EPIC ENZYMES PHARMACEUTICALS & INDL CHEMICALS LTD, MUMBAI V. ACIT 10(3), MUMBAI

ITA 2973/MUM/2014

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 3669 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 30-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR SONI
• Assessee Lawyers: V M CHAVDA
• Keywords: Principle of natural justice; Set aside
• Section: 271(1)(c); 40A(3); 143(3); 271D; 271E

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E, BENC H MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMB ER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBE R ITA NO.2973/MUM/2014 ( ASSESSMENT YEAR :2009-10 ) EPIC ENZYMES PHARMACEUTICALS & INDUSTRIAL CHEMICALS LTD. 514, PERSEPOLIS, SECTOR-7 NAVI MUMBAI- 400 703 VS. ACIT-10(3) ROOM NO.451, 4 TH FLOOR AAYKAR BHAWAN M.K.ROAD MUMBAI-400 020 PAN/GIR NO. A A ACE1137H APPELLANT ) .. R ESPONDENT ) ASSESSEE BY V.M.CHAVDA REVENUE BY VIJAY KUMAR SONI DATE OF HEARING 0 8/08/2019 DATE OF PRONOUNCEME NT 28 / 0 8 /201 9 / O R D E R PER G.MANJUNATHA (A.M) : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)22, MUM BAI DATED 27/02/2014 AND IT PERTAINS TO THE ASSESSMENT YEAR 2 009-10. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTA NCES OF THE CASE AND IN LAW, THE LD.CIT (A) HAS ERRED IN CONFIRMING THE PEN ALTY IMPOSED ON THE APPELLANT UNDER SECTION 271(L)(C) OF THE ACT, WITHO UT APPRECIATING THE FACT THAT NO TAX WAS PAYABLE BY THE APPELLANT FOR THE A. Y. 2009-10 RELEVANT TO PY 2008-09 INASMUCH AS THE ASSESSMENT WAS COMPLETED U/S, 143(3) OF THE ACT BY DETERMINING A LOSS OF RS.1,24,78,505/- A S AGAINST THE LOSS OF RS,L,71,28,808/-DECLARED BY THE APPELLANT {BY VIRTU E OF ASSESSMENT ORDER DATED 28.12.2011 ISSUED BY THE RESPONDENT HEREIN}; ITA NO.2973/MUM/2014 EPIC ENZYMES PHARMACEUTICALS & INDUSTRIAL CHEMICALS LTD. 2 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTA NCES OF THE CASE AND IN LAW, THE LD.C1T (A) HAS ERRED IN PASSING THE IMPUGN ED ORDER EX PARTE WITHOUT AFFORDING A FAIR OPPORTUNITY OF HEARING TO THE APPELLANT HEREIN, IN BREACH OF THE PRINCIPLES OF NATURAL JUSTICE, DESPIT E THE APPELLANT HAVING PLACED ON RECORD THE FACT OF AN UNTIMELY DEMISE OF THE CHAIRMAN & MANAGING DIRECTOR OF THE APPELLANT COMPANY; 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD, CIT (A) HAS ERRED IN CONFIRMING THE PE NALTY IMPOSED ON THE APPELLANT UNDER SECTION 271(L)(C) OF THE ACT, WITHO UT APPRECIATING THAT IT IS A SETTLED LAW THAT MERE CLAIM OF EXPENDITURE IN LAW , INCORRECT OR OTHERWISE, CANNOT TANTAMOUNT TO FURNISHING INACCURATE PARTICUL ARS IN THE MANNER CONTEMPLATED IN SECTION 271(1)(C) OF THE ACT; 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) OUGHT TO HAVE APPRECIATED THAT THE PENAL PROCEEDINGS UNDER SECTION 271(L)(C) OF THE ACT COULD RIOT HAVE BEEN INITIATED WHEN, THE PENAL PROCEEDINGS INITIATED ON THE SIMILAR GROUNDS UNDER SECTION 271D AND SECTION 271E RELATING TO A,Y. 2009-10 HAVE BEE N DROPPED BY THE RESPONDENT HEREIN BY VIRTUE OF ITS ORDER DATED 02.0 3.2012 5. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN CONFIRMING THE PE NALTY IMPOSED ON THE APPELLANT UNDER SECTION 271(L)(C) OF THE ACT, WITHO UT APPRECIATING THAT CONTRARY DOCUMENTARY AND ORAL EVIDENCE REFERRED IN THE ASSESSMENT ORDER DATED 29.12.2011 ISSUED BY THE RESPONDENT HE REIN; 6. APPELLANT PRAYS THAT THE IMPUGNED ORDER OF CIT (A) BE QUASHED AND SET ASIDE AND THE CONSEQUENT PENALTY IMPOSED ON THE APPELLANT UNDER SECTION 271(L)(C) OF THE ACT, BE DELETED; 7. APPELLANT CRAVES LEAVE TO ALTER OR AMEND THE A BOVE GROUNDS AND/OR ADD A NEW GROUND, AS MAY BE DEEMED FIT AND NECESSAR Y. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS MENT IN THIS CASE WAS COMPLETED U/S 143(3) OF THE I.T.ACT, 1961, DETERMINING THE TOTAL LOSS AT RS. 1,24,78,505/-, AS AGAINST, THE LO SS DECLARED AT RS. 1,71,28,808/- BY MAKING ADDITIONS TOWARDS DISALLOWA NCES OF CERTAIN PAYMENTS U/S 40A(2)(B) AND DISALLOWANCES OF CASH PA YMENTS U/S 40A(3) OF THE I.T.ACT, 1961. THEREAFTER, PENALTY PR OCEEDINGS U/S ITA NO.2973/MUM/2014 EPIC ENZYMES PHARMACEUTICALS & INDUSTRIAL CHEMICALS LTD. 3 271(1)(C) HAS BEEN INITIATED AND AFTER CONSIDERING RELEVANT SUBMISSION OF THE ASSESSEE AND ALSO TAKEN NOTE OF M ATERIAL AVAILABLE ON RECORD, LEVIED PENALTY OF RS. 13,94,989/- UNDER EXPLANATION-1 TO SECTION 271(1)(C) OF THE I.T.ACT, 1961. THE ASSESS EE CARRIED THE MATER IN APPEAL BEFORE THE LD.CIT(A). DURING THE C OURSE OF APPELLATE PROCEEDINGS, THE LD.CIT(A) HAD GIVEN SIX DATES OF H EARING TO THE ASSESEE, AS MENTIONED IN HIS APPELLATE ORDER AT PAR A 2.2, FOR WHICH, THE ASSESSEE NEITHER APPEARED NOR FILED ANY DETAILS . THEREFORE, THE LD.CIT(A) DISMISSED APPEAL FILED BY THE ASSESSEE AN D UPHELD PENALTY LEVIED U/S 271(1)(C) OF THE I.T.ACT, 1961, ON THE GROUND THAT THE FACTS OF THE CASE CLEARLY INDICATES THAT THE AS SESSEE HAD NO EXPLANATION TO OFFER FOR SOME OF THE EXPENDITURE AN D ALSO WAS NOT IN A POSITION TO SUBSTANTIATE THE CLAIM WITH MATERIAL EVIDENCES, TO PROVE THE BONAFIDE NATURE OF THE TRANSACTIONS. AGGRIEVED BY THE CIT(A) ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD.AR FOR THE ASSESEE, SUBMITTED THAT THE LD .CIT(A) HAS DISMISSED APPEAL FILED BY THE ASSESSEE, EX-PARTE FO R NON APPEARANCE AS ON THE DATES FIXED FOR HEARING, BUT S UCH NON APPEARANCE BEFORE THE AO IS NEITHER DELIBERATE NOR ANY INTENTION TO DERIVE UNDUE ADVANTAGE. THE ASSESSEE COULD NOT APPE AR BEFORE THE AO DUE TO VARIOUS REASONS BEYOND HIS CONTROL, OTHER WISE IT WAS ITA NO.2973/MUM/2014 EPIC ENZYMES PHARMACEUTICALS & INDUSTRIAL CHEMICALS LTD. 4 READY WITH EXPLANATIONS TO OFFER, IN RESPECT OF PEN ALTY LEVIED U/S 271(1)(C) OF THE I.T.ACT, 1961 AND THEREFORE, THE I SSUE MAY BE SET ASIDE TO THE FILE OF THE CIT(A) TO GIVE ONE MORE O PPORTUNITY OF HEARING TO THE ASSESSEE. THE LD. DR ON THE OTHER HA ND, STRONGLY SUPPORTING ORDER OF THE LD.CIT(A) SUBMITTED THAT TH E CONDUCT OF THE ASSESSEE CLEARLY PROVES THAT IT IS NON COOPERATIVE TO THE PROCEEDINGS BEFORE THE APPELLATE COMMISSIONER, WHICH IS EVIDENT FROM THE FACT THAT THE LD.CIT(A) HAD GIVEN SIX OPPORTUNITIES OF H EARING TO THE ASSESSEE, FOR WHICH NO COMPLIANCE HAS BEEN FILED. T HEREFORE, THE LD.CIT(A) HAD RIGHTLY DISMISSED APPEAL FILED BY THE ASSESSEE AND HIS ORDER SHOULD BE UPHELD. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED MATER IAL AVAILABLE ON RECORD. WE FIND THAT THE LD.CIT(A) HAD DISMISSE D APPEAL FILED BY THE ASSESSEE EX-PARTE FOR NON PROSECUTION BY THE AS SESSEE, EVEN THOUGH VARIOUS NOTICES WERE ISSUED FIXING THE CASE FOR HEARING AS NARRATED BY THE LD.CIT(A) IN HIS APPELLATE ORDER AT PARA 2.2 ON PAGES 2. WE FURTHER NOTED THAT ALTHOUGH, THE LD.CIT(A) HA D DISMISSED APPEAL FILED BY THE ASSESSEE EX-PARTE, BUT DECIDED THE ISSUE OF LEVY OF PENALTY U/S 271(1)(C) ON MERIT BY DISCUSSING THE ISSUE, IN LIGHT OF FACTS BROUGHT OUT BY THE AO. BUT, FACT REMAINS THAT THE LD.CIT(A) HAS DECIDED APPEAL BEHIND THE BACK OF THE ASSESSEE, WIT HOUT HEARING ITA NO.2973/MUM/2014 EPIC ENZYMES PHARMACEUTICALS & INDUSTRIAL CHEMICALS LTD. 5 FROM THE AGGRIEVED PARTY. FURTHER, NO LITIGANT WOUL D DERIVE ANY BENEFIT BY NOT PROSECUTING ITS APPEAL FILED BEFORE THE APPELLATE AUTHORITIES, RATHER IT WOULD CAUSE INCONVENIENCE TO THE AGGRIEVED PARTY, IN CASE APPEAL IS DISMISSED FOR NON PROSECUT ION. THEREFORE, WHEN THE PARTY IS NOT APPEAR FOR HEARING, THERE SHO ULD BE SOME COMPELLING REASONS, BEYOND THE CONTROL OF THE ASSES SEE, WHICH PREVENTED FROM APPEARANCE BEFORE THE AUTHORITIES TO EXPLAIN THE CASE. IN THIS CASE, THE LD.AR FOR THE ASSESSEE SUBM ITTED THAT THE ASSESSEE COULD NOT APPEAR BEFORE THE AO, DUE TO THE REASONS BEYOND ITS CONTROL. THEREFORE, CONSIDERING THE FACT S AND CIRCUMSTANCES OF THIS CASE AND ALSO TO GIVE REASONA BLE OPPORTUNITY OF HEARING TO THE ASSESSEE, WE DEEM IT APPROPRIATE TO RESTORE THE APPEAL TO FILE OF THE LD.CIT(A) AND DIRECT HIM TO D ECIDE THE APPEAL ON MERITS AFTER AFFORDING AN OPPORTUNITY OF HEARING TO THE ASSESSEE. NEEDLESS TO SAY, THE ASSESSEE SHALL APPEAR BEFORE T HE LD.CIT(A) WITHOUT SEEKING FURTHER ADJOURNMENTS. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 /08/ 2019 ITA NO.2973/MUM/2014 EPIC ENZYMES PHARMACEUTICALS & INDUSTRIAL CHEMICALS LTD. 6 SD/- (SANDEEP GOSAIN) SD/- (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 28/08/2019 THIRUMALESH SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//