ANAND RAJ ANAND, MUMBAI V. ACIT 11(1), MUMBAI

ITA 4940/MUM/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 3176 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 30-03-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 31-07-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K KARDA M
• Keywords: Capital asset; Opportunity of being heard; Principle of natural justice; Deemed to accrue or arise in india; Non-deduction of tax; Condonation of delay
• Section: 143(3); 2(14); 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI RAMLAL NEGI, JUDICIAL MEMBER ITA NO. 4940/MUM/2012 (ASSESSMENT YEAR : 2007-08) SHRI ANAND RAJ ANAND, FLAT NO.001, BLDG., NO.28, EAST SIDE APTT., MAHADA COMPLEX, NEAR OSHIWARA POLICE STATION, JOGESHWARI(W), MUMBAI 400 102 PAN: AAPDA 744F ... APPELLANT VS. THE ACIT- 11(1), MUMBAI. .... RESPONDENT APPELLANT BY : SHRI PRAMOD KUMAR PARIDA REVENUE BY : SHRI A.K.KARDAM DATE OF HEARING : 28/09/2015 DATE OF PRONOUNCEMENT : 28/09/2015 ORDER PER G.S. PANNU,AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE IS DIRE CTED AGAINST THE ORDER OF THE CIT(A)-3, MUMBAI DATED 01/10/2010 PERT AINING TO THE ASSESSMENT YEAR 2007-08, WHICH IN TURN HAS ARISEN F ROM AN ORDER PASSED BY THE ASSESSING OFFICER DATED 24/12/20 09 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2 ITA NO. 4940/MUM/2012 (ASSESSMENT YEAR : 2007-08) 2. THE MAIN GROUNDS OF APPEAL RAISED BY THE ASS ESSEE READ AS UNDER:- 1. FAILURE OF NATURAL JUSTICE - THE ORDER BEING PER VERSE MAY BE QUASHED : THE ID. LOWER AUTHORITIES ERRED IN NOT GRANTING SUFFICI ENT OPPORTUNITY TO THE APPELLANT AND THE IMPUGNED ORDER SUFFERS FROM THE F AILURE OF NATURAL JUSTICE, THEREFORE, THE SAME MAY BE QUASHED OR SET ASIDE FOR BEING PERVERSE. 2. ADDITION U/S. 41(1) - RS. 13,70,000/- A) THE ID. CIT(A) ERRED IN TREATING THE UNSECURED L OANS AS A CASE FOR ADDITION U/S. 41 (1) WITHOUT APPRECIATING THAT THESE ARE NEI THER TRADING LIABILITY NOR THESE ARE BARRED BY LIMITATION AS THE LIABILITY TO REPAY THE LOANS IS VERY MUCH ALIVE, THE SAME CANNOT BE TREATED AS DEEMED INCOME IN THE HANDS OF THE APPELLANT; HENCE, THE ADDITION U/S. 41 (1) IS UNCAL LED FOR AND THE SAME MAY BE DELETED. B) WITHOUT PREJUDICE TO ABOVE, THE OBJE CT OF SEC. 41 (1) IS NOT TO APPLY IN SUBSTITUTION OF SEC. 68; WHEN THE PRIMARY ONUS ON THE ALLEGED FRIENDLY LOAN HAS BEEN DISCHARGED AND WHEN THE SAME PERTAINS TO EARLIER PERIODS, THE ADDITION U/S. 41 (1) IS UNCALLED FOR A S IT IS NOT A CASE EITHER OF ALLEGED SUPPRESSION OF TRADING LIABILITY OR UNEXPLA INED CASH CREDIT U/S. 68. 3. DISALLOWANCE U/S. 40(A)(IA) - RS. 10,11,095/-: THE ID. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF THE VARIOUS EXPENSES U/S. 40(A)(IA) ON ACCOUNT OF NON-DEDUCTION OF TAX WITHOUT APPRECIATIN G THAT ON THE IMPUGNED CLAIMS THE PROVISION OF SEC. 40(A)(IA) IS NOT APPLI CABLE IN VIEW OF HON'BLE ITAT SPECIAL BENCH DECISION IN M/S. MERILYN SHIPPING & TRANSPORTS VS. ACIT ITA NO. 477NIZL2008, DATE OF ORDER: 29.03.2012 HENCE, THE DISALLOWANCE U/S. 40(A)(IA) IS UNCALLED FOR AND THE SAME MAY BE DELETED. 4. DISALLOWANCE OF EXEMPTION U/S. 54 - RS. 15,74,64 2/- A) THE ID. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF CLAIM OF EXEMPTIO N U/S. 54 WITHOUT APPRECIATING THAT THE ACQUIRING OF RIGHT IN FLAT QU A LETTER OF ALLOTMENT AMOUNTS TO ACQUIRING CAPITAL ASSETS U/S. 2(14) AND AS THE PURCHASE AND PAYMENTS WERE IN RIGHT TIME, DENIAL OF CLAIM U/S. 5 4 IS NOT JUSTIFIED AND THE SAME MAY BE ALLOWED. 2. AT THE OUTSET, THE LD. REPRESENTATIVE FOR THE AS SESSEE POINTED OUT TO AN AFFIDAVIT DATED 30/07/2012, WHEREBY THE ASSES SEE HAS EXPLAINED THE REASONS FOR THE DELAY IN FILING OF THE APPEAL B EFORE THE TRIBUNAL AND 3 ITA NO. 4940/MUM/2012 (ASSESSMENT YEAR : 2007-08) MADE A PRAYER SEEKING CONDONATION OF DELAY. IT IS NOTICED THAT THE APPEAL FILED BY THE ASSESSEE IS DELAYED BY 533 DAYS . THE REASONS ADVANCED BY THE ASSESSEE, AS EMERGING FROM THE AFFI DAVIT READ AS UNDER:- AFFIDAVIT I ANAND RAJ ANAD, AGED 54 YEARS, HAVING ADDRESS AT FLAT NO.001, BLDG. NO.28, EAST SIDE APPT., MAHADA COMPLEX, NEAR OSHIWARA POLICE STATION, JOGESHWARI (W), MUMBAI 400 102, DO HEREB Y STATE AS UNDER: 1. THAT I AM MUSIC DIRECTOR. DUE NON-AVAILABILITY OF ASSIGNMENT AND PROPERTY DISPUTES IN THE FAMILY. I WAS IN A STATE OF MENTAL INSTABILITY COMBINED WITH SEVERE FINANCIAL PROBLEM. 2. THAT THE CIT(A) ORDER' CRATED 01.10.2010 WAS REC EIVED BY MY SOLE TEMPORARY STAFF ON 16.12.2010. AT THAT TIME, I WAS OUT OF MUMBAI FOR A WEEK. .AFTER RETURNING, MY SAID STAFF DID NOT TELL ME ANYTHING. HAVING NO KNOWLEDGE OF TAX LAWS AND ITS IMPLICATION. I WAS FO RCED TO CHANGE MY CONSULTANT, AN ITP AND ALSO MY C.A. TO WHOM I HAD N O CAPACITY TO PAY. DUE TO NON-PAYMENT OF PROFESSIONAL FEES TO ITP, HE DID NOT CO-OPERATE WITH MY INCOME TAX WORK DURING ASSESSMENT PROCEEDING. 3. THAT AS MY ACTIVITIES ARE CLOSED SINCE 3-4 YEAR S, NO PROFESSIONAL WAS READY TO SERVE ME OR TAKE UP MY CASE. 4. THAT ON COMING TO KNOW ABOUT ORDER ON 20 TH JANUARY, 2011, I IMMEDIATELY SEND THE ORDER TO MY ITP TO DO THE NEED FUL WITH THE CASE. BY THAT TIME, MY C.A HAD LEFT ME. 5. THAT THE SAID ITP MR, SHYAM PUROHIT, KEPT THE OR DER WITH HIMSELF WITHOUT INTIMATING ME ANYTHING. I WAS UNDER THE IMPRESSION THAT EVERYTHING HAS BEEN DONE RIGHT. 6.THAT BECAUSE OF FAMILY PROBLEM OVER PROPERTY DISP UTES AND FINANCIAL PROBLEM DUE TO NO WORK ASSIGNMENT AND MY MENTAL TEN SION, MY HEALTH DETERIORATED WHICH HAS INFACT BEEN THE A PRIMARY CA USE OF DELAY. 7. THAT WITH SEVERE LIQUIDITY PROBLEMS MOUNTING WIT H VARIOUS LIABILITIES INCLUDING TAX LIABILITIES, MY ACTIVITIES WERE COMPL ETELY CLOSED WITH NO NEW WORK AT ALL. I HAD NO MONEY TO PAY TAX LIABILITIES OR TO MEET ANY LIABILITY. 8. THAT IN THE ABSENCE OF ADEQUATE LIQUIDITY, I HAD NOT EVEN PAID TO MY CONSULTANT. 4 ITA NO. 4940/MUM/2012 (ASSESSMENT YEAR : 2007-08) 9. THAT THE ORDER PASSED BY THE ID. CIT(A) WAS AS G OOD AS AN EX-PARTE ORDER. UNTIL THE RECOVERY PEOPLE KNOCKING AT MY DOOR, MY I TP DID NOT INFORM ME ANYTHING ABOUT THE APPEAL TO WHOM I HAD REPOSED COM PLETE FAITH. 10. THAT THE DELAY HAD BEEN OCCURRED BEYOND MY CON TROL. 11. THAT IN THE MEANTIME MY BANK ACCOUNT WAS ATTACH ED BY THE DEPARTMENT. THE MONEY LYING WAS TAKEN OUT OF THE SA ID ACCOUNT. WITH ALL THESE LAPSE OF PERIOD. I FOUND A CONSULTANT TO PREP ARE OUR APPEAL PAPERS WHO HAS ALSO NOT BEEN PAID AS OF TODAY. THE APPEAL PAPERS WERE PREPARED AND KEPT READY ON 30.07.2012. 12. THAT RELYING UPON A CONSULTANT (ITP) IS A BONA FIDE CAUSE ON WHICH YOUR HONOUR'S LENIENT VIEW IS SOLICITED. 13. THAT IT WAS DUE TO OUR CONSULTANT'S FAILURE TO MAKE AND PREPARE APPEAL PAPERS READY IN TIME AND DUE TO MY FAILURE FOR ARRA NGING THE PAYMENT TO MEET APPEAL FEES, THE DELAY HAS OCCURRED AND I COUL D CONVINCE THE NEW CONSULTANT, TO PREPARE MY APPEAL PAPERS SO THAT I S HOULD PREFER APPEAL IN MY TAX MATTERS. 14. THAT THERE WAS NO DELIBERATE ATTEMPT TO SIT IDL E WITHOUT PREFERRING APPEAL. 15. THAT IT IS PRAYED TO KINDLY PARDON ME AND BE P LEASED TO CONDONE THE DELAY WHICH IS ON ACCOUNT OF GENUINE AND UNAVOIDABL E CAUSE. I PRAY FOR THE CONDONATION AND ADMISSION OF APPEAL. ON MERITS, IT IS A FIT CASE FOR RESTORATION TO THE FILE OF THE ASSESSING OFFICER. 3. EXPLAINING THE CONTENTS OF THE AFFIDAVIT, THE LD . REPRESENTATIVE FOR THE ASSESSEE VEHEMENTLY POINTED OUT THAT THE DELAY WAS UNINTENTIONAL AND FOR REASONS BEYOND THE CONTROL OF THE ASSESSEE. LD. REPRESENTATIVE FOR THE ASSESSEE FURTHER POINTED OUT THAT ASSESSEE WAS FACING ACUTE FINANCIAL AND MENTAL HARDSHIPS AT THE RELEVANT POINT OF TIME AS CONTAINED IN THE AFFIDAVIT, THEREFORE, THE DELAY IN FILING OF THE APPEAL BE CONDONED. IN SUPPORT, RELIANCE HAS BEEN PLACED ON THE FOLLOWING JUDGMENTS:- 5 ITA NO. 4940/MUM/2012 (ASSESSMENT YEAR : 2007-08) A) COLLECTOR OF LAND ACQUISITION V/S. MST. KATIJI & OTHERS,167 ITR 471(SC) B). PRIMA PAPER & ENGINEERING PVT. LTD. VS. CIT, I NCOME TAX APPEAL (L) NO.403 OF 2013 DATED 9/7/2013.(BOM) C) N. BALAKRISHNAN VS. M. KRISHNAMURTHY (1998) 7 S CC 123(SC) 4. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTAT IVE APPEARING FOR THE REVENUE OPPOSED THE PRAYER OF THE ASSESSEE FOR CONDONATION OF DELAY ON THE GROUND THAT THE DELAY WAS EXCEPTIONAL. 5. HAVING HEARD THE RIVAL SUBMISSIONS, WE FIND THAT THE BONAFIDES OF THE REASONS FOR DELAY HAVE NOT BEEN ASSAILED BY THE REVENUE. MOREOVER, IT IS NOT THE LENGTH OF THE DELAY WHICH I S IMPORTANT BUT THE PLAUSIBILITY AND BONAFIDES OF THE REASONS FOR DELAY . THOUGH, THERE IS NO UNIVERSAL TEST LAID DOWN AS TO WHAT WOULD CONSTITUT E A SUFFICIENT CAUSE FOR CONDONING DELAYS IN FILING OF APPEALS, BUT IT I S QUITE WELL SETTLED THAT WHERE SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATI ON ARE PITTED AGAINST EACH OTHER, THE CAUSE OF SUBSTANTIAL JUSTICE DESERV ES TO BE PREFERRED AS LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF MST. KATIJI, 167 ITR 471(SC). IN THE PRESENT CASE, ASSESSEE HAS FURNISHED AN AFFIDAVIT WHICH BRINGS OUT THE REASONS FOR THE DELAY IN FILIN G OF THE APPEAL WHICH PRIMARILY SHOW THAT ASSESSEE WAS FACING FINANCIAL AND OTHER PERSONAL PROBLEMS. THE AFFIDAVIT ALSO POINTS OUT THAT MISTA KES ON THE PART OF THE CONSULTANT FOR HIS FAILURE TO APPROPRIATELY ASS ISTING THE ASSESSEE IN FILING OF THE APPEAL. THE AFFIDAVIT ALSO BRINGS OU T THAT ASSESSEE HAS NOW ENGAGED ANOTHER CONSULTANT WHO HAS ASSISTED THE ASS ESSEE IN DRAFTING AN APPEAL AGAINST THE ORDER OF THE CIT(A) AND FILIN G THE SAME BEFORE THE 6 ITA NO. 4940/MUM/2012 (ASSESSMENT YEAR : 2007-08) TRIBUNAL. IN SO FAR AS THE LENGTH OF THE DELAY IS CONCERNED WE FIND IN THE CASE OF PRIMA PAPER & ENGINEERING PVT. LTD.(SU PRA), THE HONBLE HIGH COURT CONDONED THE DELAY OF 515 DAYS IN FILIN G OF THE APPEAL, THUS THE DELAY BEFORE US CANNOT BE CONSTRUED AS EXCEPTIO NAL SO AS TO BE REJECTED. IN THE FINAL ANALYSIS, CONSIDERING THE REASONS ADVANCED, WHOSE BONAFIDES HAVE NOT BEEN DISPUTED, WE DEEM IT FIT AND PROPER TO CONDONE THE DELAY IN FILING OF THE APPEAL. 6. THE AFORESAID DECISION WAS PRONOUNCED AT THE TI ME OF HEARING AND, THEREAFTER BOTH THE PARTIES WERE HEARD WITH RE SPECT TO THE MERITS OF THE GROUNDS OF APPEAL RAISED. 7. IN SO FAR AS THE FIRST GROUND OF APPEAL IS CONC ERNED, LD. REPRESENTATIVE FOR THE ASSESSEE EXPLAINED THAT DUE TO THE PROBLEMS BEING FACED BY THE ASSESSEE, APPROPRIATE APPEARANCE COULD NOT BE PUT BEFORE THE CIT(A) AND, THEREFORE, THE CIT(A) DISMIS SED THE APPEAL OF THE ASSESSEE EX-PARTE. LD. REPRESENTATIVE FOR THE ASSE SSEE SUBMITTED THAT THE ASSESSEE WOULD BE SATISFIED AT THE PRESENT STA GE, IF THE APPEAL IS RESTORED BACK TO THE FILE OF CIT(A) FOR ADJUDICATIO N ON MERITS. 8. LD. DEPARTMENTAL REPRESENTATIVE APPEARING FOR THE REVENUE HAS NOT OPPOSED THE PLEA OF THE ASSESSEE FOR RESTORING THE APPEAL BACK TO THE FILE OF THE CIT(A). 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL STANDS AN D FIND THAT CIT(A) HAS PRIMARILY ENDORSED THE STAND OF THE ASSESSING O FFICER NOTICING ABSENCE OF ANY SUBMISSIONS BY THE ASSESSEE. IN OUR CONSIDERED OPINION, HAVING REGARD TO THE CIRCUMSTANCES EXPLAINED BY THE ASSESSEE, IT WOULD BE IN THE FITNESS OF THINGS THAT THE VARIOUS GROUN DS RAISED BY THE 7 ITA NO. 4940/MUM/2012 (ASSESSMENT YEAR : 2007-08) ASSESSEE ARE RESTORED BACK TO THE FILE OF CIT(A) FO R AN ADJUDICATION AFRESH ON MERITS. NEEDLESS TO SAY, THE CIT(A) SHAL L ALLOW THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD AND ONLY THER EAFTER, ADJUDICATE THE GROUNDS IN ACCORDANCE WITH LAW. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES, AS ABOVE. THE ABOVE DECISION WAS PRONOUNCED IN THE OPEN COUR T IN THE PRESENCE OF BOTH THE PARTIES AT THE CONCLUSION OF T HE HEARING ON 28/09/2015. SD/- SD/- (RAMLAL NEGI) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT ME MBER MUMBAI, DATED 28/09/2015 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 VM , SR. PS