M/s. Shanti Construction Company, Ratnagiri V. Income-Tax Officer, Ward-2, Ratnairi

ITA 375/PUN/2020

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 8963 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 15-03-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 263; 143(3); 234B; 143(2); 264; 13

Judgement Text

॥ आयकर अपीलीय न्यायाधिकरण, पुणे “बी” न्यायपीठ, पुणे में ॥ ITAT-Pune Page 1 of 16 IN THE INCOME TAX APPELLATE TRIBUNAL, PUNE “B” BENCH, PUNE BEFORE SHRI SS VISWANETHRA RAVI, JUDICIAL MEMBER AND SHRI G. D. PADMAHSHALI, ACCOUNTANT MEMBER आयकर अपीऱ सं. / ITA No. 374 & 375/PUN/2020 निर्धारण वर्ा / Assessment Year : 1999-2000 M/s Shanti Construction Company Ram Lane, Ratnagiri. PAN : ABHFS1628N . . . . . . . अपीऱधर्थी / Appellant बनाम / V/s. Income Tax Officer, Ward-2, Ratnagiri. . . . . . . . प्रत्यर्थी / Respondent द्वारा / Appearances Assessee by : None for the assessee. Revenue by : Shri M. G. Jasnani. स ु नवाई की तारीख / Date of conclusive Hearing : 08/09/2022 घोषणा की तारीख / Date of Pronouncement : 08/09/2022 आदेश / ORDER PER G. D. PADMAHSHALI, AM; Two appeals of the assessee are assailed against the orders of the Commissioner of Income Tax (Appeals)-2, Kolhapur [for short “CIT(A)”] dt. 30/01/2020 passed u/s 250 of the Income-tax Act, 1961 [for short “the Act”], which ascended out of separate orders of Income Tax Officer Ward-2, Ratnagiri [for short “AO”] dt. 26/12/2011 & 11/09/2015 passed u/s 143(3) & 220(2) respectively, for assessment year [for short “AY”] 1999-2000. M/s Shanti Construction Company ITA No. 374 & 375/PUN/2020 AY: 1999-200 ITAT-Pune Page 2 of 16 2. Since the one of legal issue involved in these two appeals is identical, with the agreement of both the parties, the matter is heard together for a consolidated order, resultantly the adjudication in lead case ITA/375/PUN/2020 positioned in succeeding paragraphs and to the extent application, shall mutatis mutandis apply to 374/PUN/2020. A. Appeal Number ITA/375/PUN/2020 (Lead case) 3. At the outset, we state that, the grounds raised by the appellant in the appeal memorandum are inconsonance with rule 8 of Income Tax Appellate Tribunal Rules, 1963 [for short “ITAT Rules”], however for the sake of reference reproduced hereinafter as; 1. On the facts and in the circumstance of the case and in law the Ld. CIT(A)-Kolhapur was not justified in dismissing the appeal of the assessee confirming the income assessed by the A.O. and without referring to the written submission filed before him. The appeal order is also ex-parte and without considering the merits of the case. The appeal order is not according to the judicial precedents available. The appeal order be set aside. M/s Shanti Construction Company ITA No. 374 & 375/PUN/2020 AY: 1999-200 ITAT-Pune Page 3 of 16 2. On the facts and in the circumstances of the case and in law the order of the assessment was passed under S. 143(3) r.w.s. 147 of the Act. Therefore Tribunal set aside the order of the CIT(A) and restored the same to the file of the A.O. with directions. The Hon’ble Tribunal vide its order dt. 20 th August 2010 issued the direction to the A.O. when the A.O. had lost his jurisdiction over the case. In view of this the assessment order passed is barred by limitation. The same be annulled. 3. On the facts and in the circumstances of the case and in law the issue of limitation was raised before Ld. CIT(A) in the written submission filed with supporting decisions. Non consideration of the legal issues ought to have been considered by Ld. CIT(A). Non consideration of vital issues assessment is vitiated in law. Therefore, all the proceedings be quashed. 4. On the facts and circumstances of the case and in law the levy of interest u/s 234A, 234B and 234C is not justified. 5. The appellant craves to leave, add/amend or alter any of the above grounds of appeal. M/s Shanti Construction Company ITA No. 374 & 375/PUN/2020 AY: 1999-200 ITAT-Pune Page 4 of 16 4. Common facts of the case borne out the records, briefly stated as; 4.1 The assessee is a partnership firm, in whose case the original assessment u/s 143(3) was initially completed on 27/12/2006 assessing the total income at ₹4,63,570/-, aggrieved thereby the assessee firm unsuccessfully challenged the assessment before first appellate authority [for short ”FAA”], and when the matter travelled to this Tribunal on a previous occasion, the Co-ordinate bench on allowing fresh legal ground raised against non-service of notice u/s 143(2) of the Act, following the judicial precedents laid by Hon’ble Supreme Court of India in “ACIT Vs Hotel Blue Moon” reported at 321 ITR 362 (SC) by an order dt. 20/08/2010 (ITA No 1070/PUN/2008) remanded the matter back to the file of Ld. AO. 4.2 Under a remand back proceedings, the Ld. AO according reasonable opportunities to the assessee of being heard and after considering the material placed before him, has vide para 03 of page number 2 of assessment order recited the entire issue in detailed M/s Shanti Construction Company ITA No. 374 & 375/PUN/2020 AY: 1999-200 ITAT-Pune Page 5 of 16 in establishing on record the irrefutable due service of notice u/s 143(2) which remained controverted, consequently the assessment re-culminated without any variation u/s 143(3) r.w.s. 254 of the Act. 4.3 When the matter was carried before FAA in the second round, the appellant was put to regular notices affording in as much as seven hearings during the period 09/02/2016 to 01/01/2020, which remained unrepresented and unattained by the appellant. In the event of non-prosecution, Ld. CIT(A) after confirming the fact of service of statutory notices on records, following the co-ordinate bench decision in “Abhay P Kalbhor Vs DCIT”, (ITA No 1469/PUN/02), dismissed the appeal of the assessee applying the principle of “VIGILANTIBUS, NO DORMENTIBUS, JURA SUBVENIUNT”. 4.4 The appellant aggrieved by the foresaid order of FAA is before this Tribunal with the grounds of appeal set in para 3 hereinbefore seeking redressal thereagainst. M/s Shanti Construction Company ITA No. 374 & 375/PUN/2020 AY: 1999-200 ITAT-Pune Page 6 of 16 5. When the matter called up at physical hearing, none represented the assessee, bearing in mind second round of appeal and hoary assessment year involved, in the interest of justice we proceeded to adjudicate the matters ex-parte on merits following rule 24 of the ITAT-Rules, which empowers this Tribunal to decide the appeal filed by the appellant ex–parte on merits where the appellant does not appear in person or through an authorised representative and the same is done placing on record a no-objection from the respondent revenue. It is further needless to mention that, the proviso to the said rule carves out an exception by empowering the Tribunal to recall the ex–parte order if the assessee appears afterwards and satisfies placing evidential material before the Tribunal that there was sufficient cause for his non– appearance when the appeal was called for hearing. 6. After hearing to the rival contentions of both the parties; and subject to the provisions of rule 18 of ITAT, Rules perused the material placed on records till the date of conclusive hearing, case laws relied upon by the appellant as well the respondent and duly considered the M/s Shanti Construction Company ITA No. 374 & 375/PUN/2020 AY: 1999-200 ITAT-Pune Page 7 of 16 facts of the case in the light of settled legal position forewarned to either parties. 7. First and third ground being identical & overlapping are taken first for adjudication, where these grounds alleged the violation of principal of natural justice for passing ex-parte order and without considering the material placed via-a-vis according sufficient opportunity to represent during second round of first appellate proceedings. 7.1 In the evince of records more particularly para 5 of page 4 & 5 of the order of FAA, it remained an undisputed fact before us that, during the course of second round of first appellate proceedings, in as much as seven notices of hearing were found to have served to the appellant, and not to surprise neither of them responded and nor represented by any written submission in rebuttal, which ultimately resulted in confirming the action of Ld. AO. 7.2 In so far as the fact of non-consideration of material placed before the Ld. CIT(A) is alleged by the M/s Shanti Construction Company ITA No. 374 & 375/PUN/2020 AY: 1999-200 ITAT-Pune Page 8 of 16 appellant is concerned, is found perverse for the reason that neither of such fact of submission is found emanating from the order of FAA nor has been brought on record by the appellant before the bench by any written submission. 7.3 Thus, due service of notices to the appellant and reasonable opportunity of fair hearing against proposition and prima-facie unbiased approach while dealing with appellate proceedings apparently stands established and we hold so in the absence of any deprecative material substantiating the claim of appellant was made through grounds of appeal raised. In fortiori, the appellant did not by any submission controvert the factual plexus in the present case, in the event we disapprove the contention of any such violation as perverse of records, resultantly ground number 1 and 3 of the appeal stands dismissed. 8. The second ground of appeal challenged the very jurisdiction of Ld. AO as outside the direction of this M/s Shanti Construction Company ITA No. 374 & 375/PUN/2020 AY: 1999-200 ITAT-Pune Page 9 of 16 Tribunal and time barred, for the reason it necessitates the reproduction of direction from para 4 & 5 of the order (ITA No 1070/PUN/2008) as under; 4. Learned DR submitted that the issue raised in the above ground regarding the service of notices issued u/s 148 and 143(2) of the Act can be addressed upon by him only after verification of the record, hence he may be allowed sufficient time for the same. The learned AR however, agreed upon that the matter can be set aside to the file of the A.O for verification. Under these backgrounds, we, in the interest of justice, set aside the matter to the file of the A.O with a direction to verify the above contention of the learned AR that notices u/s 142(2) and 148 of the Act were never served upon the assessee and decide the issue raised in the above ground and additional ground afresh after affording opportunity of being heard to the assessee. The ground no. 1(i) and additional ground are thus allowed for statistical purposes. 5. Since fate of issues raised in other grounds depends upon the outcome of the ground no. 1(i) and additional ground, the A.O is directed to adjudicate issues raised in other grounds afresh after hearing the assessee. 9. The present ground number 2 prima-facie assailed with two facets, one as regards to Jurisdiction and second as regards to Time-Barred proceedings. Addressing the jurisdictional aspects first, we note that; M/s Shanti Construction Company ITA No. 374 & 375/PUN/2020 AY: 1999-200 ITAT-Pune Page 10 of 16 9.1 It is well settled law that, the jurisdiction of the Ld. AO for passing the order in the remand proceedings is restricted to decide the issues in accordance with the directions of the Tribunal; consequently the Ld. AO is precluded from touching any other issue or aspect in giving effect order as per the directions of the Tribunal. 9.2 In this context, going through the order of this Tribunal in ITA No 1070/PUN/2008 it is evinced that, on an earlier occasion, on the issue of non-service of statutory notices raised by the assessee, the co- ordinate bench remitted the matter back to the Ld. AO to examine the service of notice u/s 143(2) and 148 of the Act and decide the other grounds a fresh after affording opportunity of being heard to the assessee, as the other grounds raised therein was dependent of legal issue of non-service of notices. 9.3 Thus, panoramically by the earlier order dt. 20/08/2010 this Tribunal directed the Ld. AO to examine the service of notices and decide the other M/s Shanti Construction Company ITA No. 374 & 375/PUN/2020 AY: 1999-200 ITAT-Pune Page 11 of 16 grounds of appeals a fresh in the light of examination and was to re-frame the assessment a fresh on the other grounds of appeals only upon establishing the due service of notice u/s 148 and 143(2) of the Act and not otherwise. 9.4 Since the impugned assessment order farmed u/s 143(3) r.w.s. 254 pursuant to directions of Tribunal exclusively dealt with service of statutory notice and did not travel out of direction vis-à-vis jurisdiction, hence this façade of ground number 2 raised fails in its substance, hence dismissed. 10. Coming to second portico of ground number 2 on the issue of time barred proceedings, it is mindful to quote that, the time limit for completing the assessment, reassessment or re-computation pursuant to direction u/s 254 is governed by the provisions of section 153(3) of the Act, which reads as; (3) Notwithstanding anything contained in sub-section (1) and (2), an order fresh assessment in pursuance of any order under section 254 or section 263 or section 264, setting aside or cancelling an assessment may be M/s Shanti Construction Company ITA No. 374 & 375/PUN/2020 AY: 1999-200 ITAT-Pune Page 12 of 16 made at any time before the expiry of nine months from the end of the financial year in which the order under section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or as the case may be, the order under section 263 or section 264 is passed by the Principal Commissioner or Commissioner. 11. It remained an undisputed fact on records that, the order u/s 254 directing the examination of service of statutory notice and consequential assessment, in the present case was passed on 20/08/2010 i.e. in the financial year 2010-2011 and the order of assessment framed u/s 143(3) r.w.s. 254 was passed on 26/12/2011, that is well within the period of nine months from the expiry of financial year 2010-11, thus there remained no substance in the ground raised by the appellant, consequently stands dismissed. 12. Ground number 5 being general calls for no adjudication, whereas remaining forth ground is challenged against levy of compensatory interest u/s 234A, 234B and 234C of the Act. 12.1 A perusal of sections 234A, 234B and 234C shows that the interest for default in furnishing return of M/s Shanti Construction Company ITA No. 374 & 375/PUN/2020 AY: 1999-200 ITAT-Pune Page 13 of 16 income, default in payment of advance-tax and interest for deferment of advance-tax are mandatory in nature. 12.2 Without replicating the text of provisions of law, it shall suffice to state that, Sections 234A, 234B and 234C in clear terms impose a mandate to collect interest at the rates stipulated therein. The expression 'shall' used in the said section cannot by any stretch of imagination be construed as 'may'. There are sufficient indications in the scheme of the Act to show that the expression 'shall' used in sections 234A, 234B and 234C is used by the Legislature deliberately and it has not left any scope for interpreting the said expression as 'may'. This is clear from the fact that prior to the amendment brought about by the Finance Act, 1987, the Legislature in the corresponding section pertaining to imposition of interest used the expression 'may' thereby giving a discretion to the authorities concerned either to reduce or waive the interest. The change brought about by the Amending Act (Finance Act, 1987) is a M/s Shanti Construction Company ITA No. 374 & 375/PUN/2020 AY: 1999-200 ITAT-Pune Page 14 of 16 clear indication of the fact that the intention of the Legislature was to make the collection of statutory interest mandatory. 12.3 Thus the levy of interest under aforestated provision of law being consequential and mandatory in nature, shall follow in line with the ground number 2 adjudicated herein before, by applying the ratio laid in a landmark decision of Hon’ble Apex Court in “CIT Vs Anjum M.H. Ghaswala” reported in 252 ITR 1 (SC), consequently the ground number 4 & 5 are also stands dismissed. B. Appeal Number ITA/374/PUN/2020 13. The ground agitated in the present appeal is consequential to order of assessment passed u/s 143(3) r.w.s. 254 of the Act against levy of interest u/s 220(2) of the Act, and for the sake of handiness same is reproduced herein below; “1. On the facts and in the circumstances of the case and in law the A.O. was not justified and Ld. CIT(A) was not justified in confirming the levy of the interest u/s 222 if the Act since as M/s Shanti Construction Company ITA No. 374 & 375/PUN/2020 AY: 1999-200 ITAT-Pune Page 15 of 16 assessment itself was barred by limitation and was not in existence, The interest/ penalty levied be quashed. 2. The appellant craves to leave, add/amend or alter any of the above grounds of appeal.” 14. It is apt to quote that, if there is a default in payment of amount demanded by service of demand notice u/s 156 within the time stipulated therein and if such a demand is not satisfied in full, then section 220(2) is triggered. However by virtue of discretionary power as laid u/s 220(2A), such levy of interest u/s 220(2) may be waived or reduced upon proving existence of certain condition as contemplated therein. 15. The appellant in an appeal before Ld. CIT(A) assailed levy of aforesaid interest merely on jurisdictional and time- barred issue and remained button up on several hearings afforded by FAA and under the present appeal too. 16. Since the ground of jurisdiction and time-barred assessment in the lead case 375/PUN/2020 is adjudicated against the appellant and in favour of revenue, therefore M/s Shanti Construction Company ITA No. 374 & 375/PUN/2020 AY: 1999-200 ITAT-Pune Page 16 of 16 consequential levy of interest u/s 220(2) for non-payment of demand raised u/s 156 r.w.s. 220(1) of the Act, being not contested placing on records the existence of any such condition as envisaged u/s 220(2A) of the Act, we find no infirmity with the orders of tax authorities below, ergo we order accordingly. 17. Resultantly, both the appeals of the appellant assessee are dismissed in aforestated terms. In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this Thursday 08 th day of September, 2022. -S/d- -S/d- SS VISWANETHRA RAVI G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / PUNE ; दिन ांक / Dated : 08 th day of September, 2022. आदेश की प्रधिधलधप अग्रेधिि / Copy of the Order forwarded to : 1.अपील र्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The Pr. CIT, Kolhapur (Mh-India) 4. The Pr. CIT, Ratnagiri (Mh-India) 5. दिभ गीय प्रदिदनदि,आयकरअपीलीय न्य य दिकरण, पुणे “बी” बेंच, पुणे / DR, ITAT, Pune “B” Bench, Pune. 6. ग र्डफ़ इल / Guard File. आिेश नुस र / BY RDER, िररष्ठ दनजी सदचि / Sr. Private Secretary आयकर अपीलीय न्य य दिकरण, पुणे / ITAT, Pune.