ATAUL U MEMON, MUMBAI V. ITO 29(1)(1), MUMBAI

ITA 4058/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5348 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 07-06-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Assessee Lawyers: S SRIRAM
• Keywords: Business income
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC MUMBAI BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 4058/MUM/2018 ASSESSMENT YEAR: 2011 - 12 & ITA NO. 4059/MUM/2018 ASSESSMENT YEAR: 2013 - 14 SHRI ATAUL U. MENON, B/21, VARDHAMAN COMPLEX, L.B.S. MARG, VIKHROLI (WEST), MUMBAI - 400083. VS. INCOME TAX OFFICER - 29(1)(1), C - 10, 1 ST FLOOR, R. NO. 101, PRATYAKSHAKARBHAVAN, BANDRAKURLA COMPLEX, BANDRA (EAST), MUMBAI - 400051. PAN NO. ACLPM6801A APPELLANT RESPONDENT ASSESSEE BY : MR. S. SRIRAM, AR REVENUE BY : MR. CHAITANYA ANJARIA, DR DATE OF HEARING : 16/05/2019 DATE OF PRONOUNCEMENT: 24/05/2019 ORDER PER N.K. PRADHAN, AM THE CAPTIONED APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 39, MUMBAI [IN SHORT CIT(A)] AND ARISE OUT OF THE ASSESSMENT COMPLETED U/S 143 R.W.S. 147 OF THE INCOME TAX ACT 1961 (THE ACT). AS COMM ON ISSUES ARE INVOLVED, WE ARE PROCEEDING TO DISPOSE THEM OFF THROUGH A CONSOLIDATED SHRI ATAUL U. MENON ITA NOS. 4058 & 4059/MUM/2018 2 ORDER FOR THE SAKE OF CONVENIENCE. FACTS BEING IDENTICAL, WE BEGIN WITH THE ASSESSMENT YEAR (AY) 2011 - 12. 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER: 1. TH E LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT PROVIDING ANY OPPORTUNITY TO CURE THE DEFECT IN ORDER TO FILE AN APPEAL IN ELECTRONIC FORMAT AND THEREBY NOT PROVIDED THE APPELLANT AN OPPORTUNITY TO PRESEN THIS CASE. 2. THE LD. CIT(A) F AILED TO APPRECIATE THAT THE ASSESSEE HAS FILED THE AP PEAL AS PER THE ADVICE GIVEN BY THE PRACTICING CHARTERE D ACCOUNTANT AND THEREFORE, NON - FILING OF AN APPEAL ELECTRONICALL Y WAS NOT DUE TO THE NEGLIGENCE ON THE PART OF THE ASSESSEE AND THEREFORE THE ASSESSEE SHOULD HAVE BEE N GIVEN AN OPPORTUNITY TO CORRECT INADVERTENT MISTAKE OF NOT FILING AN APPEAL ELECTRONICALLY BUT FILING IT IN PHYSICAL FORM. 3. THE LD. CIT(A) HAVE HELD THAT THE APPEAL FILED BY THE APPELLANT IS TREATED AS NON EST. AND THEREBY, DISMISSED THE APPEAL WITHOUT GOING INTO THE MERIT OF THE CASE AND THEREBY UPHELD THE ORDER OF ASSESSING OFFICER EVEN THOUGH T HE HARD COPY OF THE APPEAL PAPERS WERE IN HIS HAND AT THE TIME OF PASSING THE ORDER. 4. THE ASSESSING OFFICER HAS ERRED IN LAW AND ON FACTS IN MAKING THE DISALLOWA NCE OF COMMISSION OF RS. 12 ,97, 318 PAID TO VARIOUS COMMISSION AGENTS BY THE ASSESSEE IN THE COURSE OF BUSINESS OF TRADING IN CHEMICAL GASES USED IN THE PHARM A AND INDUSTRIAL SECTORS. 5. THE ASSESSING OFFICER FAI LED TO APPRECIATE THAT MOST OF T HE COMMISSION AGE NTS HAD CONFIRMED HAVING RECEIVED THE PAYMENT BY CROSSED ACCOUNT PAYEE CHEQUES FOR THE SERVICES RENDERED FOR EITHER PROCURING CHEMICAL GASES FOR THE ASSESSEE OR FOR SELLING THE CHEMICAL GASES TO VARIOUS PARTIES FOR AND ON BEHALF OF THE ASSESSEE. 6. THE ASSESS IN G OFFICER FAILED TO APPRECIATE T HAT IN THE COURSE OF THE BUSINESS OF TRADING IN CHEMICAL GASES, THE ASSESSEE HAD INCURRED EXPENDITURE OF PAYING COMMISSION TO VARIOUS AGENTS AND THEREFORE - THE SAME OUGHT TO HAVE ALLOWED WHILE COMPUTING BUSINESS INCOME OF THE ASSESSEE. SHRI ATAUL U. MENON ITA NOS. 4058 & 4059/MUM/2018 3 7. THE ORDER OF ASSESSING OFFICER DI SALLOWING THE COMMISSION OF RS.12,97,318 IS BAD IN L AW AND WITHOUT JURISDICTION. 3. BRIEFLY STATED, THE FACTS ARE THAT THE ASSESSEE HAD E - FILED HIS RETURN OF INCOME FOR THE AY 2011 - 12 ON 30.09.2011 DECLARING TOTAL INCOME AT RS.12,70,903/ - . IN THE ASSESSMENT COMPLETED U/S 143(3) R.W.S. 147 ON 07.03.2016, THE AO DETERMINED THE ASSESSED INCOME AT RS.41,09,680/ - . THE SAID ASSESSMENT ORDER WAS RECEIVED BY THE ASSESSEE ON 15.03.2016. AGAINST THE ORDER OF THE AO THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) MANUALLY IN PAPER FORM ON 04.04.2016. THE LD. CIT(A) TREATED THE APPEAL FILED BY THE ASSESSEE AS NON EST. BY HOLDING THAT : 2. NOTIFICATION NO. S.O. 637(E) DATED 1 ST MARCH, 2016, WAS ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES, NEW DELHI, AMENDING RULE 45 OF THE INCOME TAX RULES, 1962. THE NOTIFICATION MANDATES COMPULSORY E - FILING OF APPEALS BEFORE THE APPELLATE COMMISSIONER WITH EFFECT FROM MARCH 01, 2016, IN RESPECT OF ALL PERSONS WHO ARE REQUIRED TO FURNISH THEIR RETURN OF INCOME ELECTRONICALLY. 3. THE APPELLANT IS INDIVIDUAL FOR THE AY 2011 - 12, PROVISIONS OF SEC 44AB OF THE ACT WERE APPLICABLE TO THE APPELLANT. UNDER RULE 12(3) OF THE INCOME TAX RULES, 1962, THE APPELLANT WAS REQUIRED FILE THE RETURN OF INC OME ELECTRONICALLY FOR THE RELEVANT ASSESSMENT YEAR (AY 2011 - 12). SINCE THE APPEAL WAS FILED ON 04.04.2016 [I.E. ON OR AFTER 01.03.2016], AS PER RULE 45 OF THE INCOME TAX RULE, 1962, THE APPELLANT WAS REQUIRED TO FILE THE APPEAL ELECTRONICALLY. THEREFORE, THE SAID MANUAL APPEAL IS INVALID, AB INITIO . ACCORDINGLY, THERE WOULD BE NO CAUSE TO EXAMINE ANY OTHER ASPECT OF THIS APPEAL INCLUDING, DELAY IN FILING, OTHER STATUTORY PROCEDURE, DEFICIENCY IN DOCUMENTS OR THE MERITS OF THE CASE. SHRI ATAUL U. MENON ITA NOS. 4058 & 4059/MUM/2018 4 4. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMITS THAT THE APPELLANT FOR THE FIRST TIME CAME TO KNOW THROUGH THE ORDER OF THE CIT(A) RECEIVED ON 17.04.2018 THAT THE SAID APPEAL WAS REQUIRED TO BE FILED IN ELECTRONIC FORMAT AND NOT IN PHYSICAL FORM. ALSO IT IS STATED THAT T HE ASSESSEE WAS NOT GIVEN ANY OPPORTUNITY TO CURE THE DEFECT BY FILING THE APPEAL IN ELECTRONIC FORMAT. IN THIS RESPECT, THE ASSESSEE HAS FILED HIS AFFIDAVIT SWORN BEFORE THE PUBLIC NOTARY ON 29.05.2018. THE ASSESSEE ALSO ASKED MR. KAMAL SANGTANI, CHARTERE D ACCOUNTANT, TO FILE HIS AFFIDAVIT STATING THE TRUE FACTS, WHO HAD ADVISED THE ASSESSEE TO FILE THE APPEAL IN PHYSICAL FORM ON 4TH APRIL, 2016. ACCORDINGLY, MR. KAMAL SANGTANI, CHARTERED ACCOUNTANT, HAS ALSO FILED HIS AFFIDAVIT SWORN BEFORE THE PUBLIC N OT ARY ON 22.05.2018 , WHICH IS ENCLOSED WITH THE APPEAL PAPERS. THEREAFTER, THE ASSESSEE APPOINTED MR. BDMV & CO., CHARTERED ACCOUNTANTS, HAVING THEIR OFFICE AT 501, UMERJI HOUSE BLDG NO. 404, TELLI GULY, ANDHERI (EAST), ABOVE BANK OF BA RODA, MUMBAI - 400069 W HO ADVISED THE ASSESSEE TO FILE AN APPEAL WITH THE COMMISSIONER (APPEALS) IN ELECTRONIC FORMAT. THUS , THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) IN ELECTRONIC FORMAT ON 15.05.2018. THEREFORE, IT IS STATED THAT THE CIT(A) MAY BE DIRECTED TO CONSIDER THE APPEAL FILED ELECTRONICALLY ON MERITS AFTER CONDONING THE DELAY AS THE ASSESSEE ACTED AS PER THE ADVICE OF THE PERSON WHO IS SUPPOSED TO KNOW THE LAW AND PROCEDURE PRESCRIBED UNDER THE ACT. ON THE OTHER HAND, THE LD. DR SUPPORTS THE ORDER PASSED BY THE L D. CIT(A). SHRI ATAUL U. MENON ITA NOS. 4058 & 4059/MUM/2018 5 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. IN THE INSTANT CASE, THE ASSESSEE RECEIVED THE ASSESSMENT ORDER DATED 07.03.2016 PASSED BY THE AO ON 15.03.2016. THE ASSESSEE FILED AN APPEAL AGAINST THE ASSES SMENT ORDER PASSED BY THE AO BEFORE THE CIT(A) IN PHYSICAL FORM ON 04.04.2016. THE ASSESSEE, FOR THE FIRST TIME, CAME TO KNOW THROUGH THE ORDER OF THE CIT(A) RECEIVED ON 17.04.2018 THAT THE APPEAL FOR THE AY 2011 - 12 WAS REQUIRED TO BE FILED IN ELECTRONIC F ORM AND NOT IN PHYSICAL FORM. HAVING GONE THROUGH THE AFFIDAVIT FILED BEFORE THE US AND THE FACT THAT THE ASSESSEE FILED ONLINE APPEAL ON 15.05.2018, WE DIRECT THE LD. CIT(A) TO ADMIT THE APPEAL FILED ELECTRONICALLY AND PASS AN ORDER ON MERITS, AFTER CON DONING THE DELAY. FACTS BEING IDENTICAL OUR DECISION FOR THE AY 2011 - 12 APPLIES MUTATIS MUTANDIS TO AY 2013 - 14. 6. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT 24/05/2019. SD/ - SD/ - ( MAHAVIR SINGH ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 24/05/2019 RAHUL SHARMA, SR. P.S. SHRI ATAUL U. MENON ITA NOS. 4058 & 4059/MUM/2018 6 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// (SR. PRIVATE SECRETARY) ITAT, MUMBAI