M/S GEC INFRASTRUCTURE CO., Nagpur V. INCOME TAX OFFICER WARD-7(1), Nagpur

ITA 432/NAG/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3240 (ITAT-NAGPUR)
• Duration Of Justice: 4 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2019
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 19-09-2014
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Assessee Lawyers: R K GANERIWALA
• Keywords: Opportunity of being heard; Principle of natural justice; Period of limitation; Time period of passing order; Condonation of delay; Set aside
• Section: 271(1)(c); 131; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.432/NAG./2014 (ASSESSMENT YEAR : 200708 ) GEC INFRASTRUCTURE CO. A15/5, WARDHA ROAD BUTIBORI INDUSTRIAL AREA NAGPUR 440 023 PAN AAGFG3541E . APPELLANT V/S INCOME TAX OFFICER WARD7(1), NAGPUR . RESPONDENT ITA NO.15/NAG./2015 (ASSESSMENT YEAR : 200708 ) GEC INFRASTRUCTURE CO. A15/5, WARDHA ROAD BUTIBORI INDUSTRIAL AREA NAGPUR 440 023 PAN AAGFG3541E . APPELLANT V/S INCOME TAX OFFICER WARD7(1), NAGPUR . RESPONDENT ASSESSEE BY : SHRI R.K. GANERIWALA REVENUE BY : SHRI A.R. NINAWE DATE OF HEARING 23.03.2017 DATE OF ORDER 30.03 .2017 O R D E R PER RAM LAL NEGI, J.M. THESE ARE THE TWO APPEALS FILED BY THE ASSESSEE, ON E AGAINST ORDER DATED 20.10.2011 PASSED BY THE LEARNED COMMIS SIONER OF INCOME TAX (APPEALS) II, NAGPUR, HEREINAFTER REFERR ED TO AS CIT(A) WHEREBY THE LEARNED CIT(A) DISMISSED THE APPEAL FIL ED BY THE 2 GEC INFRASTRUCTURE CO. APPELLANT/ASSESSEE AGAINST ASSESSMENT ORDER PASSED UNDER SECTION 144 OF THE INCOME TAX ACT, 1961, HEREINAFTER REFERR ED TO AS THE ACT AND THE ANOTHER AGAINST ORDER DATED 12.9.2014 PASS ED BY THE LEARNED CIT(A) WHEREBY THE LEARNED CIT(A) DISMISSED THE APP EAL FILED BY THE ASSESSEE AGAINST PENALTY ORDER PASSED BY THE INCOME TAX OFFICER WARD- 7(1) NAGPUR. SINCE, BOTH THE APPEALS PERTAIN TO THE SAME ASSESSEE FOR THE ASSESSMENT YEAR 2007-08, BOTH THE APPEALS WERE CLUBBED, HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON O RDER FOR THE SAKE OF CONVENIENCE. ITA NO 432/NAG/2014, AY 2007-08 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE A P ARTNERSHIP FIRM CARRYING MANUFACTURING BUSINESS FILED ITS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR DECLARING THE TOTAL INCOME AS NIL. THE RETURN WAS PROCESSED AND AFTER SCRUTINY ASSESSMENT ORDER W AS PASSED DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 41,46,689/-. 3. THE ASSESSMENT ORDER WAS CHALLENGED BY THE ASSES SEE BY FILING FIRST APPEAL BEFORE THE CIT(A). THE LEARNED CIT(A) AFTER HEARING THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE CONFIRMED THE ADDITION OF RS. 41,46,689/-TO THE INCOME OF THE ASSESSEE BY THE AO. THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST THE SAID ORDE R PASSED BY THE LEARNED CIT(A). 4. THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER O N THE GROUND THAT THE LEARNED CIT(A) HAS WRONGLY CONFIRMED THE A DDITIONS MADE BY THE AO AND THAT THE IMPUGNED ORDER IS ILLEGAL, INCO RRECT AND BAD IN LAW AND HAS BEEN PASSED IN VIOLATION OF THE PRINCIPLES OF THE NATURAL JUSTICE. 3 GEC INFRASTRUCTURE CO. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THERE IS A DELAY OF 1005 DAYS IN FILING THIS APPEAL. THE DELAY HAS BEEN CAUSED DUE TO ILLNESS OF THE COUNSEL OF THE FIRM WHO WAS D EALING WITH THE INCOME TAX MATTER. WHEN THE ASSESSEE CAME TO KNOW T HAT LIMITATION PERIOD HAS BEEN EXPIRED, A NEW COUNSEL WAS ENGAGED AND THE APPEAL WAS FILED. THE DELAY IN FILING THE PRESENT APPEAL W AS NOT DELIBERATE BUT IT HAS HAPPENED DUE TO THE CIRCUMSTANCES BEYOND CON TROL OF THE ASSESSEE. THE LEARNED COUNSEL SUBMITTED THAT THE AP PLICATION FOR CONDONATION OF DELAY FILED BY THE ASSESSEE MAY BE A LLOWED IN THE INTEREST OF JUSTICE. 6. SUB-SECTION 5 OF SECTION 253 OF THE INCOME TAX A CT PROVIDES THAT THE TRIBUNAL MAY ADMIT APPEAL OR PERMIT FILING OF M EMORANDUM OF CROSS OBJECTION OF RESPONDENT AFTER EXPIRY OF RELEV ANT PERIOD OF LIMITATION REFERRED TO IN SUB-SECTION 3 AND 4 SECTI ON 253, IF IT IS SATISFIED THAT THERE WAS SUFFICIENT CAUSE FOR NOT P RESENTING IT WITHIN THAT PERIOD. EXPRESSION SUFFICIENT CAUSE APPEARIN G IN THIS SECTION HAS ALSO BEEN USED IN SECTION 5 OF INDIAN LIMITATION AC T, 1961. THIS EXPRESSION HAS FALLEN FOR CONSIDERATION BEFORE THE HONBLE HIGH COURTS AS WELL AS BEFORE THE HONBLE SUPREME COURT, AND TH E HONBLE COURTS ARE UNANIMOUS IN OBSERVING THAT WHENEVER SUCH ISSUE COMES FOR CONSIDERATION BEFORE ANY ADJUDICATING AUTHORITY, TH E EXPRESSION SUFFICIENT CAUSE IS TO BE CONSIDERED WITH JUSTICE ORIENTED APPROACH. WE DEEM IT APPROPRIATE TO MAKE REFERENCE TO THE DEC ISION OF HONBLE SUPREME COURT IN THE CASE OF COLLECTOR LAND ACQUISI TION VS. MST. KATIJI & OTHERS, 1987 AIR 1353. THE RELEVANT PART OF THE J UDGMENT READS AS UNDER: 1. ORDINARILY A LITIGANT DOES NOT STAND TO BENEFIT BY LODGING AN APPEAL LATE. 4 GEC INFRASTRUCTURE CO. 2. REFUSING TO CONDONE DELAY CAN RESULT IN A MERITO RIOUS MATTER BEING THROWN OUT AT THE VERY THRESHOLD AND C AUSE OF JUSTICE BEING DEFEATED. AS AGAINST THIS WHEN DELAY IS CONDONED THE HIGHEST THAT CAN HAPPEN IS THAT A CAUS E WOULD BE DECIDED ON MERITS AFTER HEARING THE PARTIES. 3. 'EVERY DAY'S DELAY MUST BE EXPLAINED' DOES NOT M EAN THAT A PEDANTIC APPROACH SHOULD BE MADE. WHY NOT EVERY H OUR'S DELAY, EVERY SECOND'S DELAY? THE DOCTRINE MUST BE A PPLIED IN A RATIONAL COMMON SENSE PRAGMATIC MANNER. 4. WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERA TIONS ARE PITTED AGAINST EACH OTHER, CAUSE OF SUBSTANTIAL JUS TICE DESERVES TO BE PREFERRED FOR THE OTHER SIDE CANNOT CLAIM TO HAVE VESTED RIGHT IN INJUSTICE BEING DONE BECAUSE O F 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 N OT ON ACCOUNT OF ITS POWER TO LEGALIZE INJUSTICE ON TECHN ICAL GROUNDS BUT BECAUSE IT IS CAPABLE OF REMOVING INJUSTICE AND IS EXPECTED TO DO SO. 7. IN THE PRESENT CASE, SMT. SANJUKTA MOHANTI, PART NER OF M/S GEC INFRASTRUCTURE COMPANY HAS SUBMITTED THAT SHE WAS T OTALLY DEPENDENT ON THE COUNSEL IN THE MATTERS REGARDING THE PENDING CASES OF THE FIRM. THAT DUE TO PROLONG ILLNESS OF THE COUNSEL SH. V.V. SARNJAME, SHE HAD TO ENGAGE NEW COUNSEL AND IN THIS PROCESS, THE ASSE SSEE COULD NOT FILE THE PRESENT APPEAL WITHIN THE LIMITATION PERIOD. SH RI VILAS V SARANJAME CA HAS SWORN AN AFFIDAVIT, THE RELEVANT PORTION OF WHICH READS AS UNDER:- 5 GEC INFRASTRUCTURE CO. THE CASE WITH CIT(A)2 COULD NOT BE HANDLED PROPERL Y DUE TO MY ILL-HEALTH, ACUTE SUFFERING FROM PAIN IN THE BAC KBONE AND I WAS NOT ABLE TO WORK. THE APPEAL AGAINST THE ORDE R OF CIT(II) COULD NOT BE FILED BY ME DUE TO MY ILL-HEAL TH. THE PAIN AND PROBLEM WAS SO SEVERE. THAT I HAD TO SUDDENLY UNDERGO BACKBONE SURGERY DUE TO SEVERE STENOSIS IN THE VERTEBRAE. FOR THIS PURPOSE I WAS ADMITTED TO WOKHARD HOSPITAL NAGPUR ON 23 RD JUNE 2013 AND WAS OPERATED ON 24 THJ JUNE 2013. IT WAS A MAJOR SURGERY WHICH LASTED FOR EIGHT HOURS. I WAS DISCHARGED FROM THE HOSPITAL ON 30 JUNE 2013 IN THE AFTERNOON. 8. SHRI VILAS V SARANJAME HAS ALSO ATTACHED THE COP Y OF DISCHARGE SUMMARY ISSUED BY THE HOSPITAL AUTHORITIES. FROM TH E DOCUMENTARY AND CIRCUMSTANTIAL EVIDENCE PLACED ON RECORD, WE AR E SATISFIED THAT THE REASONS FOR DELAY IN PRESENTING THE PRESENT APPEAL BY THE ASSESSEE WITHIN THE LIMITATION PERIOD ARE SUFFICIENT TO COND ONE THE DELAY. FURTHER WE DID NOT FIND ANY ULTERIOR MOTIVE OF THE ASSESSEE IN FILING THE APPEAL AFTER THE EXPIRY OF THE LIMITATION PERIOD. WE, THER EFORE, FOLLOWING THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE AFORESAID CASE ALLOWED THE APPLICATION THE ASSESSEE AND CONDONED T HE DELAY IN THE INTEREST OF JUSTICE AND ALLOWED THE COUNSEL FOR THE ASSESSEE TO ARGUE THE CASE ON MERITS. 9. BEFORE US, THE LD. COUNSEL SUBMITTED THAT THE LD. CIT(A) HAS WRONGLY UPHELD THE ADDITION OF RS.41,22,262/-MADE B Y THE AO. AS PER THE AUDITED BALANCE SHEET THE PAYMENTS WERE MADE IN THE FINANCIAL YEAR 2009-10. THE AO WITHOUT VERIFYING THE PAYMENT VOUCHERS ARRIVED AT THE CONCLUSION THAT NO ONE CAN PROVIDE SUCH A HU GE CREDIT. THE ASSESSEE COULD NOT PROPERLY PRESENT ITS CASE DUE TO ILL HEALTH OF THE COUNSEL. NO NOTICE WAS ISSUED TO ANY OF THE CREDITO RS AND THE ASSESSEE BEING WOMEN PARTNER COULD NOT PRODUCE THE PARTIES O F HER OWN. THE 6 GEC INFRASTRUCTURE CO. LD. COUNSEL FURTHER SUBMITTED THAT THE AO HAS MADE ADDITION OF RS.12000/-ON THE GROUND THAT THE AMOUNT WAS WITHDRA WN BY ONE OF THE PARTNERS FOR PERSONAL EXPENSES WITHOUT PROPER V ERIFICATION. SIMILARLY, AN ADDITION OF RS. 12427/-WAS MADE BY TH E AO DISBELIEVING THE STATEMENT OF ONE OF THE PARTNERS. THE LD. CIT(A ) OUGHT TO HAVE GET THE FACTS VERIFIED BEFORE CONFIRMING THE ACTION OF THE AO. THE LD. COUNSEL FURTHER SUBMITTED THAT SINCE, THE LD. CIT(A ) HAS CONFIRMED THE ASSESSMENT ORDER PASSED BY THE AO IN VIOLATION OF P RINCIPLES OF NATURAL JUSTICE, THE SAME IS LIABLE TO BE SET ASIDE. 10. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESE NTATIVE, RELYING ON THE CONCURRENT FINDINGS OF THE AUTHORITIES BELOW SUBMITTED THAT SINCE, THE ASSESSEE HAS FAILED TO ESTABLISH ITS CLA IM DURING THE ASSESSMENT PROCEEDINGS, THE LD. CIT(A) HAS RIGHTLY CONFIRMED THE ADDITIONS MADE BY THE AO. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PE RUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF T HE AUTHORITIES BELOW. THE ONLY ISSUE RAISED BY THE ASSESSEE IS THAT THE L D. CIT(A) HAS WRONGLY CONFIRMED THE TOTAL ADDITION OF RS. 41,46,6 89/-. WE NOTICE THAT DURING ASSESSMENT PROCEEDINGS THE AO ASKED THE ASSESSEE TO SUBSTANTIATE THE HUGE LIABILITIES SHOWN IN BALANCE SHEET AND IN RESPONSE THEREOF, THE COUNSEL FOR THE ASSESSEE SUBM ITTED CONFIRMATIONS FROM THE CREDITORS TO PROVE THE UNSEC URED LOANS AND ALSO SUBMITTED BILLS AND CONFIRMATIONS PROVIDED BY THE S UPPLIERS APPEARING AS SUNDRY CREDITORS IN THE BALANCE SHEET. THEREAFTE R, ON THREE DATES OF HEARING SMT. SANJUKTA MOHANTI PARTNER OF THE FIRM A TTENDED ON TWO OCCASIONS. AGAIN ON 22.10.2009, THE AO ASKED THE RE PRESENTATIVE OF THE ASSESSEE TO OFFER EXPLANATION AND FURNISH CONFI RMATIONS FROM THE PARTIES. HOWEVER, ON 28.10.2009 WHEN THE MATTER WAS FIXED FOR 7 GEC INFRASTRUCTURE CO. HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE AC CORDINGLY, THE AO ISSUED SUMMONS U/S 131 OF THE ACT TO SMT. SANJUKTA MOHANTI FOR HER APPEARANCE ON 30.10.2009. ON THE SAID DATE HER STAT EMENT WAS RECORDER U/S 131 OF THE ACT AND ON THE BASIS OF HER STATEMENT AND THE DOCUMENTS SUBMITTED BY THE ASSESSEE, THE AO FRAMED THE ASSESSMENT ORDER MAKING THE ADDITION IN QUESTION. 12. FROM THE SEQUENCE OF EVENTS IT APPEARS THAT THE SMT. SANJUKTA MOHANTI, PARTNER OF THE FIRM COULD NOT PROPERLY PRE SENT THE CASE OF THE ASSESSEE. INITIALLY THE COUNSEL FOR THE ASSESSEE AP PEARED BEFORE AO AND REPRESENTED THE ASSESSEE. SOME OF THE DOCUMENTS WERE ALSO SUBMITTED, HOWEVER, DID NOT APPEAR DURING THE SUBSE QUENT HEARINGS. THE COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US TH AT SMT. SANJUKTA PARTNER OF THE FIRM WAS NOT ACQUAINTED WITH THE PRO CEEDINGS BEFORE THE INCOME TAX AUTHORITIES AND WAS TOTALLY DEPENDENT ON THE COUNSEL. HOWEVER, DUE TO UNFITNESS AND ILLNESS OF THE COUNSE L THE REQUIRED INFORMATION AND DOCUMENTS COULD NOT BE EITHER PRODU CED BEFORE THE AO OF THE SAME REMAINED UNEXPLAINED. WE HAVE ALREAD Y ALLOWED THE APPLICATION FOR CONDONATION OF DELAY ON THE GROUND OF ILLNESS OF THE COUNSEL IN THIS CASE. HENCE, WE ARE OF THE CONSIDER ED OPINION THAT SINCE THE ASSESSEE COULD NOT PROPERLY PRESENT ITS C ASE BEFORE THE AO DUE TO THE AFORESAID REASONS DESPITE HAVING OPPORTU NITY OF BEING HEARD, THE ASSESSEE SHOULD GET AN OPPORTUNITY TO PR ESENT ITS CASE IN THE INTEREST OF JUSTICE. ACCORDINGLY, WITHOUT GOING INTO THE MERITS OF THE CASE, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) AND SEND THE FILE BACK TO THE AO FOR PASSING ASSESSMEN T ORDER AFRESH AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD T O THE ASSESSEE. 8 GEC INFRASTRUCTURE CO. ITA NO 15/NAG/2015, AY 2007-08 THE ASSESSEE HAS CHALLENGED THE PENALTY ORDER DATE D 12-9-204 PASSED BY THE LD. CIT(A)-II, NAGPUR CONTENDING THAT THE LD. CIT(A) HAS WRONGLY CONFIRMED THE PENALTY OF RS. 13,95,776/ - LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271 (1)(C) OF THE A CT BEING ILLEGAL BAD IN LAW AND HAS BEEN PASSED WITHOUT FOLLOWING THE PR INCIPLES OF NATURAL JUSTICE. 2. THE AO MADE AN ADDITION OF RS. 41,46,689/- TO TH E INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR 200708 AND THE AC CORDINGLY INITIATED PROCEEDINGS UNDER SECTION 271(1)(C) OF TH E ACT. IN APPEAL THE PENALTY WAS CONFIRMED BY THE LD. CIT(A). SINCE, WE HAVE SET ASIDE THE ORDER OF THE CIT(A) PASSED IN QUANTUM APPEAL CONFIR MING THE ADDITIONS MADE BY THE ASSESSING OFFICER AND RESTORED THE MATT ER TO THE FILE OF AO FOR PASSING ASSESSMENT ORDER AFRESH AFTER HEARIN G THE ASSESSEE IN THE LIGHT OF THE CONTENTIONS RAISED BEFORE US, THE PENALTY APPEAL CANNOT BE DECIDED AT THE STAGE. HENCE, THE PENALTY ORDER S TANDS REMITTED. THE AO IS AT LIBERTY TO INITIATE FRESH PENALTY PROC EEDINGS IF REQUIRED AFTER COMPLETION OF ASSESSMENT ORDER. IN THE RESULT BOTH THE APPEALS FILED BY THE ASSESS EE ARE ALLOWED FOR THE STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30.03.2017 SD/ - SHAMIM YAHYA ACCOUNTANT MEMBER SD/ - RAM LAL NEGI JUDICIAL MEMBER NAGPUR, DATED: 30.03.2017 9 GEC INFRASTRUCTURE CO. COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, NAGPUR CITY CONCERNED; (5) THE DR, ITAT, NAGPUR; (6) GUARD FILE. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, NAGPUR