ORANATE MULTI MODAL CARRIERS P.LTD, MUMBAI V. ITO 2(2)(4), MUMBAI

ITA 2050/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3460 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 23-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: HEENA SHETH
• Keywords: Principle of natural justice; Period of limitation; Question of law; Bad and doubtful debts; Difference of opinion; Condonation of delay; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

1 IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH MUMB AI BEFORE SHRI G.S. PANNU, VICE- PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 2050/MUM/2017 (ASSESSMENT YEAR 2008-09 ) ORIENT MULTIMODAL CARRIERS PVT. LTD., ORIENT HOUSE, 4 TH FLOOR, ADI MERZBAN PATH, BALLARD ESTATE MUMBAI- 400038. PAN: AAACO0797R VS. ITO-2(2)(4), 5 TH FLOOR, AAYAKA R BHAVAN, M.K. MARG, MUMBAI-400020 APPELLANT RESPONDE NT APPELLANT BY : MS. HEENA SHETH (AR) RESPONDENT BY : SHRI PRAMOD NIKALJE (DR) DATE OF HEARING : 23.04.2019 DATE OF PRONOUNCEMEN T : 30.04.2019 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF INCOME -TAX ACT (ACT) IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF I NCOME-TAX (APPEALS)- 5, MUMBAI [HEREINAFTER REFERRED AS LD. CIT(A)] DATE D 15.02.2016 FOR ASSESSMENT YEAR 2008-09. THE ASSESSEE HAS RAISED TH E FOLLOWING GROUNDS OF APPEAL: 01. THE LEARNED CIT(A)-5 HAS GROSSLY HEARD IN DISALLOWI NG THE CLAIM OF APPELLANT OF BAD DEBTS OF RS. 88,87,650/-. 02. THE LEARNED CIT(A)-5 HAS GROSSLY HEARD IN PASSING H IS ORDER WITHOUT CONSIDERING ALL THE FACTS AND DETAILS TO HIM. 2. THE ASSESSEE VIDE APPLICATION DATED 25.09.2018 RAIS ED THE FOLLOWING ADDITIONAL GROUNDS OF APPEAL: ITA NO. 2050 MUM 2017-ORIENT M ULTIMODAL CARRIERS PVT. LTD. 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE REASSESSMENT PROCEEDINGS ARE BAD IN LAW. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF TRANSPORT CONTRACTOR AND SHIP FREIGHT F ORWARDER, FILED ITS RETURN OF INCOME ON 13.01.2009 DECLARING LOSS OF RS . 19,77,423/-. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 15 .12.2010 BY ASSESSING LOSS OF RS. 7,79,060/-. SUBSEQUENTLY, THE ASSESSMENT WAS RE- OPENED UNDER SECTION 147 ON 25.03.2013. NOTICE UNDE R SECTION 148 DATED 25.03.2013 WAS SERVED UPON THE ASSESSEE. IN RESPONS E TO THE NOTICE UNDER SECTION 148, THE ASSESSEE FILED ITS RETURN OF INCOME ON 16.04.2013. THE ASSESSING OFFICER RECORDED THE FOLLOWING REASO NS OF RE-OPPENING: 'IT IS SEEN FROM THE SCHEDULE TO P & L A/C THAT ASS ESSEE HAS CLAIMED BAD DEBTS OF RS. 2, 06,02,015/-. OUT OF THIS, AN AMOUNT OF RS.88,87,650/- PERTAINS TO BAD DEBTS WRITTEN OFF IN RESPECT OF SANJIVAK CAR GO TRADING CO. IT WAS STATED REGARDING THE BAD DEBTS THAT THE BAD DEBTS A MOUNTING TO RS.88,87,650/- WAS CLAIMED TO HAVE BEEN PAID AS ADV ANCE TO MR. SANJEEV RISHI, GENERAL MANGER. IN THIS REGARD PARA 11, SCHE DULE 17, NOTES TO THE ACCOUNTS TO AUDIT REPORT SUBMITTED BY THE ASSESSEE IS REPRODUCED BELOW: 'THE AMOUNT MISAPPROPRIATED BY MR. SANJEEV RISHI , GENERAL MANGER, AMOUNTING TO RS.77,26,977/- IS INCLUDED IN THE SCHE DULE OF ADVANCES RECOVERABLE IN CASH OR KIND FOR VALUE TO BE RECEIVE D. THIS WAS PROVIDED IN THE ACCOUNTS OF FY 2005-06 AND IS CARRIED FORWAR D. LEGAL ACTION HAS BEEN TAKEN. THE MISAPPROPRIATION WAS ON ACCOUNT OF PERSONAL WITHDRAWAL AND INVESTMENTS MADE BY HIM WITHOUT AUTH ORITY. COMPANY HAD PROVIDED FOR RECOVERY OF VARIOUS EXPENSES BY WA Y OF DEBIT NOTES FROM M/S SAJIVAK CARGO TRADING CO., A COMPANY BELON GING TO CAPT. SANJEEV RISHI. OUT OF THE TOTAL PROVISION FOR RECOV ERY DUE TO DOUBTFULNESS OF FULL RECOVERY, THE MANAGEMENT HAS W RITTEN OFF AS BAD DEBITS OF RS.88,87,650/-'. ITA NO. 2050 MUM 2017-ORIENT M ULTIMODAL CARRIERS PVT. LTD. 3 FROM THE ABOVE, IT IS CLEAR THAT THE BAD DEBTS CLAI MED OUT OF ADVANCE GIVEN TO M/S SANJIVAK CARGO TRADING CO., BELONGS TO CAPT. SANJEEV RISHI, IS NOT A BAD DEBT AS CLAIMED BY THE ASSESSEE BUT IT IS ONLY AN ADVANCE GIVEN IN EARLIER YEARS. ACCORDINGLY, THIS AMOUNT WAS NOT OFFERED TO TAX IN THE EARLIER ASSESSMENT YEARS SINCE IT WAS ONLY AN ADVANCE GIVEN TO MR. SANJEEV RISHI, WHICH WAS APPEARING IN BALANCE SHEET AND NOT ROUTED THROUGH P & LAIC SO AS TO QUALIFY AS DEDUCTION AS PER SECTION 36(1)(VII) R .W SEC. 36(2) OF THE IT ACT. THE CLAIM OF ASSESSEE DOES NOT SATISFY THE CONDITIO NS LAID DOWN FOR ALLOWANCE OF A DEBT AS BAD AS PER PROVISIONS OF SEC . 36(1)(VII) R.W SEC. 36(2) OF THE IT ACT, WHICH INTER ALIA STATES THAT NO SUCH DEDUCTION SHALL BE ALLOWED UNLESS SUCH DEBT OR PART THERETO HAS BEEN TAKEN INT O ACCOUNT IN COMPUTING THE INCOME OF THE ASSESSEE OF THE PREVIOUS YEAR IN WHICH THE AMOUNT OF SUCH DEBT OR PART THEREOF IS WRITTEN OFF OR OF AN EARLIE R PREVIOUS YEAR, OR REPRESENT MONEY LENT IN THE ORDINARY COURSE OF THE BUSINESS O F BANKING OR MONEY LENDING WHICH IS CARRIED ON BY THE ASSESSEE. IN THE INSTANT CASE, THE AMOUNT BAD DEBTS ARE ADVANCES AND NOT THOSE WHICH ARE CRED ITED TO THE P & L A/C IN EARLIER YEARS. HENCE, THE CONDITIONS ENUMERATED U/S 36(2) OF THE IT ACT ARE NOT SATISFIED FOR ALLOWING DEDUCTION OF BAD DEBTS. IN SUPPORT THEREOF RELIANCE IS ALSO PLACED ON THE D ECISION OF THE FOLLOWING CASE LAWS BY THE AUDIT: I) GRINDWELL NORTON LTD. V/S DCIT 199 TAXMAN 197, 8 5 ITJ 389 II) CIT VIS S R SUBRAMANYA PILLAI 181TR 85 (MAD.) III) INDIAN ALUMINUM CO. LTD. V/S CIT 79 ITR 514,51 8 (SC) 4. THE ASSESSING OFFICER AFTER SUPPLYING THE REASONS R ECORDED PROCEEDED FOR REASSESSMENT. THE ASSESSEE WAS ASKED TO FILE TH E DETAILS OF BAD-DEBT AND TO FURNISH THE EXPLANATION ABOUT ITS ALLOWABILI TY. THE ASSESSEE FILED ITS DETAILED REPLY DATED 27.11.2013. THE REPLY OF A SSESSEE WAS NOT ACCEPTED BY ASSESSING OFFICER HOLDING THAT THE SAID AMOUNT IS IN RESPECT OF M/S SANJIVAK CARGO TRADING CO. AS AN ADVANCE IN THE AUDIT REPORT, THIS AMOUNT IS SHOWN AS MISAPPROPRIATED BY SANJEEV RISHI OF M/S ITA NO. 2050 MUM 2017-ORIENT M ULTIMODAL CARRIERS PVT. LTD. 4 SANJIVAK CARGO TRADING CO. AMOUNTING TO RS. 77,26,9 77/-. THIS AMOUNT WAS SHOWN IN ACCOUNTS FOR FINANCIAL YEAR 2005-06 AN D IS CARRIED FORWARD IN THE BOOKS OF ACCOUNT. THE MISAPPROPRIATI ON WAS ON ACCOUNT OF PERSONAL WITHDRAWAL AND INVESTMENT MADE BY SANJE EV RISHI WITHOUT AUTHORITY. THE ASSESSING OFFICER CONCLUDED THAT THI S AMOUNT IS NOT A BAD-DEBT AS CLAIMED BY ASSESSEE BUT IS ONLY AN ADVA NCE GIVEN IN EARLIER YEARS, THIS AMOUNT WAS NOT OFFERED TO TAX IN EARLIE R YEARS, IT WAS ONLY AN ADVANCE GIVEN TO SANJEEV RISHI WHICH IS APPEARING I N THE BALANCE-SHEET NOT ROOTED THROUGH PROFIT & LOSS ACCOUNT QUALIFIED FOR DEDUCTION UNDER SECTION 36(1)(VII). THE ASSESSING OFFICER DISALLOWE D THE BAD-DEBT OF RS. 88,87,650/- IN ASSESSMENT ORDER PASSED UNDER SECTIO N 143(3) R.W.S. 147. 5. ON APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE IN IT S STATEMENT OF FACT STATED THAT THE ASSESSEE FILED ITS SUBMISSIONS VIDE THEIR LETTER DATED 1.0.10.2013, 27.11.2013 AND 05.12.2013, HOWEVER THE ASSESSING OFFICER HAS MENTIONED ABOUT REPLY DATED 27.11.2013 ONLY. TH E ASSESSEE FURTHER EXPLAINED IN THE STATEMENT OF FACTS THAT BED DEBTS OF RS.88.87,650/- WAS ON ACCOUNT OF CERTAIN EXPENSES INCURRED BY THE ASSE SSEE COMPANY AND DEBITED TO THE ACCOUNT OF NON RECOVERY OF CERTAIN E XPENSES AND DEBITED TO THE ACCOUNT OF SANJIVIK CARGO TRADING COMPANY PV T LTD. THE RECOVERY WAS BY WAY OF DEBIT NOTES OF RS.6324437/- FOR FINANCIAL YEAR (FY) 2004-05 AND RS.2563183/- FOR FY 2005-06. THESE EXPENSES WERE OFFERED AS INCOME BY REDUCTION IN THE VARIOUS EXPEN DITURE FOR AY 2006- ITA NO. 2050 MUM 2017-ORIENT M ULTIMODAL CARRIERS PVT. LTD. 5 07. THEREFORE, IT WAS CLAIMED THAT BED DEBTS FOR AY 2008-09 WAS FULLY ALLLWAVABLE AS DEDUCTION IN ACCORDANCE WITH THE PRO VISIONS OF SECTION 36(2) AND SECTION 36(1)(VII). THE ASSESSEE ALSO FUR NISHED THE COPY OF ASSESSMENT ORDER FOR AY 2006-07 PASSED UNDER SECTIO N143(3) DATED 23.12.2008. THE ASSESSEE ALSO RAISED OBJECTION BEF ORE LD CIT(A) THAT THE NOTICE UNDER SECTION 148 IS INVALID. THE LD. CIT(A) CONFIRMED THE ACTION OF ASSESSING OFFICER ON ALMOST SIMILAR LINES. THUS, FURTHER AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 6. PERUSAL OF RECORD REVEALS THAT THERE IS DELAY OF 31 3 DAYS IN FILING APPEAL BEFORE THE TRIBUNAL. THE ORDER IMPUGNED IN THE PRES ENT APPEAL WAS PASSED BY LD CIT(A) ON 15.02.2016. HOWEVER, THIS AP PEAL WAS FILED BEFORE THE TRIBUNAL ONLY ON 23.03.2017. THE ASSESSE E HAS FILED AN APPLICATION FOR CONDONATION OF DELAY. THE APPLICATI ON FOR CONDONATION OF DELAY IS SUPPORTED BY THE AFFIDAVIT OF MR. JAMIL JA LALI, DIRECTOR OF THE ASSESSEE-COMPANY AND SH. PRAFUL SAHGHVI CHARTERED A CCOUNTANT CA. IN THE APPLICATION, THE ASSESSEE HAS STATED THAT THEY RECEIVED ORDER OF LD. CIT(A) DATED 15.02.2016 ON 15.03.2016. THE ORDER WA S HANDED OVER TO SHRI PRAFUL K. SANGHVI, CHARTERED ACCOUNTANT (CA) F OR PREPARING AND FILING APPEAL BEFORE THE TRIBUNAL. THE APPEAL COULD NOT BE PREPARED BY HIM AND FOR STATUTORY PERIOD FOR FILING APPEAL EXPI RED IN 2 ND WEEK OF JUNE 2016. THERE WAS NO INTENTIONAL AND DELIBERATE DELAY IN FILING THE APPEAL. ITA NO. 2050 MUM 2017-ORIENT M ULTIMODAL CARRIERS PVT. LTD. 6 THE ASSESSEE HAS ALSO FILED AFFIDAVIT OF SHRI PRAFU L K. SANGHVI, CHARTERED ACCOUNTANT. IN THE AFFIDAVIT, THE SAID CA STATED T HAT THE ASSESSEE HANDED OVER THE COPY OF IMPUGNED ORDER TO HIM FOR FILING APPEAL BEFORE THE TRIBUNAL. HE COULD NOT PREPARED APPEAL IMMEDIATELY ON ACCOUNT OF CHRONIC DIARRHEA AND HE COULD NOT ATTEND THE PROFES SIONAL WORK IMMEDIATELY FOR SOME TIME. THEREAFTER, INADVERTENTL Y THE SAID IMPUGNED ORDER WAS MIXED UP WITH THE OTHER PAPERS IN THE OFF ICE. HE WAS TREATED BY DR. GUNVANTLAL N. SHETH, WHO EXPIRED IN THE YEAR 2018. THE SAID DOCTOR SHETH WAS TREATING HIS AILMENT OF CHRONIC DI ARRHEA, THEREFORE, IT IS NOT POSSIBLE FOR HIM TO OBTAIN AND PRODUCE THE M EDICAL CERTIFICATE. THE SAID CA FURTHER STATED IN THE AFFIDAVIT THAT AP PEAL COULD NOT BE FILED WITHIN THE PRESCRIBED PERIOD OF LIMITATION, WHEN HE CAME ACROSS THE CIT(A) ORDER, HE REALIZE THAT APPEAL AGAINST THE SA ID ORDER HAS NOT BEEN FILED AND THEREAFTER, THE APPEAL WAS FIELD IMMEDIAT ELY. 7. THE LD. AR OF THE ASSESSEE MADE HER SUBMISSION ON T HE LINE OF CONTENTS OF APPLICATION FOR CONDONATION OF DELAY AND THE AFF IDAVITS OF DIRECTOR AND CHARTERED ACCOUNTANT, WHO WAS HANDED OVER THE COPY OF IMPUGNED ORDER FOR FILING APPEAL BEFORE THE TRIBUNAL. THE LD . AR OF THE ASSESSEE SUBMITS THAT THERE WAS NO INTENTIONAL AND DELIBERAT E DELAY IN FILING APPEAL BEFORE THE TRIBUNAL. THE DELAY WAS DUE TO BO NAFIDE REASONS AS EXPLAINED IN THE APPLICATION AND THE AFFIDAVIT FILE D IN SUPPORT THEREOF. THE LD AR FURTHER SUBMITS THAT THE ASSESSEE HAS GOO D CASE ON MERIT AND ITA NO. 2050 MUM 2017-ORIENT M ULTIMODAL CARRIERS PVT. LTD. 7 WOULD SUCCEED ON MERIT. THE ASSESSEE WOULD SUFFER L EGAL INJURY IF THE DELAY IN FILING THE APPEAL IS NOT CONDONED. 8. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUBMI TS THAT THE ASSESSEE HAS NOT EXPLAINED THE DELAY IN FILING THE PRESENT A PPEAL. THE REASON FOR CONDONATION OF DELAY IS NOT PLAUSIBLE REASONS. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE APPLICATION FOR CONDONATION OF DELAY AN D THE AFFIDAVIT OF MR. JAMIL JALALI FILED IN SUPPORT OF THE APPLICATION FO R CONDONATION OF DELAY. 10. WE HAVE CONSIDERED THE SUBMISSION OF THE PARTIES AN D HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE NOTED THAT THE FIRST APPEAL OF THE ASSESSEE WAS DISMISSED BY LD CIT(A) ON 15.02.20 16. HOWEVER, THE APPEAL BEFORE TRIBUNAL IS FILED ONLY ON 23.03.2017. THUS, THERE IS DELAY OF 313 DAYS IN FILING THE PRESENT. IN SUPPORT OF HI S CONDONATION OF DELAY, THE ASSESSEE COMPANY HAS FILED THE AFFIDAVIT OF SH. JAMIL JALALI DIRECTOR AND THE AFFIDAVIT OF SHRI PRAFUL K. SANGHV I, C.A. IT IS THE CONTENTION OF LD. AR OF THE ASSESSEE IS THAT THEY H ANDED OVER THE COPY OF THE ORDER OF LD CIT(A) TO SHRI PRAFUL K. SANGHVI; C .A TO FILE APPEAL BEFORE THE TRIBUNAL WELL WITHIN TIME, HOWEVER, THE SAID CA NEITHER FILED THE APPEAL NOR INFORM ABOUT NOT FILING OF APPEAL BE FORE TRIBUNAL WITHIN TIME. THE LD. AR OF THE ASSESSEE ALSO CONTENDED THA T NOT FILING OF APPEAL IN TIME WOULD NOT BENEFIT THE ASSESSEE RATHER THE A SSESSEE WOULD SUFFER LEGAL INJURY AND IS NOW FACING HARDSHIP AND HARASSM ENT. ITA NO. 2050 MUM 2017-ORIENT M ULTIMODAL CARRIERS PVT. LTD. 8 11. THE HONBLE SUPREME COURT IN B. MADHURI GOUD V. B. DAMODAR REDDY (2012) 12 SCC 693, BY REFERRING VARIOUS TO EARLIER DECISIONS OF SUPERIOR COURTS AND HELD THE FOLLOWING PRINCIPAL MUST BE KEP T IN MIND WHILE CONSIDERING THE APPLICATION FOR CONDONATION OF DELA Y; (I) THERE SHOULD BE A LIBERAL, PRAGMATIC, JUSTICE O RIENTED, NON-PEDANTIC APPROACH WHILE DEALING WITH AN APPLICATION FOR COND ONATION OF DELAY, FOR THE COURTS ARE NOT SUPPOSED TO LEGALISE INJUSTICE BUT ARE OBLIGED TO REMOVE INJUSTICE. (II) THE TERMS SUFFICIENT CAUSE SHOULD BE UNDERST OOD IN THEIR PROPER SPIRIT, PHILOSOPHY AND PURPOSE REGARD BEING HAD TO THE FACT THAT THESE TERMS ARE BASICALLY ELASTIC AND ARE TO BE APP LIED IN PROPER PERSPECTIVE TO THE OBTAINING FACT-SITUATION. (III) SUBSTANTIAL JUSTICE BEING PARAMOUNT AND PIVOT AL THE TECHNICAL CONSIDERATIONS SHOULD NOT BE GIVEN UNDUE AND UNCALL ED FOR EMPHASIS. (IV) NO PRESUMPTION CAN BE ATTACHED TO DELIBERATE C AUSE OF DELAY BUT, GROSS NEGLIGENCE ON THE PART OF THE COUNSEL OR LITI GANT IS TO BE TAKEN NOTE OF. (V) LACK OF BONA FIDES IMPUTABLE TO A PARTY SEEKING CONDONATION OF DELAY IS A SIGNIFICANT AND RELEVANT FACT. (VI) IT IS TO BE KEPT IN MIND THAT ADHERENCE TO STR ICT PROOF SHOULD NOT AFFECT PUBLIC JUSTICE AND CAUSE PUBLIC MISCHIEF BEC AUSE THE COURTS ARE REQUIRED TO BE VIGILANT SO THAT IN THE ULTIMATE EVENTUATE THERE IS NO REAL FAILURE OF JUSTICE. (VII) THE CONCEPT OF LIBERAL APPROACH HAS TO ENCAP SULATE THE CONCEPTION OF REASONABLENESS AND IT CANNOT BE ALLOW ED A TOTALLY UNFETTERED FREE PLAY. (VIII)THERE IS A DISTINCTION BETWEEN INORDINATE DEL AY AND A DELAY OF SHORT DURATION OR FEW DAYS, FOR TO THE FORMER DOCTR INE OF PREJUDICE IS ATTRACTED WHEREAS TO THE LATTER IT MAY NOT BE ATTRACTED. THAT APART, THE FIRST ONE WARRANTS STRICT APPROACH WHEREAS THE SECOND CALLS FOR A LIBERAL DELINEATION. (IX) THE CONDUCT, BEHAVIOUR AND ATTITUDE OF A PARTY RELATING TO ITS INACTION OR NEGLIGENCE ARE RELEVANT FACTORS TO BE T AKEN INTO CONSIDERATION. IT IS SO AS THE FUNDAMENTAL PRINCIPL E IS THAT THE COURTS ARE REQUIRED TO WEIGH THE SCALE OF BALANCE O F JUSTICE IN RESPECT OF BOTH PARTIES AND THE SAID PRINCIPLE CANN OT BE GIVEN A TOTAL GO BY IN THE NAME OF LIBERAL APPROACH. ITA NO. 2050 MUM 2017-ORIENT M ULTIMODAL CARRIERS PVT. LTD. 9 (X) IF THE EXPLANATION OFFERED IS CONCOCTED OR THE GROUNDS URGED IN THE APPLICATION ARE FANCIFUL, THE COURTS SHOULD BE VIGI LANT NOT TO EXPOSE THE OTHER SIDE UNNECESSARILY TO FACE SUCH LI TIGATION. (XI) IT IS TO BE BORNE IN MIND THAT NO ONE GETS AWA Y WITH FRAUD, IS REPRESENTATION OR INTERPOLATION BY TAKING RECOURSE TO THE TECHNICALITIES OF LAW OF LIMITATION. (XII) THE ENTIRE GAMUT OF FACTS ARE TO BE CAREFULLY SCRUTINIZED AND THE APPROACH SHOULD BE BASED ON THE PARADIGM OF JUDICIA L DISCRETION WHICH IS FOUNDED ON OBJECTIVE REASONING AND NOT ON INDIVIDUAL PERCEPTION. (XIII) THE STATE OR A PUBLIC BODY OR AN ENTITY REPR ESENTING A COLLECTIVE CAUSE SHOULD BE GIVEN SOME ACCEPTABLE LATITUDE. 12. CONSIDERING THE AFORESAID LEGAL POSITION AND THE SU BMISSION OF LD. AR OF THE ASSESSEE THAT THE ASSESSEE THAT NON FILING OF T HE APPEAL BY ASSESSEE IN TIME HAS NOT GIVEN ANY BENEFIT TO THE ASSESSEE AND THE DELAY IN FILING APPEAL WAS DUE TO BONAFIDE REASONS AS EXPLAINED IN THE APPLICATION. THE APPLICATION OF ASSESSEE IS SUPPORTED BY AFFIDAVIT O F DIRECTOR OF ASSESSEE AND THE CA TO WHOM THEY HANDED OVER THE COPY OF THE IMPUGNED ORDER FOR FILING APPEAL. IN THE APPLICATION AS WELL AS IN AFFIDAVIT FILE IN SUPPORT THEREOF, THE APPLICANT HAS CATEGORICALLY TAKEN STAN D THAT THEY HAVE TAKEN PROPER STEP AND HANDED OVER THE COPY OF IMPUGNED OR DER TO THEIR CA TO FILE APPEAL AND THAT THERE WAS NO DELIBERATE DELAY ON THE PART OF THE ASSESSEE. THE LD.CA TO WHOM THE COPY OF IMPUGNED OR DER WAS HANDED OVER ALSO FILED HIS AFFIDAVIT EXPLAINING THE CAUSE FOR NOT FILING THE APPEAL WELL IN TIME. THEREFORE, KEEPING IN VIEW THE AFORE SAID LEGAL POINTS AND THE PRINCIPLE THAT WHEN SUBSTANTIAL JUSTICE AND TEC HNICALITIES ARE PITTED AGAINST EACH OTHER THE CONSIDERATION OF SUBSTANTIAL JUSTICE MUST ITA NO. 2050 MUM 2017-ORIENT M ULTIMODAL CARRIERS PVT. LTD. 10 PREVAILED. THEREFORE, KEEPING IN VIEW THE PRINCIPLE OF NATURAL JUSTICE, THE DELAY IN FILING OF THE APPEAL IS CONDONED. 13. ON MERIT OF THE CASE, WE HAVE HEARD THE SUBMISSION OF LD. AR OF THE ASSESSEE AND LD. DR FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. AR OF THE ASSESSEE SUBMITS THAT SHE HAS RAISED ADDITIONAL GROUND OF APPEAL VIDE APPLICATION DATED 25 TH SEPTEMBER 2018. THE ADDITIONAL GROUND OF APPEAL IS RAISED IN ADDITI ON TO ORIGINAL GROUND OF APPEAL AS A PRELIMINARY GROUND OF APPEAL. THE AD DITIONAL/PRELIMINARY GROUND OF APPEAL IS PURELY QUESTION OF LAW AND GOES TO THE ROOT OF JURISDICTIONAL AND DOES NOT REQUIRE ANY NEW FACT TO BRING ON RECORD. THE RELEVANT MATERIAL RELATED TO THE PRELIMINARY/ADDITI ONAL GROUND EMANATES FROM THE ORDERS OF LOWER AUTHORITIES. 14. IN SUPPORT OF ADDITIONAL GROUND OF APPEAL, THE LD. AR OF THE ASSESSEE SUBMITS THAT THE REASONS OF REOPENING WAS FURNISHED TO THE ASSESSEE VIDE LETTER DATED 14.08.2013. THE ASSESSMENT WAS RE-OPEN ED ON 25.03.2013 WHEREIN THE ASSESSING OFFICER RE-OPENED THE ASSESSM ENT ON TWO ISSUES I.E. (I) REGARDING CLAIM OF BAD-DEBT OF RS. 88,87,6 50/- IN RESPECT OF M/S SANJIVAK CARGO TRADING CO. AND (II) BAD-DEBT IN RES PECT OF PUNJAB STATE CONTAINER AND WAREHOUSING CORPORATION OF RS. 37,92, 760/-. NO ADDITION WAS MADE IN RESPECT OF 2 ND ISSUE, HOWEVER, THE ASSESSING OFFICER MADE THE ADDITION IN RESPECT OF FIRST ISSUE. THE LD. AR OF THE ASSESSEE FURTHER SUBMITS THAT DURING THE ORIGINAL ASSESSMENT, THE AS SESSING OFFICER ITA NO. 2050 MUM 2017-ORIENT M ULTIMODAL CARRIERS PVT. LTD. 11 EXAMINED THE ISSUE THOROUGHLY. THE ASSESSING OFFICE R ISSUED NECESSARY QUESTIONNAIRE REGARDING LOAN AND ADVANCES. THE ASSE SSEE VIDE HIS REPLY DATED 26.11.2008 FURNISHED THE DETAILS OF LOAN AND ADVANCES INCLUDING NOTE ON BAD-DEBT. THE ASSESSEE ALSO PROVIDED NECESS ARY INFORMATION ABOUT THE RECOVERIES MADE FROM M/S SANJIVAK CARGO T RADING CO. RECOVERED DURING THE FINANCIAL YEAR 2005-06. THE LD . AR OF THE ASSESSEE FURTHER SUBMITS THAT ALL THE DETAILS REGARDING SUND RY DEBTOR WRITTEN OFF WERE FURNISHED BEFORE THE ASSESSING OFFICER DURING THE ORIGINAL ASSESSMENT PROCEEDING VIDE LETTER DATED 30.11.2010, COPY OF WHICH IS PLACED BEFORE THE TRIBUNAL AS PER PAGE NO.4 TO 7 OF THE PAPER BOOK. THE LD. AR OF THE ASSESSEE FURTHER SUBMITS THAT THE ASS ESSING OFFICER AFTER VERIFYING THE NECESSARY CLAIM ACCEPTED AND PASSED T HE ASSESSMENT ORDER UNDER SECTION 143(3) ON 15.12.2010. THE LD. AR OF T HE ASSESSEE FURTHER SUBMITS THAT THE RE-ASSESSMENT WAS BASED ON MERE CH ANGE OF OPINION. IN SUPPORT OF HIS SUBMISSION, THE LD. AR OF THE ASSES SEE RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT IN CASE OF CI T VS. PRIMA PAPERS AND ENGINEERING INDUSTRIES. [2014] 364 ITR 2 22 (BOM.). 15. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUBMI TS THAT THE NO SUCH GROUND OF APPEAL WAS RAISED BEFORE THE FIRST APPELL ATE TRIBUNAL. IN CASE ADDITIONAL/PRELIMINARY GROUND OF APPEAL IS ADMITTED THEN THE MATTER MAY BE RESTORED TO THE FILE OF LD. CIT(A) FOR ADJUDICAT ION OF ISSUE. ITA NO. 2050 MUM 2017-ORIENT M ULTIMODAL CARRIERS PVT. LTD. 12 16. WE HAVE NOTED THAT THE ASSESSEE HAS RAISED THE ADDI TIONAL/PRELIMINARY GROUND OF APPEAL THAT THE ASSESSMENT IS BAD IN LAW. THOUGH, NO SPECIFIC GROUND OF APPEAL WAS RAISED BY ASSESSEE BEFORE FIRS T APPELLATE AUTHORITY. HOWEVER, DURING THE FIRST APPELLATE STAGE, THE ASSE SSEE MADE SUBMISSION REGARDING VALIDITY OF RE-OPENING; THE FIRST APPELLA TE AUTHORITY DESPITE RECORDING THE SUBMISSION OF ASSESSEE HAS NOT ADJUDI CATED THE OBJECTION OF THE ASSESSEE. IN OUR VIEW, THE ADDITIONAL/PRELIM INARY GROUND OF APPEAL RAISED BY ASSESSEE IS PURELY LEGAL IN NATURE AND DO ES NOT REQUIRE TO BRING ANY NEW OR ADDITIONAL FACT ON RECORD. THE FACTS REL ATING THE ADJUDICATION OF ADDITIONAL/PRELIMINARY GROUND OF APPEAL ARE EMAN ATING FROM THE ORDER OF LOWER AUTHORITIES. THUS, THE ADDITIONAL/PRELIMIN ARY GROUND OF APPEAL IS ADMITTED. 17. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES ON THE PRELIMINARY GROUND OF APPEAL AND PERUSED THE MATERI AL AVAILABLE ON RECORD. WE HAVE ALSO DELIBERATED ON CASE LAW RELIED BY LOWER AUTHORITIES AND BY REPRESENTATIVE OF THE PARTIES. THE ASSESSING OFFICER RE-OPENED THE ASSESSMENT ON 25.03.2013. THE REASONS OF RE-OPENING WAS SERVED TO THE ASSESSEE VIDE LETTER DATED 14.08.2013. THE ASSESSIN G OFFICER OTHERWISE HAS REFERRED THE REASONS OF RE-OPENING ON PAGE NO.1 OF HIS ORDER. THE ASSESSING OFFICER WHILE RECORDING THE REASONS OF RE -OPENING RECORDED THAT FROM THE PERUSAL OF SCHEDULE TO PROFIT & LOSS ACCOUNT, THE ASSESSING OFFICER HAS SEEN THAT ASSESSEE HAS CLAIME D BAD-DEBT OF RS. ITA NO. 2050 MUM 2017-ORIENT M ULTIMODAL CARRIERS PVT. LTD. 13 2,06,02,015/-. OUT OF THIS AMOUNT, AN AMOUNT OF RS. 88,87,650/- PERTAINS TO BAD-DEBT WRITTEN OFF IN RESPECT OF M/S SANJIVIK CARGO TRADING CO. THIS BAD-DEBT WAS CLAIMED TO HAVE BEEN PAID AS ADVA NCE TO MR. SANJEEV RISHI, GENERAL MANAGER. IN PARAGRAPH-11, SCHEDULE-1 7, NOTE TO THE ACCOUNT, AUDIT REPORT, THE ASSESSEE MENTIONED ABOUT MISAPPROPRIATION OF AMOUNT OF RS. 77,26,977/- BY MR. SANJEEV RISHI, GENERAL MANAGER OF M/S SANJIVIK CARGO TRADING CO., THIS AMOUNT WAS CAR RIED FORWARD IN THE ACCOUNT FROM FINANCIAL YEAR 2005-06. THIS MISAPPROP RIATION WAS ON ACCOUNT OF PERSONAL WITHDRAWAL AND INVESTMENT MADE BY HIM WITHOUT AUTHORITY. OUT OF THE TOTAL PROVISION OF RECOVERY D UE TO DOUBTFUL OF RECOVERY, THE MANAGEMENT/ASSESSEE HAS WRITTEN OFF O F BAD-DEBT OF RS. 88,87,650/-. THE ASSESSING OFFICER FURTHER RECORDED THAT THE BAD-DEBT CLAIMED ARE CLEARLY OUT OF ADVANCE GIVEN TO M/S SAN JIVAK CARGO TRADING CO. IS NOT A BAD-DEBT BUT AN ADVANCE GIVEN IN EARLI ER YEARS, NOT ROOTED THROUGH PROFIT & LOSS ACCOUNT SO AS TO QUALIFY DEDU CTION UNDER SECTION 36(1)(VII). THE ASSESSING OFFICER TOOK THE VIEW THA T THE ADVANCE GIVEN TO MR. SANJEEV RISHI, GENERAL MANAGER IS NOT IN THE NATURE OF BAD-DEBT AND DOES NOT SATISFY THE CONDITION PRESCRIBED UNDER SECTION 36(1)(VII) R.W.S. 36(1)(II) AS THE SAME WAS NOT OFFERED IN THE EARLIER YEARS, HENCE, NOT ELIGIBLE FOR CLAIM OF BAD-DEBT. THE LD. CIT(A) CONFIRMED THE ACTION OF ASSESSING OFFICER IN ADDING/DISALLOWING THE BAD- DEBT. THOUGH THE LD. CIT(A) RECORDED THE OBJECTION OF ASSESSEE THAT NOTI CE UNDER SECTION 148 ITA NO. 2050 MUM 2017-ORIENT M ULTIMODAL CARRIERS PVT. LTD. 14 IS INVALID AND MERELY CHANGE OF OPINION. HOWEVER, N O FINDING ON THIS LEGAL OBJECTION/SUBMISSION WAS GIVEN BY HIM. 18. WE HAVE NOTED IN THE REASONS RECORDED, WHICH IS SUP PLIED TO THE ASSESSEE OR AS RECORDED BY ASSESSING OFFICER OF PAGE NO.1 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOWHERE RECORDED T HAT ANY INCOME CHARGEABLE TO TAX HAS COME TO HIS NOTICE SUBSEQUENT LY. MOREOVER, THE ASSESSING OFFICER HAS RECORDED THAT HE HAS SEEN FRO M THE SCHEDULE TO THE PROFIT & LOSS ACCOUNT THAT BAD-DEBT AMOUNTING TO RS . 88,87,650/- WAS NOT ROUTED THROUGH PROFIT & LOSS ACCOUNT AND DOES N OT QUALIFY FOR DEDUCTION. WE HAVE FURTHER NOTED THAT THE ASSESSEE DURING THE ORIGINAL ASSESSMENT PROCEEDING VIDE THEIR REPLY DATED 30.11. 2010 FURNISHED THE COMPLETE DETAILS AND EXPLAINED BEFORE THE ASSESSING OFFICER. NO DOUBT THAT ASSESSING OFFICER HAS NOT PASSED ANY DETAILED ORDER WHILE ALLOWING SUCH BAD-DEBT. THEREFORE, WE ARE OF THE VIEW THAT T HE ASSESSING OFFICER MADE THE RE-OPENING ON THE BASIS OF MATERIAL AVAILA BLE ON RECORD AND HIS ACTION IS BASED ON MERELY CHANGE OF OPINION. 19. THE HONBLE BOMBAY HIGH COURT IN CIT VS. PRIMA PAPE RS AND ENGINEERING INDUSTRIES (SUPRA) HELD THAT THE POWER TO RE-OPEN THE ASSESSMENT IS NOT A POWER OF REVIEW AND MERE CHANGE OF OPINION WOULD NOT JUSTIFY THE RE-OPENING OF THE ASSESSMENT. THIS WOULD APPLY EVEN THEN THE ASSESSMENT IS SOUGHT TO BE RE-OPENED WITHIN FOR YEAR FROM THE END OF ASSESSMENT YEAR. THEREFORE, IN VIEW OF THE ABOVE DI SCUSSION, WE ARE OF ITA NO. 2050 MUM 2017-ORIENT M ULTIMODAL CARRIERS PVT. LTD. 15 THE VIEW THAT ALL MATERIAL RELATED WITH CLAIM OF BA D-DEBT WAS AVAILABLE BEFORE THE ASSESSING OFFICER WHO HAS CONSIDERED THE MATERIAL AND ALLOWED THE BAD-DEBT TO THE ASSESSEE WHILE PASSING THE ASSESSMENT ORDER. 20. THEREFORE, SUBSEQUENT RE-ASSESSMENT OF THE SAME ISS UE BASED ON THE SAME MATERIAL IN ABSENCE OF ANY SUBSEQUENT INFORMAT ION, THE RE-OPENING IS MERELY A CHANGE OF OPINION; WE HOLD SO. THEREFOR E, THE RE-OPENING IS INVALID. IN THE RESULT, THE ADDITIONAL/PRELIMINARY GROUND OF APPEAL RAISED BY ASSESSEE IS ALLOWED. 21. AS WE HAVE ALLOWED THE ADDITIONAL/PRELIMINARY GROUN D OF APPEAL, THEREFORE, HE DISCUSSION ON MERIT OF THE CASE HAVE BECOME ACADEMIC. 22. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/04/2019. SD/- SD /- G.S. PANNU PAWAN SINGH VICE-PRESIDENT JUDICIAL MEMBER MUMBAI, DATE: 30.04.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR C BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI