STANCE MEDIA & ENTERTAINMENT P.LTD, MUMBAI V. ITO 11(1)-2, MUMBAI

ITA 497/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1877 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2007-2008
• Appeal Filed On: 23-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAHASHRI DIWEY
• Keywords: Depreciation; Opportunity of being heard; Principle of natural justice; Period of limitation; Reasonable cause; Right to appeal; Time period of passing order
• Section: 194C; 145; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI I.P.BANSAL,JUDICIAL MEMBER & SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER ITA NO. 497/MUM/12 (A.Y.2007-08) ITA NO.498/MUM/12(A.Y.2007-08) STANCE MEDIA & ENTERTAINMENT P. LTD. FLAT NO.202, BUILDING NO.2A, RAJYOG SOCIETY, NEW MHADA, ANDHERI(W), MUMBAI - 53. PAN: AAJCS 5008E (APPELLANT) VS. THE ITO 11(1)-2, AAYKAR BHAVAN, MK ROAD, MUMBAI - 20. (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI RAHASHRI DIWEY DATE OF HEARING : 21/01/2013 DATE OF PRONOUNCEMENT : 30/01/2013 ORDER PER I.P.BANSAL, J.M BOTH THESE APPEALS ARE FILED BY THE ASSESSEE AND THEY ARE DIRECTED AGAINST TWO SEPARATE ORDERS PASSED BY LD. CIT(A)-3, MUMBAI DATED 31/10/2011 FOR ASSESSMENT YEAR 2007-08. ITA NO.497 /MUM/12 IS AN APPEAL AGAINST ORDER PASSED BY LD. CIT(A) IN RESPECT OF L EVY OF CONCEALMENT PENALTY UNDER SECTION 271(1)(C) OF INCOME TAX ACT, 1961(TH E ACT) AND ITA NO.498/MUM/12 IS AN APPEAL AGAINST QUANTUM PROCEEDI NGS. GROUNDS OF APPEAL IN BOTH THE APPEALS READ AS UNDER: GROUND OF APPEAL IN ITA NO.497/MUM/12: 1. NOT GRANTING PROPER OPPORTUNITY: 1.1 THE LEARNED COMMISSIONER OF INCOME - TAX (APPEA LS) - 3, MUMBAI [LD. CIT (A)] ERRED IN PASSING THE ORDER IN BREACH OF THE PRINCIP LES OF NATURAL JUSTICE, IN AS ITA NO. 497/MUM/12 (A.Y.2007-08) ITA NO.498/MUM/12(A.Y.2007-08) 2 MUCH AS NO SUFFICIENT, PROPER AND EFFECTIVE OPPORTU NITY OF BEING HEARD GIVEN TO THE APPELLANT. 1.2 IT IS SUBMITTED THAT IN THE FACT AND CIRCUMSTAN CE OF THE CASE AND IN LAW, THE ACTION OF THE ID. CIT (A) BE HELD AS BAD AND ILLEGA L. .WITHOUT PREJUDICE TO THE ABOVE: 2.1 THE ID. CIT (A) ERRED IN DISMISSING THE APPEAL OF THE APPELLANT IN LIMINE, ON THE GROUND OF DELAY IN FILING THE APPEAL. 2.2 WHILE DOING SO, THE CIT (A) ERRED IN: (I) BASING HIS ACTION ONLY ON SURMISES, SUSPICION A ND CONJECTURE; (II) TAKING INTO ACCOUNT IRRELEVANT AND EXTRANEOUS CONSIDERATIONS; AND (III) IGNORING RELEVANT MATERIAL AND CONSIDERATIONS AS SUBMITTED BY THE APPELLANT. 2.3 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCU MSTANCES OF THE CASE, AND IN LAW, NO SUCH ACTION WAS CALLED FOR AND THE DELAY WAS REQ UIRED TO BE CONDONED. WITHOUT FURTHER PREJUDICE TO THE ABOVE: 3. IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCUM STANCES OF THE CASE, AND IN LAW, THE PENALTY OF RS. 43,13,665/- U/S. 271 (1) (C) OF THE ACT WAS NOT LEVIABLE. GROUND OF APPEAL IN ITA NO.498/MUM/12: 1. NOT GRANTING PROPER OPPORTUNITY: 1.1 THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) 3, MUMBAI [ID. CIT (A)] ERRED IN PASSING THE ORDER IN BREACH OF THE P RINCIPLES OF NATURAL JUSTICE, IN AS MUCH AS NO SUFFICIENT, PROPER AND EF FECTIVE OPPORTUNITY OF BEING HEARD GIVEN TO THE APPELLANT. 1.2 IT IS SUBMITTED THAT IN THE FACT AND CIRCUMSTAN CE OF THE CASE AND IN LAW, THE ACTION OF THE ID. CIT (A) BE HELD AS BAD AND ILLEGA L. WITHOUT PREJUDICE TO THE ABOVE: 2.1 THE LD. CIT (A) ERRED IN DISMISSING THE APPEAL OF THE APPELLANT IN LIMINE, ON THE GROUND OF DELAY IN FILING THE APPEAL. 2.2 WHILE DOING SO, THE CIT (A) ERRED IN: (I) BASING HIS ACTION ONLY ON SURMISES, SUSPICION A ND CONJECTURE; (II) TAKING INTO ACCOUNT IRRELEVANT AND EXTRANEOUS CONSIDERATIONS; AND (III) IGNORING RELEVANT MATERIAL AND CONSIDERATIONS AS SUBMITTED BY THE APPELLANT. 2.3 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCU MSTANCES OF THE CASE, AND IN LAW, NO SUCH ACTION WAS CALLED FOR AND THE DELAY WAS REQ UIRED TO BE CONDONED. WITHOUT FURTHER PREJUDICE TO THE ABOVE: ITA NO. 497/MUM/12 (A.Y.2007-08) ITA NO.498/MUM/12(A.Y.2007-08) 3 IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW: 3. THE A.O. ERRED IN PASSING THE EX-PARTE ORDER U/S . 144 OF THE INCOME - TAX ACT, 1961 (THE ACT) 4. THE A.O. ERRED IN INVOKING THE PROVISIONS OF SEC TION 145 OF THE ACT AND REJECTING THE BOOK RESULTS AS DECLARED BY THE APPELLANT. 5. THE A.O. ERRED IN DISALLOWING THE FOLLOWING AMOU NTS UNDER SECTION 40 (A)(IA) OF THE ACT: (A) PRODUCTION EXPENSES RS. 38, 50,400/- (B) MODEL COORDINATING CHARGES RS. 17, 99,500/- (C) MODELING FEES RS. 33, 32,392/- (D) PROFESSIONAL FEES RS. 4, 25,000/- (E) SALARY AND REMUNERATION TO DIRECTORS RS. 15,11,400/- (F) EVENT CONTRACTOR RS 6, 59,600/- (G) CONSULTANCY FEES RS. 1, 21,160/- (H) BROKERAGE COMMISSION & DESIGN CHARGES RS. 1, 20,950/- 6. THE A.O. ERRED IN MAKING DISALLOWANCE OF RS. 3,3 4,395/- BEING TWENTY PERCENT (20%) OF RS. 16,71,976/- COMPRISING OUT OF OFFICE & ADMINISTRATIVE EXPENSES. 7. THE A.O. ERRED IN DISALLOWING THE APPELLANTS CL AIM OF DEPRECIATION OF RS. 9,95,311/-. 2. IT IS OBSERVED THAT BOTH APPEALS FILED BY THE AS SESSEE WERE DISMISSED BY LD. CIT(A) ON ACCOUNT OF DELAY IN FILING THE APPEA L. THE APPEAL FILED IN RESPECT OF CONCEALMENT PENALTY WAS DELAYED BY 66 DAYS AN D APPEAL AGAINST QUANTUM WAS DELAYED BY 235 DAYS. THE DELAY IN FILING THE A PPEALS WAS SOUGHT TO BE CONDONED ON THE GROUND THAT ASSESSEE HAD ENGAGED O NE PERSON BEING MR. M.R. PANDEY WHO WAS IMPERSONATING HIMSELF AS CHARTERED ACCOUNTANT AND THE RELEVANT PAPERS WERE HANDED OVER TO THE SAID PERS ON AS THE ASSESSEE WAS HAVING BONA FIDE BELIEF THAT HE IS HANDLING TAX MAT TERS. AS THE EX-PARTE ASSESSMENT ORDER WAS PASSED BY AO ON 24/12/2009 AND AFTER RECEIVING SUCH EX-PARTE ORDER THE ASSESSEE MADE SEVERAL ATTEMPTS TO CONTACT SO CALLED MR. M.R. PANDEY AT HIS LAST KNOWN ADDRESS BUT COULD NOT FIND HIM. ALL THE RELEVANT PAPERS WERE IN THE CUSTODY OF SAID MR. M. R. PANDEY. LOCAL ENQUIRY MADE BY THE ASSESSEE REVEALED THAT THE SAID PERSON WAS FRAUDULENTLY UTILIZING ITA NO. 497/MUM/12 (A.Y.2007-08) ITA NO.498/MUM/12(A.Y.2007-08) 4 THE DEGREE OF CHARTERED ACCOUNTANT BY HAVING FICTIT IOUS MEMBERSHIP NUMBER. THE ASSESSEE FILED THE GRIEVANCE APPLICATION WITH T HE GRIEVANCE RESOLUTION MANAGEMENT CELL OF INSTITUTE OF CHARTERED ACCOUNTAN TS OF INDIA AND ALSO LODGED A COMPLAINT WITH THE LOCAL POLICE STATION OF OSHIW ARA, JOGESHWARI (EAST) AGAINST SO CALLED MR. M.R.PANDEY. IN THE MEANTIME, THE COMPANY APPROACHED VARIOUS SOFTWARE ENGINEERS TO RECOVER THE TALLY DA TA OF THE COMPANY FOR THE YEAR UNDER CONSIDERATION AND COULD BE ABLE TO RECOVER T HE DATA IN THE FIRST WEEK OF AUGUST, 2010. THEREAFTER, THE COMPANY HAS APPROAC HED A NEW C.A NAMELY MR. M.M.VORA AND REQUESTED THAT APPEAL COULD NOT BE FILED WITHIN THE LIMITATION PERIOD AS THE CIRCUMSTANCES WERE BEYOND THE CONTROL OF THE ASSESSEE. THE ASSESSEE ALSO FILED COPY OF LETTER SUBMITTED BY THE REAL C.A , MR. MANOJ KUMAR PANDEY, WHO STATED THAT IT HAS COME TO HIS N OTICE THROUGH THE ASSESSEE THAT SOME FRAUD CHEATER IS IMPERSONATING HIM SINCE 2004 AND INTRODUCING HIM AS MR.MANOJ KUMAR PANDEY AND HANDLING STATUTORY AUD IT OF THE ASSESSEE. ON THESE SUBMISSIONS LD. CIT(A) IN THE QUANTUM APPEAL HAS OBSERVED THAT SINCE ASSESSMENT ORDER WAS IN THE POSSESSION OF THE ASSES SEE, THE ASSESSEE COULD HAVE APPROACHED ANOTHER CHARTERED ACCOUNTANT TO FI LE THE APPEAL IN TIME, THEREFORE, IT APPEARS THAT THE ASSESSEE HAD ACCEPT ED THE ASSESSMENT ORDER. LD. CIT(A) HAS ALSO OBSERVED THAT FOR FILING AN APPEAL WHAT IS REQUIRED IS AN ASSESSMENT ORDER AND COPY OF DEMAND NOTICE WHICH WA S DULY AVAILABLE TO THE ASSESSEE RIGHT FROM 4/1/2010 BUT ASSESSEE FAILED TO FILE APPEAL ON DUE DATE OF FILLING THE APPEAL. LD. CIT(A) HAS ALSO ADMITTED T HAT IT IS TRUE THAT MR. M.R.PANDEY HAS CHEATED THE ASSESSEE BUT ACCORDING TO LD. CIT(A) THE SAME CANNOT BE CONSIDERED AS A REASONABLE CAUSE FOR NON -FILING OF THE APPEAL AS ASSESSEE WAS NOT PREVENTED BY ANY UNFORESEEN CIRCUM STANCES TO PREFER THE APPEAL IN TIME. FURTHER, LD. CIT(A) AFTER GOING THROUGH THE SUBMISSIONS OF THE ASSESSEE FIND THAT THE TALLY RECORDS IN THE COMPUT ER WERE RETRIEVED IN THE FIRST OF WEEK OF AUGUST 2010 AND PENALTY NOTICES WERE AL SO RECEIVED ON 22/6/2010, THEREFORE, ALSO THE ASSESSEE COULD FILE THE APPEAL WITH DELAY IN THE MONTH OF JUNE / JULY 2010. IN THESE CIRCUMSTANCES LD. CIT( A) HAS REJECTED THE EXPLANATIONS OF THE ASSESSEE FOR CONDONATION OF T HE DELAY. ITA NO. 497/MUM/12 (A.Y.2007-08) ITA NO.498/MUM/12(A.Y.2007-08) 5 3. ALL THESE FACTS WERE MENTIONED IN THE AFFIDAVIT SUBMITTED BY MR.LIBERALIS ALEX FERNANDES, BEING DIRECTOR OF THE ASSESSEE COMP ANY. A COPY OF WHICH HAS ALSO BEEN FILED. IT MAY ALSO BE MENTIONED HERE THA T THE RETURN OF INCOME FILED BY THE ASSESSEE WAS AT AN INCOME OF RS.11,92,363/- , WHICH HAS BEEN ASSESSED AT A SUM OF RS.1,43,42,470/- BY MAKING VARIOUS ADDI TIONS AS PER THE EX-PARTE ASSESSMENT ORDER PASSED UNDER SECTION 144 OF THE A CT. 4. NOTICE OF HEARING WAS GIVEN TO THE ASSESSEE FO R 21/01/2012 ON THE DATE WHEN THESE APPEALS WERE FILED BY THE ASSESSEE BEFORE US. HOWEVER, NONE WAS PRESENT ON THE FIXED DATE OF HEARING. THEREFO RE, WE PROCEED TO DECIDE THE APPEAL EX-PARTE QUA THE ASSESSEE. 5. LD. DR SUBMITTED THAT LD. CIT(A) HAS RIGHTLY DI SMISSED THE APPEALS FILED BY THE ASSESSEE ON THE GROUND THAT APPEALS WERE B ELATED AND THE CAUSE STATED BY THE ASSESSEE WAS NEITHER REASONABLE NOR SUFFICIE NT. RELYING ON THE OBSERVATION OF LD. CIT(A), IT WAS PLEADED BY LD. DR THAT BOTH APPEALS FILED BY THE ASSESSEE SHOULD BE DISMISSED. 6. WE HAVE CAREFULLY GONE THROUGH THE ASSESSMENT OR DER, ORDER PASSED BY THE LD. CIT(A) AND THE GROUNDS OF APPEAL TAKEN BY T HE ASSESSEE WHICH HAVE ALSO BEEN REPRODUCED IN THE ABOVE PART OF THIS ORDE R. SECTION 249(3) OF THE ACT GIVE POWER TO LD. CIT(A) FOR ADMISSION OF APPEAL AF TER EXPIRATION OF DUE DATE IN A CASE WHERE HE IS SATISFIED THAT THE ASSESSEE HAD S UFFICIENT CAUSE FOR NOT PRESENTING THE SAME WITHIN THAT PERIOD. LD. CIT(A) HIMSELF HAS ADMITTED THAT A PERSON WHO WAS FRAUDULENTLY REPRESENTING AS CHART ERED ACCOUNTANT HAD CHEATED THE ASSESSEE. THE QUANTUM APPEAL WAS FILED BY THE ASSESSEE BEFORE LD. CIT(A) ON 29/9/2010. IT IS ALSO ADMITTED BY THE LD . CIT(A) THAT THE DATA WAS RETRIEVED BY THE ASSESSEE IN THE FIRST WEEK OF AUGU ST 2010. IF BOTH THESE FACTS ARE NOT DISPUTED THEN IT CANNOT BE SAID THAT ASSESS EE DID NOT HAVE SUFFICIENT ITA NO. 497/MUM/12 (A.Y.2007-08) ITA NO.498/MUM/12(A.Y.2007-08) 6 CAUSE FOR NOT PRESENTING THE APPEAL WITHIN THE TIME . SIMPLY AVAILABILITY OF ASSESSMENT ORDER AND DEMAND NOTICE IS NOT SUFFICIEN T FOR FILING A PROPER APPEAL AS ASSESSEE MAY REQUIRE OTHER DOCUMENTS TO SEE THAT IN WHAT MANNER ADDITION MADE BY THE AO CAN BE AGITATED. IT HAS ALREADY BEE N OBSERVED THAT HEAVY ADDITIONS HAVE BEEN MADE WHICH ARE AS FOLLOWS: S.NO. NATURE OF PAYMENT SECTION APPLICABLE AMOUNT OF EXPENSES DISALLOWED (RS.) I) PRODUCTION EXPENSES 194C 38,50,400 II) MODEL CO-ORDINATING CHARGES 194J 17,99,500 III) MODEL FEES & MODELLING FEES 194J 33,32,392 IV) PROFESSIONAL FEES 194J 4,25,000 V) SALARY PAID TO DIFFERENT EMPLOYEES 192 15,11,4 00 VI) EVENT EXPENSES 194J 6,59,600 VII) BROKERAGE & COMMISSION 194H 1,20,950 VIII) PAYMENTS MADE TO CONSULTANCY FEES 194J 1,21,160 IX) EDUCATION UNDER CHAPTER VIA WRONGLY CLAIMED 9,95,000 TOTAL ADDITION MADE (RS) 1,28,15,402 FOR ALL THESE ADDITIONS ASSESSEE WAS REQUIRED TO OBTAIN THE PAPERS. ALONGWITH APPEAL PAPERS ASSESSEE HAS FILED A CERTIFICATE FRO M THE SOFTWARE FIRM THAT THE DATA WAS RETRIEVED ONLY IN THE FIRST WEEK OF AUG.20 10. AS THE APPEAL WAS FILED ON 27/9/2010, IT CANNOT BE SAID THAT ASSESSEE HAS T AKEN UNREASONABLE TIME TO FILE APPEAL BEFORE LD. CIT(A). MOREOVER EARLIER TO THAT ASSESSEE WAS IN THE PROCESS OF FINDING OUT THE PERSON WHO WAS FALSELY R EPRESENTING MR.MANOJ KUMAR PANDEY AND HAS ALSO LODGED COMPLAINT WITH ICA I AND POLICE. THEREFORE, IT CANNOT BE SAID THAT ASSESSEE WAS NOT DUE DILIGEN T ABOUT HIS RIGHT OF APPEAL. KEEPING IN VIEW ALL THESE FACTS AND CIRCUMSTANCES O F THE CASE WE ARE OF THE OPINION THAT DELAY IN FILING THE APPEAL BEFORE LD. CIT(A) SHOULD HAVE BEEN CONDONED BY LD. CIT(A) AND THE CASE OF THE ASSESSEE WAS REQUIRED TO BE HEARD ON MERITS. THEREFORE, WE DIRECT LD. CIT(A) TO COND ONE THE DELAY IN FILING THE QUANTUM APPEAL AND DECIDE THE APPEAL FILED BY THE ASSESSEE ON MERITS AFTER GIVING THE ASSESSEE A REASONABLE AND SUFFICIENT OPP ORTUNITY OF HEARING. AS ASSESSMENT ORDER PASSED BY THE AO IS AN EX-PARTE OR DER, LD. CIT(A), IF REQUIRED ITA NO. 497/MUM/12 (A.Y.2007-08) ITA NO.498/MUM/12(A.Y.2007-08) 7 CAN CALL FOR REMAND REPORT FROM THE AO. WE DIRECT ACCORDINGLY. SINCE WE ARE RESTORING THIS ISSUE TO THE FILE OF LD. CIT(A) AND MERITS HAVE NOT BEEN DECIDED BY LD. CIT(A) AND THOSE WILL BE RE-ADJUDICATED BY LD. CIT(A) IN ACCORDANCE WITH OUR ABOVE DIRECTIONS, WE DO NOT GO INTO THE MERITS OF THE ADDITIONS. IN VIEW OF THE ABOVE DISCUSSIONS ITA NO.498/M/12 IS ALLOWED FO R STATISTICAL PURPOSES. 7. SINCE QUANTUM PROCEEDINGS HAVE BEEN RESTORED, AD OPTING THE SAME VIEW THE DELAY IN FILING THE APPEAL AGAINST CONCEALMENT PENALTY WHICH IS TO THE TUNE OF 66 DAYS IS ALSO CONDONED AND CONCEALMENT PENALTY APPEAL WILL BE RE- ADJUDICATED BY LD. CIT(A) AFTER DECIDING THE QUANT UM APPEAL. WITH THESE DIRECTIONS THIS APPEAL IS ALSO RESTORED TO THE FILE OF LD. CIT(A) AND IS CONSIDERED TO BE ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, BOTH THESE APPEALS ARE CONSIDERED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE 30 TH DAY OF JAN.2013 SD/- SD/- (N.K.BILLAIYA ) (I.P.BANSAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 30 TH JAN.2013 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.R E BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM.