Goldquest International Pvt. Ltd., CHENNAI V. DCIT, CHENNAI

ITA 2283/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7619 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 17-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTHA
• Assessee Lawyers: G SEETHARAMAN
• Keywords: Depreciation; Commercial expediency; Condonation of delay

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . , ! ' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO.2283/MDS/2015 ! # $# / ASSESSMENT YEAR : 2009-2010 M/S. GOLDQUEST INTERNATIONAL PVT. LTD, THE RAIN TREE PLACE, B WING, 9 TH FLOOR, NO.7, MCNICHOLS ROAD, CHETPUT, CHENNAI 600 031. [PAN AABCG3717C ] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE II(2) CHENNAI. ( / APPELLANT) ( /RESPONDENT) %& ' ( / APPELLANT BY : SHRI. G. SEETHARAMAN, ADVOCATE )*%& ' ( /RESPONDENT BY : SHRI. A.V. SREEKANTHA, JCIT. ' + / DATE OF HEARING : 17-02-2016 ,-$ ' + / DATE OF PRONOUNCEMENT : 30-03-2016 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AG AINST ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-6, CHEN NAI IN ITA NO.160/CIT(A)-6/2014-15, DT 26.11.2015 FOR THE ASS ESSMENT YEAR ITA NO.2283/MDS/2015. :- 2 -: 2009-2010 PASSED U/S.143(3) R.W.S.147 AND 250 OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). 2. THE ASSESSEE HAS RAISED ONLY SUBSTANTIVE GROUND THA T THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT C ONDONING THE DELAY OF 52 DAYS IN FILING OF APPEAL AND OVERLOOKIN G GENUINE REASONS AND DISMISSED THE APPEAL ON TECHNICAL GROUNDS. 3. THE BRIEF FACTS OF THE CASE THAT THE ASSESSEE COMP ANY IS IN THE BUSINESS OF MULTILEVEL MARKETING OF NUMISMATIC S AND OTHER PRODUCTS, COULD NOT FILE RETURN OF INCOME DUE TO TE CHNICAL PROBLEMS WITHIN DUE DATE. THE LD. ASSESSING OFFICER ON VERIF ICATION FOUND THE ASSESSEE HAS SALES OF >7,07,94,947/- FOR THE FINAN CIAL YEAR 2008-09 AS AGAINST >154,95,57,726/- AS ON 31.03.2008 FOR THE FINANCIAL YEAR 2007-08. THE ASSESSING OFFICER ISSUED NOTICE U/S.1 48 OF THE ACT AND IN COMPLIANCE TO NOTICE, THE RETURN OF INCOME WAS FILE D WITH TOTAL INCOME OF >24,25,460/- AND WAS PROCESSED U/S.143(1) OF TH E ACT ON 12.11.2013, THE COMPANY FILED ADJOURNMENT LETTER ST ATING DETAILS CALLED FOR ARE IN THE CUSTODY OF MANAGING DIRECTOR WHO IS OUT OF HEADQUARTERS AND THE ASSESSING OFFICER ISSUED SUMMO NS U/S.131 OF THE ACT ON 19.03.2014 WAS RETURNED UNSERVED WITH ENDOR SEMENT OF NOT AVAILABLE AT THIS ADDRESS. THE ASSESSING OFFICER OBSERVED AUDIT REPORT OF THE COMPANY REFERRED AT PAGE 2 AS UNDER:- ITA NO.2283/MDS/2015. :- 3 -: FURTHER AS PER THE AUDITORS REPORT, IT HAS BEEN STATED THAT WE DO NOT EXPRESS ANY OPINION ON WHETHER THE ACCOUNTS GIVE A TRUE AND FAIR VIEW IN CONFORMITY WI TH THE ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN INDIA. AS THE RE-ASSESSMENT IS GETTING TIME BARRED BY 31.03.2014 AND AS THE DIRECTOR OF THE COMPANY HAD NOT RESPONDED TO ANY NOTICES INCLUDING SUMMON ISSUED, THE ASSESSMENT IS COMPLETED AFTER DISCUSSION WITH THE AUTHORIRSED REPRESENTATIVE EXPARTE BASED ON THE OBSERVATIONS OF THE STATUTORY AUDITOR AND AVAILABLE MATERIAL, THE ASSESSING OFFICER COMPLETED ASSESSMEN T BY DISALLOWING EXPENSES AS NO SATISFACTORY EXPLANATIONS WAS FURNI SHED THAT EXPENSES ARE EXCLUSIVELY INCURRED FOR THE PURPOSE OF BUSINES S >47,65,485/-. ON PERUSAL OF THE FIXED ASSETS OF THE COMPANY, THE LD . ASSESSING OFFICER FOUND THE ASSESSEE CLAIMED DEPRECIATION >12,50,223 /-ON BUILDING AT MUMBAI AND COMPANY COULD NOT SUBSTANTIATE WITH CR EDIBLE EVIDENCE OF OPERATIONS. THE ASSESSEE COMPANY DISCLOSED IN FI NANCIAL STATEMENTS OTHER INCOME >29,53,756/- PERTAINING TO DIVIDEND FROM SHARES AND MUTUAL FUNDS EXEMPTED U/S.10(34) AND 10(35) OF THE ACT AND PROFIT ON SALE OF INVESTMENT OF >52,24,352/-. THE ASSESSEE HAS INCURRED CERTAIN INDIRECT EXPENSES FOR MAKING INVESTMENTS AND LD. AS SESSING OFFICER RELIED ON THE DELHI TRIBUNAL DECISION OF ESCORTS LTD VS. ACIT 102 TTJ 522 AND DISALLOWED INDIRECT EXPENSES AND MANAGEMENT EX PENSES ESTIMATING AT 1% OF DIVIDEND INCOME AS IN EARLIER Y EAR ASSESSMENT 2007-08 IN ASSESSEES OWN CASE. WITH THESE ABOVE D ISALLOWANCE THE ITA NO.2283/MDS/2015. :- 4 -: ASSESSING OFFICER PASSED ASSESSMENT ORDER U/S.143(3 ) R.WS. 147 ON 25.03.2014 WITH ASSESSED INCOME OF >84,70,705/-. A GGRIEVED BY THE ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE COMM ISSIONER OF INCOME TAX (APPEALS). 4. IN THE APPELLATE PROCEEDINGS, THE LD. AUTHORISED REPRESENTATIVE RAISED GROUNDS ON THE GENUINESS OF E XPENSES WERE THE LD. ASSESSING OFFICER HAS OVERLOOKED THE NATURE A ND COMMERCIAL EXPEDIENCY OF BUSINESS WHICH WAS CONSIDERED IN EARL IER ASSESSMENTS. THE COMMISSIONER OF INCOME TAX (APPEALS) FOUND THAT THE ASSESSEE COMPANY HAS MENTIONED THE RECEIPT OF THE ASSESSMENT ORDER ON 02.04.2014. AS PER THE PROVISIONS OF SEC.249 OF TH E ACT, THE ASSESSEE HAS TO FILE AN APPEAL WITHIN A PERIOD OF 30 DAYS FR OM THE DATE OF INTIMATION OF ORDER. WHEREAS THE APPEAL WAS FILED ON 25.06.2014 AND CONDONATION PETITION WAS FILED EXPLAINING THE REAS ONS AND CIRCUMSTANCES REFERRED AT PAGE 2 OF CIT ORDER AS UN DER:- 1. THE ASSESSMENT ORDER AND DEMAND NOTICE F OR THE ASSESSMENT YEAR 2009-10 WERE SERVED ON S OMEONE ON 02.04.2014. ON THAT BASIS, THE APPEAL SHOULD HAV E BEEN FILED ON OR BEFORE 03.05.2014. 2. IT IS FILED ON 25.06.2014 AFTER A DELAY OF 52 DAYS. 3. THE MANAGING DIRECTOR OF THE COMPANY WAS UNDER DETENTION BY THE ANDHRA POLICE FOR ALLEGED VIOLATIO N OF MONEY CIRCULATION SCHEME FROM 16.02.2014 AND WAS RELEASED ONLY ON 02.06.2014. SHE REACHED CHENNAI O N 15.06.2014. ITA NO.2283/MDS/2015. :- 5 -: 4. SUBSTANTIAL QUESTIONS OF LAWS AND FACTS ARE INVOLVED IN T HE APPEAL AND THE PETITIONER IS DORMANT. 5. THEREFORE, THE PETITIONER PRAYS THAT THE DELAY OF 52 DAYS, IN FILING THE APPEAL, MAY BE CONDONED. THE COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERED THE FINDINGS OF THE ASSESSING OFFICER AND WITHOUT GOING INTO MERITS AS THE ASSESSEE COULD NOT EXPLAIN CIRCUMSTANCES AND SUBSTANTIATE TH E DELAY OF 52 DAYS IN CONDONATION PETITION AND IGNORED THE FACT THAT THE MANAGING DIRECTOR OF THE COMPANY WAS UNDER DETENTION BY ANDH RA PRADESH POLICE FOR ALLEGED VIOLATION OF MONEY CIRCULATION S CHEME FROM 16.02.2014 AND RELEASED ON 02.06.2014. THE LD. COMM ISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT THE ASSESSEE DOE S NOT HAVE SUFFICIENT CAUSE FOR DELAY AND AFFIDAVIT FILED IS N OT IN ORDER AS PER THE LAW AND THERE IS NO DUE DILIGENCE OF THE PROVISION S OF THE ACT AND DISMISSED THE APPEAL IN LIMINE WITHOUT CONDONING 5 2 DAYS DELAY. AGGRIEVED BY THE ORDER OF COMMISSIONER OF INCOME T AX (APPEALS), THE ASSESSEE ASSAILED AN APPEAL BEFORE TRIBUNAL. 5. THE LD. AUTHORISED REPRESENTATIVE EXPRESSED THE INA BILITY OF THE ASSESSEE COMPANY IN FILING APPEAL AS THE ORIGI NAL DEMAND NOTICE WAS SERVED ON PERSON NOT AUTHORIZED THEREFORE EXACT DATE OF SERVICE COULD NOT BE OBTAINED AND FURTHER MANAGING DIRECTO R OF THE COMPANY WAS UNDER DETENTION BY ANDHRA PRADESH POLICE FROM 1 6.02.2014. THE ITA NO.2283/MDS/2015. :- 6 -: MANAGING DIRECTOR ALONE IS AUTHORIZED TO SIGN THE APPEAL PAPERS AND THERE IS NO OTHER DIRECTOR WAS AUTHORIZED IN THE A BSENCE OF BOARD OF DIRECTORS AND AS PER THE ASSESSMENT ORDER, THE AUDI TOR DO NOT EXPRESS ANY OPINION ON TRUE AND FAIR VIEW OF THE ACCOUNTS. THE ASSESSEE COMPANY PASSED THROUGH GENUINE HARDSHIP AND HAVE F AIR CHANCES OF SUCCEEDING IN APPEAL ON MERITS AND PRODUCED ORDER C OPY OF CRIMINAL PETITION OF DETENTION OF MANAGING DIRECTOR. 6. CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE VEHEME NTLY OPPOSED FOR CONDONING THE DELAY. 7. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD AND JUDICIAL DECISIONS CITED. BEFORE US, TH E LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE REITERATED SUBMISSI ONS MADE BEFORE THE ASSESSING OFFICER AND ALSO ON DELAY IN FILING T HE APPEAL IN APPELLATE PROCEEDINGS. CONSIDERING THE SUBMISSIONS OF AUTHOR ISED REPRESENTATIVE ON DELAY, WE HIGHLIGHT THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF N. BALAKRISHNAN V. M. KRISHNAMURTHY, AIR 1998 SC 3222 OBSERVED AS UNDER :- '11. RULES OF LIMITATION ARE NOT MEANT TO DESTROY T HE RIGHT OF PARTIES. THEY ARE MEANT TO SEE THAT PARTIES DO NOT RESORT DILATORY TACTICS, BUT SEEK THEIR REMEDY PROMPTLY. THE OBJECT OF PROVIDING A LEGAL REMEDY IS TO REPAIR THE DAMAGE CAUSED BY RE ASON OF LEGAL INJURY. LAW OF LIMITATION FIXES A LIFE SPAN F OR SUCH LEGAL REMEDY FOR THE REDRESS OF THE LEGAL INJURY SO SUFFE RED. TIME IS PRECIOUS AND THE WASTED TIME WOULD NEVER REVISIT. D URING EFFLUX OF TIME NEWER CAUSES WOULD SPROUT UP NECESSITATING NEWER ITA NO.2283/MDS/2015. :- 7 -: PERSONS TO SEEK LEGAL REMEDY BY APPROACHING THE COU RTS. SO A LIFE SPAN MUST BE FIXED FOR EACH REMEDY. UNENDING P ERIOD FOR LAUNDERING THE REMEDY MAY LEAD TO UNENDING UNCERTAI NTY AND CONSEQUENTIAL ANARCHY. LAW OF LIMITATION IS THUS FO UNDED ON PUBLIC POLICY. IT IS ENSHRINED IN THE MAXIM INTERES T REIPUBLICAE UP SIT F INIS LITIUM ( IT IS FOR THE GENERAL WELFAR E THAT A PERIOD BE PUT TO LITIGATION). RULES OF LIMITATION ARE NOT MEA NT TO DESTROY THE RIGHT OF THE PARTIES. THEY ARE MEANT TO SEE THA T PARTIES DO NOT RESORT TO DILATORY TACTICS BUT SEEK THEIR REMEDY PR OMPTLY. THE IDEA IS THAT EVERY LEGAL REMEDY MUST BE KEPT ALIVE FOR A LEGISLATIVELY FIXED PERIOD OF TIME. 12. A COURT KNOWS THAT REFUSAL TO CONDONE DELAY WOU LD RESULT IN FORECLOSING A SUITOR FROM PUTTING FORTH HIS CAUSE. THERE IS NO PRESUMPTION THAT DELAY IN APPROACHING THE COURT IS ALWAYS DELIBERATE. THIS COURT HAS HELD THAT THE WORDS 'SUF FICIENT CAUSE' UNDER SECTION 5 OF THE LIMITATION ACT SHOULD RECEIV E A LIBERAL CONSTRUCTION SO AS TO ADVANCE SUBSTANTIAL JUSTICE V IDE SHAKUNTALA DEVI JAIN V. KUNTAL KUMARI, AIR 1969 SC 575 AND STATE OF WEST BENGAL V. THE ADMINISTRATOR, HOWAH MUNICAPACITY, AIR 1972 SC 749.' FURTHER, WE REFER THE CASE OF STATE OF WEST BENGAL VS. ADMINISTRATOR, HOWRAH MUNICIPALITY, AIR 1972 SC 749, THE SUPREME C OURT HELD THAT EXPRESSION 'SUFFICIENT CAUSE' SHOULD RECEIVE A LIBE RAL CONSTRUCTION SO AS TO ADVANCE THE PURPOSE OF JUSTICE PARTICULARLY WHEN THERE IS NO MOTIVE BEHIND DELAY. THIS NECESSARILY IMPLIES THAT PARTIES MUST ACT BONAFIDELY, EXPEDITIOUSLY AND WITH DUE CARE. A CASUAL OR A NEGL IGENT LITIGANT WHO HAS ACTED WITH UTTER IRRESPONSIBLE ATTITUDE, CANNOT CLAIM THE CONDONATION OF DELAY IN LAW WHEN THE RIGHT HAS ACCR UED TO THE OTHER SIDE. THE EXPRESSION 'SUFFICIENT CAUSE' WILL ALWAYS HAVE RELEVANCY TO REASONABLENESS. THE ACTIONS WHICH CAN BE CONDONED B Y THE COURT SHOULD FALL WITHIN THE REALM OF NORMAL HUMAN CONDUC T OR NORMAL CONDUCT OF A LITIGANT. IT IS NEITHER EXPECTED NOR C AN IT BE A NORMAL ITA NO.2283/MDS/2015. :- 8 -: CONDUCT OF A PUBLIC SERVANT OR A LITIGANT THAT THEY WOULD KEEP THE FILES UNMOVED, UNPROCESSED FOR MONTHS TOGETHER ON THEIR T ABLES. HOW THE POWER OF CONDONATION OF DELAY IS TO BE EXERCISED, H AS BEEN EXPLAINED BY THE APEX COURT IN THE CASE OF COLLECTOR, LAND ACQUISITION V MST. KATIJI AND OTHERS- 167 ITR 471 (SC) AS UNDER:- ( PAGES 472 ). ' THE LEGISLATURE HAS CONFERRED THE POWER TO CONDON E DELAY BY ENACTING SECTION 51 OF THE LIMITATION ACT OF 1963 I N ORDER TO ENABLE THE COURTS TO DO SUBSTANTIAL JUSTICE TO PART IES BY DISPOSING OF MATTERS ON DE MERITS '. THE EXPRESSION 'SUFFICIENT CAUSE ' EMPLOYED BY THE LEGISLATURE IS ADEQUATELY E LASTIC TO ENABLE THE COURTS TO APPLY THE LAW IN A MEANINGFUL MANNER WHICH SUB SERVES THE ENDS OF JUSTICE THAT BEING THE LIFE-PURPOSE OF THE EXISTENCE OF THE INSTITUTION OF COURTS. IT I S COMMON KNOWLEDGE THAT THE COURT HAS BEEN MAKING A JUSTIFIA BLY LIBERAL APPROACH IN MATTERS INSTITUTED IN THIS COURT. BUT T HE MESSAGE DOES NOT APPEAR TO HAVE PERCOLATED DOWN TO ALL THE OTHER COURTS IN THE HIERARCHY. AND SUCH A LIBERAL APPROACH IS AD OPTED ON PRINCIPLE AS IT IS REALIZED THAT: 1. ORDINARILY, A LITIGANT DOES NOT STAND TO BENEFI T BY LODGING AN APPEAL LATE. 2. REFUSING TO CONDONE DELAY CAN RESULT IN A MERITO RIOUS MATTER BEING THROWN OUT AT THE VERY THRESHOLD AND CAUSE OF JUSTICE BEING DEFEATED. AS AGAINST THIS, WHEN DELAY IS COND ONED, THE HIGHEST THAT CAN HAPPEN IS THAT A CAUSE WOULDBE DEC IDED ON MERITS AFTER HEARING THE PARTIES. 1. ' ANY APPEAL OR ANY APPLICATION, OTHER THAN AN A PPLICATION UNDER ANY OF THE PROVISIONS OF ORDER XXI OF THE COD E OF CIVIL PROCEDURE, 1908, MAY BE ADMITTED AFTER THE PRESCRIB ED PERIOD IF THE APPELLANT OR THE APPLICANT SATISFIES THE COURT THAT HE HAD SUFFICIENT CAUSE FOR NOT PREFERRING THE APPEAL OR M AKING THE APPLICATION WITHIN SUCH PERIOD.' ( PAGE 473) 3. ' EVERY DAY'S DELAY MUST BE EXPLAIN ED' DOES NOT MEAN THAT PEDANTIC APPROACH SHOULD BE MADE. WHY NOT EVERY HOUR'S DELAY, EVERY SECOND'S DELAY? THE DOCTRINE MU ST BE APPLIED IN A RATIONAL, COMMON SENSE AND PRAGMATIC M ANNER. 4. WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDER ATIONS ARE PITTED AGAINST EACH OTHER, THE CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRED, FOR THE OTHER SIDE CANNOT CLAIM TO HAVE ITA NO.2283/MDS/2015. :- 9 -: VESTED RIGHT IN INJUSTICE BEING DONE BECAUSE OF A N ONDELIBERATE DELAY. 5. THERE IS NO PRESUMPTION THAT DELAY IS OCCASIONED DELIBERATELY, OR ON ACCOUNT OF CULPABLE NEGLIGENCE, OR ON ACCOUNT OF MALAFIDES. A LITIGANT DOES NOT STAND TO BENEFIT BY RESORTING TO DELAY. IN F ACT, HE RUNS SERIOUS RISK. 6. IT MUST BE GRASPED THAT THE JUDICIARY IS RESPEC TED NOT ON ACCOUNT OF ITS POWER TO LEGALIZE INJUSTICE ON TECHN ICAL GROUNDS BUT BECAUSE IT IS CAPABLE OF REMOVING INJUSTICE AND IS EXPECTED TO DO SO.' WE CONSIDER THE FACTUAL ASPECTS AND MERITS OF THE C ASE AS THE DELAY IN FILING THE APPEAL WAS NOT WANTON AS PER CONDONAT ION PETITION FILED IN APPELLATE PROCEEDINGS. FURTHER ON PERUSAL OF REC ORD OF THE EVENTS FROM THE ASSESSMENT PROCEEDINGS TO THE TRIBUNAL, TH E COMPANY SEEMS TO BE PASSING THROUGH SERIOUS BUSINESS IRREGULARIT IES AND ALSO MANAGING DIRECTOR WAS DETAINED. THE SUBMISSIONS OF LD. AUTHORISED REPRESENTATIVE ON GENUINE AND SUFFICIENT REASONS FO R DELAY CAN NOT BE IGNORED. THE MANAGING OF DIRECTOR WAS DETAINED BY THE ANDHRA PRADESH POLICE AND LD. AUTHORISED REPRESENTATIVE PR ODUCED COPY OF ORDER OF METROPOLITAN SESSIONS JUDGE, VIJAYAWADA DA TED 30 TH MAY, 2014 AS SUPPORTIVE EVIDENCE OF DENTATION. SO, CONS IDERING THE REASONS AND ALSO DETENTION OF THE MANAGING DIRECTOR DURING THE PERIOD OF ASSESSMENT, WE FIND THERE IS SUFFICIENT CAUSE IN THE FACTUAL CIRCUMSTANCES. WE CONDONE THE DELAY AND DIRECT THE LD.COMMISSIONER OF INCOME TAX (APPEALS) TO ADJUDICATE APPEAL ON MER IT. ITA NO.2283/MDS/2015. :- 10 -: 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED ON WEDNESDAY, THE 30TH DAY OF MARCH, 2016, AT CHENNAI. SD/- SD/- ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER ( . ) (G. PAVAN KUMAR) /JUDICIAL MEMBER / CHENNAI 0 / DATED: 30.03.2016 KV 1 ' )!+23 43$+ / COPY TO: 1 . %& / APPELLANT 3. 5+ () / CIT(A) 5. 389 )!+! / DR 2. )*%& / RESPONDENT 4. 5+ / CIT 6. 9:# ; / GF