AKSHAY SOFTWAREE TECHNOLOGIES LTD, NAVI MUMBAI V. ASST CIT CIR 15(1)(1), MUMBAI

ITA 3687/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8940 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 22-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH DESH
• Assessee Lawyers: URVI A ME HTA
• Keywords: Opportunity of being heard; Principle of natural justice; Deemed to accrue or arise in india; Reasonable cause; Bad and doubtful debts
• Section: 142(1); 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNALMUMBAI BENCHES A , MUMBAI BEFORE S HRI G.S. PANNU (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 3687 /MUM/20 1 7 ASSESSMENT YEAR: 2012 - 13 M/S AKSHAY SOFTWARE - TECHNOLOGIES LTD., UNIT NO. 214, BUILDING 2, MILLENNIUM BUSINESS PARK, SECTOR 1, MAHAPE, NAVI MUMBAI - 400710 PAN: AAACA4778Q VS. THE ASSISTANT COMMISSIONER OF INCOME TAX - CIRCLE 15 (1)(1), AAYKAR BHAVAN, NEW MARINE LINES, MUMBAI - 400020 (APPELLANT) (RESPONDENT) ASSESSEE BY : MS. URVI A. ME HTA (AR REVENUE BY : SHRI SAURABH DESHPANDE (DR) DATE OF HEARING: 07 /09 /201 7 DATE OF PRONOUNCEMENT: 27 / 10 /201 7 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST ORDER DATED 30/03 /2017 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 34 , MUMBAI , FOR THE A S S ESSMENT YEAR 2012 - 13 , WHEREBY THE LD. CIT (A) HAS DISMISSED THE APPEAL FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDER PASSED U/S 143 (3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE A CT). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY ENGAGED IN THE BUSINESS OF PROVIDING SOFTWARE SERVICES AND SALE OF PRODUCTS DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATIO N, FILED ITS RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 97,64,110/ - . SINCE, THE CASE WAS SELECTED FOR SCRUTINY , NOTICE U/S 143(2) AND 142(1) OF THE ACT WERE SERVED UPON THE ASSESSEE AND IN RESPONSE THEREOF THE AUTHORIZED REPRESENTATIVE (AR) OF THE ASSESSEE APPEARED BEFORE THE AO AND MADE SUBMISSIONS . IT WAS NOTICED THAT THE 2 ITA NO. 368 7 /MUM/2017 ASSESSMENT YEAR: 2012 - 1 3 ASSESSEE HAD MADE INVESTMENT S DURING THE YEAR UNDER CONSIDERATION. ACCORDINGLY, THE ASSESSEE WAS TO EXPLAIN AS TO WHY DISALLOWANCE U/S 14A READ WITH RULE 8D SHOULD NOT BE MADE. T HE ASSESSEE CONTENDED THAT SECTION 14A IS NOT APPLICABLE IN ITS CASE. REJECTING THE CONTENTION OF THE ASSESSEE, THE AO MADE DISALLOWANCE OF RS. 6,71,305/ - U/S 14A OF THE ACT AND ADDED THE SAID AMOUNT TO THE INCOME OF THE ASSESSEE THEREBY DETERMINED THE TOT AL INCOME OF THE ASSESSEE RS. 1,04,35,410/ - (ROUNDED OFF). FEELING AGGRIEVED, THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE LD. CIT (A). THE LD. CIT (A) DISMISSED THE APPEAL EX - PARTE AS THE ASSESSEE DID NOT APPEAR BEFORE THE LD. CIT (A) ON THE DA TE OF HEARING. 3 . THE ASSESSEE HAS PREFERRED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDE R PASSED BY THE LD. CIT (APPEAL S ), BEFORE THE TRIBUNAL ON THE FOLLOWING EFFECTIVE GROUNDS: - 1:0 RE: PASSING AN EX - PARTE ORDER: 1:1 THE COMMISSIONER OF INCOME - TAX (APPEALS ) HAS ERRED IN PASSING AN EX - PARTE ORDER IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. 1:2 THE APPELLANT SUBMITS THAT CONSIDERING THE FACTS OF ITS CASE AND THE LAW PREVAILING ON THE SUBJECT THE EX - PARTE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) IS BAD IN LAW AND AB - INITIO VOID AND HENCE OUGHT TO BE STRUCK DOWN. 1:3 THE COMMISSIONER OF INCOME - TAX (APPEALS) SHOULD BE DIRECTED TO RE - HEAR THE APPEAL DE - NEVO. WITHOUT PREJUDICE TO THE FOREGOING A. RE.: COMPUTATION OF INCOME IN ACCORDA NCE WITH NORMAL PROVISIONS OF THE INCOME - TAX ACT, 1961 2:0 RE.: DISALLOWANCE U/S 14A OF THE INCOME - TAX ACT, 1961: 2:1 THE COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING A SUM OF 3 ITA NO. 368 7 /MUM/2017 ASSESSMENT YEAR: 2012 - 1 3 RS. 6,71,305 / - U/S 14A OF THE INCOME - TAX ACT, 1961, R.W.R. 8D OF THE INCOME - TAX RULES, 1962. 2:2 THE APPELLANT SUBMITS THAT CONSIDERING THE FACTS AND CIRCUMSTANCES OF ITS CASE AND THE LAW PREVAILING ON THE SUBJECT NO FURTHER DISALLOWANCE U/S 14A OF THE INCOME - TAX ACT , 1961 IS CALLED FOR AND THE DISALLOWANCE SO MADE BY THE COMMISSIONER OF INCOME - TAX (APPEALS) IS MISCONCEIVED, INCORRECT AND ILLEGAL. 2:3 THE APPELLANT SUBMITS THAT THE ASSESSING OFFICER BE DIRECTED TO DELETE THE DISALLOWANCE SO MADE BY HIM AND TO RE - COMP UTE ITS TOTAL INCOME ACCORDINGLY. 3:0 RE.: CREDIT FOR TAX DEDUCTED AT SOURCE AMOUNTING TO RS. 2,10,456/ - GRANTED SHORT: 3:1 THE COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN GRANTING THE APPELLANT CRE DIT FOR TAX DEDUCTED AT SOURCE SHORT BY RS. 2,10,456/ - WHILE COMPUTING ITS TAX LIABLITY FOR THE YEAR UNDER CONSIDERATION . 3:2 THE APPELLANT SUBMITS THAT CONSIDERING THE FACTS AND CIRCUMSTANCES OF ITS CASE AND THE LAW PREVAILING ON THE SUBJECT IT IS ENTITL ED TO FULL CREDIT FOR TAX DEDUCTED AT SOURCE FROM ITS INCOME AS CLAIMED BY IT. 3:3 THE APPELLANT SUBMITS THAT THE ASSESSSING OFFICER BE DIRECTED TO GRANT FULL CREDIT FOR TAX DEDUCTED AT SOURCE AND TO RE - COMPUTE ITS TAX LIABILITY ACCORDINGLY. B. RE.: CO MPUTATION OF BOOK PROFITS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 115JB OF THE INCOME - TAX ACT, 1961 4:0 RE.: NON REDUCTION OF PROVISION FOR BAD DEBTS WRITTEN BACK AGGREGATING TO RS. 1,95,230/ - .: 4:1 THE COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN NOT REDUCING THE AMOUNT OF RS. 1,95,230/ - BEING THE AMOUNT OF PROVISION FOR BAD DEBTS 4 ITA NO. 368 7 /MUM/2017 ASSESSMENT YEAR: 2012 - 1 3 WRITTEN BACK WHILE ARRIVING AT THE APPELLANTS BOOK PROFITS FOR THE PURPOSE OF SECTION 115JB OF THE INCOME TAX ACT , 1961. 4:2 THE APPELLANT SUBMITS THAT CONSIDERING THE FACTS AND CIRCUMSTANCES OF ITS CASE AND THE LAW PREVAILING ON THE SUBJECT THE AMOUNT OF RS. 1,95,230/ - BEING PROVISION FOR NON - PERFORMING ASSETS WRITTEN BACK OUGHT TO HAVE BEEN REDUCED WHILE ARRIVING AT ITS BOOK PROFITS FOR THE PURPOSE OF SECTION 115JB OF THE INCOME - TAX ACT, 1961. 4:3 THE APPELLANT SUBMITS THAT THE ASSESSING OFFICER BE DIRECTED TO REDUCE THE AMOUNT OF RS. 1,95,230/ - WHILE COMPUTING ITS BOOK PROFITS FOR THE PURPOSE OF SECTION 115JB OF THE INCOME - TAX ACT, 1961. 5:0 RE.: TAX CREDIT IN RESPECT OF TAX PAID ON DEEMED INCOME IN TERMS OF 115JAA OF THE INCOME - TAX ACT, 1961 HAS NOT BEEN GRANTED.: 5:1 THE COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSI NG OFFICER IN NOT CONSIDERING THE TAX CREDIT U/S 115JAA OF THE INCOME - TAX ACT, 1961 WHILE COMPUTING THE APPELLANTS TAX FOR THE YEAR. 5:2 THE APPELLANT SUBMITS THAT CONSIDERING THE FACTS AND CIRCUMSTANCES OF ITS CASE AND THE LAW PREVAILING ON THE SUBJECT THE APPELLANT IS ENTITLED TO CREDIT FOR MAT PAID IN THE PRECEDING YEARS AND THE STAND TAKEN BY THE ASSESSING OFFICER IN THIS REGARD IS ERRONEOUS AND NOT IN ACCORDANCE WITH LAW. 5:3 THE APPELLANT SUBMITS THAT THE ASSESSING OFFICER BE DIRECTED TO DELETE THE DISALLOWANCE SO MADE BY HIM AND TO RE - COMPUTE IS TOTAL INCOME ACCORDINGLY. 4. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD. CIT (A) HAS PASSED THE IMPUGNED ORDER IN VIOLATION OF ONE OF THE CARDINAL PRINCIPLES OF NATURAL JU STICE AS THE IMPUGNED ORDER HAS BEEN PASSED EX PARTE. THE LD. COUNSEL FURTHER SUBMITTED THAT THE LD. CIT(A) OUGHT TO HAVE DECIDED THE APPEAL AFTER HEARING THE ASSESSEE. THE ASSESSEE SOUGHT A DJOURNMENTS IN ORDER TO 5 ITA NO. 368 7 /MUM/2017 ASSESSMENT YEAR: 2012 - 1 3 COMPILE THE RELEVANT DOCUMENTS BEFORE FILI NG WRITTEN REPLY. DELAY IN FILING REPLY WAS NEITHER INTENTIONAL NOR NEGLIGENT ACT OF THE ASSESSEE. THE LD. COUNSEL FURTHER SUBMITTED THAT IN THE INTEREST OF JUSTICE, EITHER THE ORDER MAY BE SET ASIDE OR THE SAME MAY BE SENT BACK TO THE LD. CIT(A) FOR FRESH ADJUDICATION AFTER HEARING THE ASSESSEE. 5. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) SUBMITTED THAT THE AO HAS PASSED THE ASSESSMENT ORDER AFTER HEARING THE ASSESSEE AND TAKING INTO CONSIDERATION THE ENTIRE EVIDENCE PLACED ON RE CORD BY THE ASSESSEE TO SUBSTANTIATE ITS CLAIM. THE LD. DR FURTHER SUBMITTED THAT SINCE THE ASSESSEE FAILED TO PRESENT ITS CASE BEFORE THE LD. CIT (A), DESPITE AVAILING SUFFICIENT OPPORTUNITY, THE LD. CIT (A) HAS RIGHTLY PASSED THE EX - PARTE ORDER. HENCE, T HERE IS NO MERIT IN THE APPEAL OF THE ASSESSEE. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE ORDERS PASSED BY THE AUTHORITIES BELOW . T HE LD. CIT (A) HAS PASSED THE IMPUGNED ORDER ON THE GROUND THAT THE ASSESSEE HAS FAILED TO FILE WRITTE N STATEMENT AND NECESSARY DETAILS IN SUPPORT OF THE GROUNDS OF APPEAL RAISED DESPITE SUFFICIENT OPPORTUNITY GIVEN TO IT . THE OBSERVATIONS OF THE LD. CIT(A) READ AS UNDER: - 2.4.4 FROM THE ABOVE, IT IS OBSERVED THAT SEVERAL OPPORTUNITIES OF HEARING WE RE AFFORDED TO THE APPELLANT AND THERE HAS BEEN NO PROPER COMPLIANCE WHICH SHOWS THAT THE APPELLANT HAS NOT INTEREST TO PURSUE OR PROSECUTE THE APPEAL. THE NOTICES HAVE BEEN DULY SERVED ON THE APPELLANT AND THE ACKNOWLEDGEMENT HAS BEEN PLACED ON RECORD. BU T THERE WAS NO RESPONSE FROM THE APPELLANT/THE AR NOR WAS FILED ANYTHING IN SUPPORT OF THE APPEAL. THOUGH IT HAS SOUGHT ADJOURNMENT ON VARIOUS OCCASIONS, IT DID NOT COMPLY WITH THE APPEAL PROCEEDINGS. IT IS THE APPELLANT WHICH FILED THIS APPEAL AGGRIEVED B Y THE ASSESSMENT ORDER AND THE APPELLANT IS EXPECTED TO NOT ONLY PURSUE THE APPEAL BUT EFFECTIVELY PROSECUTE THE APPEAL BEFORE THE APPELLATE AUTHORITY IF IT IS GENUINELY AGGRIEVED BY THE ASSESSMENT ORDER. IN VIEW OF THE FACTS AND 6 ITA NO. 368 7 /MUM/2017 ASSESSMENT YEAR: 2012 - 1 3 CIRCUMSTANCES NARRATED ABO VE, THE APPEAL FILED BY THE APPELLANT DOES NOT DESERVE ANY MERIT CONSIDERATION AND AS TO BE DISMISSED. HENCE, I HAVE NO OTHER OPTION BUT TO DISMISS THE APPEAL. RELIANCE IS PLACED ON THE DECISION OF THE HONBLE CHANDIGARH TRIBUNAL IN THE CASE OF SUSHAM SING LA (33 ITR 449)(2014). IN THIS CASE IT WAS HELD THAT WHERE NONE WAS PRESENT ON THE BEHALF OF THE APPELLANT FOR HEARING, NEITHER ANY ADJOURNMENT WAS SOUGHT, THE APPEALS FILED BY THE ASSESSEE WAS TO BE DISMISSED. HONBLE COCHIN BENCH OF THE ITAT IN ITS DECIS ION (43 TAXMANN.COM 176) OBSERVED THAT THE ASSESSEES APPEAL CAN BE DISMISSED WHERE THE ASSESSEE HAD FAILED TO SHOW THAT THERE WAS A REASONABLE CAUSE FOR NON - APPEARANCE ON THE DATE OF HEARING OF APPEAL. ALSO, THE HONBLE JURISDICTIONAL HIGH COURT IN A RECE NT JUDGMENT IN THE CASE OF BHARAT PETROLEUM CORPORATION LTD. (359 ITR 371) (2014) UPHELD THE DISMISSAL OF THE APPEAL BY THE TRIBUNAL FOR NOT RESPONDING THE APPEAL FILED BEFORE THE TRIBUNAL. SIMILARLY, HONBLE BOMBAY HIGH COURT IN THE CASE OF JAYANTILAL S. SHAH (53 TAXMAN 229) UPHELD THE DECISION OF THE TRIBUNAL IN FAVOUR OF THE REVENUE. IN THIS CASE THE ASSESSEE SOUGHT AN ADJOURNMENT IN CERTAIN PROCEEDINGS BEFORE THE TRIBUNAL WHICH WAS GRANTED AND ON THE ADJOURNED DATE CHOSE NOT TO ATTEND THE PROCEEDINGS. T HE TRIBUNALS REJECTION OF THE ASSESSEES PETITION WITHOUT FURTHER OPPORTUNITY OF BEING HEARD WAS UPHELD BY THE BOMBAY HIGH COURT. RELIANCE IS ALSO PLACED ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF MULTIPLAN INDIA P LTD. 38ITD 320 (1991 ) DELHI). IN THE LIGHT OF THE FACTS OF THE CASE AND THE DECISIONS OF THE CASES CITED ABOVE, I DISMISS THE APPEAL. 7. WE NOTICE THAT THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE WITHOUT GOING INTO THE MERIT S OF THE CASE OR DISCUSSING THE FIN DINGS OF AO IN THE LIGHT OF THE EVIDENCE ON RECORD. THE LD CIT(A) HAS DISMISSED THE APPEAL RELYING ON THE VARIOUS DECISIONS OF HIGH COURTS AND THE TRIBUNALS. WE NOTICED THAT DURING THE APPELLATE PROCEEDING THE ASSESSEE SOUGHT ADJOURNMENTS ON FOUR DATES FIX ED FOR HEARING AND DESPITE THAT THE ASSESSEE DID NOT APPEAR 30.03.2017 WHEN THE CASE WAS FIXED FOR FINAL HEARING. THOUGH THE LD. CIT(A) HAS GIVEN SEVERAL OPPORTUNITIES TO THE ASSESSEE YET AS PER THE SETTLED LAW REQUIREMENTS OF FAIR HEARING HAS TWO ELEMENTS I.E., OPPORTUNITY TO BE HEARD 7 ITA NO. 368 7 /MUM/2017 ASSESSMENT YEAR: 2012 - 1 3 MUST BE GIVEN AND SUCH OPPORTUNITY MUST BE REAL AND NOT ILLUSORY. IN THE PRESENT CASE APART FROM PASSING EX PARTE ORDER THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE WITHOUT GOING INTO THE MERITS OF THE CASE. IN OTH ER WORDS THERE IS NO APPLICATION OF MIND OF THE APPELLATE AUTHORITY ON MERITS OF THE CASE. SINCE, THE ASSESSEE IS DISSATISFIED WITH THE ASSESSMENT ORDER PASSED BY THE AO, WE ARE OF THE CONSIDERED VIEW THAT THE APPELLANT/ASSESSEE SHOULD GET AN OPPORTUNITY T O PRESENT ITS CASE BEFORE THE FIRST APPELLATE AUTHORITY IN THE INTEREST OF JUSTICE. WE , ACCORDINGLY, SET ASIDE THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) AND SEND TH E PRESENT APPEAL BACK T O THE LD. CIT(A) FOR DECIDING THE APPEAL AFRESH AFTER AFFORDING A R EASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE, HOWEVER, DIRECT THE ASSESSEE NOT TO SEEK ADJOURNMENTS ON FRIVOLOUS GROUND(S) DURING THE APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A) . THE APPEAL IS ACCORDINGLY DISPOSED OF. IN THE RESULT, APPEAL F ILED BY THE ASSESSEE FOR A SSESSMENT YEAR 2012 - 201 3 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH OCTOBER , 2017 . SD/ - SD/ - ( G.S. PANNU ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 27 / 10 / 2017 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A ) - 8 ITA NO. 368 7 /MUM/2017 ASSESSMENT YEAR: 2012 - 1 3 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI