KISHORE KAMLAKSH RAO, MUMBAI V. ASST CIT 11(2), MUMBAI

ITA 202/MUM/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84198 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 27-08-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 08-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice; Right to appeal
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUM BAI , , BEFORE SHRI JOGINDER SINGH, JM AND SHRI SANJAY ARO RA, AM ./ I.T.A. NO. 202/MUM/2014 ( / ASSESSMENT YEAR: 2009-10) KISHORE KAMALAKSH RAO C/O. S. L. JAIN TAX CONSULTANT, 1302/3, NAVJIVAN COMMERCIAL PREMISES, LAMINGTON ROAD, MUMBAI-400 008 / VS. ASST. CIT-11(2), MUMBAI ' ./# ./PAN/GIR NO. AAAPR 7438 M ( '$ /APPELLANT ) : ( %&'$ / RESPONDENT ) '$ ' ( / APPELLANT BY : SHRI S. L. JAIN %&'$ ' ( / RESPONDENT BY : SHRI JEETENDRA KUMAR ) *+, ' - . / DATE OF HEARING : 23.09.2014 /01 ' - . / DATE OF PRONOUNCEMENT : 14.11.2014 2 / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-3, MUMBAI (CIT(A) FOR SHO RT) DATED 31.10.2013, DISMISSING THE ASSESSEES APPEAL CONTESTING ITS ASSESSMENT U/S .144 OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A.Y.) 20 09-10 VIDE ORDER DATED 28.12.2011. 2. THE ISSUE, ON MERITS, ARISING IN THE PRESENT APP EAL, IS THE MAINTAINABILITY IN LAW, AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE, OF THE ADMISSIBILITY OF THE ASSESSEES APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, HAVING BEEN SINCE DISMISSED AS INVALID. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSMENT IN TH E INSTANT CASE WAS MADE U/S. 144 OF THE ACT AT RS. 150.56 LAKHS, AS AGAINST THE RETURNE D INCOME OF RS. 72.55 LAKHS. THE 2 ITA NO. 202/MUM/2014 (A.Y. 2009-10) KISHORE KAMALAKSH RAO VS. ASST. CIT ASSESSEE PREFERRED AN APPEAL ON 03/02/2012. THE APP EAL MEMO WAS, HOWEVER, SIGNED BY ONE, SHRI S.L. JAIN, CHARTERED ACCOUNTANT, WHO HAD ALSO REPRESENTED THE ASSESSEE AT THE ASSESSMENT STAGE. AFTER SHOW CAUSING THE ASSESSEE I N THE MATTER; THE ASSESSEE FAILING TO RESPOND, THE APPEAL WAS DISMISSED AS INVALID. ACCOR DINGLY, THE ASSESSEE IS IN SECOND APPEAL, RAISING THE FOLLOWING GROUNDS: 1. THE COMMISSIONER OF INCOME TAX (APPEALS)-3 HAS ERRE D IN LAW IN DISMISSING THE APPEAL FOR STATISTICAL PURPOSES. 2. THE COMMISSIONER OF INCOME TAX (APPEALS)-3 HAS ERRE D IN LAW IN OBSERVING THAT IT IS HELD THAT THE APPEAL FILED BY THE APPELLANT ON 03.02.2012 IS INVALID, IN-AS-MUCH AS, THE VERIFICATION HAS NOT BEEN SIGNED BY THE APPELLANT. 4. BEFORE US, THE LD. AUTHORIZED REPRESENTATIVE (AR ) WOULD TAKE US THROUGH RULE 45 OF THE INCOME TAX RULES, 1963 (THE RULES HEREINAF TER) TO CONTEND THAT THE MEMORANDUM OF APPEAL, BEING SIGNED BY SHRI. S.L. JAIN, THE ASS ESSEES AUTHORIZED REPRESENTATIVE, WAS IN TERMS OF THE SAID RULE. ON IT BEING POINTED OUT TO HIM BY THE BENCH THAT THE POWER OF ATTORNEY IS DATED 02.08.2013 (PB PG. 20 ), WHICH IS MUCH AFTER THE FILING OF THE APPEAL, HE WOULD EXPLAIN THAT THE ASSESSEE WAS OUT OF STATION AT THE RELEVANT TIME, AND THAT WAS THE REASON FOR THE APPEAL MEMO BEING SIGNED BY HIS COUN SEL IN THE FIRST PLACE. IF THE ASSESSEE WAS AVAILABLE, HE WOULD CONTINUE, HE WOULD HAVE SIG NED THE APPEAL MEMO HIMSELF. TO A QUERY BY THE BENCH THAT IN THAT CASE HOW COULD IT B E SAID THAT THE APPEAL WAS PRESENTED OR VERIFIED BY AN AUTHORIZED PERSON; THE AUTHORITY FOR SIGNING HAVING BEEN GIVEN ONLY SUBSEQUENTLY, HE WOULD SUBMIT THAT IT WOULD OPERATE RETROSPECTIVELY, VALIDATING THE APPEAL. RELIANCE WAS PLACED BY HIM ON REMFRY & SONS VS. CIT [2005] 276 ITR 1 (DEL) (145 TAXMAN 22 (DEL)). THE LD. DEPARTMENTAL REPRESENTATIVE (DR) WOULD, ON THE OTHER HAND, SUBMIT THAT THE CONDUCT OF THE ASSESSEE, AS APPARENT FROM THE B ARE READING OF THE ASSESSMENT AND THE APPELLANT ORDER, DOES NOT INSPIRE ANY CONFIDENCE; T HE ASSESSEE ABYSMALLY FAILING TO RESPOND AND COOPERATE IN THE PROCEEDINGS BEFORE THE REVENUE AUTHORITIES. THE PERSON SIGNING THE MEMORANDUM OF APPEAL, IN ORDER TO SATIS FY THE CONDITION OF RULE 45 (OF THE RULES) READ WITH SECTION 140 OF THE ACT, IS TO BE S PECIFICALLY AUTHORIZED FOR THE PURPOSE, 3 ITA NO. 202/MUM/2014 (A.Y. 2009-10) KISHORE KAMALAKSH RAO VS. ASST. CIT WHICH IN THE INSTANT CASE WAS ADMITTEDLY GRANTED ON LY ON 02/8/2013. THERE IS THUS NO QUESTION OF THE SAME BEING RETROACTIVE OR RETROSPEC TIVE, AS BEING CONTENDED BY THE ASSESSEE. 5. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL OR RECORD. 5.1 THE ISSUE, AS WE DISCERN, THAT WE NEED TO ADDRE SS IS IF THE APPEAL IS INVALID, I.E., INCOMPETENT OR NON EST IN LAW, SO THAT IT CANNOT BE VALIDATED, OR IS IRRE GULAR, SO THAT IT BEARS A CURABLE DEFECT. THE HONBLE COURT IN REMFRY & SONS (SUPRA) HAS CLARIFIED THAT THE FACTS VERIFIED PER THE APPEAL MEMO ARE RELATABLE TO THE RECORDS AND NOT THE PERSONAL KNOWLEDGE OF THE APPELLANT. IT HAS DISTINGUISHED TH E TERM ILLEGAL AND IRREGULAR THUS: 22. THE EXPRESSION ILLEGAL HAS BEEN DEFINED AS BEING CONTRARY TO LAW AND IS NORMALLY APPLICABLE TO EVERYTHING WHICH IS A N OFFENCE OR WHICH IS PROHIBITED BY LAW. THIS WORD HAS AN EXTENSIVE MEANI NG INCLUDING ANYTHING AND EVERYTHING WHICH IS PROHIBITED BY LAW WHICH CON STITUTES AN OFFENCE AND WHICH FURNISHES THE BASIS FOR A CIVIL SUIT. GIVING IT A WIDER MEANING, THE EXPRESSION HAS BEEN EQUATED AS UNLAWFUL (REFERENC E CAN BE MADE TO JUDGMENT IN EMPEROR V. FAZLUR RAHMAN AIR 1930 PAT. 593), BUT IT MAY STILL NOT BE VOID. THIS EXPRESSION IS DISCERNLY DIS TINGUISHABLE FROM THE EXPRESSION IRREGULARITY AND IRREGULARITY IS DEF INED AS A WANT OF ADHERENCE TO SOME PRESCRIBED RULE OR MODE OF PROCEEDINGS AND PRIMARILY CONSISTS OF OMITTING TO DO WHAT IS NECESSARY FOR DUE AND ORDERL Y CONDUCT OF THE PROCEEDINGS. THE WORD ILLEGALITY ON THE OTHER HAN D IS PROPERLY PREDICTABLE OF RADICAL DEFECTS ONLY AND SIGNIFIES WHAT IS CONTR ARY TO THE PRINCIPLE OF LAW, AS DEFINED FROM THE MERE RULE OF PROCEDURE. IT DENO TES A COMPLETE DEFECT IN JURISDICTION OR PROCEEDINGS. FOR INSTANCE, DENIAL O F PRINCIPLES OF NATURAL JUSTICE WOULD RENDER THE PROCEEDINGS ILLEGAL WHILE THE MEMORANDUM OF APPEAL NOT BEING SIGNED BY THE PRESCRIBED PERSON UN DER RULES WOULD BE AN IRREGULARITY. IRREGULARITY IS AN EXPRESSION OF LESSER EFFECT AS AN ACT WHICH IS IMPROPER OR INEFFICIENT BY REASON, OR DEPARTURE FROM THE PRESCRIBED. IT PRIMARILY CONNOTES THE NEGLECT OF ORDER OR METHOD A ND MAY NOT BE ACCORDING TO REGULATIONS (REFERENCE CAN BE MADE TO THE LAW LEXICON BY P. RAMANATHA AIYAR, 1997 EDITION). 23. IN THE CASE OF MARTIN BURN LTD. V. CORPORATION OF CALCUTTA AIR 1966 SC 529, THE SUPREME COURT HELD THAT IRREGULARITY COVERS ANY CASE, THING THAT HAS NOT BEEN DONE IN THE MANNER LAID DOWN BY T HE STATUTE, AND THUS, THIS WORD DOES NOT COVER A CASE OF PROCEDURAL IRREGULAR ITY ONLY. ONE OF THE BASIC DISTINCTION BETWEEN THE TWO EXPRESSIONS IS TH E RESULTANT EFFECT OF ITS BEING CURABLE OR UNCURABLE. NORMALLY, THE ILLEGALI TY WHICH GOES TO THE VERY ROOT OF THE MATTER OR JURISDICTION COULD HARDL Y FALL IN THE CLASS OF THOSE 4 ITA NO. 202/MUM/2014 (A.Y. 2009-10) KISHORE KAMALAKSH RAO VS. ASST. CIT CASES, BUT AN IRREGULARITY WHICH IS MERELY PROCED URAL AND IT HAS EVEN BEEN SUBSTANTIALLY COMPLIED WITH, THAN TO BRING SUCH A C ASE ( SIC ) WITHIN THE CLASS OF CASES WHERE IRREGULARITY IS CURABLE, WOULD BE A FAIR A JUST INTERPRETATION OF THE RELEVANT RULE. FURTHER, RULE 45 WAS INFERRED BY IT AS A PART OF THE PROCEDURAL LAW, WHICH HAS TO BE CONSTRUED LIBERALLY SO AS TO ADVANCE THE CASE OF JUSTICE AND EQUITY, PROVIDING THE ASSESSEE AN OPPORTUNITY TO CORRECT OR RECTIFY THE E RROR. THE SIGNING OF THE APPEAL MEMO BY THE ASSESSEES CHARTERED ACCOUNTANT, WHO HAD ALSO R EPRESENTED IT IN THE ASSESSMENT PROCEEDINGS, WAS IN THAT CASE CONSIDERED AS SUBSTAN TIAL COMPLIANCE OF THE PROCEDURAL REQUIREMENT OF LAW. 5.2 COMING TO THE FACTS OF THE PRESENT CASE, WE OBS ERVE THE APPEAL MEMO TO BE SIGNED BY ASSESSEES CHARTERED ACCOUNTANT, WHO REPRESENTED IT BEFORE THE AO. EVEN AS OBSERVED BY THE HONORABLE COURT IN THE CITED CASE, THE APPEL LATE PROCEEDINGS ARE ONLY A CONTINUATION OF THE ASSESSMENT PROCEEDINGS. VIDE THE SAID AUTHOR IZATION, THE SAID AR WAS COMPETENT TO REPRESENT THE CASE OF THE ASSESSEE AND BIND THE ASS ESSEE BY HIS ACTS AND DEEDS. THE LD. AR, BY PREFERRING THE APPEAL IN TIME, CLEARLY SIGNIFIES THE ASSESSEES INTENT TO INVOKE THE APPELLANT PROCEDURE, I.E., TO EXERCISE THE STATUTOR Y RIGHT OF APPEAL. ALSO, WE FIND FORCE IN THE LD. ARS CONTENTION THAT THE ASSESSEE WAS NOT A VAILABLE AT THE RELEVANT TIME, AND THAT IF HE WAS, HE WOULD HAVE HIMSELF SIGNED THE APPEAL MEM O RATHER THAN AUTHORIZING HIS CHARTERED ACCOUNTANT FOR THE PURPOSE, ALBEIT SUBSEQ UENTLY. TRUE, THEREFORE, THE APPEAL AS FILED CANNOT BE SAID TO STRICTLY SATISFY THE REQUIR EMENT OF LAW IN-AS-MUCH AS IT COULD NOT BE SAID TO HAVE BEEN SIGNED BY THE PERSON AUTHORIZED B Y THE ASSESSEE FOR THE PURPOSE. HOWEVER, THE SUBSEQUENT GRANTING OF THE POWER OF AT TORNEY IN FAVOUR OF THE AR, AUTHORIZING HIM SO, WOULD CAUSE TO REMOVE THE DEFEC T IN PRESENTING OR PREFERRING THE APPEAL. THERE HAS BEEN THUS SUBSTANTIAL COMPLIANCE OF THE PROCEDURE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. ANY OTHER VIEW OF THE MA TTER, WOULD, IN OUR VIEW, DEFEAT THE CAUSE OF SUBSTANTIAL JUSTICE, WHICH ANY PROCEDURAL LAW SEEKS TO ACHIEVE. WE ALSO OBSERVE THE ASSESSMENT TO BE U/S. 144, I.E. , A BEST JUDGMENT ASSESSMENT AND, FURTHER, THE ASSESSEE TO HAVE NOT ATTENDED THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY. THAT IS, HIS CASE THEREFORE REMAINS UNRE PRESENTED TO DATE BEFORE ANY AUTHORITY. 5 ITA NO. 202/MUM/2014 (A.Y. 2009-10) KISHORE KAMALAKSH RAO VS. ASST. CIT 5.3 THE APEX COURT IN COLLECTOR, LAND ACQUISITION V. MST. KATIJI & OTHRS . [1987] 167 ITR 471 (SC) HELD THAT WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATIONS ARE PITTED AGAINST EACH OTHER, THE CAUSE OF SUBSTANTIAL JUSTIC E DESERVES TO BE PREFERRED, FOR THE OTHER SIDE CANNOT CLAIM TO HAVE A VESTED RIGHT IN INJUSTI CE THAT MAY OTHERWISE ARISE. IN VIEW OF THE FOREGOING, WE ARE IN THE FACTS AND CIRCUMSTANCE S OF THE OPINION THAT THE ASSESSEES APPEAL BEFORE THE FIRST APPELLATE AUTHORITY IS A VA LID APPEAL IN LAW. WE, ACCORDINGLY, VACATING HIS FINDINGS IN THE MATTER, DIRECT THE SAI D AUTHORITY TO DISPOSE OF THE ASSESSEES APPEAL BEFORE HIM, I.E., ON MERITS, IN ACCORDANCE W ITH LAW, AND AFTER ALLOWING THE PARTIES BEFORE HIM A REASONABLE OPPORTUNITY OF BEING HEARD. WE DECIDE ACCORDINGLY. 6. IN THE RESULT, THE ASSESSEES IS ALLOWED WITH TH E AFORE-STATED DIRECTIONS. ORDER PRONOUNCED IN THE OPEN COURT ON NOVEMBER 14, 2014 SD/- SD/- (JOGINDER SINGH) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ) 3, MUMBAI; 4 * DATED : 14.11.2014 ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. %&'$ / THE RESPONDENT 3. ) 5- ( ) / THE CIT(A) 4. ) 5- / CIT - CONCERNED 5. 8+9 %-*: , . : 1 , ) 3, / DR, ITAT, MUMBAI 6. <= , / GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , ) 3, / ITAT, MUMBAI