M/S PHOENIX DEVCONS PVT. LTD., Indore V. THE ACIT4 (1), Indore

ITA 280/Ind/2021

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 1052 (ITAT-INDORE)
• Duration Of Justice: 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 27-12-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reasonable cause; Liquidation
• Section: 271(1)(c); 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE MS. SUCHITRA R. KAMBLE, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER (Conducted through Virtual Court) ITA No.279 to 281/Ind/2021 Assessment Year: 2008-09 & 2009-10 M/s. Phoenix Devcons Pvt. Ltd. Indore Vs. ACIT-4(1) Indore (Appellant / Assessee) (Respondent/ Revenue) PAN: AAECP3934B Assessee by Shri Anil Kamal Garg & Shri Arpit Gaur, ARs Revenue by None Date of Hearing 25.08.2022 Date of Pronouncement 30.08.2022 O R D E R Per Bench: 1. These appeals filed by assessee are of two types, (i) Quantum- Appeals i.e. ITA No. 280/Ind/2021 and ITA No. 281/Ind/2021 are against two separate orders passed by Ld. CIT(A)-II, Indore [“Ld. CIT(A)”], both dated 29.11.2018, arising out of a single consolidated assessment-order dated 30.12.2017 passed by Ld. ACIT, Circle-(1), Indore [“Ld. AO”] u/s 254 read with section 143(3) of the Income-tax Act, 1961 [“the act”] for assessment-year [“AY”] 2008-09 and 2009-10; and (ii) Penalty-Appeal i.e. ITA No. 279/Ind/2021 is against the order passed by Ld. CIT(A)-II, Indore [“Ld. CIT(A)”] dated 22.06.2017, arising out of penalty-order dated 27.03.2015 passed by Ld. ACIT-4(1), Indore [“Ld. AO”] u/s 271(1)(c) of the act for AY 2008-09. The Quantum-Appeals emanate from a single consolidated assessment-order and Penalty-Appeal is also closely-related, therefore we have heard these appeals together and proceed to decide by ITA No.279 TO 280/Ind/2021 M/s. Phoenix Devcons Pvt. Ltd. A.Y. 2008-09 & 2009-10 Page 2 of 10 this common-order for the sake of an easy referencing and convenient understanding. 2. These appeals are required to be argued by CIT-DR from revenue side, but when the matters were called for hearing, none appeared on behalf of revenue. It is observed that the revenue has been seeking regular adjournments. Vide 1 st letter dated 12.08.2022, adjournments have been sought for cases fixed on 16.08.2022 to 18.08.202 on medical-ground of Ld. CIT-DR. Thereafter, vide 2 nd letter dated 18.08.2022 (accompanied by a certificate of Dr. Manish Nema), adjournments have been sought for cases fixed on 22.08.2022 to 23.08.2022 on medical-ground. Again vide 3 rd letter dated 23.08.2022, adjournments have been sought for the cases fixed on 24.08.2022 to 25.08.2022 on medical-ground and in the same letter it is also mentioned that the charge had been given to a different CIT-DR, but interestingly it is also mentioned that the new CIT-DR is attending training at IIM, Ahmedabad and therefore unable to represent. It is also observed that in the 2 nd letter dated 18.08.2022 and 3 rd letter dated 23.08.2022, although request has been made to grant adjournments in “following cases” or “cases as per list” but no details of cases for which adjournments were required is actually furnished. The revenue has not taken care to make a suitable arrangement to represent its cases. Initially for a few days, the ITAT has allowed adjournment-requests but thereafter it was not possible to entertain such requests any more due to discomfort to the litigants and their counsels. Therefore, the adjournment-request of revenue is not accepted in these appeals. We proceed to dispose of the appeal after hearing the Ld. AR and material available on record. 3. The Registry has informed that these appeals are filed after expiry of prescribed period of 60 days and therefore time-barred. Ld. AR submitted that the assessee-company has filed condonation-applications supported by duly-sworn affidavit, seeking condonation of delay. Ld. AR submitted that the assessee-company was engaged in the business of real-estate and it developed one colony named “Phoenix Town”. Unfortunately, during the period from 2014 to 2016, the plot-buyers filed several FIRs and ITA No.279 TO 280/Ind/2021 M/s. Phoenix Devcons Pvt. Ltd. A.Y. 2008-09 & 2009-10 Page 3 of 10 complaints against the company and its directors, which led to extreme adversities; the financial affairs and legal matters came to a hault; all functionaries of the assessee-company underwent trauma and pressure from the society; and finally the office of the assessee-company too closed in the year 2017. Ld. AR submitted that the key-director and functionary of the assessee-company, Shri Ritesh Ajmera got arrested in the year 2016, followed by arrest of its accountant in the year 2017. Thereafter, they were bailed, re-arrested, etc. and final release of Shri Ritesh Ajmera happened in the year 2021. Ld. AR submitted that the evidences supporting these incidents are placed on record. Ld. AR submitted that owing to such untoward developments all through, the notices, correspondences, orders, etc. from various departments including income- tax could not reach to the company / its functionaries and none of the compliances of laws could be made. Ld. AR submitted that it is post- release in the year 2021 that Shri Ritesh Ajmera was able to undertake the pending litigation-matters of the company and synchronise for filing of appeals. Ld. AR pointed out that at present, the assessee-company is under liquidation. Ld. AR submitted that the delay in filing of appeals is due to such onerous circumstances and not because of any lethargy, negligence or mala fide intention. Ld. AR submitted that by making delay in filing appeals, the assessee-company does not stand to derive any benefit, rather it is suffering. Placing reliance upon the decision of Hon’ble Supreme Court in Collector, Land Acquisition Vs Mst. Katiji and others 1987 AIR 1353, 1987 2 SCC 387, Ld. AR prayed to take a judicious view qua the assessee-company, condone delay and proceed with appeals. 4. In the case of Collector, Land Acquisition vs Mst. Katiji (Supra), the Hon'ble Supreme Court held: “The expression ‘sufficient cause’ employed by the legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice -- that being the life-purpose for the existence of the institution of Courts.” ITA No.279 TO 280/Ind/2021 M/s. Phoenix Devcons Pvt. Ltd. A.Y. 2008-09 & 2009-10 Page 4 of 10 The Hon’ble Court also made following observations: “1. Ordinarily a litigant does not stand to benefit by lodging an appeal late. 2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is con- doned the highest that can happen is that a cause would be decided on merits after hearing the parties. 3. "Every day's delay must be explained" does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common sense pragmatic manner. 4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. 5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk. 6. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.” 5. In the instant case, applying the same principles set out by Hon’ble Supreme Court, we find that there is no culpable negligence or malafide intention on the part of the assessee-company in delayed filing of present appeals. We also observe that position of company had worsened year- after-year due to adverse extremities to the extent that assessee-company has reached to liquidation stage. We do not find anything on record to suggest that there was a deliberate attempt to take any kind of benefit by late filing. Therefore, in such circumstances, we find that there exists sufficient and reasonable cause for condoning the delay and as held by the Hon’ble Supreme Court, where substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserved to be preferred. In the light of aforesaid discussions on ITA No.279 TO 280/Ind/2021 M/s. Phoenix Devcons Pvt. Ltd. A.Y. 2008-09 & 2009-10 Page 5 of 10 factual aspects pointed out by Ld. AR and in exercise of powers under section 253(5) of the Income-tax Act, 1961, we hereby condone the delay in filing present appeals and proceed to adjudicate on merits. Facts in brief: 6. The assessee filed return of AY 2008-09 and AY 2009-10 at a total income of Rs. Nil and Rs. Nil respectively, which were originally assessed vide 1 st assessment-order dated 30.12.2011 u/s 153A at a total income of Rs. 86,53,75,685/- and Rs. 22,79,31,112/- respectively. The assessee carried matters in appeal to Ld. CIT(A) and got part-relief. Against the orders of Ld. CIT(A), both the assessee and revenue went in appeals to ITAT, Indore in Appeal No. IT(SS)A Nos. 197 & 198/Ind/2013 and IT(SS)A Nos. 252 & 253/Ind/2013, which were decided by ITAT vide order dated 18.05.2016 u/s 254 wherein further relief was granted on some issues and some issues were set aside to Ld. AO for a fresh adjudication. In pursuance of the order of ITAT, the Ld. AO passed a 2 nd assessment-order dated 30.12.2017 for AY 2008-09 and 2009-10 at a total income of Rs. 7,39,84,151/- and Rs. 5,92,44,976/- respectively. Against this 2 nd assessment-order, the assessee filed appeals to Ld. CIT(A)-II, Indore, who decided appeals vide order dated 29.11.2018 whereby the appeals of assessee have been dismissed. Now, the assessee has filed Quantum- Appeals against the order dated 29.11.2018 of Ld. CIT(A). In the intervening period, Ld. AO has also passed a penalty-order u/s 271(1)(c) on 27.03.2015 for AY 2008-09 on the basis of additions made in the 1 st assessment-order dated 30.12.2011 as modified consequent upon appeal- order of Ld. CIT(A). The assessee filed appeal against penalty-order to Ld. CIT(A), who decided appeal vide order dated 22.06.2017 without giving any relief. Now the assessee has filed Penalty-Appeal against the order dated 22.06.2017 of Ld. CIT(A). Quantum-Appeals: ITA No.279 TO 280/Ind/2021 M/s. Phoenix Devcons Pvt. Ltd. A.Y. 2008-09 & 2009-10 Page 6 of 10 7. Ld. AR drew our attention to the impugned order dated 29.11.2018, passed by Ld. CIT(A), where the Ld. CIT(A) has dismissed the appeals filed by assessee by observing as under: “2. The case was fixed/adjourned is not hearing on 05.04.2018, 26.07.2018, 23.08.2018, 11.09.2018 & 29.11.2018. On the dates of hearing neither anybody attended nor filed any written submission. 2.1 It seems that the appellant is not interested to pursue its appeal. Therefore, this appeal cannot be kept pending adjudication for indefinite period. Mere filing of appeal is not enough rather it requires effective prosecution also. The assessee has also not filed any information with this office. In view of these facts, I am of the considered view that the appeal of the assessee is liable to be dismissed. This view is supported by many judicial pronouncements which are as under: i. CIT vs. B.No. Bhattachargee 118 ITR 461 ii. Estate of Late Tukojirao Holkar vs. CWT 223 ITR 480 iii. CIT vs. Multiplan India ltd. 38 ITD 320 (Del) 2.2 However, in the interest of natural justice, I have gone through the assessment order and grounds of appeal. After taking into account the totality of the facts and circumstances of the case, grounds of appeal at Sr. No. 1 to 9 of grounds of appeal are hereby dismissed for the reasons that the facts and findings brought out by the Assessing Officer in the assessment order have not been controverted by the appellant. Therefore, the Assessing Officer has been found justified in making the various additions as per the assessment order. Therefore, all the grounds of appeal are dismissed.” 8. Analysing above paras, Ld. AR submitted that the Ld. CIT(A) has dismissed the appeals of assessee for the simple reason of non- prosecution. Ld. AO also submitted that although in Para No. 2.2, Ld. CIT(A) has tried to demonstrate as if he were disposing grounds on merit, but the same is not a disposal on merits, it is essentially a dismissal of assessee’s grounds due to non-prosecution and non-representation. 9. Then, Ld. AR re-emphasised the onerous circumstances faced by the assessee-company for so many years, which we have already narrated in earlier paragraph while condoning the delay in filing of appeals and do ITA No.279 TO 280/Ind/2021 M/s. Phoenix Devcons Pvt. Ltd. A.Y. 2008-09 & 2009-10 Page 7 of 10 not wish to repeat now for the sake of brevity. Ld. AR submitted that due to the very same reasons, the assessee-company was prevented from making representations before the Ld. CIT(A). Ld. AR made a humble pray that (i) having regard to the factual matrix of onerous circumstances; (ii) the fact that Ld. CIT(A) has dismissed the appeals of assessee instead of making a proper adjudication of the grievances on merits; (iii) to grant a substantial justice; and (iv) to enable a fair and proper assessment in accordance with law, an opportunity must be given to the assessee by remanding these appeals back to Ld. CIT(A) so that the assessee can submit all necessary details / documents to Ld. CIT(A) and Ld. CIT(A) can take a judicious view in accordance with law. Ld. AR further assured that the assessee will co-operate the department and submit the details and documents as required. 10. We have heard the submissions of Ld. AR and find much weightage. After a careful consideration of the facts and keeping in view the objective to grant a substantial justice and allow fair play to both sides, we are not inclined to decide these appeals on merits. At this stage, we feel it more appropriate to remand these cases back to Ld. CIT(A) who would grant adequate opportunities to the assessee to provide necessary details / documents, consider the submissions of assessee and take a well- reasoned decision on merits of the issues in accordance with law. We also direct the assessee to co-operate the Ld. CIT(A) and supply all details / documents required by him without seeking unnecessary adjournments, failing which the Ld. CIT(A) would take a decision on the basis of available material on record. We order accordingly. Penalty-Appeals: 11. Ld. AR carried us to the impugned order dated 22.06.2017, passed by Ld. CIT(A), where the Ld. CIT(A) has observed as under: “3. The case was fixed/adjourned for hearing on 25.11.2016, 28.04.2017, 19.05.2017 and 22.06.2017 and notices were returned unserved on the given address. On the dates of ITA No.279 TO 280/Ind/2021 M/s. Phoenix Devcons Pvt. Ltd. A.Y. 2008-09 & 2009-10 Page 8 of 10 hearing neither the case was represented personally/through counsel nor any written submission were filed. 3.1 It seems that the assessee is not interested to pursue its appeal. Therefore this appeal cannot be kept pending adjudication for indefinite period. Mere filing of appeal is not enough rather it requires effective prosecution also. The assessee has also not filed any information with this office. In view of these facts, I am of the considered view that the appeal of the assessee is liable to be dismissed. This view is supported by many judicial pronouncements which are as under: i. CIT vs. B.No. Bhattachargee 118 ITR 461 ii. Estate of Late Tukojirao Holkar vs. CWT 223 ITR 480 iii. CIT vs. Multiplan India ltd. 38 ITD 320 (Del)” 12. Ld. AR thereafter carried us to subsequent paragraph No. 3.2 to 4.3 of the order of Ld. CIT(A) and submitted that although the Ld. CIT(A) has tried to demonstrate as if he were disposing appeal on merit, but the same is not an effective disposal on merit. Then, the Ld. AR re-iterated the onerous circumstances, as discussed earlier, faced by the assessee- company due to which it could not make representation before Ld. CIT(A). 13. Besides above, the Ld. AR also invited our attention to one more legal-cum-factual mistake in the impugned order dated 22.06.2017 passed by Ld. CIT(A). Ld. AR submitted that the order imposing penalty was passed by Ld. AO on 27.03.2015, on the basis of 1 st assessment-order dated 30.12.2011. While passing this penalty-order, the Ld. AO has taken into account the relief granted by Ld. CIT(A) but not taken into account the relief granted by ITAT in order dated 18.05.2016 in first round of litigation. According to Ld. AR, the Ld. CIT(A) has also not considered this aspect in its order 22.06.2017. The Ld. AR went on making further submission that as of now, the 2 nd assessment-order passed by Ld. AO consequent upon the order of ITAT dated 18.05.2016 has also reached to this ITAT in the aforesaid ITA No. 280/Ind/2021 for AY 2008-09. Therefore, the Penalty-Order would require a thorough re-visit by Ld. CIT(A) based on final outcome in Quantum-Appeal. ITA No.279 TO 280/Ind/2021 M/s. Phoenix Devcons Pvt. Ltd. A.Y. 2008-09 & 2009-10 Page 9 of 10 14. With aforesaid submissions, Ld. AR prayed that in all fitness, it would be better to remand the Penalty-Appeal also to Ld. CIT(A). 15. On a careful consideration of the submission of Ld. AR and on perusal of relevant records, we are satisfied that the present case involves penalty u/s 271(1)(c) which is closely-linked with the finality of assessment. Since we are remanding Quantum-Appeals to Ld. CIT(A) in preceding paragraphs, it would be more appropriate to remand the Penalty-Appeal also to Ld. CIT(A), who could decide penalty-matter perfectly based on the outcome and findings in quantum-proceeding. We order accordingly. 16. In the final result, all three appeals of assessee are allowed for statistical purpose. Order pronounced as per Rule 34 of I.T.A.T. Rules 1963 on 30.08.2022 Sd/- Sd/- (SUCHITRA KAMBLE) (B.M. BIYANI) Judicial Member Accountant Member Indore, Dated : 30.08.2022 Patel/ Sr. P.S. Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore 1. Date of taking dictation ITA No.279 TO 280/Ind/2021 M/s. Phoenix Devcons Pvt. Ltd. A.Y. 2008-09 & 2009-10 Page 10 of 10 2. Date of typing & draft order placed before the Dictating Member 3. Date on which the approved draft comes to the Sr. P.S./P.S. 4. Date on which the fair order is placed before the Dictating Member for pronouncement 5. Date on which the file goes to the Bench Clerk 6. Date on which the file goes to the Head Clerk 7. Date on which the file goes to the Assistant Registrar for signature on the order 8. Date of dispatch of the Order