RAKHI ANANT SAWANT, MUMBAI V. ACIT-CIR 16(1), MUMBAI

ITA 2911/MUM/2022

AI Insights

Ms. Rakhi Anant Sawant appealed against the orders of the Commissioner of Income Tax (Appeals) for the assessment years 2013-14 and 2014-15, which confirmed various additions and disallowances made by the Assessing Officer. The appeals were initially delayed significantly due to the COVID-19 pandemic and the subsequent deaths of two tax advisors. The Tribunal found that the assessee was not given adequate opportunity to present her case before the CIT(A), as required by the principles of natural justice. Consequently, the Tribunal set aside the CIT(A)'s orders and remitted the case for a fresh hearing.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 301194 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 20-02-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 15-11-2022
• Other Referred Cases: Land Acquisition Collector vs. MST Katiji & Others 167 ITR 471 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Opportunity of being heard; Principle of natural justice; Period of limitation; Condonation of delay; Revised return; TDS; Set aside
• Section: 68; 80C; 143(3); 14A; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “D”, MUMBAI BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER ITA Nos.2911 & 2912/M/2022 Assessment Years: 2013-14 & 2014-15 Ms. Rakhi Anant Sawant, 4001, B-Wing, Behgind Oshiwara Bus Depot, Oshiwara, Mumbai – 400 104 PAN: AUMPS5377C Vs. ACIT, Cir.16(1) / 16(1)(5), Mumbai - 400021 (Appellant) (Respondent) Present for: Assessee by : Shri V.K. Tulsiyan, A.R. Revenue by : Smt. Mahita Nair, D.R. Date of Hearing : 21 . 02 . 2023 Date of Pronouncement : 28 . 02 . 2023 O R D E R Per : Kuldip Singh, Judicial Member: At the very outset it is brought to the notice of the Bench by the Ld. A.R. for the appellant, Ms. Rakhi Anant Sawant (hereinafter referred to as ‘the assessee’) that there is a delay of 1255 days in filing the present appeal and sought to condone the delay by moving application supported with an affidavit on the grounds inter-alia that the impugned order under appeal passed by the Ld. CIT(A) on 25.11.2019 was received by the assessee on 17.02.2020 from the office of her tax advisor but appeal could not ITA Nos.2911 & 2912/M/2022 Ms. Rakhi Anant Sawant 2 be filed before the Tribunal within 60 days due to Covid 19 pandemic; that thereafter brief was given to an another tax advisor to file the appeal who went back to his native place due to nationwide lockdown imposed on 24.03.2020 but did not return; that only on receipt of the demand notice the assessee came to know that the appeal to be filed against the impugned order has not been filed and started contacting his counsel but it came to her notice that during the second wave of Covid-19 he passed away due to pandemic; that thereafter the assessee engaged one Mr. Sunil Khanna, tax practitioner to file the appeal who after retrieving/reconstructing the record prepared the appeal but he also passed away on 16.08.2022; that thereafter the assessee with great difficulties located her brief only in the last week of October 2022 engaged new counsel and filed the appeal; that the delay in filing the aforesaid appeals are neither intentional nor malafide but due to unavoidable circumstances beyond her control. 2. However, on the other hand, the Ld. D.R. for the Revenue opposed the application for condonation of delay on the ground that the late filing of appeals in this case is apparently malafide due to callous attitude of the assessee and prayed for dismissal of the application. 3. Keeping in view the aforesaid contentions made by the assessee supported with an affidavit that due to sudden demise of two of her counsels due to Covid 19 appeals could not be filed within limitation and that due to onslaught of pandemic Hon’ble Supreme Court in suo-moto writ petition (Civil) No.3 of 2020 dated 08 th March 2021 extended the limitation of filing appeal/application ITA Nos.2911 & 2912/M/2022 Ms. Rakhi Anant Sawant 3 etc. from 15.03.2020 to 04.03.2021 and also ordered to extend the benefit of balance period of limitation remaining at the disposal of the appellant as on 15.03.2020. In these circumstances and keeping in view the sufficient cause proved on file by the assessee the delay of 1255 days in filing the present appeal is required to be condoned. 4. Moreover, when the delay in filing the appeal is examined in the light of the impugned order passed by the Ld. CIT(A) which is ex-parte it becomes more pertinent to condone the delay. Hon’ble Supreme Court in case of Land Acquisition Collector vs. MST Katiji & Others 167 ITR 471 (SC) held that “it is on contention of delay that when substantial justice and technical considerations are pitted against each other, the case of substantial justice deserves to be preferred, for the other side cannot claim to have a vested right in injustice being done because of a non deliberate delay.” Keeping in view the discussion made in the preceding paras, we are of the considered view that there is sufficient ground to condone the delay in filing the appeal, hence hereby condoned. Both the appeals are ordered to be registered and taken up for disposal on merits. 5. The assessee by filing the present appeals, sought to set aside the impugned orders even dated 25.11.2019 passed by Commissioner of Income Tax (Appeals), Mumbai [hereinafter referred to as the CIT(A)] qua the assessment years 2013-14 & 2014-15 on the grounds inter-alia that :- ITA No.2911/M/2022 for A.Y. 2013-14 “1. The Learned Commissioner of Income Tax (Appeals )-4, Mumbai [CIT(A)] erroneously confirmed the addition of Rs.9,29,529/- on account of professional fees without appreciating that assessment should have been made on the basis of revised return which was filed before notice was issued u/s 143(2) to the appellant. ITA Nos.2911 & 2912/M/2022 Ms. Rakhi Anant Sawant 4 2. The CIT(A) erroneously confirmed the addition of Rs.8,53,802/- made u/s 68 by the AO on account of difference in cash in hand shown in the original return and revised return without appreciating that assessment should have been made on the basis of revised return which was filed before notice was issued u/s 143(2) to the appellant. 3. The CIT(A) erroneously confirmed the disallowance of 20% of expenses of Rs.27,36,089/- made by AO on account of want of full verification and thereby upholding disallowance of further Rs.2,73,609/- (being 10% of Rs.27,36,089/-) in addition to 10% which had been suo-moto disallowed by appellant herself. 4. The CIT(A) erroneously confirmed the disallowance of depreciation of Rs. 2,49,005/- as made by the AO treating the premises as let out and in not appreciating the fact that the appellant had used the said premises for her business and had rightly claimed depreciation on the same. 5. The CIT(A) erroneously confirmed the disallowance of Rs. 4,01,312/- being interest on Gold Loan as made by AO and in not appreciating the fact that the appellant has used the Gold Loan for her business and rightly claimed interest on Gold Loan as business expense. 6. The CIT(A) erroneously confirmed the disallowance of interest on housing loan amounting to Rs. 13,00,542/- as made by the AO and in not appreciating the fact that the appellant has used 50% of the premises for her business and rightly claimed 50% of interest on housing loan availed as business expense. 7. The CIT(A) erroneously confirmed the disallowance of Rs.14,498/- out of disallowance of Rs.91,061/- made by the AO u/s 14A of the Act. The appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at, the time of hearing of the appeal.” ITA No.2912/M/2022 for A.Y. 2014-15 “1. The Learned Commissioner of Income Tax (Appeals )-4, Mumbai [CIT(A)] erroneously confirmed the following disallowances made by the AO: i. Depreciation on Office Premises and other depreciable fixed assets to the extent of Rs. 5,42,832/- ii. Interest on Gold Loan of Rs. 29,129/- iii. Bank Interest on Home Loan to the extent of Rs.12,92,957/- iv. Various genuine professional expenses to the extent of Rs.1,25,227/- ITA Nos.2911 & 2912/M/2022 Ms. Rakhi Anant Sawant 5 2. The CIT(A) erred on facts and in law in not allowing deduction of Rs.1,00,000/- u/s 80C in respect of repayment of Housing Loan to Bank of Baroda. The appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at, the time of hearing of the appeal.” 6. Briefly stated facts necessary for consideration and adjudication of the issues for A.Y. 2013-14 at hand are : assessee being an artist claimed her income from house property, loss from business and profession and income from other sources, filed her return of income for A.Y. 2013-14 at Rs.Nil after claiming loss of Rs.5,32,826/-. Thereafter, the assessee filed revised return of income declaring revised total income of Rs.52,72,910/- which was subjected to scrutiny. The assessee filed necessary details, clarification and explanations through her representative. Declining the contentions raised by the assessee the AO proceeded to make addition of Rs.72,51,676/- on account of professional fees, more particularly for non furnishing of any explanation or justification for variation in professional fees received. The AO also made addition on account of difference in cash in hand of Rs.8,53,802/- under section 68 of the Income Tax Act, 1961 (for short ‘the Act’). The AO also made disallowances of expenses inter-alia show production expenses, gym and fitness, cosmetic and surgery expenses etc. to the tune of Rs.2,73,609/-. The AO disallowed 20% of the aforesaid expenditure of Rs.27,36,089/- i.e. Rs.2,73,609/- on adhoc basis. The AO also disallowed depreciation claimed by the assessee on let out office premises to the tune of Rs.2,49,005/-. The AO disallowed interest on gold loan to the tune of Rs.4,01,312/-. The AO also disallowed interest on housing loan to the tune of Rs.13,00,542/-. The AO also made disallowance of Rs.91,061/- under section 14A of the Act. The AO also disallowed ITA Nos.2911 & 2912/M/2022 Ms. Rakhi Anant Sawant 6 an amount of Rs.38,125/- being the amount paid by the assessee in the form of interest on TDS and thereby framed the assessment at the total income of Rs.94,09,880/- under section 143(3) of the Act for A.Y. 2013-14. 7. In A.Y. 2014-15 the AO made an addition of Rs.5,42,832/- by way of disallowance on account of depreciation claimed on let out office premises inter-alia that disallowance of interest on gold loan to the tune of Rs.29,129/-; disallowance on interest on housing loan to the tune of Rs.12,92,957/-; disallowance to the tune of Rs.4,447/- under section 14A made addition on account of sundry creditor to the tune of Rs.4,72,000/- to that AO also made addition of Rs.67,416/- on account of wrong claim of audit fees and also made disallowance of Rs.1,25,227/- being the 20% of expenditure of Rs.6,26,134/- claimed by the assessee and thereby framed the assessment under section 143(3) of the Act at Rs.56,98,190/- for A.Y. 2014-15. 8. The assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has dismissed the appeals filed by the assessee for want of filing any submission as well as for want of prosecution. Feeling aggrieved with the impugned order passed by the Ld. CIT(A) the assessee has come up before the Tribunal by way of filing present appeals. 9. The Ld. D.R. for the Revenue contended that sufficient opportunities were given to the assessee but she has not preferred to put in appearance. ITA Nos.2911 & 2912/M/2022 Ms. Rakhi Anant Sawant 7 10. We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto. 11. At the very outset, it is brought to the notice of the Bench by the Ld. A.R. for the assessee that the impugned orders have been passed by the Ld. CIT(A) at the back of the assessee for which the assessee has not received any notice. 12. We have perused para 4 of both the appeals wherein it is categorically mentioned by the Ld. CIT(A) that opportunity of hearings were granted to the assessee on 13.11.2018, 13.09.2019, 27.09.2019, 23.10.2019 and 15.11.2019 for A.Y. 2013-14 and on 30.07.2019, 27.09.2019, 23.10.2019 and 11.11.2019 for A.Y. 2014-15 but none appeared on behalf of the assessee nor filed any written submissions. 13. Perusal of para 4 of both the appeals shows that it is nowhere brought on record by the Ld. CIT(A) as to what was the mode of getting service of assessee affected nor there is any satisfaction of the Ld. CIT(A) if the notices issued by him were duly served upon the assessee. 14. Keeping in view the fact that proceedings before the Ld. CIT(A) were not even faceless proceedings, in these circumstances, it was not difficult to get the notice served even through dasti. In these circumstances, we are of the considered view that adequate opportunity of being heard has not been given to ITA Nos.2911 & 2912/M/2022 Ms. Rakhi Anant Sawant 8 the assessee which is a sine qua non to pass a legally valid order as per principle of natural justice. To decide the issue once for all, to stop the multiplicity of proceedings and to provide adequate opportunity of being heard to the assessee the impugned orders passed by the Ld. CIT(A) are required to be set aside, hence set aside and remitted back to the Ld. CIT(A) to decide afresh after providing opportunity of being heard to the assessee. 15. Resultantly, both the appeals filed by the assessee are allowed for statistical purposes. Order pronounced in the open court on 28.02.2023. Sd/- Sd/- (GAGAN GOYAL) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 28.02.2023. * Kishore, Sr. P.S. Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The CIT (A) Concerned, Mumbai The DR Concerned Bench //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai.