SAJJAN M MAKHARIA, MUMBAI V. ITO 20(3)(3), MUMBAI

ITA 2762/MUM/2014

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9111 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2006-2007
• Appeal Filed On: 22-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AJAY KUMAR KESHARI
• Assessee Lawyers: V C SHAH
• Keywords: Business income; Bonafide belief; Reasonable cause; Speculation loss; Condonation of delay
• Section: 143(3); 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 2762/MUM/2014 ASSESSMENT YEAR: 200 6 - 07 SHRI SAJJAN M. MAKHARIA 408, SKYLARK - A, LOKHANDWALA COMPLEX, FOUR BUNGALOWS, ANDHERI (W), MUMBAI - 400058. VS. ITO - 20(3)(3), PIRAMAL CHAMBERS, PAREL, MUMBAI - 400012. PAN NO. AGAPM3817D APPELLANT RESPONDENT ASSESSEE BY : MR. V.C. SHAH , AR REVENUE BY : MR. AJAY KUMAR KESHARI, DR DATE OF HEARING : 01/10/2018 DATE OF PRONOUNCEMENT : 13 /12/2018 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2006 - 07 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 3 1 , MUMBAI [IN SHORT CIT(A)] AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) OF THE INCOME TAX ACT 1961, (THE ACT). 2. THE GROUNDS OF APPEAL READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEANED CIT(A) ERRED IN COMING TO THE CONCLUSION THAT THE DELAY IN FILING THE APPEAL WAS NOT CONDONABLE WHICH IS DONE BY IGNORING THE REASONS FOR DELAY WHICH WERE SHRI SAJJAN M. MAKHARIA ITA NO. 2762/MUM/2014 2 JUSTIFIABLE AND HE OUGHT TO HAVE CONDONE D THE DELAY AND CONSIDER THE APPEAL ON MERIT. 2. ON THE FACTS AND IN T HE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT (A ) ERRED IN COMING TO THE DECISION THAT THE REASONS GIVEN BY YOUR APPELLANT WERE NOT SUFFICIENT AND DID NOT CONTAIN ADEQUATE GROUNDS TO CONDONE THE DELAY WHICH HE OUGHT TO HAVE CONSIDER ED TO ADMINIST ER THE JUSTICE AFTER CONSIDERING THE CONTENTS OF THE APPEAL ON MERIT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT (A) ERRED IN NOT CONSIDERING THAT THE APPEAL WAS FILED WITHIN A REASONABLE TIME AFTER THE DECISION OF THE HON . HIGH COURT FOR EARLIER YEAR WAS RECEIVED WHICH REQUIRED YOUR APPELLANT TO FILE AN APPEAL TO GET APPROPRIATE RELIEF FOR A.Y 2006 - 07 4. YOUR APPELLANT SUBMITS THAT THE LEARNED CIT (A) IS DIRECTED TO CONDONE THE DELAY A ND CONSIDER THE APPEAL ON MERIT. 5. ALTERNAT IVELY, YOUR APPELLANT PRAYS THAT THE FOLLOWING GROUND RAISED BEFORE THE LEARNED CIT (A) BE DECIDED ON MERIT TO ADMIN ISTER THE ENDS OF JUSTICE. 'THE LOSS INCURRED BY THE APPELLANT IN THE EARLIER YEAR I.E., A.Y. 2005 - 06 AS DETERMINED BY THE ASSESSING OFFICER RS . 36,99,924/ - WHICH IS PERTAINING TO DERIVATIVE / F & O TRANSACTIONS IN SHARES CAN BE SET OFF AGAINST DERIVATIVE / F & O INCOME RS. 16,05,120/ - AS DETERMINED BY ASSESSING OFFICER FOR A.Y. 2006 - 07. THE INCOME OF RS.16,05,120/ - FROM THE SAME TYPE OF TRANSACTIONS CAN BE SET OFF AGAINST THE LOSS OF SAME TYPE TRANSACTIONS FOR AY 2005 - 06 IRRESPECTIVE WHETHER IT IS TREATED AS SPECULATIVE OR OTHERWISE RS.36,99,924/ - . IT IS HELD BY THE INCOME TAX APPELLATE T RIBUNAL, MUMBAI G BENCH, MUMBAI VIDE ITA NO. 1798/MUM/2010, ASSESSMENT YEAR 2006 - 07, GAGENDRA KUMAR T AGARWAL V. INCOME TAX OFFICER. IN VIEW OF THE ABOVE DECISION, IT IS STATED THAT THE ASSESSEE BE ALLOWED TO SET OFF CARRY FORWARD LOSS OF EARLIER YEAR RS. 36,99,924/ - OF AY 2005 - 06 AGAINST SHRI SAJJAN M. MAKHARIA ITA NO. 2762/MUM/2014 3 BUSINESS INCOME OF RS.16,05,120/ - OF AY 2006 - 07 DETERMINED BY THE INCOME TAX OFFICER AND BE ALLOW ED TO SET OFF OF INCOME AGAINST CARRIED FORWARD LOSS. 3. THERE HAS BEEN A DELAY OF TWO YEARS AND TEN MONTHS ON THE PART OF T HE ASSESSEE WHILE FILING APPEAL BEFORE THE CIT(A). IT IS FOUND THAT THE ASSESSEE HAS FILED AN AFFIDAVIT SHOWING THE FOLLOWING REASONS : I, SAJJAN MAKHARIA SON OF MITHULAL MAKHARIA 57 YEARS OF AGE, A HINDU INHABITANT OF MUMBAI SOLEMNLY AFFIRM AND DECLARE AS UNDER, I HAVE RECEIVED THE ORDER U/S 143(3) FOR THE AY 2006 - 07 ON 29.12.2008, THE ASSESSING OFFICER HAS TREATED CARRIED FORWARD LOSS OF AY 2005 - 06 OF DERIVATIVE TRANSACTION A SPECULATIVE LOSS AND NOT ALLOWED TO SET OFF THE INCOME FOR THE YEAR ENDING 31. 03.2006 FROM DERIVATIVE TRANSACTION TREATING THE SAME AS INCOME FROM BUSINESS. MY CHARTERED ACCOUNTANT ADVISED ME THAT MY APPEAL FOR AY 2005 - 06 CARRIED FORWARD LOSS OF DERIVATIVES AS BUSINESS LOSS FOR A.Y. 2005 - 06 . THE INCOME TAX DEPARTMENT HAS PREFERRED THE APPEAL BEFORE ITAT MUMBAI. THE ITAT MUMBAI VIDE ORDER DATED 21.05.2010 ALLOWED THE APPEAL OF INCOME TAX DEPARTMENT IN VIEW OF DECISION OF SPECIAL BENCH OF TRIBUNAL KOLKATA IN CASE OF SHREE CAPITAL SERVICES LTD. V. ACIT/(2009) 28 DTR (KOL.) SB TRI (1). I IMMEDIATELY APPROACHED MY CHARTERED ACCOUNTANT WHO HAS ARRANGED A MEETING WITH ADVOCATE HIGH COURT MS. VASATI B PATEL. THE ADVOCATE ADVICE TO FILE THE APPEAL IN HIGH COURT EXPECTING FAIR CHANCE OF WIN. AND I ACCORDINGLY FILED THE APPEAL IN MUMBAI HIGH CO URT. THE HONORABLE MUMBAI HIGH COURT VIDE THEIR JUDGMENT PRONOUNCED ON 20.10.2011 DISMISSED MY APPEAL. I HAVE RECEIVED THE COPY OF ORDER FROM MY ADVOCATE ON 15.11.2011. I IMMEDIATELY ON RECEIPT OF THE COPY OF ORDER, I HAVE FILED THE APPEAL BEFORE YOUR HON OR. SHRI SAJJAN M. MAKHARIA ITA NO. 2762/MUM/2014 4 SIR/MADAM, I UNDER GOOD FAITH AND BONAFIDE BELIEF DID NOT FILE THE APPEAL FOR AY 2006 - 07 AS PER THE ADVICE OF CHARTERED ACCOUNTANT AND ADVOCATE, TILL THE LAST HOPE WAS BROKEN AS PER THE HONORABLE MUMBAI HIGH COURT ORDER FOR AY 2005 - 06. I REQUEST YOUR HONOR FROM BOTTOM OF MY HEART TO KINDLY CONDONE THE DELAY IN FILING THE APPEAL BEING FOR REASONABLE CAUSE AND WITHOUT ANY MALAFIDE INTENTION. I HAVE SUFFERED VERY HEAVY FINANCIAL LOSS; MY ENTIRE FAMILY WAS DISTURBED FINANCIALLY AND MENTALLY. MOREOVER, MY ELDER SON WHO WAS ASSISTING ME IN BUSINESS ACTIVITIES HAS TO TAKE UP EMPLOYMENT. THE DEPONENT PRAYS AND URGES, MERCY AND FAVOR OF CONDONATION OF DELAY IN FILING THE APPEAL. I, SAJJAN MITHULAL MAKHARIA SOLEMNLY AFFIRM AND DECLARE THIS 7 TH DAY OF OCTOBER 2013 AT MUMBAI. 4. IN SUPPORT OF HIS CONTENTIONS FOR CONDONATION OF THE DELAY, THE LD. COUNSEL FILES A COPY OF THE DECISION IN THE CASE OF VIJAY VISHIN MEGHANI V. DCIT (2017) 86 TAXMANN.COM 98 (BOMBAY). IN THAT CASE IT IS HELD THAT WHERE ASSESSEE FILE D APPEAL BEFORE TRIBUNAL WITH A DELAY OF 2984 DAYS BY TAKING A PLEA THAT HE WAS WRONGLY ADVISED BY HIS CHARTERED ACCOUNTANT NOT TO FILE APPEAL, IN VIEW OF FACT THAT ASSESSEE PRODUCED AFFIDAVIT OF CHARTERED ACCOUNTANT IN SUPPORT OF HIS PLEA AND SAID AFFIDAV IT WAS NOT CONTESTED BY REVENUE AUTHORITIES, TRIBUNAL WAS NOT JUSTIFIED IN REFUSING TO CONDONE DELAY IN FILE THE APPEAL. IN THE INSTANT CASE, NO AFFIDAVIT OF THE CHARTERED ACCOUNTANT OR THE ADVOCATE HAS BEEN FILED. THUS THE PRESENT CASE IS DISTINGUISHAB LE FROM THE DECISION IN VIJAY VISHIN MEGHANI (SUPRA) RELIED ON BY THE LD. COUNSEL OF THE ASSESSEE. SHRI SAJJAN M. MAKHARIA ITA NO. 2762/MUM/2014 5 5 . IN THE CASE OF INDERCHAND D. KOCHAR V. ACIT , RELIED ON BY THE LD. DR, THE HONBLE MADRAS HIGH COURT VIDE ORDER DATED 03.08.2016 (TCA NO. 522, 523, 507, 5 08 AND 509 OF 2016 AND C.M.P. NO. 10444, 10445, 10118 AND 10119 OF 2016) HAS REFERRED TO THE DECISION OF THE HONBLE SUPREME COURT IN H. DOHIL CONSTRUCTIONS COMPANY PRIVATE LIMITED V. NAHAR EXPORTS LIMITED , REPORTED IN 2015 1 SCC 680 AND ESHA BHATTACHARJEE V. RAGHUNATHPUR NAFAR ACADEMY , REPORTED IN (2013) 12 SCC 649, WHICH ARE DISCUSSED INFRA . 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE REAS ONS FOR OUR DECISION ARE GIVEN BELOW. IN H. DOHIL CONSTRUCTIONS COMPANY PRIVATE LIMITED V. NAHAR EXPORTS LIMITED , (SUPRA) , THE HON'BLE SUPREME COURT, AFTER CONSIDERING ITS DECISION IN ESHA BHATTACHAR JEE V. RAGHUNATHPUR NAFAR ACADEMY , REPORTED IN (2013) 12 SCC 649 AT PARAGRAPH NO.23, HELD AS FOLLOWS: 23. WE MAY ALSO USEFULLY REFER TO THE RECENT DECISION OF THIS COURT IN ESHA BHATTACHARJEE ESHA BH ATTACHARJEE V. RAGHUNATHPUR NAFAR ACADEMY , REPORTED IN [2013] 12 SCC 649, WHERE SEVERAL PRINCIPLES WERE CULLED OUT TO BE KEPT IN MIND WHILE DEALING WITH SUCH APPLICATIONS FOR CONDONATION OF DELAY. PRINCIPLES (IV), (V), (VIII), (IX) AND (X) OF PARA 21 CAN B E USEFULLY REFERRED TO, WHICH READ AS UNDER: (SCC PAGES 658 - 59): 21.4(IV) NO PRESUMPTION CAN BE ATTACHED TO DELIBERATE CAUSATION OF DELAY BUT, GROSS NEGLIGENCE ON THE PART OF THE COUNSEL OR LITIGANT IS TO BE TAKEN NOTE OF. 21.5. (V) LACK OF BONA FIDES IMP UTABLE TO A PARTY SEEKING CONDONATION OF DELAY IS A SIGNIFICANT AND RELEVANT FACT. SHRI SAJJAN M. MAKHARIA ITA NO. 2762/MUM/2014 6 21.8. (VIII) THERE IS A DISTINCTION BETWEEN INORDINATE DELAY AND A DELAY OF SHORT DURATION OR FEW DAYS, TO THE FORMER DOCTRINE OF PREJUDICE IS ATTRACTED WHEREAS TO THE LATTE R IT MAY NOT BE ATTRACTED. THAT APART, THE FIRST ONE WARRANTS STRICT APPROACH WHEREAS THE SECOND CALLS FOR A LIBERAL DELINEATION. 21.9 (IX) THE CONDUCT, BEHAVIOUR AND ATTITUDE OF A PARTY RELATING TO ITS INACTION OR NEGLIGENCE ARE RELEVANT FACTORS TO BE TAK EN INTO CONSIDERATION. IT IS SO AS THE FUNDAMENTAL PRINCIPLE IS THAT THE COURTS ARE REQUIRED TO WEIGH THE SCALE OF BALANCE OF JUSTICE IN RESPECT OF BOTH PARTIES AND THE SAID PRINCIPLE CANNOT BE GIVEN A TOTAL GO - BY IN THE NAME OF LIBERAL APPROACH. 21.10. (X ) IF THE EXPLANATION OFFERED IS CONCOCTED OR THE GROUNDS URGED IN THE APPLICATION ARE FANCIFUL, THE COURTS SHOULD BE VIGILANT NOT TO EXPOSE THE OTHER SIDE UNNECESSARILY TO FACE SUCH A LITIGATION. 6.1 UNDER SECTION 24 6A OF THE ACT, APPEALS HAVE TO BE FILED BEFORE THE CIT(A), WITHIN A PERIOD OF 30 DAYS FROM THE DATE OF SERVICE OF ORDER APPEALED AGAINST . FOR CONDONING THE DELAY IN FILING THE APPEAL, IT MUST BE PROVED BEYOND DOUBT THAT THE ASSESSEE WAS DILIGENT AND NOT GUIL TY OF NEGLIGENCE WHATSOEVER. DUE DILIGENCE AND CAUTION ARE THE ESSENTIAL REQUIREMENTS. AN EXAMINATION OF THE AFFIDAVIT AT PARA 3 AGAINST THE BACKDROP OF THE RATIO LAID DOWN IN THE DECISIONS RENDERED BY THE HONBLE SUPREME COURT EXTRACTED AT PARA 6 HEREINBE FORE, LEAD US TO THE CONCLUSION THAT THE DELAY OF TWO YEARS AND 10 MONTHS IN FILING THE APPEAL BEFORE THE CIT(A) COULD NOT BE CONDONED. SHRI SAJJAN M. MAKHARIA ITA NO. 2762/MUM/2014 7 7. IN THE RESULT THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 /12/2018. SD/ - SD/ - (MAHAVIR SINGH) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 1 3 /12/2018 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (SR. PRIVATE SECRETARY) ITAT, MUMBAI