M/S. J.D. AUTOMOBILES & ALLIED SERVICES PVT. LTD., CHENNAI V. ACIT, CC - 3 (2), CHENNAI

ITA 289/CHNY/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5808 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 05-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J PAVITHRAN KUMAR
• Assessee Lawyers: B RAMAKRISHNAN
• Keywords: Unexplained expenditure; Search and seizure; Principle of natural justice; Condonation of delay; Set aside
• Section: 142(1); 250

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . , . , & BEFORE SHRI V.DURGA RAO , JUDICIAL MEMBER AND SHRI G.MANJUNATHA, ACCOUNTANT MEMBER ./ I.T.A.NOS.289, 290 & 291/CHNY/2020 ( / ASSESSMENT YEARS: 2013-14 TO 2015-16) M/S.J.D.AUTOMOBILES & ALLIED SERVICES PVT. LTD., 90, MADHAVARAM HIGH ROAD, PERAMBUR, CHENNAI-600 011. VS THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3(2), CHENNAI PAN: AADCJ 2101M ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. B.RAMAKRISHNAN, FCA /RESPONDENT BY : MR. J.PAVITHRAN KUMAR , JCIT /DATE OF HEARING : 30.09.2020 /DATE OF PRONOUNCEMENT : 30.09.2020 / O R D E R PER G.MANJUNATHA, ACCOUNTANT MEMBER: THESE THREE APPEALS FILED BY THE ASSESSEE ARE DI RECTED AGAINST SEPARATE, BUT IDENTICAL ORDERS OF THE COM MISSIONER OF INCOME TAX (APPEALS)-19, CHENNAI DATED 27.09.2019 A ND THEY PERTAIN TO THE ASSESSMENT YEARS 2013-14, 2014-15 AND 2015-16. SINCE, FACTS ARE IDENTICAL AND ISSUES ARE COMMON, F OR THE SAKE OF CONVENIENCE THESE APPEALS WERE HEARD TOGETHER AND A RE BEING DISPOSED OFF, BY THIS CONSOLIDATED ORDER. 2. THE ASSESSEE HAS MORE OR LESS RAISED COMMON GROU NDS OF APPEAL FOR ALL THE ASSESSMENT YEARS. THEREFORE, FOR THE SAKE OF 2 ITA NOS.289 TO 291/CHNY/2020 BREVITY, THE GROUNDS OF APPEAL FILED FOR THE ASSESS MENT YEAR 2013-14 ARE REPRODUCED AS UNDER:- 1. FOR THAT THE ORDER OF THE LEARNED COMMISSION ER OF INCOME TAX (APPEALS) - 19, CHENNAI U/S. 250 OF THE INCOME TAX ACT, 1961 IS OPPOSED TO LAW, FACTS AND CIRCUMSTANCES OF THE CASE AND THE PRINCIPLES OF NATURAL JUSTICE. 2. FOR THAT THE LEARNED COMMISSIONER OF INCOME T AX (APPEALS) ERRED IN DISMISSING THE APPEAL FOR NON-PROSECUTION PLACING RELIANCE ON THE DECISION OF DELHI TRIBUNAL IN THE C ASE OF CIT V. MIS MULTIPLAN INDIA (P) LTD IN [1991] 38 ITD 320 (D ELHI). 3. FOR THAT THE LEARNED COMMISSIONER OF INCOME T AX (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.72,000/- MAD E BY THE ASSESSING OFFICER ON ACCOUNT OF INCENTIVE PAYABLE T O DEALER STATING THAT THE SAME IS NOT RECORDED AND PAID TO D EALER. 4. FOR THAT THE LEARNED COMMISSIONER OF INCOME T AX (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.7,37,660/- M ADE BY THE ASSESSING OFFICER ON ACCOUNT OF PROCESSING FEE RECE IVED STATING THAT THE SAME IS NOT ADMITTED. 5. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.1 ,20,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LATE FEE COL LECTED FROM CUSTOMERS STATING THAT THE SAME IS NOT RECORDED IN BOOKS. 6. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.1, 29,821/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED EXPENDITURE TOWARDS SALARY. 7. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.1, 03,965/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF AMOUNTS RECE IVED TOWARDS OTHERS STATING THAT THE SAME WAS NOT OFFERE D TO TAX. 8. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE LEVY OF INTEREST U/S 234A CONSEQUENT TO THE ABOVE ADDITIONS. 3 ITA NOS.289 TO 291/CHNY/2020 3. AT THE TIME OF HEARING, THE AUTHORIZED REPRES ENTATIVE FOR THE ASSESSEE SUBMITTED THAT THERE IS A DELAY OF 71 DA YS IN FILING OF ALL THESE APPEALS BEFORE THE TRIBUNAL FOR WHICH NECE SSARY PETITION ALONG WITH SWORN AFFIDAVIT HAS BEEN FILED FOR C ONDONATION OF DELAY. THE LEARNED AR FOR THE ASSESSEE REFERRING TO THE AFFIDAVIT FILED BY THE ASSESSEE SUBMITTED THAT DELAY IN FILING OF APP EALS BEFORE THE TRIBUNAL IS DUE TO INADVERTENT MISTAKE OF THE COUNSEL OF THE ASSESSEE, WHO HANDLED TAX MATTERS BEFORE THE ASSE SSING OFFICER AS WELL AS THE LEARNED CIT(A). THE LEARNED AR FURT HER SUBMITTED THAT THE LEARNED CIT(A) HAS DISMISSED THE APPEALS FILED BY THE ASSESSEE EX-PARTE, FOR NON-APPEARANCE OF THE ASS ESSEE ON THE DATE OF HEARING AND SERVED THE ORDER THROUGH E-M AIL ID GIVEN IN THE MEMO OF APPEAL, WHICH WAS NOT FOLLOWED UP / ADDRE SSED BY THE PERSON IN-CHARGE FOR FINANCE & TAXATION OF THE AS SESSEE COMPANY. FURTHER, THE ASSESSEE HAS CHANGED HIS C OUNSEL DURING SEPTEMBER, 2019 AND THIS ISSUE WAS HANDED OVER TO NEW COUNSEL FOR RESOLVING THE TAX DISPUTE AND AT THAT TIM E, THE COUNSEL CAME TO KNOW THAT THE APPEALS WERE NOT FILED AGAINST THE ORDERS OF LEARNED CIT(A). SUBSEQUENTLY, ON TAKING STOCK OF P ENDING LITIGATION AND ON VERIFYING THE STATUS, THE ASSESSEE HAS TAK EN IMMEDIATE STEPS AND FILED APPEALS ON 05.02.2020 BEFORE THE T RIBUNAL WITH A 4 ITA NOS.289 TO 291/CHNY/2020 DELAY OF 71 DAYS. HE FURTHER SUBMITTED THAT THE DE LAY IN FILING OF APPEALS WAS BEYOND THE CONTROL OF THE ASSESSEE A ND NOT FILING WITHIN TIME THE ASSESSEE DID NOT DERIVE ANY B ENEFIT, THEREFORE IN THE INTEREST OF JUSTICE AND EQUITY, THE DELAY IN FILING APPEALS MAY BE CONDONED TO ADVANCE SUBSTANTIAL JUSTICE. 4. THE LEARNED DR, ON THE OTHER HAND, STRONGLY OP POSING THE PETITION FILED BY THE ASSESSEE FOR CONDONATION OF DELAY SUBMITTED THAT REASONS GIVEN BY THE ASSESSEE FOR DELAY IN F ILING OF APPEALS DOES NOT COME UNDER THE PURVIEW OF REASONABLE AN D BONAFIDE CAUSE AND ACCORDINGLY, THE DELAY IN FILING OF APP EALS MAY NOT BE CONDONED. 5. WE HAVE HEARD BOTH SIDES AND PERUSED THE PE TITION FILED BY THE ASSESSEE FOR CONDONATION OF DELAY IN FILING OF APPEALS. ON PERUSAL OF THE REASONS OFFERED BY THE ASSESSEE FOR NOT FILING THE APPEAL WITHIN THE TIME ALLOWED UNDER THE ACT, WE F IND THAT THE DELAY IN FILING OF APPEALS IS MAINLY BECAUSE OF MISHA NDLING OF TAX PROCEEDINGS BEFORE THE AUTHORITIES BY THE EARLIER CONSULTANT, WHO HAD HANDLED THE TAX MATTERS OF THE ASSESSEE FOR WHICH THE ASSESSEE CANNOT BE PENALIZED. THEREFORE, TAKING NOTE OF OVERALL FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO CO NSIDERING THE 5 ITA NOS.289 TO 291/CHNY/2020 REASONS GIVEN BY THE ASSESSEE, WE DEEM IT APPROPRI ATE TO CONDONE THE DELAY IN FILING APPEALS TO DECIDE THE ISSUES ON MERITS. ACCORDINGLY, THE DELAY IN FILING OF APPEALS IS CONDONED AND APPEALS OF THE ASSESSEE ARE ADMITTED FOR HEARIN G. 6. THE BRIEF FACTS OF THE CASE AS COLOURED OUT FR OM APPEAL FOR ASSESSMENT YEAR 2013-14 ARE THAT THE ASSESSEE I S A PRIVATE LIMITED COMPANY WHICH IS ENGAGED IN THE BUSINESS OF FINANCING TWO WHEELERS SOLD THROUGH ITS GROUP CONCERNS NAME LY M/S. KAMAKSHI MOTORS, M/S.KRITHIK MOTORS AND M/S, ENKAY MOTORS. A SEARCH AND SEIZURE OPERATION U/S.132 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS CONDU CTED ON THE BUSINESS PREMISES OF THE ASSESSEE ALONG WITH RESID ENTIAL PREMISES OF THE DIRECTOR ON 28.01.2015. CONSEQUENT TO SEA RCH, CASE WAS TAKEN UP FOR ASSESSMENT AND ACCORDINGLY NOTICE U/ S.153A OF THE ACT. IN RESPONSE TO NOTICE, THE ASSESSEE HAS FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.3,53,221/-. SUBSEQUENT LY, THE CASE WAS TAKEN UP FOR SCRUTINY ASSESSMENT AND NOTICE U/S.1 43(2) AND 142(1) OF THE ACT WERE ISSUED CALLING FOR VARIOUS DETAIL S INCLUDING BOOKS OF ACCOUNTS ALONG WITH RELEVANT DOCUMENTS TO VERIF Y THE INFORMATION CONTAINED IN THE ELECTRONIC DEVICES AND LEDGERS SEIZED DURING THE COURSE OF SEARCH. THE ASSESSING OFFICER HAD ALSO REQUESTED FOR 6 ITA NOS.289 TO 291/CHNY/2020 PRODUCTION OF BANK ACCOUNTS OF THE ASSESSEE MAINTA INED WITH UNITED BANK OF INDIA. THE ASSESSEE NEITHER APPEA RED BEFORE THE ASSESSING OFFICER NOR FILED DETAILS CALLED FOR DU RING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER LE FT WITH NO OPTION HAS COMPLETED THE ASSESSMENT BASED ON THE MATERIALS AVAILABLE ON RECORD AND MADE VARIOUS ADDITIONS INCLUDING ADDITIONS TO INCENTIVE PAYABLE TO DEALER COLLECTE D BUT NOT RECORDED AND PAID TO DEALER, PROCESSING FEE AMOUN T RECEIVED FROM CUSTOMERS BUT NOT RECORDED IN BOOKS, UNEXPLAINED EXPENDITURE AND AMOUNTS COLLECTED TOWARDS OTHERS BUT NOT OFFE RED TO TAX. 7. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE CIT(A). BEFORE THE LEARNED CIT(A) AL SO, THE ASSESSEE NEITHER APPEARED NOR FILED ANY DETAILS TO JUSTI FY ITS CASE, WHICH IS EVIDENT FROM THE FACT THAT DESPITE SIX OPPORTUNITY OF HEARINGS WAS PROVIDED TO THE ASSESSEE, THERE WAS NO RESPONSE FRO M THE ASSESSEE TO AVAIL OPPORTUNITY TO FILE THE DETAILS. THEREFOR E, THE LEARNED CIT(A) HAS PROCEEDED TO PASS EX-PARTE ORDER BY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS.B.N .BHATTACHARJEE AND ANOTHER (118 ITR 461) AND DISMISSED THE APPEAL FILED BY THE ASSESSEE IN LIMINE . THE LEARNED CIT(A) HAS ALSO REJECTED VARIOUS GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ON ADDITION S MADE BY THE 7 ITA NOS.289 TO 291/CHNY/2020 ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE HAS NOT FILED ANY EXPLANATION OR MATERIAL / DOCUMENTARY EVIDENCE AT T HE TIME OF APPELLATE PROCEEDINGS AND EVEN DURING THE ASSESSMEN T PROCEEDINGS. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 8. THE LEARNED AR FOR THE ASSESSEE SUBMITTED THAT THE LEARNED CIT(A) HAS DISMISSED APPEALS FILED BY THE ASSESSEE EX-PARTE, WITHOUT DISCUSSING THE ISSUES ON MERITS IN A HURRI ED MANNER FOR NON- APPEARANCE OF THE ASSESSEE ON GIVEN DATES OF HEARI NG, BUT THE FACT REMAINS THAT THE COUNSEL FOR THE ASSESSEE HAD FILE D A LETTER REQUESTING FOR DATE, BUT THE CIT(A) HAS IGNORED TH E ADJOURNMENT SOUGHT BY THE ASSESSEE AND DISMISSED THE APPEALS E X-PARTE. THEREFORE, THE ORDER OF THE CIT(A) MAY BE SET ASIDE TO GIVE ONE MORE OPPORTUNITY OF HEARING TO THE ASSESSEE TO FILE NECESSARY EVIDENCE TO DEFEND ITS CASE. 9. THE LEARNED DR, ON THE OTHER HAND, STRONGLY SUP PORTING THE ORDER OF THE CIT(A) SUBMITTED THAT THE FACTS BROUGH T OUT BY THE LEARNED CIT(A) CLEARLY INDICATE THAT THE ASSESSEE W AS NON- COOPERATIVE TO THE PROCEEDINGS BEFORE THE CIT(A) A S WELL AS ASSESSING OFFICER. FROM THE ABOVE, IT IS VERY CLEAR THAT THE ASSESSEE 8 ITA NOS.289 TO 291/CHNY/2020 IS NOT INTERESTED IN PURSUING ITS CASE AND HENCE TH ERE IS NO NEED TO GIVE ANOTHER OPPORTUNITY TO THE ASSESSEE BEFORE THE ASSESSING OFFICER. 10. WE HAVE HEARD BOTH PARTIES, PERUSED THE MATERI AL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS WELL SETTLED PRINCIPLES OF LAW THAT A PERSON, WHO FILED APPEAL SHALL GO TO THE AUTHORITIES AND JUSTIFY ITS CASE ALONG WITH NE CESSARY EVIDENCE. IN CASE, THE ASSESSEE DOES NOT CHOOSE TO APPEAR BEFORE THE AUTHORITIES, THEN THE AUTHORITIES ARE LEFT WITH NO OTHER OPTION BUT TO PROCEED TO PASS AN ORDER IN ACCORDANCE WITH LAW ON THE BASIS OF MATERIALS AVAILABLE ON RECORD, BUT, AT THE SAME TIM E, THE AUTHORITIES ARE BOUND TO DISPOSE OF THE APPEAL FILED BY THE ASS ESSEE ON MERITS ON THE BASIS OF MATERIALS AVAILABLE ON RECORD. IN THIS CASE, ON A PERUSAL OF THE ORDER PASSED BY THE LEARNED CIT(A), WE FIND THAT THE CIT(A) HAS DISMISSED THE APPEALS FILED BY THE ASSES SEE EX-PARTE IN LIMINE WITHOUT DISCUSSING THE ISSUES ON MERITS. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE APPEALS NEED TO GO BAC K TO THE FILE OF CIT(A) TO GIVE ONE MORE OPPORTUNITY OF HEARING TO T HE ASSESSEE TO FILE NECESSARY EVIDENCES AND TO DECIDE THE ISSUES INVOLVED IN THE APPEALS ON MERITS. HENCE, WE SET ASIDE THE ORDERS O F THE LEARNED CIT(A) AND RESTORE THE APPEALS BACK TO THE FILE OF THE CIT(A) TO 9 ITA NOS.289 TO 291/CHNY/2020 DECIDE THE ISSUES ON MERITS. NEEDLESS TO SAY, THE A SSESSEE SHALL GO AND FILE NECESSARY EVIDENCES WITHOUT SEEKING ANY FU RTHER ADJOURNMENTS. IN CASE, THE ASSESSEE CHOOSES NOT T O APPEAR BEFORE THE LEARNED CIT(A), THEN THE APPELLATE AUTHORITY IS AT LIBERTY TO DECIDE THE APPEALS IN ACCORDANCE WITH LAW. 11. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E FOR ALL THE ASSESSMENT YEARS ARE ALLOWED FOR STATISTICAL PURPOS ES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH SEPTEMBER, 2020 SD/- S D/- ( . ) ( . ) (V.DURGA RAO) ( G.MANJUNATHA ) $ & / JUDICIAL MEMBER & / ACCOUNTANT MEMBER $ /CHENNAI, ) /DATED 30 TH SEPTEMBER, 2020 DS +, -, /COPY TO: 1. APPELLANT 2. RESPONDENT 3. . () /CIT(A) 4. . /CIT 5. , 2 /DR 6. /GF .