HAMPEE DYEING P. LTD, MUMBAI V. ITO 10(3)(1), MUMBAI

ITA 3060/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48913 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 24-05-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 19-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: A K GHOSH
• Keywords: Business income; Opportunity of being heard; Condonation of delay; Bonafide mistake; Set aside

Judgement Text

1 ITA NO.3060/MUM/2010 (ASST YEAR 2003-04) IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI MUMBAI MUMBAI MUMBAI H HH H BENCH BENCH BENCH BENCH MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI J SUDHAKAR REDDY J SUDHAKAR REDDY J SUDHAKAR REDDY J SUDHAKAR REDDY, AM & , AM & , AM & , AM & SHRI SHRI SHRI SHRI VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM ITA NO. ITA NO. ITA NO. ITA NO.3060/MUM/2010 3060/MUM/2010 3060/MUM/2010 3060/MUM/2010 (ASST YEAR (ASST YEAR (ASST YEAR (ASST YEAR 2003 2003 2003 2003- -- -04 0404 04) )) ) HAMPEE DYEING P LTD C/O VANDANA DYEING P LTD RATAN INDL. COMPOUND LBS MARG BHANDUP (W) MUMBAI 78 VS THE INCOME TAX OFFICER WARD 10(3)(1), MUMBAI ( (( (APPELLANT APPELLANT APPELLANT APPELLANT) )) ) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) PAN NO. PAN NO. PAN NO. PAN NO.AABCH 0352A AABCH 0352A AABCH 0352A AABCH 0352A A SSESSEE BY SHRI A K GHOSH REVENUE BY SHRI ALEXANDER CHANDY PER PER PER PER VIJAY VIJAY VIJAY VIJAY PAL RAO PAL RAO PAL RAO PAL RAO, , , , JM JMJM JM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 18.2.2010 OF THE CIT(A) ARISING FROM THE PENALTY OR DER U/S 271(1)( C) OF THE I T ACT FOR THE ASSESSMENT YEAR 2003-04. 2 THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN THIS APPEAL: ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE AND IN LAW THE LD CIT(A) ERRED IN NOT CONDONING THE DELAY IN FILING T HE APPEAL AND THEREBY CONFIRMING PENALTY OF RS. 1,57,631/- U/S 271(1)(C ) MADE BY THE ASSESSING OFFICER . 2.1 THE ASSESSEE HAS FILED ITS RETURN OF INCOME DEC LARING THE TOTAL LOSS OF RS. 18,490/-. THE ASSESSEE ADMITTED THE RENTAL INCO ME FROM THE COMMERCIAL PROPERTY OF RS. 7,44,200/- AS BUSINESS INCOME. THE ASSESSING OFFICER HELD THAT THE RENTAL INCOME CANNOT BE ASSESSED UNDER THE HEAD INCOME FROM PROFESSION OR BUSINESS AND ACCORDINGLY, HE ASSESSED THE INCOME U NDER THE HEAD INCOME FROM 2 ITA NO.3060/MUM/2010 (ASST YEAR 2003-04) HOUSE PROPERTY. THE ASSESSING OFFICER FRAMED THE ASSESSMENT BY DETERMINING THE TOTAL INCOME AT RS. 5,20,940/-. THE ASSESSEE CH ALLENGED THE ASSESSMENT ORDER WITH RESPECT TO THE DISALLOWANCE OF CLAIM OF DEDUCTION OF RS. 92,010/- ON ACCOUNT OF SOCIETY MAINTENANCE CHARGES. THE CIT(A) DIRECTED THE ASSESSING OFFICER TO VERIFY THE CLAIM OF THE ASSESSEE FOR TH E DEDUCTION OF RS. 92,010/-. ACCORDINGLY, THE ASSESSING OFFICER PASSED CONSEQUEN TIAL ORDER AND THE TOTAL INCOME OF THE ASSESSEE WAS COMPUTED AT RS. 4,28,930 /. 2.2 THE ASSESSING OFFICER INITIATED PENALTY PROCEE DINGS AND LEVIED A PENALTY OF RS. 1,57,631/- VIDE ORDER DATED 2.3.2007 IN RESP ECT OF THE RENTAL INCOME, WHICH WAS OFFERED AS BUSINESS INCOME FROM BUSINESS BUT A SSESSED BY THE ASSESSING OFFICER UNDER THE HEAD INCOME FROM HOUSE PROPERTY . 2.3 THE ASSESSEE CHALLENGED THE PENALTY ORDER BEFOR E THE CIT(A). SINCE THE APPEAL WAS FILED BELATEDLY AROUND 17 MONTHS, THE CI T(A) DISMISSED THE APPEAL OF THE ASSESSEE ON THE GROUND OF DELAY, VIDE THE IMPUG NED ORDER. 3 BEFORE US, THE LD AR OF THE ASSESSEE HAS SUBMITTE D THAT THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY IS VERY AGED PERSO N ABOUT 80 YEARS OLD. AFTER RECEIVING THE PENALTY ORDER, HE HAS INADVERTENTLY K EPT THE SAME IN THE DRAWER AT HIS RESIDENCE AND FORGOT TO FILE APPEAL AGAINST PEN ALTY ORDER. WHEN HE REALIZED, THE TIME FOR FILING OF THE APPEAL AGAINST THE SAID ORDER WAS EXPIRED AND IN THIS PROCESS, THERE WAS A DELAY IN FILING THE APPEAL BEF ORE THE CIT(A). HE FURTHER CONTENDED THAT BECAUSE OF THE BONAFIDE MISTAKE AND INADVERTENT OVERSIGHT DUE 3 ITA NO.3060/MUM/2010 (ASST YEAR 2003-04) TO OLD AGE ON THE PART OF THE ASSESSEE, THE DELAY W AS CAUSED, WHICH IS NEITHER INTENTIONAL NOR DELIBERATE. HE HAS FURTHER CONTEND ED THAT THE ASSESSEE WANTED TO FILE THE AFFIDAVIT DATED 18.2.2010 BEFORE THE CI T(A); BUT THE CIT(A) DID NOT ENTERTAIN THE SAME AND PASS THE ORDER ON THE SAME D ATE. ACCORDINGLY, THE LD AR OF THE ASSESSEE HAS PLEADED THAT THE DELAY IN FILIN G THE APPEAL MAY BE CONDONED AND THE PENALTY MAY ALSO BE DELETED. HE HAS FILED A COPY OF THE AFFIDAVIT BEFORE US. 3.1 ON THE OTHER HAND, THE LD DR REFERRED THE ORDER OF THE CIT(A) AND SUBMITTED THAT THE ASSESSEE FAILED TO PRODUCE ANY S UPPORTING EVIDENCE OR ANY EXPLANATION TO THE CIT(A) FOR CONDONATION OF DELAY. ACCORDINGLY, IT WAS SUBMITTED THAT THE CIT(A) IS JUSTIFIED IN NOT CONDONING THE D ELAY IN FILING THE APPEAL. 4 WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND RELEVA NT RECORD. IT IS SETTLED OF LAW THAT WHILE DECIDING THE CONDONATION OF DELAY IN FILING OF APPEAL, THE COURT SHOULD TAKE A LENIENT VIEW. WHEN THE EXPLAN ATION AND REASONS GIVEN BY THE ASSESSEE FOR DELAY IN FILING THE APPEAL ARE NOT FOUND AS MALAFIDE OR A DEVICE TO COVER AN ULTERIOR PURPOSE IN AN UNDERHAND WAY, T HEN, THE COURT SHOULD BE LIBERAL IN CONSTRUING SUFFICIENT CAUSE AND SHOULD L EAN IN FAVOUR OF SUCH PARTY. HOWEVER, THE LITIGANT DOES NOT STAND THE BENEFIT BY FILING THE APPEAL AT A BELATED STAGE TO TAKE AN ADVANTAGE OF PROCESS OF LAW. WHENE VER SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATION ARE OPPOSED TO EACH OTHER, CAUSE OF SUBSTANTIAL JUSTICE HAS TO BE PREFERRED AND THE COURT SHOULD TAKE JUSTI CE ORIENTED APPROACH WHILE DECIDING THE MATTER OF CONDONATION OF DELAY. 4 ITA NO.3060/MUM/2010 (ASST YEAR 2003-04) 5 IN THE CASE IN HAND, THE LD CIT(A) HAS DECLINED T O CONDONE THE DELAY ON THE GROUND THAT THE ASSESSEE FAILED TO PRODUCE ANY SUPP ORTING EVIDENCE IN THE FORM OF AFFIDAVIT OR ANY EXPLANATION. SINCE THE ASSESSE E HAS PRODUCED THE COPY OF THE AFFIDAVIT DATED 18.12.2010 BEFORE US AND THE CIT(A) DECIDED THE APPEAL OF THE ASSESSEE ON 18.12.2010 ITSELF ON THE FIRST DAY OF H EARING; THEREFORE, IN OUR CONSIDERED OPINION, A PROPER AND EFFECTIVE OPPORTUN ITY OF HEARING HAS NOT BEEN AFFORDED TO THE ASSESSEE TO FILE THE SUPPORTING EVI DENCES FOR EXPLAINING THE DELAY IN FILING THE APPEAL. ACCORDINGLY, IN THE FACTS AN D CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE, WE SET ASIDE THE ORDER OF THE CIT(A) AND REMAND THE MATTER BACK TO HIS FILE TO CONSIDER THE AFFIDAVIT IN SUPPORT OF CAUSE OF DELAY IN FILING THE APPEAL AND THEREAFTER DECIDE THE ISSUE A FRESH IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. 6 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE I S ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THE 31 ST DAY OF MAY 2011. SD/- SD/- ( (( ( J SUDHAKAR REDDY J SUDHAKAR REDDY J SUDHAKAR REDDY J SUDHAKAR REDDY ) )) ) ACCOUNTANT MEMBER ( (( ( VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO ) )) ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 31 ST MAY 2011 RAJ* 5 ITA NO.3060/MUM/2010 (ASST YEAR 2003-04) COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI