Mysore Sales Internationals Ltd , Bangalore V. Deputy Commissioner of Income TAx Circle-1 , Bangalore

ITA 1959/BANG/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0179 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 05-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO BENGALURU
• Assessee Lawyers: H N KHINCHA
• Keywords: Opportunity of being heard; Bonafide belief; Reasonable cause; Condonation of delay
• Section: 143(3); 14A; 263; 63; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NOS.2172 & 1959/BANG/2017 ASSESSMENT YEAR : 2010 - 11 MYSORE SALES INTERNATIONAL LTD., MSIL HOUSE, NO.36, CUNNINGHAM ROAD, BANGALORE 560 052. PAN: AADCM 6234C VS. THE DEPUTY COMMISSIONER OF INCOME TAX (LTU), BANGALORE. APP ELL ANT RESPONDENT APPELLANT BY : SHRI H.N. KHINCHA, CA RESPONDENT BY : SHRI D. SUDHAKAR RAO, CIT(DR)(ITAT), BENGALURU . DATE OF HEARING : 11.09. 201 8 DATE OF PRONOUNCEMENT : 12 .09 .201 8 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER ITA NO.2172/BANG/2017 THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORD ER DATED 19.03.2015 OF THE CIT, LTU, BANGALORE PASSED U/S. 2 63 OF THE ACT RELATING TO ASSESSMENT YEAR 2010-11. ITA NOS.2172 & 1959/BANG/2017 PAGE 2 OF 5 2. THE ASSESSEE IS A GOVT. OF KARNATAKA UNDERTAKIN G ENGAGED IN THE BUSINESS OF MARKETING OF SEVERAL PRODUCTS. FOR THE AY 2010-11, THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INC OME OF RS.5,07,68,590. AN ORDER OF ASSESSMENT U/S. 143(3) OF THE INCOME-TA X ACT, 1961 [THE ACT] WAS PASSED BY THE AO ON 18.3.2013 DETERMINING THE T OTAL INCOME OF ASSESSEE AT RS.5,27,23,417 AFTER DISALLOWING EXPENS ES OF RS.8,82,430 U/S. 14A OF THE ACT, OTHER EXPENSES OF RS.9,22,833 AND B OGUS EXPENSES OF RS.1,49,569. 3. THE CIT, LTU, BANGALORE IN EXERCISE OF HIS POWER S U/S. 263 OF THE ACT WAS OF THE VIEW THAT THE AFORESAID ORDER OF THE AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE A SSESSEE HAD AVAILED OF A LOAN OF RS.500 LAKHS FOR PURCHASE OF MACHINERIES FR OM GOVT. OF KARNATAKA. INTEREST PAYABLE ON SUCH LOAN UPTO MARCH, 2004 WAS CLAIMED AS DEDUCTION BY THE ASSESSEE WHILE COMPUTING ITS INCOME FROM BUS INESS. THE INTEREST SO ACCUMULATED WHICH REMAINED OUTSTANDING IN THE BALAN CE SHEET AS ON 31.3.2009 WAS RS.383.20 LAKHS. VIDE G.O. FD 28 RLG 09 DATED 31.3.2010, THE GOVT. OF KARNATAKA CONVERTED THE OUT STANDING INTEREST AS THEIR CAPITAL CONTRIBUTION TO THE ASSESSEE COMPANY. ACCORDING TO THE CIT, BY VIRTUE OF SUCH CONVERSION, THE ASSESSEE RECEIVED A BENEFIT IN THE FORM OF WAIVER OF INTEREST AND THE SUM OF RS.383.20 LAKHS O UGHT TO HAVE BEEN BROUGHT TO TAX AS BENEFIT CONSEQUENT TO WAIVER AND CESSATION OF LIABILITY U/S. 41(1)(A) OF THE ACT. SINCE THE AO FAILED TO EXAMIN E THIS ASPECT, THE CIT BY THE IMPUGNED ORDER SET ASIDE THE ORDER OF AO DATED 18.3.2013 AND DIRECTED THE AO TO EXAMINE THE ISSUE AFTER AFFORDING OPPORTU NITY OF BEING HEARD TO THE ASSESSEE. 4. AGGRIEVED BY THE ORDER PASSED U/S. 263 OF THE AC T, THE ASSESSEE HAS PREFERRED THE ABOVE APPEAL BEFORE THE TRIBUNAL. ITA NOS.2172 & 1959/BANG/2017 PAGE 3 OF 5 5. THERE IS A DELAY OF ABOUT 906 DAYS IN FILING THI S APPEAL BY THE ASSESSEE. THE REASONS FOR FILING THE APPEAL BELATED LY HAS BEN EXPLAINED AS DUE TO ASSESSEES BONAFIDE BELIEF THAT THE ISSUE WAS LEFT OPEN IN THE IMPUGNED ORDER AND IT COULD PUT FORTH ITS CASE IN T HE PROCEEDINGS BEFORE THE AO, PURSUANT TO THE ORDER PASSED U/S. 263 OF THE AC T. IN THE PROCEEDINGS BEFORE THE AO PURSUANT TO THE ORDER PASSED U/S. 263 OF THE ACT, THE AO ADDED AS SUM OF RS.383.20 LAKHS AS INCOME OF THE AS SESSEE U/S. 41(1)(A) OF THE ACT IN THE ORDER DATED 17.8.2015 R.W.S. 263 OF THE ACT. THE APPEAL FILED BY THE ASSESSEE AGAINST THE SAID ORDER WAS DI SMISSED FOR NON- PROSECUTION BY THE CIT(A) BY ORDER DATED 31.7.2017, WHICH WE WILL DEAL WITH LATER. IT APPEARS THAT WHEN THE ASSESSEE APPROACH ED OTHER SENIOR TAX CONSULTANTS FOR FILING APPEAL AGAINST THE ORDER OF CIT(A) DATED 31.7.2017, THEY ADVISED THAT AN APPEAL OUGHT TO HAVE BEEN FILE D AGAINST THE ORDER DATED 19.3.2015. THEREAFTER THE APPEAL WAS FILED W ITH A DELAY OF 905 DAYS. 6. WE HAVE EXAMINED THE REASONS FOR CONDONATION OF DELAY AND ARE OF THE VIEW THAT THE REASONS SO GIVEN ARE NOT ACCEPTAB LE. IF OWING TO PROFESSIONAL ADVISE, APPEAL WAS NOT FILED AGAINST T HE ORDER U/S. 263 DATED 19.3.2015, THEN THE SUBSEQUENT ADVISE BY ANOTHER PR OFESSIONAL COULD HAVE BEEN ACCEPTED AS REASONABLE CAUSE. THE ASSESSEE DI D NOT SEEK ANY LEGAL ADVISE AND CLAIMS THAT IT WAS UNDER BONAFIDE BELIEF THAT THE ISSUE CAN BE AGITATED BEFORE THE AO IN THE PROCEEDINGS BEFORE TH E AO PURSUANT TO THE ORDER U/S. 263 OF THE ACT DATED 19.3.2015. THE REA SONS GIVEN ARE, THEREFORE, NOT ACCEPTED AND THE APPEAL OF THE ASSES SEE IN ITA NO.2172/BANG/2017 IS DISMISSED AS BARRED BY TIME. ITA 1959/BANG/2017 7. AS FAR AS ITA NO.1959/BANG/2017 WHICH IS THE APP EAL OF THE ASSESSEE AGAINST THE ORDER OF THE CIT(APPEALS) DATE D 31.07.2017 IS ITA NOS.2172 & 1959/BANG/2017 PAGE 4 OF 5 CONCERNED, THE SAID APPEAL ARISES PURSUANT TO THE O RDER OF THE CIT PASSED U/S. 263 OF THE ACT DATED 19.3.2015. IN THE SAID P ROCEEDINGS, THE AO ADDED RS.383.20 LAKHS AS IN THE CASE OF ASSESSEE ON CESSATION OF LIABILITY U/S. 41(1)(A) OF THE ACT. THE ASSESSEE FILED APPEA L AGAINST THE ORDER OF THE AO BEFORE THE CIT(APPEALS) BUT THE CIT(APPEALS) DIS MISSED THE SAID APPEAL FOR NON-PROSECUTION BECAUSE ON 26.7.2017 WHE N THE APPEAL WAS LISTED FOR HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE. 8. THERE IS A DELAY OF 9 DAYS IN FILING THIS APPEAL BY THE ASSESSEE. IT HAS BEEN EXPLAINED BY THE ASSESSEE THAT THE DELAY I N OWING TO INTERVENING PUBLIC HOLIDAYS. THE APPEAL FEE WAS HOWEVER PAID O N 27.09.2017. THE LAST DATE FOR FILING THE APPEAL BEFORE THE TRIBUNAL WAS 30.09.2017. 30.09.2017 AND 01.10.2017 WERE SATURDAY AND SUNDAY AND 02.10.2 017 WAS PUBLIC HOLIDAY ON ACCOUNT OF GANDHI JAYANTHI. THE APPEAL OUGHT TO HAVE BEEN FILED ON 03.10.2017, BUT WAS FILED ON 05.10.2017. CONSIDERING THE FACTS OF THE CASE AND THE BONAFIDES OF THE ASSESSEE AND KEEPING IN MIND THE FACT THAT THE DELAY IN FILING THE APPEAL IS NOT INORDINA TE, WE CONDONE THE DELAY IN FILING THE APPEAL. 9. AS FAR AS MERITS OF THE APPEAL IS CONCERNED, IT IS SEEN THAT ON 26.7.2017 THE AR OF THE ASSESSEE SENT A MAIL FOR AD JOURNMENT TO CIT(A) ON THE GROUND THAT THE AR WAS OUT OF STATION. THIS MAIL WAS SENT AT 3.36 PM ON 26.7.2017. THE IMPUGNED ORDER WAS PASSED BY THE CIT(APPEALS) ON 31.7.2017 IGNORING THE REQUEST FOR ADJOURNMENT. IN THESE CIRCUMSTANCES, IN THE INTEREST OF JUSTICE, WE SET ASIDE THE ORDER OF CIT(APPEALS) FOR FRESH CONSIDERATION BY THE CIT(APPEALS), AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THIS APPEAL IS TREATED AS A LLOWED FOR STATISTICAL PURPOSES. ITA NOS.2172 & 1959/BANG/2017 PAGE 5 OF 5 10. IN THE RESULT, ITA NO.2172/BANG/2017 IS DISMISS ED, WHILE ITA NO.1959/BANG/2017 IS TREATED AS ALLOWED FOR STATIST ICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF SEPTEMBER, 2018. SD/- SD/- ( G. MANJUNATHA ) ( N.V. VASUDEVAN ) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 12 TH SEPTEMBER, 2018. / D ESAI S MURTHY / COPY TO: 1. APP ELL ANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.