIMSELF FROM THE ASSESSEE-COMPANY AND AFTER HIS DEP ARTURE VARIOUS DOCUMENTS INCLUDING THAT OF EX PARTE REVISION ORDER PASSED BY THE LD. C .I.T. U/S. 263 OF THE ACT BECAME UNTRACEABLE. THEREAFTER, ONE SRI KAILASH YADAV, AN ASSOCIATE MEMBER OF ICAI AND A NEW ENTRANT IN THE FIELD OF DIRECT TAXATION, WAS ENTRUS TED WITH ITS INCOME-TAX MATTERS. IT WAS UNDER HIS ADVICE THAT THE ASSESSEE-COMPANY DID NOT FILE ANY APPEAL AGAINST ORDER OF 2 THE LD. A.O. U/S. 263/143(3) OF THE ACT BEFORE THE CONCERNED LD. C.I.T.(A), RATHER THE APPEAL WAS FILED BEFORE THE I.T.A.T. THE ASSESSEE-C OMPANY THEREAFTER CAME ACROSS THE PRESENT LAWYER AND IT WAS REVEALED THAT THE APPROPR IATE FORUM TO DISPUTE SUCH ORDER IS THE LD. C.I.T.(A) AND NOT THE I.T.A.T. ON HIS PROP ER ADVICE, THEREFORE, AN APPLICATION FOR WITHDRAWAL OF THE APPEAL, STATING THE ABOVE FACTS, WAS FILED BEFORE THE TRIBUNAL AND THE PRAYER FOR WITHDRAWAL OF THE APPEAL WAS ACCEPTED BY THE TRIBUNAL. THEREAFTER AS PER ADVICE AND GUIDANCE OF THE PRESENT LAWYER, THE ASSE SSEE OBTAINED A CERTIFIED COPY OF THE ORDER OF LD. C.I.T. U/S. 263 OF THE ACT FROM THE DE PARTMENT ON 22/9/2010 AND THE INSTANT APPEAL WAS FILED THEREAFTER. IT WAS STATED BY THE ASSESSEE THAT IN THE ABOVE SITUATION AND CIRCUMSTANCES, DELAY OF 788 DAYS HAD OCCURRED IN FILING OF THE PRESENT APPEAL BEFORE THE TRIBUNAL. IN SUPPORT OF THE SUBM ISSION, THE ASSESSEE ALSO FILED AN AFFIDAVIT FROM SRI KAILASH KR. YADAV, AN ASSOCIATE MEMBER OF ICAI, WHO AFFIRMED THAT THE ASSESSEE-COMPANY WAS HIS FIRST CLIENT AND HE WA S STILL PURSUING HIS CAREER IN CHARTERED ACCOUNTANCY AND HIS ACQUAINTANCE WITH TAX RELATED ISSUES WERE STILL DEVELOPING. IT WAS FURTHER AFFIRMED BY SRI YADAV THAT ACCORDING TO HIS ERRONEOUS ADVICE, THE ASSESSEE FILED APPEAL BEFORE THE TRIBUNAL INSTEAD O F LD. C.I.T.(A) WHICH CAUSED SUCH DELAY. ON THE ABOVE FACTS, THE LD. COUNSEL SUBMITT ED THAT DUE TO ERSTWHILE TAX CONSULTANT AND ACA OF ICAIS FAILURE/OMISSION TO LOOK INTO THE MATTER IN PROPER PERSPECTIVE, THE DELAY WAS CAUSED. HE FURTHER SUBMITTED THAT NO LIT IGANT DOES STAND TO BENEFIT BY LODGING AN APPEAL LATE WHEN THERE IS DEMAND AND PENALTY IMP OSED. THEREFORE, THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM FILING THE APPEA L IN TIME. THE REASONS ALSO AFFIRM THAT THERE WAS NO WILLFUL NEGLIGENCE OR MALAFIDES O N THE PART OF THE ASSESSEE. FURTHER, CONSEQUENCES OF APPROPRIATE ACTION OF THE ERSTWHILE TAX CONSULTANT/ACA SHOULD NOT BE VISITED ON THE ASSESSEE. THE LEARNED COUNSEL, THER EFORE, PRAYED FOR CONDONATION OF DELAY AND ADMISSION OF THE APPEAL FOR DISPOSAL ON MERITS. 3. WE HAVE HEARD THE PARTIES, GONE THROUGH THE CON DONATION PETITION AND THE AFFIDAVIT OF SRI KAILASH KR. YADAV, AN ACA OF ICAI. AFTER CONSIDERING THE SAME, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE WAS PREVEN TED FROM SUFFICIENT AND REASONABLE CASE IN FILING THE APPEAL BELATEDLY. THE HONBLE S UPREME COURT IN THE CASE OF COLLECTOR, LAND ACQUISITION VS. MST. KATIJI & ORS. [167 I.T.R. 471 (SC)] HAS DIRECTED TO ADOPT A PRAGMATIC AND LIBERAL APPROACH WHILE CONSIDERING TH E PETITION FOR CONDONATION OF DELAY. 3 WE, THEREFORE, RESPECTFULLY RELYING UPON THE ABOVE DECISION OF HONBLE SUPREME COURT AND CONSIDERING THE FACTS OF THE CASE DEEM IT PROPE R TO CONDONE THE DELAY OF 788 DAYS IN RESPECT OF THE APPEAL BEFORE US AND ADMIT THE SAME FOR HEARING ON MERITS. 4. NOW COMING TO THE MERIT OF THE CASE, THE ASSESS EE-COMPANY IN RESPONSE TO NOTICE U/S. 148 OF THE ACT FILED ITS RETURN FOR THE ASSESS MENT YEAR UNDER CONSIDERATION SHOWING INCOME OF RS.6,97,300/-. IN COURSE OF ASSESSMENT P ROCEEDINGS THE ASSESSEE FILED DETAILS OF EXPENSES AND EVIDENCES THEREOF, WHICH DID NOT ME ET SATISFACTION OF THE LD. A.O. HE, THEREFORE, COMPLETED THE ASSESSMENT U/S. 144/147 OF THE ACT DATED 22/12/2006 ON A TOTAL INCOME OF RS. 14,54,300/- BY MAKING SEVERAL D ISALLOWANCES OF EXPENSES AGGREGATING TO RS.7,57,000/-. THE LD. C.I.T. THEREAFTER ISSUED NOTICE U/S. 263 OF THE ACT, STATING AS UNDER :- ON EXAMINATION OF THE ASSESSMENT RECORDS IT HAS BEEN OBSERVED THAT THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE I.T. AC T, 1961 ON 22.12.2006 ON A TOTAL INCOME 14,54,300/-. A PERUSAL OF THE ASSESSM ENT RECORD REVEAL THAT IN SHEDULE F OF THE P&L ACCOUNT THE CLOSING STOCK OF F INISHED GOODS FOR THE ASSESSMENT YEAR 2000-01 WAS SHOWN AT RS.1,15,20,868 /- BUT IN THE P&L ACCOUNT RELEVANT TO THE ASSESSMENT YEAR 2001-02 YOU HAVE SH OWN OPENING STOCK OF GOODS AT RS.1,44,77,950/-. IF THE RETURN FOR THE A.Y. 01 -02 IS TAKEN TO BE CORRECT THEN THE CLOSING STOCK FOR THE A.Y. 2000-01 SHOULD HAVE BEEN RS.1,44,77,950 AND NOT RS.1,15,20,868/- AS SHOWN BY YOU IN THE RETURN FOR THE A.Y. 2000-01. THIS RESULTED IN AN UNDER ASSESSMENT OF RS.29,57,082/-. TAKING THE ABOVE FACTOR INTO CONSIDERATION, I AM OF THE OPINION THAT THE ORDER PASSED BY THE ASSESSING OFFICER U/S.143(3) ON 22.12 .2006 IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. 5. IN RESPONSE TO THE SAID NOTICE U/S.263 OF THE A CT FIXING THE HEARING ON 16/5/2008 THE ASSESSEE COMPANY VIDE ITS PETITION DATED 15/5/2 008 STATED THAT THE PERSON CONCERNED CONVERSANT WITH THE TAX MATTER OF THE COM PANY IS SICK AND THUS REQUESTED THE LD. C.I.T. FOR AN ADJOURNMENT ON MEDICAL GROUND. T HE LD. C.I.T., HOWEVER, ON THE GROUND OF NON-PRODUCTION OF ANY MEDICAL CERTIFICATE REJECTED THE PRAYER OF THE ASSESSEE AND PASSED ORDER U/S. 263 OF THE ACT DATED 19/5/2008 EX PARTE QUA THE ASSESSEE, CANCELLING THE ASSESSMENT ORDER AND DIRECTING THE LD. A.O. TO REFRAME THE ASSESSMENT BY CORRECTING THE ERRORS AS STATED IN THE ORDER. HENCE THE ASSES SEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. AT THE TIME OF HEARING BEFORE US, THE LEARNED C OUNSEL SUBMITTED THAT THE LD. C.I.T. ASSUMED JURISDICTION U/S. 263 OF THE ACT ON THE PRE SUMPTION THAT THERE WAS A DIFFERENCE OF RS.29,57,082/- BETWEEN THE CLOSING STOCK OF FINI SHED GOODS SHOWN FOR THE ASSESSMENT 4 YEAR UNDER CONSIDERATION AND THE OPENING STOCK FOR THE IMMEDIATELY SUBSEQUENT ASSESSMENT YEAR 2001-02, WHICH HAS RESULTED IN AN U NDER ASSESSMENT OF INCOME. HE SUBMITTED THAT THE LD. C.I.T. ASSUMED THAT THE OPEN ING STOCK OF THE SUBSEQUENT ASSESSMENT YEAR WAS CORRECT, WHICH LED HIM TO ASSUM E THAT CLOSING STOCK OF THE ASSESSMENT YEAR UNDER CONSIDERATION WAS SHOWN AT LE SSER VALUE, WHICH WAS BASED ON UNFOUNDED PREMISES WITHOUT CONSIDERING THE AUDITED BOOKS OF ACCOUNTS OF THE ASSESSEE. HE FURTHER SUBMITTED THAT CLOSING STOCK OF A YEAR B ECOMES OPENING STOCK OF THE NEXT YEAR. AS THE LD. A.O. COULD NOT FIND ANY DISCREPAN CY IN THE CLOSING STOCK OF THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THE AL LEGATION OF THE LD. C.I.T. OF ALLEGED UNDER VALUATION OF CLOSING STOCK WAS A FUTILITY IN ITSELF. FURTHER, IT IS SETTLED THAT THE ERROR ENVISAGED BY SEC. 263 OF THE ACT IS NOT ONE W HICH DEPENDS ON CONTINGENCY OR GUESS WORK, BUT IT SHOULD BE ACTUALLY AN ERROR EITHER OF FACT OR OF LAW. RELIANCE WAS PLACED ON CIT VS. TRUSTEES OF ANUPAM CHARITABLE TRUST [167 IT R 129 (RAJ)] AND JAI KUMAR KANKARIA VS. CIT [251 ITR 707 (CAL)]. HE, THEREFORE, SUBMIT TED THAT CONDITIONS PRECEDENT FOR INVOKING THE PROVISIONS OF SEC. 263 OF THE ACT NOT BEING SATISFIED, THE ORDER PASSED U/S. 263 OF THE ACT SHOULD BE QUASHED. 6.1. THE LEARNED COUNSEL ALSO SUBMITTED THAT EVEN OTHERWISE ALSO THE ORDER OF THE LD. C.I.T. IS NOT SUSTAINABLE IN LAW. THE LD. C.I.T. H AS PASSED THE IMPUGNED ORDER IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. HE FURTHER SUBMI TTED THAT AN ORDER U/S. 263 OF THE ACT CANNOT BE VALIDLY PASSED UNLESS A SHOW CAUSE NOTICE IS PROPERLY SERVED AND REASONABLE OPPORTUNITY IS AFFORDED TO THE ASSESSEE. IN THIS C ASE, ONLY ONCE THE CASE WAS FIXED AND THE ASSESSEE IN RESPONSE FILED AN ADJOURNMENT PETIT ION ON THE SICKNESS OF THE PERSON WHO WAS LOOKING AFTER THE MATTER. HOWEVER, THE LD. C.I .T. VIOLATING THE PRINCIPLES OF AUDI ALTERAM PARTEM DIRECTED THE LD. A.O. TO REFRAME THE ASSESSMENT, W HICH WAS AGAINST THE SETTLED POSITION IN LAW. 7. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTH ER HAND, SUPPORTED THE ORDER OF THE LD. C.I.T. HE, HOWEVER, SUBMITTED THAT HE HAS NO SERIOUS OBJECTION IF THE MATTER IS SENT BACK TO THE FILE OF THE LD. C.I.T. FOR FRESH A DJUDICATION. 8. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL PLACED ON RECORD. THERE IS NO DISPUTE TO THE FACT THAT CONSIDERING THE OPENING BALANCE OF THE SUBSEQUENT ASSESSMENT YEAR, THE LD. C.I.T. PRESUMED DISCREPANC Y IN THE CLOSING BALANCE OF THE 5 ASSESSMENT YEAR UNDER CONSIDERATION AND FOR THIS HE HAS NOT POINTED OUT ANY IRREGULARITY OR DEFECT IN THE ACCOUNTS MAINTAINED FOR THE ASSESS MENT YEAR UNDER CONSIDERATION WHICH, ACCORDING TO HIM, THE LD. A.O. FAILED TO APPLY HIS MIND IN COURSE OF ASSESSMENT PROCEEDINGS. HOWEVER, AT THE SAME TIME, WE OBSERVE THAT ONLY ONCE THE CASE WAS FIXED FOR HEARING ON 16/5/2008 AND IN RESPONSE THE ASSESS EE FILED A PETITION DATED 15/5/2008 SEEKING ADJOURNMENT OF THE HEARING ON THE GROUND OF ILLNESS OF THE PERSON CONVERSANT WITH THE MATTER. THE LD. C.I.T. REJECTING SUCH PET ITION FOR WANT OF MEDICAL CERTIFICATE PASSED EX PARTE ORDER U/S. 263 OF THE ACT AND SENT THE ASSESSMENT BACK TO THE LD. A.O. FOR DOING AFRESH. THE LD. C.I.T. IN SUPPORT OF HIS ACTION HAS RELIED ON THE DECISIONS OF HONBLE SUPREME COURT IN THE CASES OF CIT VS. HUKUM CHAND MOHANLAL [82 ITR 624 (SC)] AND GITA DEVI AGGARWAL VS. CIT [76 ITR 496 (SC)]. HOWEVER, THE FACTS OF THE PRESENT CASE ARE DISTINGUISHABLE AS IN BOTH THE ABOVE CASES THE ASSESSEE DID NOT AVAIL THE OPPORTUNITY WHICH WAS PROVIDED TO THEM, WHEREAS IN THE CASE BEFORE US THE ASSESSEE DULY COMPLIED WITH THE NOTICE OF HEARING BY MAKING A PRA YER FOR ADJOURNMENT. THEREFORE, THE DECISIONS CITED BY THE LD. C.I.T. ARE NOT APPLICABL E TO THE FACTS OF THE PRESENT CASE. CONSIDERING THE ABOVE, IN OUR CONSIDERED OPINION, T HE ASSESSEE WAS NOT PROVIDED WITH REASONABLE AND ADEQUATE OPPORTUNITY TO REPRESENT AN D EXPLAIN THE CASE BEFORE THE LD. C.I.T. WE, THEREFORE, DEEM IT PROPER TO RESTORE TH E MATTER TO THE FILE OF THE LD. C.I.T. FOR FRESH ADJUDICATION AFTER AFFORDING ADEQUATE OPP ORTUNITY OF BEING HEARD TO THE ASSESSEE. WE ORDER ACCORDINGLY. 9. IN THE RESULT, THE ASSESSEES APPEAL IS DEEM ED TO BE ALLOWED FOR STATISTICAL PURPOSES. SD/- SD/- , % % % % . .. . ! ! ! !. .. . , , , , '# '# '# '# , ( N.VIJAYAKUMARAN, JUDICIAL MEMBER) ( C.D.RAO, ACCOUNTANT MEMBER) ( (( (!# !# !# !#) )) ) DATE: 6 TH -01-2012 6 $ $ $ $ / ITA NO. 1844 (KOL) OF 2010 '5 1 /%% 6''7- COPY OF THE ORDER FORWARDED TO: 1. +, / THE APPELLANT : BRIPRANIL INDUSTRIES LTD., 22, B.R.B. ROAD, 4 TH FLOOR, ROOM NO. 41, KOLKATA-700 001 2 . /0+, / THE RESPONDENT : THE C.I.T., KOL-II, KOLKATA 3. THE I.T .O., WARD-5(3), KOLKATA 4. :%; /% / DR, ITAT, KOLKATA BENCHES, KOLKATA 5. GUARD FILE . 0 /%/ TRUE COPY, '5/ BY ORDER, (DKP) ASSTT. REGISTRAR .