HEMCHANDRA MISTRY, NAVI MUMBAI V. ITO 22(3)(4), NAVI MUMBAI

ITA 3263/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2061 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 08-12-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 07-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K MOHANDA S
• Assessee Lawyers: AJEET MANWANI
• Keywords: Opportunity of being heard; Reasonable cause; Condonation of delay
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H, MUMBAI BEFORE SHRI JASON P. BOAZ (AM) AND SHRI. AMIT SHUKL A (JM) ITA NO.3263 TO 3265/MUM/2014 ASSESSMENT YEAR: 2007-08 HEMCHANDRA MISTRY 1301-EDEN PALACE, SECTOR 16-H, SANPADA. NAVI MUMBAI 400 703. PAN : A BAPM4719K VS. THE ITO 22 (3)(4), ROOM NO. 306, TOWER NO. 6, VASHI RAILWAY STATION COMPLEX, VASHI, NAVI MUMBAI- 400705 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. AJEET MANWANI RESPONDENT BY : SHRI. K. MOHAN DAS DATE OF HEARING: 08/12/2015 DATE OF PRONOUNCEMENT: 11/12/2015 O R D E R PER BENCH THESE THREE APPEALS ARE DIRECTED AGAINST THE O RDERS OF THE CIT (APPEALS)-33, MUMBAI FOR ASSESSMENT YEAR 2007-2 008. SINCE THESE APPEALS WERE HEARD TOGETHER AND ARE INTER-CON NECTED, THEY ARE DISPOSED OFF BY WAY OF THIS COMBINED ORDER. 2. THE FACTS OF THE CASE, BRIEF BY, ARE AS UNDE R:- 2.1 THE ASSESSEE FILED THE RETURN OF INCOME FOR ASSESSMENT YEAR 2007-08 ON 08/11/2007 DECLARING TOTAL INCOME OF RS. 2,50,090/-. THE CASE WAS SELECTED FOR SCRUTINY AND INSPITE OF MANY NOTICES ISSUED BY THE ASSESSING OFFICER (IN SHORT AO), THEY WERE RE TURNED BACK UNSERVED THE AO. THE AO THEN ISSUED A NOTICE TO THE ASSESSEE ON 07/12/2009 2 ITA NO.3263-3265/MUM/2014 ASSESSMENT YEAR: 2007-08 CALLING UPON HIM TO SHOW CAUSE WHY THE ASSESSMENT SHOULD NOT BE COMPLETED EX-PARTE. THIS NOTICE WAS SERVED BY AFFI XTURE AT THE KNOWN ADDRESSES OF THE ASSESSEE, TO WHICH ALSO THEY WAS N O COMPLIANCE BY THE ASSESSEE. ON ISSUE OF ANOTHER NOTICE THE ASSESS EE PRESENTED HIMSELF BEFORE THE AO WHERE HE WAS CONFRONTED WITH INFORMATION GATHERED U/S 133(6) OF THE ACT FROM ONE SHRI. SUNIL GULATI. THE ASSESSEE IS REPORTED TO HAVE NOT FILED ANY REPLY TH ERETO. IN THAT VIEW OF THE MATTER, THE AO PROCEEDED TO COMPLETE THE ASSESS MENT VIDE ORDER DT. 29/12/2009, ON THE BASIS OF DETAILS ON RECORD INCLUDING CASS INFORMATION IN RESPECT OF CASH DEPOSITS OF RS. 19, 66,500/- AND RS.16,02,000/- IN THE ASSESSES SAVING BANK ACCOUN TS WITH COSMOS CO-OP BANK AND CORPORATION BANK LTD, RESPECTIVELY AND COMPUTED THE ASSESSEES INCOME AT RS. 42,17,890/- THE AO SI MULTANEOUSLY ALSO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) AND 27 1 (1)(B) OF THE ACT BY ISSUE OF NOTICES ON 29/12/2009. 2.2 SUBSEQUENTLY, THE AO ALSO TOOK UP THE PENAL TY PROCEEDINGS U/S 271(1)(B) AND 271(1)(C) OF THE ACT FOR ASSESSMENT Y EAR 2007-08 AND ISSUED NOTICE TO THE ASSESSEE ON 08/06/2010, FIXING THE HEARING IN THESE MATTERS ON 16/06/2010. SINCE THERE WAS NO SUP POSE FROM THE ASSESSEE THERETO, THE AO AFTER THIS SIMPLE NOTICE P ROCEEDED TO LEVY PENALTY OF RS. 13, 38,200/- U/S 271(1)(C) OF THE A CT AS NO APPEAL HAD BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF ASS ESSMENT AND PENALTY OF RS.10,000/- U/S 271(1)(B) OF THE ACT SINCE, THER E WAS NO RESPONSE TO THE ISSUE TO THE SINGLE NOTICE FIXING THE HEARING F OR 16/06/2010. BOTH THESE ORDERS ARE DATED 21/06/2010. 2.3 FROM THE DETAILS ON RECORD, IT APPEARS THA T THE ASSESSEE PREFERRED APPEALS AGAINST THE ORDERS OF ASSESSMENT FOR ASSESSMENT 3 ITA NO.3263-3265/MUM/2014 ASSESSMENT YEAR: 2007-08 YEAR 2007-08 DT. 29/12/2009 AND THE ORDER DT. 21/06 /2010 LEVYING PENALTY U/S 271(1) (C) AND 271 (1) (B) OF THE ACT B EFORE THE CIT(APPEALS)-33, MUMBAI, ON 24/01/2012. 3.1 ON APPEAL AS PER THE IMPUGNED ORDER OF LD. CIT(A) THE ORDER OF THE ASSESSMENT FOR ASST. YEAR 2007-08 DT. 29/12/200 9 WAS SERVED ON THE ASSESSEE ON 02/01/2010 AND THEREFORE THE APPEAL WAS TO HAVE BEEN FILED BEFORE HIM ON OR BEFORE 01/02/2010. THE APPEAL WAS FILED ON 24/01/2012, RESULTING THEREBY IN A DELAY OF 1 YE AR 11MONTHS AND 23 DAYS. THE LD.CIT(A) OBSERVES THAT THE ASSESSEE HAD NOT FILED A PETITION FOR CONDONATION OF DELAY IN FILING THE AP PEAL BUT MERELY SUBMITTED AT GROUND NO. 10 OF HIS SUBMISSION DT. 21 /12/2012 THAT THE DELAY BE CONDONED AS IT WAS BY REASONABLE CAUSE DUE TO CHANGE IN HIS OFFICE AND RESIDENTIAL PREMISES, DEATH OF HIS SISTE R-IN-LAW, ILLNESS OF HIS MOTHER AND SELF WITH WHICH HE WAS PRE-OCCUPIED AND THEREFORE COULD NOT GIVE INSTRUCTIONS TO HIS CA/ITP TO FILE THE APP EAL IN TIME. THE LD. CIT (A) WAS OF THE OPINION THAT THE DELAY OF 1 YEAR , 11MONTHS AND 23 DAYS WAS INORDINATE AND DID NOT CONDONE THE DELAY A ND AS STATED IN PARA 2.10 PROCEEDED TO DISMISS THE APPEAL. THE LD. CIT (A), HOWEVER, THEN WENT ON TO ADJUDICATE THE APPEAL ON MERITS ALS O, AS IS EVIDENT FROM THE IMPUGNED APPELLATE ORDER, AND DISMISSED TH E APPEAL ON MERITS. 3.2 IN THE MATTER OF THE PENALTY OF RS. 42,17,890 /- LEVIED U/S 271(1)(C) OF THE ACT, ON APPEAL, THE LD.CIT(A) D ISMISSED THE ASSESSEES APPEAL FOR NON PROSECUTION, AFTER ISSUI NG NOTICES ON THREE OCCASIONS, WHICH ADMITTEDLY WERE NOT SERVED ON THE ASSESSEE . THOUGH, THIS APPEAL ALSO WAS FILED LATE ALONG WITH THE OTHER TWO 4 ITA NO.3263-3265/MUM/2014 ASSESSMENT YEAR: 2007-08 APPEALS, THIS ISSUE WAS NEITHER OBSERVED NOR ADDRES SED BY THE LD CIT(A). 3.3 IN THE MATTER OF PENALTY OF RS. 10,000/- LEVIE D U/S 271(1)(B) OF THE ACT, THE LD. CIT (A) OBSERVED THAT SINCE THE OR DER DT. 21/06/2010 WAS RECEIVED BY THE ASSESSED ON 25/06/2010, HE OUGH T TO HAVE FILED THE APPEAL ON OR BEFORE 25/07/2010. SINCE, THE APP EAL WAS FILED ON 24/01/2012. THIS WAS A DELAY OF 1 YEAR 6 MONTHS. TH E LD.CIT (A) WAS OF THE VIEW THAT THE DELAY IN FILLING THE APPEAL CA NNOT BE CONDONED AS IT WAS INORDINATE AND THEREFORE, PROCEEDED TO DISMISS THE APPEAL. 4.1 WE HAVE HEARD BOTH PARTIES AND PERUSED AND CAR EFULLY CONSIDERED THE MATERIAL ON RECORD. ADMITTEDLY, TH ERE WAS A DELAY OF 1 YEAR 11 MONTHS AND 23 DAYS IN FILING THE APPEAL B EFORE THE LD.CIT (A) IN RESPECT OF THE ORDER OF ASSESSMENT DT. 29/12/200 9 FOR ASST. YEAR 2007-08. SIMILARLY, THERE WAS A DELAY OF 1 YEAR 6 M ONTHS IN FILING THE APPEAL AGAINST THE ORDER DT. 21/06/2010 LEVYING PEN ALTY OF RS. 10,000/- U/S 271(1) (B) OF THE ACT. IT APPEARS THAT THOUGH THERE WAS A SIMILAR DELAY IN FILLING THE APPEAL AGAINST THE ORD ER DT. 21/06/2010 LEVYING PENALTY OF RS. 42,17,890/-, U/S 271(1)(C) O F THE ACT THE LD.CIT (A) DISMISSED THIS APPEAL ON GROUNDS OF NON PROSECUTION. 4.2 THE HONBLE APEX COURT IN THE CASE OF COLLEC TOR, LAND ACQUISITION (167 ITR 471((SC), WHILE LAYING DOWN TH E PRINCIPLES FOR CONSIDERING THE MATTERS OF CONDONATION OF DELAY IN FILING APPEALS HAS STATED THAT SUBSTANTIAL JUSTICE SHOULD PREVAIL OVE R TECHNICAL CONSIDERATIONS. THE HONBLE COURT ALSO EXPLAINED T HAT EVERYDAYS DELAY MUST BE EXPLAINED DOES NOT MEAN THAT A PEDANTIC APP ROACH SHOULD BE TAKEN. THE DOCTRINE MUST BE APPLIED IN A NATURAL, C OMMON SENSE AND 5 ITA NO.3263-3265/MUM/2014 ASSESSMENT YEAR: 2007-08 PRAGMATIC MANNER. CONSIDERING THE AFORESAID PRINCIP LES, WE FIND FROM THE DETAILS ON RECORD THAT THE ASSESSEE HAD IN FACT , FILED A PETITION DT. 22/07/2013 FOR CONDONATION OF DELAY OF 1 YEAR 11 MO NTHS AND 23 DAYS IN FILING THE APPEAL IN THE QUANTUM APPEAL, WHICH A S PER ACKNOWLEDGMENT OF THE OFFICE OF LD. CIT (A) WAS FIL ED ON 23/07/2013. (PLACED AT PAGE 34 OF THE ASSESSEES PAPER BOOK CON TAINING 1-226 PAGES). THIS WAS FILED WELL BEFORE THE LD. CIT (A) DISPOSED THE APPEALS IN THE CASE ON LAND. IN THIS PETITION, WHICH APPARE NTLY HAS NOT BEEN CONSIDERED BY THE LD. CIT (A), IT IS SUBMITTED THAT THE ORDER OF ASSESSMENT WAS VIRTUALLY COMPLETED EX-PARTE. THE ASSESSEE SUBMITS THAT THE DELAY IN FILING THE APPEAL WAS DUE TO PRE OCCUPATION WITH THE SICKNESS OF HIS SISTER-IN-LAW WHO DIED ON 03/07/200 9 (COPY OF DEATH CERTIFICATE PLACED AT PAGE 165 OF THE PAPER BOOK) A ND SUBSEQUENTLY BOTH HIM AND HIS MOTHER TOOK ILL AND HE WAS BUSY WI TH MEDICAL TESTS, HOSPITAL VISITS AND DOCTORS CONSULTATIONS. IN THESE CIRCUMSTANCES IT IS SUBMITTED THAT HIS BUSINESS SUFFERED LOSSES, WHICH RESULTED IN HIM HAVING TO SELL HIS OFFICE AND RESIDENTIAL PROPERTIE S TO MEET THE MEDICAL BILLS. THE ASSESSEE PRAYED THAT IT WAS FOR THESE RE ASONS THAT THE ASSESSEE FILED THE APPEALS BELATEDLY BY AND PRAYED FOR CONDONATION OF DELAY IN THE LARGER INTEREST OF JUSTICE. THESE EXPL ANATIONS BY THE ASSESSEE, IN OUR VIEW, WOULD HOLD GOOD FOR ALL THRE E APPEALS. 4.3 OBVIOUSLY, AS IS EVIDENT FROM THE RECORD, THE LD.CIT (A) DID NOT CONSIDER THIS PETITION DT. 22/07/2013 FILED BEFORE HIM, AS THERE IS NOT A WHISPER ABOUT THIS IS THE IMPUGNED ORDER. ON A PE RUSAL OF THE ORDER OF ASSESSMENT FOR ASSESSMENT YEAR 2007-08 DT. 29/12 /2009 AND THE ORDERS LEVYING PENALTY U/S 271(1)(C) OF THE ACT AN D 271(1)(B) OF THE ACT FOR THE SAME YEAR, IT IS EVIDENT THAT THESE ORDERS HAVE BEEN PASSED BY THE AO IN HASTE WITHIN A PERIOD OF 3 MONTHS, FROM T AKING UP THE 6 ITA NO.3263-3265/MUM/2014 ASSESSMENT YEAR: 2007-08 MATTERS WITHOUT PROPER SERVICE OF THE NOTICES ON TH E ASSESSEE AND IN AN EX-PARTE MANNER. THE LD CIT(A), WE FIND HAS REFU SED TO CONDONE THE DELAY SUMMARARILY EVEN WITHOUT CONSIDERING THE LETT ER DT. 22/07/2013 FILED BEFORE HIM ON 23/07/2013 SEEKING CONDONATION OF DELAY. 4.4 TAKING INTO ACCOUNT THE FACTS AND CIRCUMSTAN CES OF THE CASE, WE ARE OF THE OPINION THAT, IF THE SAID DELAY IN FILIN G THE APPEALS BEFORE THE LD. CIT(A) IS CONDONED, THERE SHALL BE NO LOSS TO R EVENUE AS LEGITIMATE TAXES PAYABLE BY THE ASSESSEES TO REVE NUE, IN ACCORDANCE WITH LAW, ABOVE WILL BE COLLECTED. MOREOVER, IT IS HARD TO BELIEVE THAT AN ASSESSEE, IN WHOSE CASES TAXES OF RS. 18, 43,607/- AND PENALTIES OF RS. 13, 38,200/- AND RS. 10,000/- HAVE BEEN LEVIED U/S 271(1) (C) AND 271 (1)(B) OF THE ACT RESPECTIVELY, WOULD WANTONLY F ILE THE APPEALS BELATEDLY, THEREBY, JEOPARDIZING HIS OWN CASE. IN THIS VIEW OF THE MATTER, WE ARE OF THE OPINION THAT THIS IS A FIT CA SE FOR CONDONING THE DELAY IN FILING THESE APPEALS BEFORE THE LD.CIT (A) AND ACCORDINGLY CONDONE THE SAME IN THE INTEREST OF EQUITY AND JUST ICE. 4.5 IN RESPECT OF THE LD CIT (A)S ORDER DT. 03/0 2/2014, PASSED IN RESPECT OF THE ORDER OF ASSESSMENT FOR ASSESSMENT Y EAR 2007-08 DT. 29/12/2009, WE ALSO FIND THAT THE LD CIT(A) AFTER R EFUSING CONDONATION OF DELAY IS FILING THE APPEAL AND DISMI SSING THE ASSESSEES APPEAL, AT PARA 2.10 OF HIS ORDER, HAS PROCEEDED TO ADJUDICATE THE ISSUES IN APPEAL ON MERITS. WE ARE OF THE VIEW TH AT ONCE THE LD CIT(A) HAS REFUSED THE TO CONDONE THE DELAY IN FILING THE APPEAL, THE SAID APPEAL IS NOT ADMITTED FOR HEARING AND ADJUDICATION AND THEREFORE HE WAS PRECLUDED FROM ADJUDICATING THE APPEAL ON ME RITS, AS NOTHING IS PENDING BEFORE HIM. IN THIS REGARD, THE ASSESSEE H AS PLACED RELIANCE ON THE DECISION OF THE ITAT, KOLKATA BENCH IN THE C ASE OF DR MURARI 7 ITA NO.3263-3265/MUM/2014 ASSESSMENT YEAR: 2007-08 MOHAN KOKEY IN ITA NO. 1397,1399,1401,1403 AND1406/ KOL/2014 DT. 05/11/2014 WHEREIN FOLLOWING THE DECISION OF THE HO NBLE BOMBAY HIGH COURT IN CIT VS. MYSORE IRON & STEEL WORKS (19 49) 17 ITR 478(BOM), IT WAS HELD AT PARA 8 THEREOF THAT ONCE THE LD. CIT(A) HAS NOT ADMITTED THE APPEAL AS BEING BARRED BY LIMITATI ON, HE SHOULD NOT HAVE ADJUDICATED ON MERITS. IN THIS VIEW OF THE MA TTER AND RESPECTFULLY FOLLOWING THE DECISIONS OF THE HONBLE BOMBAY HIGH COURT (SUPRA) AND THE ITAT KOLKATA BENCH IN THE CASE OF MURARI MOHAN KOKEY (SUPRA), WE SET ASIDE THE ORDERS OF THE LD CIT (A) IN RESPECT O F THE ORDER OF ASSESSMENT FOR ASSESSMENT YEAR 2007-08 DT. 29/12/20 09, AND THE ORDER LEVYING PENALTY U/S 271(1) (B) OF THE ACT DT. 21/10/2010 AND RESTORE THEM TO THE FILE OF THE AO FOR DENOVO ASSES SMENT WITH THE OBSERVATION THAT THE FINDINGS RENDERED BY THE LD CI T(A) ON MERITS SHALL HAVE NO BEARING ON THE FRESH ASSESSMENT TO BE CARRI ED OUT BY THE AO. NEEDLESS TO ADD THE ASSESSEE SHALL BE GIVEN ADEQUAT E OPPORTUNITY OF BEING HEARD AND TO FILE DETAILS ETC. WHICH SHALL BE CONSIDERED ALONG WITH THOSE FILED BEFORE THE CIT(A) AND BEFORE US IN THE PAPER BOOK (PAGE 1 TO 226). 4.6 SINCE WE HAVE SET ASIDE THE ASSESSMENT AND AP PELLATE ORDERS OF AUTHORITIES BELOW ON QUANTUM ISSUES FOR ASSESSMENT YEAR 2007-08 TO THE FILE OF THE AO FOR FRESH ASSESSMENT, THE PENALT Y LEVIED U/S 271(1)(C) OF THE ACT WOULD NOT NOW SURVIVE FOR CONSIDERATION AND THE SAME IS CONSEQUENTLY CANCELLED. 5. IN THE RESULT, THE ASSESSES APPEALS FOR ASSESSM ENT YEAR 2007-08 ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 8 ITA NO.3263-3265/MUM/2014 ASSESSMENT YEAR: 2007-08 ORDER PRONOUNCED IN THE OPEN COUR T ON 11/12/2015 SD/- SD/- ( AMIT SHUKLA ) (JASON P.BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 11 .12.2015 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. !' , $ !' % , / DR, ITAT, MUMBAI 6. &' ( / GUARD FILE. / BY ORDER, ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI PRAMILA