M/s K. Venkataraju, V. THE ADD.CIT , RAJAHMUNDRY RANGE, Rajahmundry

ITA 408/VIZ/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0189 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 01-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Bonafide belief; Period of limitation; Reasonable cause; Condonation of delay
• Section: 143(3); 142(1)

Judgement Text

ITA NO.408/VIZAG/2012 K. VENKATARAJU, VEMAGIRI, E.G. DIST. 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . . . . , ,, , . . . . , , , , % % % % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER . .. ./ // / I.T.A.NO.408/VIZAG/2012 ( / ASSESSMENT YEAR : 2008-09 ) K. VENKATARAJU VEMAGIRI, E.G. DIST. VS. ADDL. CIT RAJAHMUNDRY RANGE RAJAHMUNDRY [ PAN: AABFK4007A ] (, , , , / APPELLANT) (-., -., -., -., / RESPONDENT ) , / / APPELLANT BY : SHRI G.V.N.HARI, AR -., / / RESPONDENT BY : SHRI M.N.MURTHY NAIK, DR / 3 / DATE OF HEARING : 2 9 . 1 0.2015 / 3 / DATE OF PRONOUNCEMENT : 30.11.2015 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF COMMISSIONER OF INCOMETAX (APPEALS), VISAKHAPATNAM DATED 30-07-2012 FOR THE ASSESSMENT Y EAR 2008-09. ITA NO.408/VIZAG/2012 K. VENKATARAJU, VEMAGIRI, E.G. DIST. 2 2. THE APPEAL FILED BEFORE THE TRIBUNAL IS TIME BAR RED BY 13 DAYS. THE LD. A.R. SUBMITTED THAT THE ASSESSEE FILE D A CONDONATION PETITION ALONG WITH AFFIDAVIT AND PRAYE D FOR CONDONATION OF MARGINAL DELAY IN FILING THE APPEAL. THE ASSESSEE PLEADED THAT THE DELAY IN FILING APPEAL IS BEYOND ITS CONTROL AS DURING THE SAME PERIOD ITS AUTHORISED RE PRESENTATIVE SRI. V.V.S. KRISHNA RAO WAS ENGAGED IN HOSPITAL WOR K FOR TREATMENT OF HIS FATHER AT CARE HOSPITAL HYDERABAD. SOON AFTER HIS FATHER RECOVERY, HE PREPARED APPEAL PAPERS FOR FILING HENCE THERE IS DELAY OF13DAYS IN FILING THE APPEAL. TO TH IS EFFECT, THE MANAGING PARTNER OF THE FIRM SRI. K. VENKATARAJU FI LED AFFIDAVIT ALONG WITH COPY OF DISCHARGE SUMMARY OF CARE HOSPIT AL, HYDERABAD. THEREFORE, PRAYED FOR CONDONATION OF DEL AY. 3. WE HAVE HARD BOTH THE PARTIES. THE LD. D.R. NEV ER OBJECTED THE CONDONATION OF DELAY. HAVING CONSIDERE D THE SUBMISSIONS AND ALSO EXERCISING POWERS VESTED WITH THE TRIBUNAL UNDER SECTION 253(5) OF THE INCOME TAX ACT , 1961 WE CONDONE THE DELAY IN FILING THE APPEAL, ADMIT THE A PPEAL AND PROCEED TO DECIDE THE ISSUES AGITATED BEFORE US. ITA NO.408/VIZAG/2012 K. VENKATARAJU, VEMAGIRI, E.G. DIST. 3 4. THE BRIEF FACTS OF THE CASE, IS THAT THE ASSESS EE IS A PARTNERSHIP FIRM, WHICH IS ENGAGED IN THE BUSINESS OF CIVIL CONTRACTS. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE A.Y. 2008-09 ON 28-09-2008 DECLARING TOTAL INCOME OF RS. 2,48,42,090/-. THE CASE WAS SELECTED FOR SCRUTINY A ND STATUTORY NOTICES U/S 143(2) AND 142(1) WERE ISSUED. IN RESPO NSE TO NOTICE, THE ASSESSEE AUTHORISED REPRESENTATIVE APPE ARED AND FURNISHED THE BOOKS OF ACCOUNTS AND OTHER DETAILS. THE ASSESSING OFFICER, HOWEVER, DID NOT SATISFY WITH TH E BOOKS OF ACCOUNTS, REJECTED THE BOOKS OF ACCOUNTS AND ESTIMA TED THE NET PROFIT ON CONTRACT RECEIPTS. IN ADDITION, THE ASSES SING OFFICER HAS MADE SEPARATE ADDITIONS TOWARDS INTEREST RECEIV ED FROM BANKS AND ALSO ADDITIONS TOWARDS INCOME FROM SAND R AMP. THUS, THE ASSESSING OFFICER, COMPLETED THE ASSESSME NT U/S 143(3) AND DETERMINED THE TOTAL INCOME OF RS. 4,38, 33,473/- AS AGAINST THE RETURNED INCOME OF RS. 2,48,42,090/- . 5. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) ON 23-01-2012. THE ASSESSM ENT WAS COMPLETED ON 27-12-2010. THE ASSESSEE SUPPOSED TO F ILE THE ITA NO.408/VIZAG/2012 K. VENKATARAJU, VEMAGIRI, E.G. DIST. 4 APPEAL WITHIN 30 DAYS FROM THE DATE OF COMMUNICATIN G THE ASSESSMENT ORDER. THUS, THERE IS A DELAY OF 323 DAY S IN FILING THE APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. TH E ASSESSEE FILED A PETITION FOR CONDONATION OF DELAY IN FILING THE APPEAL AND EXPLAINED THAT AFTER RECEIPT OF ASSESSMENT ORDER, T HE SAME WAS HANDED OVER TO ACCOUNTANT/EMPLOYEE SRI SRINIVASA AN D DIRECTED TO FILE THE APPEAL. THE ASSESSEE WAS UNDER THE BONA FIDE BELIEF THAT THE PERSON ENTRUSTED WITH THE WORK HAS BEEN AL READY FILED THE APPEAL. BUT, LATER ON IT WAS NOTICED THAT THE A PPEAL WAS NOT FILED BY THE PERSON AND WITHOUT COMPLETING THE WORK THE EMPLOYEE LEFT THE SERVICE OF THE FIRM. THE ASSESSEE STATED THAT THE DELAY IS UNINTENTIONAL AND IT WAS HAPPENED BECA USE OF MISTAKE OF THE EMPLOYEES TO WHOM THE WORK IS ENTRUS TED. THEREFORE, PRAYED FOR CONDONE THE DELAY. THE CIT(A) , HOWEVER, DID NOT CONVINCED WITH THE REASONS ADDUCED BY THE A SSESSEE DISMISSED THE APPEAL AS NOT MAINTAINABLE. WHILE DOI NG SO, THE CIT(A) OBSERVED THAT THE THERE IS NO REASONABLE CAU SE GIVEN BY THE ASSESSEE TO CONDONE SUCH A LONG DELAY OF 323 DA YS, IF THE DELAY IS CONDONED FOR SUCH REASONS IT WOULD AMOUNT TO MAKING ITA NO.408/VIZAG/2012 K. VENKATARAJU, VEMAGIRI, E.G. DIST. 5 MOCKERY OF LIMITATION PROVIDED IN THE STATUTE. AGGR IEVED BY THE CIT(A) ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE LEARNED COUNSEL FOR THE ASSESSEE, IN THE FI RST PLACE, SUBMITTED THAT THERE WAS REASONABLE CAUSE FOR DELAY IN FILING THE FIRST APPEAL BEFORE THE CIT(A), WHICH WAS EXPLA INED IN THE PETITION FILED BEFORE THE LEARNED CIT(A) SEEKING CO NDONATION OF DELAY. THE AUTHORISED REPRESENTATIVE, FURTHER, SUBM ITTED THAT, THE FIRST APPELLATE AUTHORITY WAS NOT JUSTIFIED IN DECLINING TO CONDONE THE DELAY AND DISMISSING THE APPEAL AS BARR ED BY LIMITATION. THE AUTHORISED REPRESENTATIVE EXPLAINED THAT THE WORK WAS ENTRUSTED TO ACCOUNTANT/EMPLOYEE SRI. SRIN IVASA AND DIRECTED TO FILE THE APPEAL. THE ASSESSEE WAS UNDER THE BONAFIDE BELIEF THAT THE PERSON ENTRUSTED WITH THE WORK HAS BEEN ALREADY FILED THE APPEAL. BUT, LATER ON IT WAS NOTICED THAT THE APPEAL WAS NOT FILED BY THE PERSON AND WITHOUT COMPLETING THE WORK THE EMPLOYEE LEFT THE SERVICE OF THE FIRM. THE ASSESSEE STATED THAT THE DELAY IS UNINTENTIONAL AND IT WAS HAPPENED BECAUSE OF MISTAKE OF THE EMPLOYEES TO WHO M THE WORK IS ENTRUSTED. THUS, THERE IS REASONABLE CAUSE IN NOT FILING THE APPEAL WITHIN THE STATUTORY TIME LIMIT. THE LD. COUNSEL ITA NO.408/VIZAG/2012 K. VENKATARAJU, VEMAGIRI, E.G. DIST. 6 FURTHER SUBMITTED THAT, THE ISSUES INVOLVED IN THIS APPEAL ARE COVERED IN FAVOUR OF THE ASSESSEE BY THE VARIOUS JU DGMENTS OF COURTS/TRIBUNALS. HE, FURTHER, SUBMITTED THAT THE C IT(A), IN ASSESSEE OWN CASE FOR THE ASST. YEAR 2009-10, CONSI DERED THE ISSUES IN FAVOUR OF THE ASSESSEE ON MERITS. THE A.R . FURTHER SUBMITTED THAT THE ASSESSEE IS HAVING MERITS IN ITS CASE, IN CASE THE DELAY IS NOT CONDONED, A MERITORIOUS CASE THROW N OUT OF THE JUDICIAL REVIEW. TO SUPPORT HIS ARGUMENTS, THE AUTH ORISED REPRESENTATIVE RELIED UPON THE JUDGMENTS OF HONBLE SUPREME COURT IN THE CASE OF IMPROVEMENT TRUST, LUDHIANA VS . UJAGAR SINGH &ORS, IN CIVIL APPEAL NO. 2395 OF 2008. HE FU RTHER RELIED UPON THE JUDGMENT OF HONBLE MADRAS HIGH COURT IN T HE CASE OF SAIYANA WAREHOUSE (P) LTD. VS. ASSISTANT COMMISSION ER OF INCOME TAX, (2014) 90 CCH 32 AND ALSO COORDINATE BE NCH DECISION IN THE CASE OF SIBAR DAIRY PVT. LTD. VS. A CIT, IN IT(SS)A. NO. 6/VIZ/2007. 7. ON THE OTHER HAND, THE LD. D.R. STRONGLY OPPOSIN G THE ABOVE CONTENTIONS OF THE ASSESSEE SUPPORTED THE IMP UGNED ORDER OF THE LEARNED CIT(A). ITA NO.408/VIZAG/2012 K. VENKATARAJU, VEMAGIRI, E.G. DIST. 7 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AS REGARDS THE PRELIMINARY ISS UE IN THIS APPEAL RELATING TO 323 DAYS DELAY ON THE PART OF TH E ASSESSEE IN FILING THE APPEAL BEFORE THE CIT(A), IT IS OBSERVED THAT SUB- SECTION (3) OF S.249 EMPOWERS THE CIT(A) TO ADMIT T HE APPEAL FILED BY THE ASSESSEE AFTER EXPIRY OF THE SPECIFIED PERIOD UNDER THE STATUTE, IF HE IS SATISFIED THAT THE ASSESSEE H AD SUFFICIENT REASONABLE CAUSE FOR NOT FILING THE APPEAL WITHIN T HE PERIOD. IN THE PRESENT CASE ON HAND, THE ASSESSEE FILED AN APP LICATION BEFORE THE CIT(A) FOR THE CONDONATION OF DELAY AND PERUSAL OF THE SAME SHOWS THAT ONE OF ITS EMPLOYEE, WHO HAD EN TRUSTED WITH THE APPEAL WORK LEFT THE SERVICE OF THE FIRM W ITHOUT COMPLETING THE WORK DURING THE RELEVANT PERIOD, WHI CH RESULTED IN NON FILING OF APPEAL BEFORE THE CIT(A) WITHIN T HE TIME PRESCRIBED UNDER THE ACT. AT THE TIME OF HEARING BE FORE US, THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THIS REASON CONSTITUTED SUFFICIENT CAUSE, WHICH PREVENTE D THE ASSESSEE FROM FILING THE APPEAL WITHIN THE SPECIFIE D TIME ALLOWED UNDER THE ACT. THE HONBLE SUPREME COURT I N THE CASE OF COLLECTOR, LAND ACQUISITION VS. MST. KATIJI & OR S. (1987) 62 ITA NO.408/VIZAG/2012 K. VENKATARAJU, VEMAGIRI, E.G. DIST. 8 CTR (SC) 23 : (1987) 167 ITR 471 (SC) HAS LAID DOWN CERTAIN PRINCIPLES FOR DECIDING THE ISSUE RELATING TO CONDO NATION OF DELAY IN FILING THE APPEAL. THE SAME ARE REPRODUCED HEREUNDER: '(1) ORDINARILY, A LITIGANT DOES NOT STAND TO BENEF IT BY LODGING AN APPEAL LATE (2) REFUSING TO CONDONE DELAY CAN RESULT IN A MERIT ORIOUS MATTER BEING THROWN AT THE VERY THRESHOLD AND CAUSE OF JUSTICE BEING DEFEA TED. AS AGAINST THIS, WHEN DELAY IS CONDONED, THE HIGHEST THAT CAN HAPPEN IS T HAT A CAUSE WOULD BE DECIDED ON MERITS AFTER HEARING THE PARTIES. (3) EVERY DAYS DELAY MUST BE EXPLAINED DOES NOT MEAN THAT A PEDANTIC APPROACH SHOULD BE MADE. WHY NOT EVERY HOURS DELAY , EVERY SECONDS DELAY ? THE DOCTRINE MUST BE APPLIED IN A RATIONAL, COMMON SENSE AND PRAGMATIC MANNER. (4) WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDER ATION ARE PITTED AGAINST EACH OTHER, THE CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRED, FOR THE OTHER SIDE CANNOT CLAIM TO HAVE VESTED RIGHT IN INJUSTICE BEIN G DONE BECAUSE OF A NON- DELIBERATE DELAY. (5) THERE IS NO PRESUMPTION THAT DELAY IS OCCASIONE D 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 SE RIOUS RISK. (6) IT MUST BE GRASPED THAT THE JUDICIARY IS RESPEC TED NOT ON ACCOUNT OF ITS POWER TO LEGALISE INJUSTICE ON TECHNICAL GROUNDS BUT BECA USE IT IS CAPABLE OF REMOVING INJUSTICE AND IS EXPECTED TO DO SO.' 9. THE LEARNED COUNSEL FOR THE ASSESSEE, AT THE TIM E OF HEARING BEFORE US REFERRED THE HONBLE SUPREME COUR T DECISION IN THE CASE OF IMPROVEMENT TRUST, LUDHIANA VS. UJAG AR SINGH &ORS, IN CIVIL APPEAL NO. 2395 OF 2008, WHEREIN THE HONBLE SUPREME COURT OBSERVED THAT AFTER ALL, JUSTICE CAN BE DONE ONLY WHEN THE MATTER IS FOUGHT ON MERITS IN ACCORDANCE W ITH LAW ITA NO.408/VIZAG/2012 K. VENKATARAJU, VEMAGIRI, E.G. DIST. 9 RATHER THAN TO DISPOSE IT ON TECHNICAL ISSUES. THEI R LORDSHIPS, FURTHER OBSERVED THAT ENDS OF JUSTICE WOULD BE MET BY SETTING ASIDE THE IMPUGNED ORDERS AND THE MATTER IS REMITTE D TO THE EXECUTING COURT TO CONSIDER AND DISPOSE OF APPELLAN TS OBJECTIONS ON MERITS. IT IS PERTINENT TO POINT THAT UNLESS MALAFIDES ARE WRIT LARGE ON THE CONDUCT OF THE PART Y, GENERALLY AS A NORMAL RULE, DELAY SHOULD BE CONDONED. IN THE LEGAL ARENA, AN ATTEMPT SHOULD ALWAYS BE MADE TO ALLOW THE MATTE R TO BE CONTESTED ON MERITS RATHER THAN TO THROW IT ON SUCH TECHNICALITIES. APART FROM THE ABOVE, THE APPELLANT WOULD NOT HAVE GAINED IN ANY MANNER WHATSOEVER, BY NOT FILING THE APPEAL WITHIN THE PERIOD OF LIMITATION. IT IS ALSO WORTH NOTICING THAT DELAY WAS ALSO NOT THAT HUGE, WHICH COULD NOT HAVE BEEN CONDONED, WITHOUT PUTTING THE RESPONDENTS TO HARM O R PREJUDICE. IT IS THE DUTY OF THE COURT TO SEE TO IT THAT JUSTICE SHOULD BE DONE BETWEEN THE PARTIES. 10. IF THE PRINCIPLES LAID DOWN BY THE HONBLE SUPR EME COURT ARE APPLIED TO THE FACTS OF THE PRESENT CASE, WE AR E OF THE OPINION THAT THE REASON GIVEN BY THE ASSESSEE FOR D ELAY IN FILING THE APPEAL BEFORE CIT(A) WITHIN THE TIME ALLOWED UN DER THE ACT ITA NO.408/VIZAG/2012 K. VENKATARAJU, VEMAGIRI, E.G. DIST. 10 THAT ONE OF ITS EMPLOYEE WHO HAD ENTRUSTED WITH APP EAL WORK HAS LEFT THE FIRM DURING THE RELEVANT PERIOD, RESUL TING INTO NON FILING OF APPEAL WITHIN THE TIME CONSTITUTED SUFFIC IENT REASON. MOREOVER, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTE D THAT, THE ISSUES INVOLVED IN THIS APPEAL ARE COVERED IN FAVOU R OF THE ASSESSEE BY THE VARIOUS JUDGMENTS OF COURTS/TRIBUNA LS. HE, FURTHER, SUBMITTED THAT THE CIT(A), IN ASSESSEE OWN CASE FOR THE ASST. YEAR 2009-10, CONSIDERED THE ISSUES IN FA VOUR OF THE ASSESSEE ON MERITS. CONSIDERING THE FACTS AND CIRCU MSTANCES OF THE CASE, THE LEARNED CIT(A) OUGHT TO HAVE CONDONED THE DELAY ON THE PART OF THE ASSESSEE IN FILING THE APPEAL B EFORE HIM, BY EXERCISING THE POWER CONFERRED UPON HIM UNDER THE P ROVISIONS OF SUB-SECTION (3) OF S.249. WHEN MERITS AND TECHNI CAL LAPSES PITTED EACH OTHER, THE CAUSE OF MERITS DESERVES TO BE PREFERRED. FURTHER, NO LITIGANT WOULD GET ANY BENEFIT BY LODGI NG AN APPEAL LATE, BUT, WOULD LAND IN DEEP TROUBLE. REFUSING TO CONDONE DELAY CAN RESULT IN A MERITORIOUS MATTER BEING THRO WN AT THE VERY THRESHOLD AND CAUSE OF JUSTICE BEING DEFEATED. THEREFORE, THE CIT(A) SHOULD HAVE CONDONED THE DELAY IN FILING THE APPEAL. ITA NO.408/VIZAG/2012 K. VENKATARAJU, VEMAGIRI, E.G. DIST. 11 11. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO APPLYING THE RATIOS OF HONBLE SUPREME COURT D ECISION IN THE CASE OF COLLECTOR, LAND ACQUISITION VS. MST. KA TIJI&ORS. (1987) 62 CTR (SC) 23 (1987) 167 ITR 471 (SC) AND IMPROVEMENT TRUST, LUDHIANA VS. UJAGAR SINGH &ORS, IN CIVIL APPEAL NO. 2395 OF 2008, WE CONDONE THE DELAY ON TH E PART OF THE ASSESSEE IN FILING THE APPEAL BEFORE THE CIT(A) AND ALLOW THE GROUND RAISED BY THE ASSESSEE ON THIS ISSUE. HA VING CONDONED THE DELAY IN FILING THE APPEAL BEFORE THE CIT(A), WE REMIT THE MATTER BACK TO THE FILE OF THE LEARNED CI T(A) FOR DECIDING THE ISSUES INVOLVED IN THIS APPEAL ON MERI TS. IN VIEW OF THE ABOVE, WE DIRECT THE CIT(A) TO ADMIT THE APPEAL OF THE ASSESSEE AND DISPOSE IT ON MERITS AFTER AFFORDING R EASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 12. IN THE RESULT, THE ASSESSEE APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 30 TH NOV15. SD/- SD/- ( (( ( . .. . ) ) ) ) ( (( ( . . . . ) ) ) ) ( (( ( V. DURGA RAO ) )) ) ( (( ( G. MANJUNATHA) / // / JUDICIAL MEMBER / // / ACCOUNTANT MEMBER /VISAKHAPATNAM: 6 / DATED : 30.11.2015 VG/SPS ITA NO.408/VIZAG/2012 K. VENKATARAJU, VEMAGIRI, E.G. DIST. 12 / - 7 / COPY OF THE ORDER FORWARDED TO :8 1. , / THE APPELLANT M/S. K. VENKATARAJU, D.NO.2-59, VEMAGIRI, KADIYAM MANDALAM, EAST GODAVARI DISTRICT. 2. -., / THE RESPONDENT ADDL. CIT, RAJAHMUNDRY RANGE, RAJAHMUNDRY . 3. : / THE CIT, VISAKHAPATNAM. 4. : () / THE CIT(A), VISAKHAPATNAM. 5. -, , / // / DR, ITAT, VISAKHAPATNAM 6 . . . . / GUARD FILE / BY ORDER // TRUE COPY // @A ( SR.PRIVATE SECRETARY ) , / // / ITAT, VISAKHAPATNAM