SHRI VIJAY BABULAL KHANDELWAL, KANHAN DISTT. NAGPUR V. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-3, NAGPUR

ITA 385/NAG/2017

• Counselvise Citation: [2014] 117 COUNSELVISE.COM (IT) 8893 (ITAT-NAGPUR)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 23-10-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 13-11-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Period of limitation; Condonation of delay; Set aside
• Section: 43B; 234B; 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE S HRI SHAMIM YAHYA (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 385 / NAG/2017 ASSESSMENT Y EAR: 201 2 - 13 SHRI VIJAY BABULAL KHANDELWAL, TARASA ROAD, KANHAN, (DISTT) NAGPUR - 441401 PAN : AHXPK1274 E VS. THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE - 3, NAGPUR (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.P . DEWANI (AR ) REVENUE BY : SHRI GITESH KUMAR ( SR. D R ) DATE OF HEARING: 08 /05 /201 8 D ATE OF PRONOUNCEMENT: 15 / 06 /201 8 O R D E R PER RAM LAL NEGI, JM THE ASSESSEE HAS PREFERRED THIS APPEAL AGAINST THE ORDER DATED 29.12.2016 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 2 , NAGPUR, WHEREBY THE LD. CIT (A ) HAS DISMISSED THE APPEAL FILED BY THE ASSESSEE AGAINST THE ASSESSMENT ORDER PASSED UNDER SECTION 143 (3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE ENGAGED IN THE BUSINESS OF TRADING AND MINING OF ORE, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARING THE TOTAL INCOME OF RS. 47,40,752/ - . THE RETURN WAS PROCESSED U/S 143 (1) OF THE ACT. SINCE, THE CASE WAS SELECTED FOR SCRUTINY NOTICE U/S 143 (2) AND 142 (1) WERE ISSUED. IN RESPONSE TO THE S AID NOTICES, THE COUNSEL FOR THE ASSESSEE FURNISHED THE COPY OF COMPUTATION OF INCOME, COPY OF AUDIT REPORT, BALANCE SHEET, PROFIT AND LOSS ACCOUNT, DETAILS OF MAJOR EXPENSES, ACCOUNTS MAJOR LOSS AND ADVANCES CREDITORS AND DEBTORS, DETAILS OF ADDITION TO 2 ITA NO. 385 / NAG /2017 ASSESSMENT YEAR: 2012 - 13 F IXED ASSETS, CONFIRMATION OF UNSECURED LOANS, BANK STATEMENTS, DETAILS OF CAPITAL ALONG WITH JUSTIFICATION OF SHARE PREMIUM PAID AND PAYMENT MADE U/S 43B AND OFFERED EXPLANATIONS. IT WAS NOTICED THAT THE ASSESSEE HAD ADVANCED LOAN OF RS. 50,00,000/ - TO M /S KRESCENT MINING, RS. 29,34,55 4/ - TO MR. D.P. ROY, RS. 1,60,85,797/ - TO MR. AJAY KHANDELWAL, RS. 12,00,000/ - TO M/S SHYAMJI DI ARY, RS. 9,08,616/ - TO MS. MEENU KHANDELWAL, RS. 9,65,050/ - TO MS. SUNITA KHANDELWAL AND DID NOT CHARGE ANY INTEREST THEREON . IT WA S FURTHER NOTICE D THAT THE ASSESSEE HAD INCURRED EXPENSES ON FUNDS RAISED BY HIM @ 10.50% TO 12% FROM VARIOUS PARTIES. T HE ASSESSEE HAD INCURRED EXPENSES TOWARDS INTEREST OF RS. 30,07,990/ - . ACCORDINGLY, THE COUNSEL FOR THE ASSESSEE WAS ASKED AS TO WHY INT EREST EXPENDITURE OF RS. 30,07,990/ - SHOULD NOT BE DISALLOWED CORRESPONDING TO THE INTEREST F REE ADVANCE S OF RS. 2,75,25,584/ - TO THE AFORESAID PARTIES. THE A.O. REJECTED THE EXPLANATION OFFERED BY THE COUNSEL FOR THE ASSESSEE AND DISALLOWED THE INTEREST EX PENDITURE OF RS. 30,07,990/ - AND ADDED THE AMOUNT TO THE INCOME OF THE ASSESSEE. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE CHALLENGED THE SAME BEFORE THE LD. CIT (A). SINCE, THE ASSESSEE DID NOT APPEAR BEFORE THE LD. CIT (A). THE LD. CIT (A) PROCEEDE D EX - PARTE AND DISMISSED THE APPEAL OF THE ASSESSEE. AGAINST THE SAID ORDER, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER PASSED BY THE LD.CIT (A) ON THE FOLLOWING EFFECTIVE GROUNDS : - 1. THE ORDER PAS SED BY HONBLE CIT (A) DISMISSING THE APPEAL IS ILLEGAL, INVALID AND BAD IN LAW. 2. THE LEARNED CIT (A) ERRED IN DISMISSING APPEAL WITHOUT ADJUDICATING THE MERITS OF ADDITION IN ASSESSMENT FRAMED. 3. THE ORDER PASSED BY CIT (A) IS WITHOUT PROPER OPPORTUNITY OF BEING HEARD AND THUS IS BAD IN LAW. 3 ITA NO. 385 / NAG /2017 ASSESSMENT YEAR: 2012 - 13 4. THE ADDITION MADE BY A.O. AND CONFIRMED BY CIT (A) AT RS. 30,07,990/ - IN RESPECT TO DISALLOWANCE OF INTEREST EXPENSES IS UNJUSTIFIED, UNWARRANTED AND EXCESSIVE. 5. THE ADDITION MADE BY A.O. AND CONFIRMED BY CIT (A) AT RS . 62,300/ - OUT OF AGRICULTURAL INCOME SHOWN IN THE RETURN IS UNJUSTIFIED, UNWARRANTED AND EXCESSIVE. 6. THE ASSESSEE DENIES LIABILITY TO BE ASSESSED TO INTEREST U/S 234A, 234B AND 234C OF INCOME TAX ACT, 1961. WITHOUT PREJUDICE THE INTEREST LEVIED U/S 234A, 234B AND 234C IS UNJUSTIFIED, UNWARRANTED AND EXCESSIVE. 4. THE ASSESSEE HAS ALSO MOVED AN APPLICATION FOR CONDONATION OF DELAY OF 230 DAYS IN FILING THE PRESENT APPEAL ON THE GROUND THAT THE IMPUGNED ORDER WAS RECEIVED ON 27.01.2017 . THE SAME WAS SENT T O SH. RAJESH JHAWAR , CHARTERED ACCOUNTANT, FOR FILING APPEAL. SINCE, HE REMAINED BUSY IN ARRANGEMENT OF MARRIAGE CEREMONY OF HIS SON WHICH WAS TO BE TAKEN PLACE ON 06.02.2017, THE SAID ORDER REMAINED UNATTENDED IN HIS OFFICE AND THE APPEAL COULD NOT BE FIL ED WITHIN THE PRESCRIBED PERIOD OF LIMITATION. 5. BEFORE US, T HE LD. COUNSEL FURTHER SUBMITTED THAT SH. RAJESH JHAWAR , CA HAS SWORN AN AFFIDAVIT WHEREIN HE HAS ADMITTED HIS MISTAKE. THE LD. COUNSEL SUBMITTED THAT THE DELAY HAS BEEN CAUSED DUE TO THE MIST AKE OF CA CONCERNED AS MENTIONED IN THE APPLICATION DULY SUPPORTED BY THE AFFIDAVIT . S INCE THE DELAY WAS NOT ATTRIBUTABLE TO THE ASSESSEE, THE APPLICATION MAY BE ALLOWED AND THE DELAY MAY BE CONDONED IN THE INTEREST OF JUSTICE. THE LD. COUNSEL RELIED ON TH E DECISION OF THE ITAT NAGPUR BENCH RENDERED IN THE CASE OF M/S RAIPUR FERRO ALLOYS LTD., ITA NOS. 130,253 & 253/NAG/2001 AND THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF VIJAY VISHIN MEGHANI IN ITA NO 493 OF 2015 DATED 19.09.2017 IN SUPPOR T OF HIS CONTENTION. 4 ITA NO. 385 / NAG /2017 ASSESSMENT YEAR: 2012 - 13 6 . ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE OPPOSED THE APPLICATION ON THE GROUND THAT THE REASON MENTIONED BY THE ASSESSEE IS NOT SUFFICIENT TO CONDONE THE DELAY. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD INCLUDING THE CASES RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE. SUB - SECTION 5 OF SECTION 253 OF THE INCOME TAX ACT PROVIDES THAT THE TRIBUNAL MAY ADMIT APPEAL OR PERMIT FILING OF MEMORANDUM OF CROSS - OBJECTION OF RESPO NDENT AFTER EXPIRY OF RELEVANT PERIOD OF LIMITATION REFERRED TO IN SUB - SECTION 3 AND 4 SECTION 253, IF IT IS SATISFIED THAT THERE WAS SUFFICIENT CAUSE FOR NOT PRESENTING IT WITHIN THAT PERIOD. THE EXPRESSION SUFFICIENT CAUSE IN THIS SECTION HAS ALSO BEEN USED IN SECTION 5 OF INDIAN LIMITATION ACT, 1961. THIS EXPRESSION HAS COME FOR CONSIDERATION BEFORE THE HONBLE HIGH COURTS AS WELL AS BEFORE THE HONBLE SUPREME COURT, AND THE HONBLE COURTS ARE UNANIMOUS IN OBSERVING THAT THE EXPRESSION SUFFICIENT CAUS E IS TO BE CONSIDERED WITH JUSTICE ORIENTED APPROACH. THE HONBLE SUPREME COURT IN THE CASE OF COLLECTOR LAND ACQUISITION VS. MST. KATIJI & OTHERS, 1987 AIR 1353 HAS OBSERVED AS UNDER: 1. ORDINARILY A LITIGANT DOES NOT STAND TO BENEFIT BY LODGING AN APPE AL LATE. 2. 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 THAT CAN HAPPEN IS THAT A CAUSE WOULD BE DECIDED ON MERI TS AFTER HEARING THE PARTIES. 3. '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 APPLIED IN A RATIONAL COMMON SENSE PRAGMATIC MANNER. 4. WHE N SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATIONS ARE PITTED AGAINST EACH OTHER, CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRED 5 ITA NO. 385 / NAG /2017 ASSESSMENT YEAR: 2012 - 13 FOR THE OTHER SIDE CANNOT CLAIM TO HAVE VESTED RIGHT IN INJUSTICE BEING DONE BECAUSE OF A NON - DELIBERATE DELAY. 5. 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. 6. IT MUST BE GRASPED THAT 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. 8 . HENCE , IN VIEW OF THE PRINCIPLES OF LAW LAID DOWN BY THE HONBLE SUPREME COURT AFORESAID AND TH E OTHER CASES RELIED UPON BY THE LD. COUNSEL, WE ALLOW THE APPLICATION AND CONDONED THE DELAY IN FILING THE PRESENT APPEAL IN THE INTEREST OF JUSTICE AND ALLOWED THE LD. COUNSEL FOR THE ASSESSEE TO ARGUE THE CASE ON MERIT S . 9 . ON MERITS, THE LD. COUNSEL FO R THE ASSESSEE SUBMITTED THAT THE IMPUGNED ORDER IS BAD IN LAW AS THE SAME HAS BEEN PASSED WITHOUT HEARING THE APPELLANT/ASSESSEE. THE LD. COUNSEL FURTHER CONTENDED THAT THE NOTICES ISSUED BY THE LD. CIT(A) WERE NOT SERVED ON THE ASSESSEE. SINCE, THE PENAL TY LEVIED IS UNJUSTIFIED, UNWARRANTED AND BAD IN LAW THE SAME IS REQUIRED TO BE DELETED. 10 . ON THE OTHER HAND THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE FINDINGS OF THE LD. CIT(A). 11 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE NOTICE THAT THE LD. CIT(A) HAS PROCEEDED EX PARTE BY DRAWING PRESUMPTION UNDER SECTION 114 OF THE EVIDENCE ACT THAT EVIDENCE WHICH COULD BE AND IS NOT PRODUCED WOULD, IF PRODUCED, BE UNFAVOURABLE TO THE PERSON WHO WITHHOLDS IT. WHE REAS THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT NOTICES WERE NOT RECEIVED BY THE ASSESSEE. EVEN IF IT IS ASSUMED THAT THE 6 ITA NO. 385 / NAG /2017 ASSESSMENT YEAR: 2012 - 13 ASSESSEE DID NOT APPEAR DESPITE SERVICE OF NOTICE, THE LD. CIT(A) WAS REQUIRED TO DECIDE THE APPEAL ON MERITS TAKING INTO CONSIDE RATION THE ENTIRE EVIDENCE ON RECORD. HOWEVER, IN THE PRESENT CASE WE NOTICE THAT THE LD. CIT(A) HAS DECIDED THE APPEAL FOR NON PROSECUTION. 1 2 . THE HONBLE JURISDICTIONAL HIGH COURT HAS HELD IN THE CASE OF CIT (CENTRAL) NAGPUR VS. PREMKUMAR ARJUNDAS LUTH RA(HUF) 297 CTR 614 (BOM) THAT THE LAW DOES NOT EMPOWER THE CIT (A) TO DISMISS THE APPEAL FOR NON - PROSECUTION . THE OPERATIVE PART OF THE JUDGMENT OF THE HONBLE HIGH COURT READS AS UNDER: - 8. FROM THE AFORESAID PROVISIONS, IT IS VERY CLEAR ONCE AN APPEA L IS PREFERRED BEFORE THE CIT (A), THEN IN DISPOSING OF THE APPEAL, HE IS OBLIGED TO MAKE SUCH FURTHER INQUIRY THAT HE THINKS FIT FOR DIRECT THE ASSESSING OFFICER TO MAKE FURTHER INQUIRY AND REPORT THE RESULT OF THE SAME TO HIM AS FOUND IN SECTION 250 (4) OF THE ACT. FURTHER SECTION 250(6) OF THE OBLIGES THE CIT (A) TO DISPOSE OF AN APPEAL IN WRITING AFTER STATING THE POINTS FOR DETERMINATION AND THEN RENDER A DECISION ON EACH OF THE POINTS WHICH ARISE FOR CONSIDERATION WITH REASONS IN SUPPORT. SECTION 251( 1)(A) AND (B) OF THE ACT PROVIDE THAT WHILE DISPOSING OF APPEAL THE CIT (A) WOULD HAVE THE POWER TO CONFIRM, REDUCE, ENHANCE OR ANNUL AN ASSESSMENT AND/OR PENALTY. BESIDES EXPLANATION TO SUB - SECTION (2) OF SECTION 251 OF THE ACT ALSO MAKES IT CLEAR THAT W HILE CONSIDERING THE APPEAL, THE CIT (A) WOULD BE ENTITLED TO CONSIDER AND DECIDE ANY ISSUE ARISING IN THE PROCEEDINGS BEFORE HIM IN APPEAL FILED FOR ITS CONSIDERATION, EVEN IF THE ISSUE IS NOT RAISED BY THE APPELLANT IN ITS APPEAL BEFORE THE CIT (A). TH US ONCE AN ASSESSEE FILES AN APPEAL UNDER SECTION 246A OF THE ACT, IT IS NOT OPEN TO HIM AS OF RIGHT TO WITHDRAW OR NOT PRESS THE APPEAL. IN FACT THE CIT (A) TO SET ASIDE THE ORDER OF THE ASSESSING OFFICER AND RESTORE IT TO THE JUNE, 2001 THE POWER OF THE CIT (A) TO SET ASIDE THE ORDER OF THE ASSESSING OFFICER AND RESTORE IT TO THE ASSESSING OFFICER FOR PASSING A FRESH ORDER STANDS WITHDRAWN. THEREFORE, IT WOULD BE NOTICED THAT THE POWERS OF THE CIT (A) IS CO - TERMINUS WITH THAT OF THE ASSESSING OFFICER I.E. HE CAN DO ALL THAT ASSESSING OFFICER 7 ITA NO. 385 / NAG /2017 ASSESSMENT YEAR: 2012 - 13 COULD DO. THEREFORE JUST AS IT IS NOT OPEN TO THE ASSESSING OFFICER TO NOT COMPLETE THE ASSESSMENT BY ALLOWING THE ASSESSEE TO WITHDRAW ITS RETURN OF INCOME, IT IS NOT OPEN TO THE ASSESSEE IN APPEAL TO WITHDRAW AND/OR THE CIT (A) TO DISMISS THE APPEAL ON ACCOUNT OF NON - PROSECUTION OF THE APPEAL BY THE ASSESSEE. THIS IS AMPLY CLEAR FROM THE SECTION 251(1)(A) AND (B) AND EXPLANATION TO SECTION 251 (2) OF THE ACT WHICH REQUIRES THE CIT (A) TO APPLY HIS MIND TO ALL ISSUES W HICH ARISE FROM THE IMPUGNED ORDER BEFORE HIM WHETHER OR NOT THE SAME HAS BEEN RAISED BY THE APPELLANT BEFORE HIM. ACCORDINGLY, THE LAW DOES NOT EMPOWER THE CIT (A) TO DISMISS THE APPEAL FOR NON - PROSECUTION AS IS EVIDENT FROM THE PROVISIONS OF THE ACT. 1 3 . IN VIEW OF THE FACTS AND THE CIRCUMSTANCES UNDER WHICH THE LD. CIT(A) HAS PASSED THE IMPUGNED ORDER AND IN THE LIGHT OF THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT DISCUSSED ABOVE, WE SET ASIDE THE EX - PARTE ORDER PASSED BY THE LD. CIT (A) AND SEND THE APPEAL BACK TO THE LD. CIT (A) FOR DECIDING THE SAME ON MERITS AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE APPELLANT/ASSESSEE. WE ALSO DIRECT THE APPELLANT/ASSESSEE TO APPEAL BEFORE THE LD. CIT(A) AND NOT TO SEEK ADJOURNMENTS ON FRIVOLOUS GROUNDS DURING THE PROCEEDINGS. THE APPEAL IS DISPOSED OF ACCORDINGLY. IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR A SSESSMENT YEAR 2012 - 2013 PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JU NE , 2018 . SD/ - SD/ - ( SHAMIM YAHYA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER NAGPUR, DATED: 15 / 0 6 /201 8 ALINDRA, PS 8 ITA NO. 385 / NAG /2017 ASSESSMENT YEAR: 2012 - 13 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) 4. CIT 5. DR, ITAT, NAGPUR 6. GUARD FILE . BY ORDER, //TRUE COPY/ / ( SR. PS/PS ) ITAT, NAGPUR