M/s Jimmi Resorts Pvt. Ltd., Ludhiana V. Asstt. Director of Income Tax (International Taxation), Chandigarh

ITA 500/CHANDI/2022

AI Insights

The case involves M/s Jimmi Resorts Pvt. Ltd., the appellant, contesting the orders of the lower tax authorities which confirmed a demand under sections 201 and 201(1A) of the Income Tax Act, 1961, for non-deduction of tax at source on payment for the purchase of land. The appeal was significantly delayed, filed 1867 days late, and the tribunal examined the reasons for this delay, which included advice from the appellant's chartered accountants and legal consultants that there were no merits in further appealing the case. The tribunal found that the appellant had been adequately advised and was aware of the consequences of not filing an appeal in time, leading to the dismissal of the appeal on the grounds of limitation.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127865 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 18-07-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 29-05-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: TANZIL. R. PADVEKAR
• Keywords: Condonation of delay; TDS; Capital Gains
• Section: 250; 201

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ, च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, “A” CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER आयकर अपील सं./ITA No 500/CHD/2022 नधा रण वष / Assessment Year : 2011-12 M/s Jimmi Resorts Pvt. Ltd., 901-902, Great Eastern Summit, “A” Wing, Plot No.56, Sector 15-CBD, Belapur, Navi Mumbai. V s The ACIT (International Taxation), Chandigarh. थायीलेखासं./PAN NO: AABCJ2171P अपीलाथ /Appellant यथ /Respondent नधा रती क ओर से/Assessee by: Shri Girish Dave & Shri Tanzil. R. Padvekar, Advocates राज व क ओर से/ Revenue by : Smt. Amanpreet Kaur, Sr. DR स ु नवाई क तार"ख/Date of Hearing : 19.07.2023 उदघोषणा क तार"ख/Date of Pronouncement : 07.08.2023 आदेश/Order Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order of the ld. Commissioner of Income Tax (Appeals)-43 New Delhi [hereinafter referred to as ‘ld.CIT(A)’] dated 24.01.2017. The assessee in this appeal has contested the action of the lower authorities in confirming the demand raised u/s 201 and 201(1A) of the Income Tax Act, 1961 (in short ‘the Act’) holding the assessee as an assessee in default ITA No.500/CHD/2022 A.Y. 2011-12 Page 2 of 8 for non deduction of tax at source on payment of consideration for purchase of land. 2. The appeal is time barred by long delay of 1867 days. There is an affidavit placed on file of one Shri Kuldip Singh Grewal, Director of the assessee company citing the reasons for the delay in filing the appeal and with request for condonation thereof. The reasons for delay have been mentioned in para 8 to 10 of the said affidavit, the contents of which, for the sake of ready reference, are reproduced as under : 8. I state and submit that after the impugned Order was passed by Learned CIT (Appeals),the Company was advised by the Chartered Accountants' firm KPMG that the company should not challenge this order of Learned CIT (Appeals) further in appeal as there are no merits in the case of the appellant. 9. I state and submit that relying and accepting the advice of the Chartered Accountants, the Appellant Company did not prefer any Appeal against the Order under Section 250 of the Act dated 24 th January, 2017 before the Income Tax Appellate Tribunal (In short, the ITAT) 10. I state and submit that subsequently the Learned AO also initiated penalty proceeding under Section 271C of the Income Tax Act, 1961 and passed an Order dated l st May, 2017 imposing penalty of Rs.12,11,280/- which was confirmed by Learned CIT (Appeals) on 22/08/2019. It is at this stage that the Company realised the grave situation to which it stood exposed by an ill advice of the authorised representative.” 3. Then para 17 to 19 of the said affidavit are also relevant in this respect, which are reproduced as under : 17 I state and submit that we apprised the advocates of the correspondences with the Chartered Accountants Firm, KPMG representing our matter then and the concern and embarrassment caused to the company by the orders of the authorities below. The entire set of exchanges of E-mails exchanged by and between the company and the Chartered Accountants shall be filed in the course ITA No.500/CHD/2022 A.Y. 2011-12 Page 3 of 8 of hearing of the prayer made for the condonation of delay .The period of delay involved in filing the appeal is worked out as under: 1. Date of order under section 201(1)/(1A)- 03/02/2014; 2. Date of order of CIT (Appeals) in order against order under section 201(1)/ (1A)-24/01/2017; 3. Date of order imposing penalty under section 271C- 01/05/2017; 5. Date of order of CIT (Appeals) confirming the penalty- 22/08/2019; 6. Period of delay with reference to item (2) above (a) Falling in the year 2017- 158 days (b) Falling in the years from 2018 to 2021-1460 days; (c) Falling in the year 2022 till the date of presentation of appeal in the ITAT—150 days: (d) Total delay 1768 days. 18 I state and submit that it would not require Solomon's wisdom to perceive that the delay is colossal but what is to be seen is whether the appellant is guilty of negligence and sheer carelessness and if it had sufficient cause which can be demonstrated then delay may be condoned in the interest of substantive justice. The set of correspondence with the chartered accountants shall confirm the distress faced by it and circumstances in which the company was driven with its exposure to substantial high demand in view of orders of the authorities below which were unjust. 19 The Appellant Company was acting in bonafide belief on the advice of the Chartered Accountants' Firm, KPMG. Hence the delay of 1768 days may kindly be condoned and appeal be heard in the interest of substantive justice. No prejudice can be caused to any party involved, in specific, to the Revenue if the appeal filed by the applicant is heard by Honourable Bench on the merits of the case. 4. The ld. Counsel for the assessee has also relied upon the affidavit of one Shri Ramesh Sadanand Shenoy, Chartered Accountant cum Finance Head of the assessee company, para 9 to 11 of his affidavit explains the reasons for delay in filing the appeal, contents of which for the sake of ready reference are reproduced hereunder : ITA No.500/CHD/2022 A.Y. 2011-12 Page 4 of 8 9. I state and submit that after the impugned Order was passed by Learned CIT (Appeals), the Company as instructed by form BSR Affiliates/KPMG that the company should not challenge this order of Learned CIT (Appeals) further in appeal. In the opinion of M/s BSR & Co there was no merit in the case of the Appellant. The reason for such an understanding of theirs is evident from email of 28/06/2018 for the first time in writing. 10. I state and submit that relying and accepting the advice of the Chartered Accountants, BSR Affiliates/KPMG the Appellant Company did not prefer any Appeal against the Order under Section 250 of the Act dated 24 th January, 2017 before the Income Tax Appellate Tribunal (In short, the ITAT. 11. I state and submit that subsequently the Learned AO also initiated penalty proceeding under Section 271C of the Income Tax Act, 1961 and passed an Order dated 1 st May, 2017 imposing penalty of Rs. 12,11,280/- which was confirmed by Learned CIT (Appeals) on 22/08/2019. It is at this stage that the Company realized the grave situation to which it stood exposed by an ill advice of the authorized representative. 5. A perusal of the above contents of the affidavit of the Director of the assessee company as well as that of Finance Head of the assessee company, would show that the only reason mentioned for delay in filing the appeal, is that the assessee company was advised by their Counsel/Law Firm/Chartered Accountant that there was no merit in the assessee's case and that filing of any further appeal before this Tribunal would not bring the desired results. 6. Apart from the aforesaid affidavit, the assessee in the Paper Book has attached the copies of e-mail correspondence entered into between the said Finance Head of the assessee company and its Consultant BSR Affiliates/KPMG over a period (on different dates) to show that how the matter stands pursued continuously by the Finance Head of the company ITA No.500/CHD/2022 A.Y. 2011-12 Page 5 of 8 through the years to its logical extent. 7. We have gone through the entire correspondence sought to be relied upon by the counsel for the assessee in this respect. A perusal of the correspondence would show that the assessee, to avoid its liability, has discussed with its consultants as to how it can escape not only from the demand raised by the Assessing Officer (in short ‘the AO’) u/s 201/201(1A) of the Act, but also, in relation to levy of penalty u/s 271C of the Act and also as to how the cost of acquisition of the land by the seller can be claimed at high price or otherwise to make efforts to show that there were lesser capital gains to the seller so that the lesser TDS liability of the assessee may be shown and the quantum of the demand u/s 201(1A) and also the penalty u/s 271 may be get reduced. The assessee and the consultants of the assessee discussed at length each and every aspect as to what other documents/evidences, can somehow, be arranged to avoid/reduce the tax liability of the assessee including the documents/evidence to press the claim that the land in question was rural agricultural land, not falling in the definition of capital asset. However, since the assessee could not arrange for such evidences, the said claim of agriculture land was not pressed by then counsel/consultant before the lower authorities. After making efforts and exhausting all the ITA No.500/CHD/2022 A.Y. 2011-12 Page 6 of 8 measures and possibilities, the assessee and its consultants arrived at a conclusion that there was no merit in their case and they dropped the idea of filing further appeal. It is not a case where the assessee was not in knowledge of the consequences i.e. the tax liability/demand raised u/s 201/201(1A) or the penalty u/s 271C of the Act. The assessee was assisted by not only its own in-house Chartered Accountants but also renowned tax consultant firms, namely BSR Affiliates/KPMG. There is no pleading in the affidavit, either of the Director of the assessee company or of the in- house Chartered Accountant–cum-Finance Head of the assessee company or otherwise that the assessee was not aware of the nature of proceedings or that the assessee was not aware that the assessee has the right to file appeal against the order of the Ld. CIT(A) or as to the consequences of the non filing of the appeal. Not only this, the other methods/possibilities/arrangement of documents/evidence was also discussed as to some-how put a case that the land in question was agriculture land and there was no Income Tax liability on transfer of the same or otherwise, as to how the tax liability can be reduced by pleading no capital gains or lesser capital gains to the seller. After exploring of all the possibilities, a conscious decision has been taken not to file further appeal to this Tribunal. After having taken this ITA No.500/CHD/2022 A.Y. 2011-12 Page 7 of 8 decision, the assessee was fully aware and was bound to face the corresponding consequences of the tax demand etc. There is no reasonable or genuine cause pleaded or mentioned by the assessee for which the assessee was prevented from filing the appeal in time. In this case, neither there was any mis-advice about any statutory provision to the assessee nor there was any mis-advice to the assessee of any statutory procedure relating to filing of the appeal. Moreover, as noted above, the assessee itself has its own Chartered Accountant-cum-Finance Head, who, as discussed above, had already explored all the possibilities. Once the assessee has taken its own conscious decision after getting all the expert advice not to file the appeal and therefore, the litigation has attained finality. We find no reason to disturb the finality only because the assessee now, after almost four years, has decided to file the appeal because some other consultant has advised him to do so or that only because the assessee now is facing tax demand/penalty etc. There is no merit in the pleadings of the assessee relating to the sufficiency of cause for long delay of 1867 days in filing the present appeal. The appeal is, therefore, dismissed as being barred by limitation. 8. Since we have already dismissed the appeal being barred by limitation, so there is no requirement of going into the merits of the case. ITA No.500/CHD/2022 A.Y. 2011-12 Page 8 of 8 9. In the result, appeal of the assessee is dismissed. Order pronounced on 07 th Aug., 2023. Sd/- Sd/- (VIKRAM SINGH YADAV) (SANJAY GARG) लेखा सद य/ Accountant Member या यक सद य Judicial Member “Poonam.” आदेश क त(ल)प अ*े)षत/ Copy of the order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent 3. आयकरआय ु +त/ CIT 4. आयकरआय ु +त (अपील)/ The CIT(A) 5. )वभागीय त न.ध, आयकरअपील"यआ.धकरण, च0डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड फाईल/ Guard File आदेशान ु सार/ By order, सहायकपंजीकार/ Assistant Registrar