Sumanta Kumar Das, Bhubaneswar V. ACIT, Circle-1(2), Bhubaneswar

ITA 36/CTK/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1217 (ITAT-CUTTACK)
• Duration Of Justice: 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 25-02-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K K BAL
• Keywords: Condonation of delay
• Section: 201

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI C.M. GARG, JM & SHRI L.P. SAHU, AM . / ITA NO. 36 /CTK/201 9 ( / ASSESSMENT YEAR : 20 1 1 - 201 2 ) SUMANTA KUMAR DAS, PLOT NO. - LB - 11 8, STAGE - IV, BUDHESWARI, LAXMISAGAR, BHUBANESWAR - 751006 VS. ACIT, CIRCLE - 1(2), BHUBANESWAR ./ PAN NO. : A DYPD 8979 L ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI K.K.BAL , ADVOCATE /REVENUE BY : SHRI SUBHENDU DUTTA , DR / DATE OF HEARING : 26 / 11 /2019 / DATE OF PRONOUNCEMENT : 06 / 1 2 /2019 / O R D E R PER L.P.SAHU , A M : TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT( A) - 1 , BHUBANESWAR , DATED 27.10.2015 FOR THE ASSESSMENT YEAR 201 1 - 201 2 . 2. AS PER THE OFFICE NOTE, THERE IS A DELAY OF THREE YEAR S THREE MONTHS AND FIVE DAYS IN FILING THE APPEAL OF ASSESSEE. THE ASSESSEE HAS FILED AN APPLICATION FOR CONDONATION OF DELAY AL ONG WITH AFFIDAVIT STATING THEREIN THAT DUE TO PROLONGED ILLNESS AND NEGLIGENCE OF THE PREVIOUS COUNSEL, HE COULD NOT FILE THE APPEAL IN TIME. ON THE OTHER HAND, LD. DR DID NOT OBJECT TO CONDONE THE DELAY. WE HAVE ALSO GONE THROUGH THE SAID APPLICATION A LONG WITH THE AFFIDAVIT FILED BY THE ASSESSEE EXPLAINING ITA NO. 36 /CTK/201 9 2 THE REASONS FOR DELAY. THE HON'BLE SUPREME COURT IN THE CASE OF COLLECTOR, LAND ACQUISITION VS. MST KATJI & OTHERS (167 ITR 471) OBSERVED THAT: ' THE LEGISLATURE HAS CONFERRED THE POWER TO CONDONE DELAY BY ENACTING SEC 5 OF LIMITATION ACT IN ORDER TO ENABLE THE COURTS TO DO SUBSTANTIAL JUSTICE TO PARTIES DISPOSING OF MATTER ON 'MERITS'. THE EXPRESSION 'SUFFICIENT CAUSE', EMPLOYED BY THE LEGISLATURE IS ADEQUATELY ELASTIC TO ENABLE THE COURTS TO APPLY THE LAW IN A MEANINGFUL MANNER WHICH SUB SERVES THE ENDS OF JUSTICE THAT BEING THE LIFE PURPOSE OF THE EXISTENCE OF THE INSTITUTION OF COURT. IT IS COMMON KNOWLEDGE THAT THIS COURT HAS BEEN MAKING JUSTIFI ABLY LIBERAL APPROACH IN MATTERS INSTITUTED IN THIS COURT. BUT THE MESSAGE DOES NOT APPEAR TO HAVE PERCOLATED DOWN TO ALL THE OTHER COURTS IN THE HIERARCHY. AND SUCH A LIBERAL APPROACH IS ADOPTED ON PRINCIPLE AS IT IS REALIZED THAT: (I) ORDINARILY, A LIT IGANT DOES NOT STAND TO BENEFIT BY LODGING AN APPEAL LATE. (II) REFUSING TO CONDONE DELAY CAN RESULT IN A MERITORIOUS MATTER BEING THROWN OUT AT THE VERY THRESHOLD AND CAUSE OF JUSTICE BEING DEFEATED. AS AGAINST THIS, WHEN DELAY IS CONDONED, THE HIGHEST T HAT CAN HAPPEN IS THAT A CAUSE WOULD BE DECIDED ON MERITS AFTER HEARING THE PARTIES. (III) 'EVERY DAY'S DELAY MUST BE EXPLAINED' DOES NOT MEAN THAT A PEDANTIC APPROACH SHOULD BE MADE. WHY NOT EVERY HOUR'S DELAY, EVERY SECOND'S DELAY? THE DOCTRINE MUST BE A PPLIED IN A RATIONAL COMMON SENSE AND PRAGMATIC MANNER. (IV) WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATIONS ARE PITTED AGAINST EACH OTHER, THE CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRED, FOR THE OTHER SIDE CANNOT CLAIM TO HAVE VESTED RIG HT IN INJUSTICE BEING DONE BECAUSE OF A NON - DELIBERATE DELAY. (V) THERE IS NO PRESUMPTION THAT DELAY IS OCCASIONED DELIBERATELY, OR ON ACCOUNT OF CULPABLE NEGLIGENCE, OR ON ACCOUNT OF MALA FIDES. A LITIGANT DOES NOT STAND TO BENEFIT BY RESORTING TO DELAY. IN FACT, HE RUNS A SERIOUS RISK. (VI) IT MUST BE GRASPED THAT THE JUDICIARY IS RESPECTED NOT ON ACCOUNT OF ITS POWER TO LEGALIZE INJUSTICE ON TECHNICAL GROUNDS BUT BECAUSE IT IS CAPABLE OF REMOVING INJUSTICE AND IS EXPECTED TO DO SO.' 3 . THE HON'BLE APE X COURT FURTHER IN THE CASE OF N. BAL KRISHNAN V/S. M. KRISHNAMURTHY - [(1998) 7 SCC 123] OBSERVED THAT: 'THE PRIMARY FUNCTION OF A COURT IS TO ADJUDICATE THE DISPUTE BETWEEN THE PARTIES & TO ADVANCE SUBSTANTIAL JUSTICE. THE TIME LIMIT FIXED FOR APPROACHIN G THE COURT IN DIFFERENT SITUATIONS IS NOT BECAUSE ON THE EXPIRY OF SUCH TIME A BAD CAUSE WOULD TRANSFORM IN TO A GOOD CAUSE. RULES OF LIMITATION ARE NOT MEANT TO DESTROY THE RIGHTS OF PARTIES. THEY ITA NO. 36 /CTK/201 9 3 ARE MEANT TO SEE THAT PARTIES DO NOT RESORT TO DILATORY T ACTICS, BUT SEEN THEIR REMEDY PROMPTLY. LAW OF LIMITATION IS THUS FOUNDED ON PUBLIC POLICY. IT IS ENSHRINED IN THE MAXIM 'INTEREST REPUBLIC UP SIT FINIS LITHIUM' (IT IS FOR GENERAL WELFARE THAT A PERIOD BE PUT TO LITIGATION). RULES OF LIMITATION ARE NOT ME ANT TO DESTROY THE RIGHTS OF THE PARTIES. THERE IS NO PRESUMPTION THAT DELAY IN APPROACHING THE COURT IS ALWAYS DELIBERATE. IN EVERY CASE OF DELAY, THERE CAN BE SOME LAPSE ON THE PARTY OF THE LITIGANT CONCERNED. THAT ALONE IS NOT ENOUGH TO TURN DOWN HIS P LEA AND TO SHUT THE DOOR AGAINST HIM. IF THE EXPLANATION DOES NOT SMACK OF MALA FIDES OR IT IS NOT PUT FORTH AS PER OF A DILATORY STRATEGY, THE COURT MUST SHOW UTMOST CONSIDERATION TO THE SUITOR.' 6. IN THE CASE OF CONCORD OF INDIA INSURANCE CO. LTD. V. SMT. NIRMALA DEVI AIR 1979 SC 1666, THE SUPREME COURT HAS HELD THAT A LEGAL ADVICE TENDERED BY A PROFESSIONAL AND THE LITIGANT ACTING UPON IT ONE WAY OR THE OTHER COULD BE A SUFFICIENT CAUSE TO SEEK COND ONATION OF DELAY AND COUPLED WITH THE OTHER CIRCUMSTANCES AND FACTORS FOR APPLYING LIBERAL PRINCIPLES AND THEN SAID DELAY CAN BE CONDONED. EVENTUALLY, AN OVERALL VIEW IN THE LARGER INTEREST OF JUSTICE HAS TO BE TAKEN. NONE SHOULD BE DEPRIVED OF ADJUDICATIO N ON MERITS UNLESS THE COURT OF LAW OR THE TRIBUNAL/APPELLATE AUTHORITY FINDS THAT THE LITIGANT HAS DELIBERATELY AND INTENTIONALLY DELAYED FILING OF THE APPEAL THAT HE IS CARELESS, NEGLIGENT AND HIS CONDUCT IS LACKING IN BONA FIDES. 4. CONSIDERING THE APP LICATION ALONG WITH THE AFFIDAVIT OF THE ASSESSEE FOR CONDONATION OF DELAY AND RESPECTFULLY FOLLOWING THE ABOVE DECISIONS OF HONBLE SUPREME COURT, WE CONDONE THE DELAY IN FILING THE APPEAL AND THE APPEAL IS HEARD FINALLY. 5. THE ASSESSEE HAS RAISED THE FO LLOWING GROUNDS OF APPEAL : - 1. FOR THAT THE ORDER OF THE FORUM BELOW IS ARBITRARY, UNJUST, ILLEGAL AND CONTRARY TO THE EVIDENCES AVAILABLE ON RECORD, THEREFORE THE ASSESSMENT IS LIABLE TO BE QUASHED. 2. FOR THAT THE INCOME HAS BEEN ESTIMATED @ 12 % WITHOUT CONSIDERING T HE NATURE OF BUSINESS, TURNOVER , ASSESSEE'S OWN PROFIT RATE IN THE PRECEDING ASSESSMENT YEARS AND PROVIDING ANY COMPARATIVE CASE OF SIMILAR LINE OF BUSINESS . THEREFORE THE ESTIMATION IS ARBITRARY WITHOUT ANY BASIS AND IT SHOULD HAVE BEEN REDUCED TO THE RATE OFFERED THE ASSESSEE AT 4.2%. 3. FOR THAT THE TOTAL BANK DEPOSITS AT RS.5,34,92,958/ - INCLUDES TURNOVER DISCLOSED AT RS. 1,47,51,785/ - . SINCE THE ASSESEE HAS ALREADY DISCLOSED THE INCOME ON RS. 1,47,51,785/ - IT SHOULD NOT HAVE B EEN DEDUCTED FROM RS.5,34,92,958/ - FOR THE PURPOSE OF ESTIMATION . THEREFORE THE ESTIMATION OF INCOME ON THE ENTIRE ITA NO. 36 /CTK/201 9 4 BANK DEPOSITS AMOUNT TO DOUBLE TAXATION. THEREFORE THE INCOME ASSESSED IS ILLEGAL AND LIABLE TO BE REDUCED ACCORDINGLY. 4. FOR THAT THE ASSESSEE CRAVES FOR ADDITION, MODIFICATION ANY GROUNDS OF APPEAL EITHER BEFORE THE HEARING OF THE APPEAL OR AT THE TIME OF HEARING OF THE APPEAL. 6. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL, ENGAGED IN THE BUSINESS OF PLYING COMMERCI AL VEHICLES IN THE NAME AND STYLE OF LIFE TRANSPORTS AND FILED HIS RETURN OF INCOME ELECTRONICALLY ON 12.10.2011 DECLARING TOTAL INCOME AT RS.15,00,604/ - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES WERE ISSUED TO THE ASSESSE E. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE IS RECEIVING THE INCOME FROM BUSINESS PROFESSION, HOUSE PROPERTY AND INCOME FROM OTHER SOURCES. ON VERIFICATION OF RECORDS, THE AO FOUND THAT THE ASSESSEE HAS CONCEALED HIS INCO ME AND ACCORDINGLY, THE AO REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE U/S.145(3) OF THE ACT ESTIMATED @12% OF THE GROSS RECEIPTS OF RS.5,34,92,958/ - WHICH COMES TO RS.64,19,155/ - AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. FURTHER WITH REG ARD TO HOUSE PROPERTY, THE AO HAS ACCEPTED THE SAME AS CLAIMED IN THE RETURN OF INCOME. HOWEVER, WITH REGARD TO INCOME FROM BANK DEPOSITS, THE AO FOUND THAT THE ASSESSEE HAS RECEIVED INTEREST OF RS.1864/ - AND AS THE ASSESSEE HAS DECLARED INTEREST ONLY RS. 1418/ - IN THE RETURN, THEREFORE, THE AO DEDUCTED THE SAME AND ADDED RS.446/ - TO THE TOTAL INCOME OF THE ASSESSEE. FINALLY, THE AO ASSESSED THE TOTAL INCOME OF THE ASSESSEE ITA NO. 36 /CTK/201 9 5 AT RS.20,29,710/ - MAKING ADDITIONS UNDER THE DIFFERENT HEADS AND PASSED ORDER U/S.14 3(3) OF THE ACT VIDE DATED 28.03.2014. 7. FEELING AGGRIEVED FROM THE ORDER OF AO, THE ASSESSEE APPEALED BEFORE THE CIT(A) AGITATING THE ADDITION MADE BY THE AO ADOPTING RATE OF PROFIT @12% ON THE TOTAL TURNOVER ALONG WITH PENALTY U/S.271(1)(C) OF THE ACT, HOWEVER, THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE ON BOTH THE COUNTS. 8. FURTHER FEELING AGGR IEVED FROM THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL AGAINST THE ADDITION CONFIRMED BY THE CIT(A) ESTIMATI NG THE PROFIT OF THE ASSESSEE @12% ON THE TOTAL TURNOVER. 9. LD.AR BEFORE US SUBMITTED THAT BOTH THE AUTHORITIES BELOW HAVE NOT CONSIDERED THE INCOME OF BUSINESS, TURNOVER AND ASSESSEES NET PROFIT RATE SHOWN IN THE PRECEDING ASSESSMENT YEARS AND PROVIDING ANY COMPARATIVE CASE OF SIMILAR LINE OF BUSINESS. IT WAS ALSO THE CONTENTION OF LD. AR THAT THE TOTAL BANK DEPOSITS AT RS.5,34,92,958/ - INCLUDES TURNOVER DISCLOSED AT RS.1,47,51,785/ - . SINCE THE ASSESSEE HAS ALREADY DISCLOSED THE INCOME OF RS.1,47,51,785/ - , THEREFORE, THE AO HAS WRONGLY DEDUCTED FROM RS.5,34,92,958/ - FOR THE PURPOSE OF ESTIMATION OF INCOME ON THE ENTIRE BANK DEPOSITS, WHICH AMOUNTS TO DOUBLE TAXATION. LD. AR FURTHER SUBMITTED THAT THERE IS NO BASIS ON WHICH THE AO HAS ESTIMATED THE PROFIT FROM TRANSPORT BUSINESS @12%. IT WAS ALSO ITA NO. 36 /CTK/201 9 6 SUBMITTED THAT IN TRANSPORT BUSINESS, NORMAL PROFIT IS AROUND 4 TO 5% AND, HENCE, BOTH THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN ESTIMATING AND CONFIRMING THE PROFIT AT A VERY HIGH RATE OF 12%. THEREFORE, THE LD. AR SUBMITTED THAT A REASONABLE PERCENTAGE OF PROFIT MAY KINDLY BE DIRECTED TO BE ESTIMATED. 10. LD. DR, ON THE OTHER HAND, RELIED ON THE ORDERS OF AUTHORITIES BELOW. 11. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSING THE ENTIRE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE AO HAS ESTIMATED NET PROFIT OF THE ASSESSEE ON THE GROSS TURNOVER @12 % AFTER REJECTING BOOKS OF ACCOUNTS OF THE ASSESSEE ON ACCOUNT OF NON - SATISFACTION WITH THE CORRECTNESS & COMPLETENESS OF THE ACCOUNTS OF THE ASSESS EE. THE CIT(A) ALSO THUMBED TO THE VIEW TAKEN BY THE AO. AS PER THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE US THAT THE ASSESSEE IS ENGAGED IN TRANSPORT BUSINESS AND THE ENTIRE CREDIT MADE INTO THE B ANK ACCOUNT ARE THE B USINESS RECEIPTS . THIS ACT OF THE AO AMOUNT S TO DOUBLE STANDARD. DURING THE COURSE OF HEARING, THE ASSESSEE PRODUCED A COPY OF ASSESSMENT ORDER IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2009 - 2010 AND SUBMITTED THAT D URING THE ASST. YEAR 2009 - 10 THE PROFIT FROM TRANSPORT BUSINESS AND BUS INESS AND SALE OF USED VEHICLE HAS BEEN ACCEPTED @ 5.76% OF THE GROSS RECEIPTS AT RS.1,38,82,346/ - AND PROFIT PERCENTAGE FROM TRANSPORT BUSINESS IS 7.5%. THEREFORE , THE ESTIMATION OF NET PROFIT @12 % IS ITA NO. 36 /CTK/201 9 7 QUITE HIGH IN COMPARISON TO THE PERCENTAGE OF NET PRO FIT ACCEPTED BY THE DEPARTMENT IN ASSESEE'S OWN CASE . CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AND THE FACT THAT THE ASSESSEE IS ENGAGED IN THE TRANSPORT BUSINESS, TO MEET THE END OF JUSTICE, WE RESTRICT THE ESTIMATION MADE BY THE AO AND CONFIRMED BY THE CIT(A) TO 10 % AND DIRECT THE AO TO APPLY 10 % OF THE GROSS RECEIPT AS ` AGAINST 12%. ACCORDINGLY, WE MODIFY THE IMPUGNED ORDER AND PARTLY ALLOW THE GROUNDS OF APPEAL OF THE ASSESSEE. 12 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWE D . ORDER PRONOUNCED IN THE OPEN COURT ON 06 / 1 2 / 201 9 . S D/ - ( C.M.GARG ) S D/ - (L.P.SAHU) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK ; DATED 06 / 1 2 /201 9 PRAKASH KUMAR MISHRA, SR.P.S. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 1. / THE APPELLANT - SUMANTA KUMAR DA S, PLOT NO. - LB - 118, STAGE - IV, BUDHESWARI , LAXMISAGAR, BHUBANESWAR - 751006 2. / THE RESPONDENT - ACIT, CIRCLE - 1(2), BHUBANESWAR 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT , CUTTACK 6. / GUARD FILE. //TRUE COPY//