HARISH EXPORTER, MUMBAI V. JT CIT RG 13(1), MUMBAI

ITA 32/MUM/2010

• Counselvise Citation: 3219914 RSA 2010
• Duration Of Justice: 1 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 06-06-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 04-01-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GOLI SRINIWAS RAO
• Assessee Lawyers: PRAKASH K JOTWANI
• Keywords: Condonation of delay; Reassessment proceedings
• Section: 143(3); 80HHC; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H, MUMBAI BEFORE SHRI N.V.VASUDEVAN(J.M) & SHRI R.K.PANDA (A .M) ITA NO.32/MUM/2010(A.Y. 2001-02) ITA NO.33/MUM/2010(A.Y. 2003-04) M/S. HARISH EXPORTER, 1 ST FLOOR, DCOR HOUSE, 212/216, SHERRIF DEVJI STREET, MUMBAI 400 003. PAN:AAAFH 0176Q (APPELLANT) VS. THE JCIT, CIR. 13(1), AAYKAR BHAVAN, MK ROAD, MUMBAI 20. (RESPONDENT) APPELLANT BY : SHRI PRAKASH K. JOTWANI RESPONDENT BY : SHRI GOLI SRINIWAS RAO ORDER PER N.V.VASUDEVAN, J.M, THESE ARE APPEALS BY THE ASSESSEE AGAINST THE TWO ORDERS BOTH DATED 30/6/2006 OF CIT(A) 13 MUMBAI RELATING TO ASSESSMEN T YEARS 2001-02 AND 2003-04 THE GROUND OF APPEAL IN ALL THE APPEALS AR E COMMON AND THEY READ AS FOLLOWS: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW: 1. THE LD. CIT(A) ERRED IN DISPOSING THE APPE AL EX-PARTE. 2. THE LEARNED CIT(A) ERRED IN NOT GRANTING DEDUCTI ON U/S. 80HHC ON DEPB FOR THE REASON THAT SINCE THE EXPORT TURNOVER OF THE APPELLANT IS OVER RS. 10 CRORES, THE APPELLANT IS NOT ELIGIBLE F OR DEDUCTION 3. THE LEARNED CIT(A) ERRED IN NOT CONSIDERING THAT WHAT IS TAXABLE WOULD ONLY THE PREMIUM OF THE DEPB AND NOT THE DEPB IN EN TIRETY AND THE BALANCE PREMIUM AMOUNTS TO AN INCENTIVE ELIGIBLE FO R DEDUCTION U/S. 80 HHC. 2. THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN TH E BUSINESS OF EXPORTS. FOR A.Y. 2001-02 A RETURN OF INCOME WAS FILED ON 5/ 10/2001 DECLARING NIL ITA NO.32/MUM/2010(A.Y. 2001-02) ITA NO.33/MUM/2010(A.Y. 2003-04) 2 INCOME AFTER CLAIMING DEDUCTION UNDER SECTION 80 HH C OF THE INCOME TAX ACT, 1961 (THE ACT) OF RS. 4,98,04,115/-. THIS RET URN WAS PROCESSED UNDER SECTION 143(1) OF THE ACT AND AN ORDER UNDER SECTIO N 143(3) DATED 10/12/2002 WAS ALSO PASSED.. LATER ON, THE ASSESS ING OFFICER NOTICED THAT THE ASSESSEES TURN OVER DURING THE RELEVANT PREVIO US YEAR WAS MORE THAN RS. 10 CRORES. THE ASSESSEE HAD RECEIVED EXPORT INCENT IVES OF RS. 2,95,09,448/- WHICH INCLUDED RECEIPT ON ACCOUNT OF DEPB OF RS. 80 ,61,493/-. THE ASSESSING OFFICER ALSO NOTICED THAT THE RATE AT WHI CH DEPB WAS RECEIVED BY THE ASSESSEE WAS HIGHER THAN THE DUTY DRAW BACK RAT E. THE ASSESSING OFFICER WAS, THEREFORE, OF THE VIEW THAT IN TERMS OF THE 3 RD AND 4 TH PROVISO TO SECTION 80 HHC(3) INSERTED BY THE TAXATION LAWS(2 ND AMENDMENT) ACT 2005, THE ASSESSEE WAS NOT ELIGIBLE FOR ADDING 90% OF THE SU M RECEIVED U/S. 28(IIID) AND 28(IIIE) OF THE ACT AND THAT THIS SUM HAD TO BE EXCLUDED FROM THE PROFITS CALCULATED UNDER THE HEAD PROFITS AND GAINS OF BUSI NESS UNDER CLAUSE BAA(1) BELOW SECTION 80 HHC OF THE ACT. SINCE THE ASSESSE E HAD ADDED 90% OF DEPB RECEIPTS OF RS. 80,61,493/- WHILE ARRIVING AT THE CLAIM OF DEDUCTION UNDER SECETION 80 HHC OF THE ACT UNDER THE PROVISO BELOW SECTION 80 HHC(3) OF THE ACT, THE ASSESSING OFFICER WAS OF THE VIEW T HAT THE DEDUCTION UNDER SECTION 80 HHC HAS BEEN EXCLUSIVELY CLAIMED BY THE ASSESSEE. HE, THEREFORE, ISSUED NOTICE UNDER SECTION 148 OF THE ACT. 3. IN THE REASSESSMENT PROCEEDINGS THE ASSESSING OF FICER EXCLUDED DEPB RECEIPTS WHILE COMPUTING DEDUCTION TO BE ALLOWED UN DER SECTION 80 HHC OF THE ACT. THE CIT(A) CONFIRMED THE ORDERS OF THE AS SESSING OFFICER. 4. THE FACTS IN THE OTHER ASSESSMENT YEAR I.E. 2 003-04 IS ALSO IDENTICAL EXCEPT FOR THE CHANGE IN THE QUANTUM OF DEPB RECEIP TS. EVEN IN THAT YEAR THE ASSESSING OFFICER EXCLUDED DEPB RECEIPTS WHILE COMPUTING DEDUCTION TO BE ALLOWED UNDER SECTION 80 HHC OF THE ACT. THE CI T(A) CONFIRMED THE ORDERS OF THE ASSESSING OFFICER. ITA NO.32/MUM/2010(A.Y. 2001-02) ITA NO.33/MUM/2010(A.Y. 2003-04) 3 5. AGAINST THE AFORESAID ORDERS OF THE CIT(A) THE A SSESSEE HAS PREFERRED THESE APPEALS BEFORE THE TRIBUNAL. 6. THERE HAS BEEN A DELAY OF MORE THAN 3 YEARS DAYS IN FILING THESE APPEALS BY THE ASSESSEE. THE REASONS FOR THE DELAY IN FILING THE APPEALS HAVE BEEN EXPLAINED BY THE ASSESSEE AS FOLLOWS. THE CIT (A) PASSED THE ORDER DATED 30/6/2006 AND THOSE ORDERS WERE RECEIVED BY T HE ASSESSEE ON 30/6/06. THE ASSESSEE OUGHT TO HAVE FILED THE APPE ALS ON OR BEFORE 29/8/06(60 DAYS FROM THE DATE OF RECEIPT OF THE ORD ER OF CIT(A)). THE APPEALS HAVE HOWEVER BEEN FILED BY THE ASSESSEE ON 10/5/201 0 I.E. AFTER A DELAY OF 1320 DAYS. THE ASSESSEE HAS SUBMITTED THAT ITS INS TRUCTING CHARTERED ACCOUNTANT WHO WAS LOOKING AFTER THE INCOME TAX MAT TERS ADVISED THE ASSESSEE NOT TO FILE ANY FURTHER APPEAL BEFORE THE TRIBUNAL AS IT WOULD BE AN EXERCISE IN FUTILITY. HOWEVER, THE TAX CONSULTANT , LATER ADVISED THE ASSESSEE THAT IT HAS A GOOD CHANCE OF SUCCESS BECAUSE OF THE DECISION OF THE SPECIAL BENCH OF THE ITAT MUMBAI IN THE CASE OF TOPMAN EXPO RTS VS. ITO, 125 TTJ 289, WHEREIN IT WAS HELD THAT IT IS ONLY PROFIT ELE MENT ON SALE OF DEPB AND NOT THE ENTIRE RECEIPTS OF SALE OF DEPB WHICH HAS T O BE EXCLUDED FROM THE PROFITS OF THE BUSINESS UNDER EXPLANATION BAA(1) BE LOW SECTION 80 HHC OF THE ACT. IN VIEW OF THIS SUBSEQUENT DEVELOPMENTS IN TH E LAW THE ASSESSEE WAS ADVISED TO FILE THE APPEALS AND HAS ACCORDINGLY FIL ED THE APPEALS BELATEDLY. IT HAS BEEN SUBMITTED THAT THE ASSESSEE ACTED BONAFIDE AND ON THE BASIS OF ADVISE OF PROFESSIONAL AND THAT THERE WAS NO NEGLIG ENCE OR MALAFIDE INTENTION OR DELIBERATE IN ACTION AND, THEREFORE, T HE DELAY IN FILING THE APPEAL SHOULD BE CONDONED. THE FACTS STATED ABOVE HAVE BE EN AFFIRMED BY AN AFFIDAVIT OF THE CHARTERED ACCOUNTANT OF THE ASSESS EE WHO ADVISED THE ASSESSEE NOT TO FILE FURTHER APPEALS AND ALSO AFFID AVIT OF THE PARTNER OF THE ASSESSEE. 7. THE LD. COUNSEL FOR THE ASSESSEE DRAWING OUT ATT ENTION TO THE AFORESAID FACTS SUBMITTED THAT THE DELAY IN FILING THE APPEAL S SHOULD BE CONDONED AS ITA NO.32/MUM/2010(A.Y. 2001-02) ITA NO.33/MUM/2010(A.Y. 2003-04) 4 THERE WAS SUFFICIENT CAUSE FOR THE DELAY. IN THIS REGARD RELIANCE WAS PLACED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS. STERLI TE INDUSTRIES INDIA LTD. VS. ACIT (2006) 6 SOT 497(MUM), WHEREIN THE ITAT MUMBAI HAS HELD THAT DELAY IN FILING APPEAL BECAUSE OF ADVISE OF PROFESSIONAL WOULD BE SUFFICIENT CAUSE FOR CONDONING THE DELAY. SIMILAR OTHER DECISIONS RENDERED BY THE DIFFERENT BENCHES OF THE ITAT WERE ALSO CITED BEFORE US. 8. THE LD. D.R OPPOSED THE PRAYER FOR CONDONATION O F DELAY AND FURTHER SUBMITTED THAT THE DECISION OF THE SPECIAL BENCH OF ITAT MUMBAI IN THE CASE OF TOPMAN EXPORTS TAKING A VIEW IN FAVOUR OF THE A SSESSEE HAS SINCE BEEN REVERSED BY THE HONBLE BOMBAY HIGH COURT AND, THER EFORE, EVEN OTHERWISE THE ASSESSEE DOES NOT HAVE ANY CASE ON MERITS. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN OU R VIEW THE REASONS GIVEN IN THE AFFIDAVIT FOR CONDONATION OF DELAY ARE SUFFICIENT TO CONDONE THE DELAY IN FILING THE APPEAL ON BEHALF OF THE ASSESSE E. THE FACT THAT THE ASSESSEE WAS GUIDED BY THE ADVISE OF CHARTERED ACCO UNTANT FOR NOT FILING THE APPEAL BEFORE THE TRIBUNAL AND THE FACT THAT SUBSEQ UENT PROFESSIONAL ADVISE WAS RECEIVE BY THE ASSESSEE FOR FILING AN APPEAL BE FORE THE TRIBUNAL BECAUSE OF LATER DECISIONS RENDERED IN FAVOUR OF THE ASSESS EE, WOULD BE SUFFICIENT CAUSE FOR NOT FILING THE APPEAL WITHIN TIME. IT IS ALSO SEEN THAT THERE HAS BEEN NO NEGLIGENCE OR IN ACTION ON THE PART OF THE ASSESSEE. THE TAX LIABILITY HAS TO BE IN ACCORDANCE WITH LAW AND CANNOT BE FAS TENED BECAUSE OF TECHNICAL LAPSES. A LIBERAL APPROACH HAS TO BE ADO PTED IN THE MATTER OF CONDONATION OF DELAY. WE, THEREFORE, CONDONE THE D ELAY IN FILING THE APPEALS BY THE ASSESSEE. 10. ON MERITS WE FIND THAT THE DECISION OF THE SPEC IAL BENCH IN THE CASE OF TOPMAN EXPORTS(SUPRA) HAS SINCE BEEN REVERSED BY TH E HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. KALPATARU COLOURS & CH EMICALS, ITA 2887 OF 2009. WE ARE, THEREFORE, OF THE VIEW THAT IT WOULD BE APPROPRIATE TO DIRECT ITA NO.32/MUM/2010(A.Y. 2001-02) ITA NO.33/MUM/2010(A.Y. 2003-04) 5 THE ASSESSING OFFICER TO DISPOSE OF THE ISSUE IN ACCORDANCE WITH THE DECISION OF THE HONBLE BOMBAY HIGH COURT . THE LD. COUNS EL FOR THE ASSESSEE HOWEVER, SUBMITTED THAT APPEALS HAVE BEEN PREFERRED AGAINST THE DECISION OF THE HONBLE BOMBAY HIGH COURT BEFORE THE HONBLE SU PREME COURT. WE ARE OF THE VIEW THAT THE ASSESSING OFFICER SHOULD CONSI DER THE ISSUE IN THE LIGHT OF THE AVAILING BINDING PRECEDENT. WE DIRECT ACCORDIN GLY. FOR STATISTICAL PURPOSES THESE APPEALS ARE TREATED AS ALLOWED. 11. IN THE RESULT, ALL THE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE 10 TH DAY OF JUNE, 2011. SD/- SD/- (R.K.PANDA ) (N.V.VASUDEVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED. 10 TH JUNE.2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3 . THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.RH BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM. ITA NO.32/MUM/2010(A.Y. 2001-02) ITA NO.33/MUM/2010(A.Y. 2003-04) 6 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 6/6/11 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 7/6/11 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER