M/S SPECTRUM CHEMICALS PVT LTD., INDORE V. ITO 2(3)(2), MUMBAI

ITA 451/MUM/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2893 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2006-2007
• Appeal Filed On: 17-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVINDRA SINGH
• Keywords: Capital asset converted into stock in trade; Opportunity of being heard; Period of limitation; Set aside
• Section: 271(1)(c); 143(3); 139(1); 22; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI BEFORE SHRI PRAMOD KUMAR, HONBLE VICE PRESIDENT AN D SHRI SAKTIJIT DEY, HONBLE JUDICIAL MEMBER ITA NO. 451/MUM/2020 ASSESSMENT YEAR: 2006-07 ITA NO. 453/MUM/2020 ASSESSMENT YEAR: 2007-08 & ITA NO. 455/MUM/2020 ASSESSMENT YEAR: 2012-13 M/S SPECTRUM CHEMICALS PVT. LTD., 201, RAJANI BUILDING, 569, MG ROAD, INDORE - 452001 PAN: AAICS2382L VS. ITO - 2(3)(2), PRATISHTHA BHAVAN, 3 RD 4 TH FLOOR, 101 MK ROAD, MUMBAI - 400020 (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI RAVINDRA SINGH (CIT DR) DATE OF HEARING : 11/10 /202 1 DATE OF PRONOUNCEMENT: 22/10/2021 O R D E R PER SAKTIJIT DEY, JM CAPTIONED APPEALS BY THE SAME ASSESSEE ARISE OUT OF THREE SEPARATE ORDERS OF LEARNED COMMISSIONER OF INCOME TAX (APPEA LS)-6, MUMBAI. WHILE APPEALS RELATING TO ASSESSMENT YEARS 2006-07 AND 20 07-08 ARE AGAINST IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF TH E INCOME TAX ACT, 1961, APPEAL FOR THE ASSESSMENT YEAR 2012-13 ARISES OUT O F QUANTUM PROCEEDINGS. ITA NO. 451/MUM/2020 (AY 2006-07) AND ITA NO. 453/M UM/2020 (AY 2007-08) 2 ITA NOS. 451, 453 & 455/MUM/2020 ASSESSMENT YEARS: 2006-07, 2007-08 & 2012-13 2. THESE TWO APPEALS ARE AGAINST IMPOSITION OF PENA LTY UNDER SECTION 271(1)(C) OF THE ACT. 3. BRIEFLY THE FACTS ARE, THE ASSESSEE IS A RESIDEN T COMPANY. FOR THE ASSESSMENT YEARS UNDER CONSIDERATION, ASSESSEE HAD FILED ITS RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT. BASED ON INFORMATI ON RECEIVED THAT THE ASSESSEE HAS MADE CASH DEPOSITS IN ITS BANK ACCOUNT , ASSESSMENTS WERE REOPENED UNDER SECTION 147 OF THE ACT. ULTIMATELY, THE ASSESSING OFFICER (AO) COMPLETED THE ASSESSMENTS UNDER SECTION 143(3) R.W. S. 147 OF THE ACT ADDING BACK THE CASH DEPOSITS MADE IN THE BANK ACCOUNT. BA SED ON THE ADDITIONS MADE, THE AO INITIATED PROCEEDINGS FOR IMPOSITION O F PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND ULTIMATELY PASSED ORDERS I MPOSING PENALTY OF RS. 5,24,719/- AND RS. 61,200/- IN ASSESSMENT YEARS 200 6-07 AND 2007-08 RESPECTIVELY. AGAINST THE PENALTY ORDERS SO PASSED, ASSESSEE PREFERRED APPEALS BEFORE LEARNED COMMISSIONER (APPEALS). HOWEVER, LEA RNED COMMISSIONER (APPEALS) DISPOSED OF THE APPEALS EX-PARTE. WHILE D OING SO, HE DISMISSED THE APPEALS ON THE GROUND THAT THE APPEALS WERE NOT FIL ED WITHIN THE PERIOD OF LIMITATION AND THE ASSESSEE DID NOT FILE ANY APPLIC ATION SEEKING CONDONATION OF DELAY. 4. WHEN THE APPEALS WERE CALLED FOR HEARING, NONE A PPEARED ON BEHALF OF THE ASSESSEE, HENCE, WE PROCEED TO DISPOSE OF THE APPEA LS EX-PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REP RESENTATIVE AND BASED ON MATERIALS ON RECORD. 5. HEARD LEARNED DEPARTMENTAL REPRESENTATIVE AND PE RUSED THE MATERIALS ON RECORD. IT IS EVIDENT, ALLEGING THAT THE ASSESSE E DID NOT RESPOND TO NOTICE OF 3 ITA NOS. 451, 453 & 455/MUM/2020 ASSESSMENT YEARS: 2006-07, 2007-08 & 2012-13 HEARING ISSUED FROM TIME TO TIME LEARNED COMMISSION ER (APPEALS) HAS PROCEEDED TO DISPOSE OF THE APPEALS EX-PARTE. WHILE DOING SO, LEARNED COMMISSIONER (APPEALS) HAS OBSERVED THAT THOUGH IN FORM NO. 35, THE ASSESSEE HAS MENTIONED THE DATE OF RECEIPT OF THE P ENALTY ORDER AS 20.01.2017, HOWEVER, AS PER THE REPORT OF THE AO, THE ORDERS WE RE SERVED ON THE ASSESSEE ON 30.03.2015. WHEREAS, THE APPEALS WERE FILED ON 24.0 1.2017. THUS, HE HELD THAT THE INORDINATE DELAY IN FILING THE APPEALS HAVING N OT BEEN SATISFACTORILY EXPLAINED BY THE ASSESSEE, APPEALS ARE NOT MAINTAIN ABLE IN TERMS OF SECTION 249(2) OF THE ACT. ACCORDINGLY, HE DISMISSED THE AP PEALS WITHOUT DECIDING THEM ON MERIT. THOUGH, LEARNED COMMISSIONER (APPEALS) HA S MENTIONED THAT SUFFICIENT OPPORTUNITY WAS GRANTED TO THE ASSESSEE TO REPRESENT ITS CASE, HOWEVER, IT IS QUITE POSSIBLE THAT THE HEARING NOTI CES MAY NOT HAVE BEEN RECEIVED BY THE ASSESSEE. FURTHER, AS PER ASSESSEE S CLAIM, THE PENALTY ORDERS WERE SERVED ON HIM ON 20.01.2017. WHEREAS, LEARNED COMMISSIONER (APPEALS) HAS ALLEGED THAT AS PER THE REPORT OF THE AO, THE P ENALTY ORDERS WERE SERVED ON THE ASSESSE ON 30.03.2015, HENCE, THE APPEALS ARE B ARRED BY LIMITATION. IN OUR VIEW, UNLESS THE ASSESSEE IS GIVEN AN OPPORTUNITY T O EXPLAIN THE CAUSE OF DELAY, IF ANY, FOR WHICH THE APPEALS WERE DISMISSED WITHOU T GOING INTO THE MERITS, IT MAY CAUSE SERIOUS PREJUDICE TO THE ASSESSEE, SINCE, OTHER CONSEQUENCES UNDER THE PROVISIONS OF THE ACT, SUCH AS, PROSECUTION CAN BE LAUNCHED AGAINST THE ASSESSEE. KEEPING IN PERSPECTIVE ALL THESE FACTS, W E ARE OF THE VIEW THAT IN THE INTEREST OF FAIRPLAY AND JUSTICE, THE ASSESSEE DESE RVES AN OPPORTUNITY TO EXPLAIN THE ALLEGED DELAY IN FILING THE APPEALS BEFORE LEAR NED COMMISSIONER (APPEALS), WHICH, IT WAS UNABLE TO DO DUE TO EX-PARTE DISPOSAL OF THE APPEALS. ACCORDINGLY, 4 ITA NOS. 451, 453 & 455/MUM/2020 ASSESSMENT YEARS: 2006-07, 2007-08 & 2012-13 THE IMPUGNED ORDERS OF LEARNED COMMISSIONER (APPEAL S) ARE SET ASIDE AND THE MATTERS ARE RESTORED BACK TO HIS FILE FOR DE NOVO A DJUDICATION AFTER PROVIDING REASONABLE OPPORTUNITY TO THE ASSESSEE TO EXPLAIN T HE DELAY, IF ANY, IN FILING THE APPEALS. 6. IN THE RESULT, APPEALS ARE ALLOWED FOR STATISTIC AL PURPOSES. ITA NO. 455/MUM/2020 (AY 2012-13) 7. THIS APPEAL ARISES OUT OF THE ASSESSMENT PROCEED INGS COMPLETED UNDER SECTION 143(3) OF THE ACT. 8. WE HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIV E AND PERUSED THE MATERIALS ON RECORD. IT IS EVIDENT, ASSESSEES APPE AL AGAINST THE ASSESSMENT ORDER WAS DISMISSED BY AN EX-PARTE ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS). THOUGH, LEARNED COMMISSIONER (APPEAL) HA S STATED THAT IN SPITE OF A NUMBER OF OPPORTUNITIES GIVEN TO THE ASSESSEE, NO R EPRESENTATION WAS MADE, HOWEVER, WE ARE OF THE VIEW THAT CAUSE OF JUSTICE S HOULD BE BETTER SERVED IF ONE MORE OPPORTUNITY IS GRANTED TO THE ASSESSEE TO REPR ESENT ITS CASE BEFORE LEARNED COMMISSIONER (APPEALS). IN VIEW OF THE AFORESAID, W E ARE INCLINED TO SET ASIDE THE IMPUGNED ORDER OF LEARNED COMMISSIONER (APPEALS ) AND RESTORE THE ISSUES BACK TO THE FILE OF LEARNED COMMISSIONER (APPEALS) FOR DE NOVO ADJUDICATION AFTER DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSE E. WE ALSO DIRECT THE ASSESSEE TO MAKE PROPER REPRESENTATION BEFORE LEARN ED COMMISSIONER (APPEALS) AND COOPERATE IN FINALIZATION OF THE APPEAL PROCEED INGS. 9. IN THE RESULT, APPEAL IS ALLOWED FOR STATISTICA L PURPOSES. 10. TO SUM UP, ALL THE APPEALS ARE ALLOWED FOR STAT ISTICAL PURPOSES. 5 ITA NOS. 451, 453 & 455/MUM/2020 ASSESSMENT YEARS: 2006-07, 2007-08 & 2012-13 ORDER PRONOUNCED IN THE OPEN COURT ON 22 OCTOBE R, 2021. SD/- SD/- (PRAMOD KUMAR ) VICE PRESIDENT (SAKTIJIT DEY) JUDICIAL MEMBER MUMBAI; DATED: 22/10/2021 ALINDRA, PS / 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// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI 6 ITA NOS. 451, 453 & 455/MUM/2020 ASSESSMENT YEARS: 2006-07, 2007-08 & 2012-13 R. NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON/DRAFT DICTATION SHEETS ARE ATTACHED/DICTATED DIRECTLY ON PC SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 ORDER PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO THE AR 10 DATE OF DISPATCH OF ORDER