Charms Industries Ltd., Ahmedabad V. The Income tax Officer,Co.Ward-7(1), Ahmedabad

ITA 512/AHD/2009

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 2163 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 01-02-2011
• Assessment Year: 1996-1997
• Appeal Filed On: 17-02-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: ANIL N SHAH
• Keywords: Period of limitation; Reasonable cause; Condonation of delay
• Section: 143(3); 234B; 264; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND D. C. AGRAWAL , AM) ITA NO.512/AHD/2009 A. Y.: 1996-97 CHARMS INDUSTRIES LTD., 108, SAMPADA BUILDING, B/H. A. K. PATEL HOUSE,MITHAKALI SIXTH ROAD, NAVRANGPURA, AHMEDABAD VS THE INCOME TAX OFFICER, COMPANY WARD -7(1), AHMEDABAD PA NO. 213-C/CO. WD.7(1), AHMEDABAD (APPELLANT) (RESPONDENT) APPELLANT BY SHRI ANIL N. SHAH, AR RESPONDENT BY SHRI K. MADHUSUDAN, SR. DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF THE CIT(A)-VI, AHMEDABAD DATED 10 TH NOVEMBER, 2008 FOR ASSESSMENT YEARS 1996-97. 2. THE ASSESSEE IN THE GROUNDS OF APPEAL CHALLENGED THE ORDER OF THE LEARNED CIT(A) IN DISMISSING PRAYER FOR CONDONA TION OF DELAY AS WELL AS CHARGING OF INTEREST U/S 234A, 234B AND 234 C OF THE IT ACT. 3. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE AO P ASSED THE ORDER U/S 143(3) READ WITH SECTION 148 OF THE IT ACT ON D ATED 23-03-2000. THE ASSESSMENT ORDER WAS CHALLENGED BEFORE THE LEAR NED CIT(A) BY INSTITUTING APPEAL ON 27-04-2007 WHICH WAS TIME BAR RED BY 7 YEARS FROM THE DUE DATE. THE ASSESSEE FILED APPLICATION F OR CONDONATION OF DELAY IN WHICH IT WAS EXPLAINED THAT ON RECEIPT OF THE IMPUGNED ORDER ITA NO.512/AHD/2009 CHARMS INDUSTRIES LTD. VS ITO, CO. WARD 7(1), AHMED ABAD 2 AND CONSIDERING THE LEGAL POSITION PREVAILING AT TH AT TIME, THE ASSESSEE WAS ADVISED BY ITS CONSULTANT THAT INTERES T CAN BE WAIVED BY THE LEARNED CCIT AND NO APPEAL WAS REQUIRED TO B E PREFERRED IN VIEW OF THE JUDGMENT OF THE HONBLE SUPREME COURT I N THE CASE OF TUTICORIN ALKALI CHEMICALS AND FERTILIZERS LTD. AND EVEN IF THE SAME IS PREFERRED CONSIDERING THE ISSUE AND THE AMOUNT INVO LVED THE SAME MAY NOT BE BENEFICIAL. THE ASSESSEE COMPANY ACCORDI NGLY PREFERRED THE APPLICATION FOR WAIVER OF INTEREST U/S 234A, 23 4B AND 234C OF THE IT ACT ON DATED 14-08-2000. THIS APPLICATION WAS WI THIN THE TIME AND WAS DISPOSED OF BY THE LEARNED CCIT VIDE ORDER DATE D 10-04-2007 U/S 119 (2) (A) OF THE IT ACT WHICH WAS RECEIVED ON 17-04-2007 AND THEREAFTER APPEAL IS PREFERRED BEFORE THE LEARNED C IT(A) AGAINST THE ORDER OF THE ASSESSMENT. IT IS FURTHER EXPLAINED TH AT THE ASSESSEE COMPANY HAVE FULLY SATISFIED THE DEMAND AND NO DEMA ND WAS PENDING. THE LEARNED CCIT DISMISSED THE APPLICATION OF THE ASSESSEE FOR WAIVER OF THE INTEREST BECAUSE THE CONDITIONS O F THE CBDT CIRCULAR ARE NOT FULFILLED. THE ASSESSEE COMPANY APPROACHED FOR LEGAL ADVICE AND CAME TO KNOW THAT CONSIDERING THE QUANTUM OF AM OUNT INVOLVED IT MAY BE COSTLY AFFAIRS TO APPROACH THE HONBLE HIGH COURT FOR REDRESSAL OF THE REMEDY. IT WAS ADVISED TO PREFER A PPEAL BEFORE THE FIRST APPELLATE AUTHORITY (CIT(A)) WITH PRAYER FOR CONDONATION OF DELAY. IT WAS, THEREFORE, SUBMITTED THAT THE DELAY IN FILI NG OF THE APPEAL MAY BE CONDONED. THE ASSESSEE RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF N. BALAKRISHNAN VS M. KRISHNAMURTHY, 1988 SEC 123 AS REPORTED IN BCAJ JANUARY, 1999 30 BCAJ AND OTHER CASES AS WELL. IT WAS, THEREFORE, PRAYED THAT DELAY MAY BE CONDONED OF 7 YEARS. THE LEARNED CIT(A) HOWEVER, DI D NOT AGREE WITH ITA NO.512/AHD/2009 CHARMS INDUSTRIES LTD. VS ITO, CO. WARD 7(1), AHMED ABAD 3 THE CONTENTION OF THE ASSESSEE AND NOTED THAT THE A SSESSEE HAS BEEN AVAILING SERVICES OF THE CHARTERED ACCOUNTANTS AND TAX CONSULTANTS AND HAVE OBTAINED PROPER LEGAL ADVICE AND FURTHER N OTED THAT IT WAS A DEVICE OF THE ASSESSEE WITH ULTERIOR MOTIVE TO COVE R UP THE LIMITATION, OTHERWISE, THE ASSESSEE HAS NO CASE FOR CONDONATION . ACCORDINGLY, THE APPEAL OF HE ASSESSEE WAS DISMISSED BEING TIME BARRED. 4. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSION MADE BEFORE THE LEARNED CIT(A) AND RELIE D UPON THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CA SE OF RAYALA CORPORATION PVT. LTD. VS CIT, 311 ITR 1 IN WHICH TH E ASSESSEE INSTEAD OF AVAILING OF THE REMEDY OF FILING OF REVI SION PETITION U/S 264 (3) OF THE IT ACT AGAINST THE LEVY OF THE INTEREST APPROACHED THE HIGH COURT BY FILING A WRIT PETITION AND THE HONBLE HIG H COURT DISMISSED THE WRIT PETITION WITH LIBERTY TO THE ASSESSEE TO A PPROACH THE COMMISSIONER FOR WAIVER OF INTEREST U/S 264 OF THE IT ACT WITHIN 30 DAYS FROM THE DATE OF ORDER. HOWEVER, THE ASSESSEE FILED REVISION PETITION BEYOND THE PERIOD OF 30 DAYS, THEREFORE, I T WAS DISMISSED. IN THIS CASE IT WAS FOUND THAT EXPLANATION OFFERED BY THE LEARNED COUNSEL THAT HE WAS NOT AWARE OF THE PERIOD PRESCRIBED BY T HE COURT COULD BE ACCEPTED AND THAT SOME PAPERS WERE MISPLACED IN THE REGISTRY. ACCORDINGLY, DELAY WAS CONDONED AND THE REVISION PE TITION WAS RESORTED TO THE FILE OF THE COMMISSIONER TO DECIDE ON MERIT. 5. ON THE OTHER HAND, THE LEARNED DR SUBMITTED THAT THE ASSESSEE WAS AWARE OF THE REMEDY UNDER THE LAW AGAINST THE O RDER OF THE AO BY FILING APPEAL BEFORE THE LEARNED CIT(A) WHICH FA CT WAS ALSO ITA NO.512/AHD/2009 CHARMS INDUSTRIES LTD. VS ITO, CO. WARD 7(1), AHMED ABAD 4 MENTIONED IN THE APPLICATION FOR CONDONATION OF DEL AY AS REPRODUCED IN THE IMPUGNED ORDER. THEREFORE, THE ASSESSEE CANN OT PLEAD ANY BONA FIDE. THE LEARNED DR FURTHER SUBMITTED THAT IT IS MENTIONED IN THE DEMAND NOTICE ATTACHED WITH THE ASSESSMENT ORDE R THAT THE ASSESSEE COULD PREFER APPEAL BEFORE THE CONCERNED C IT(A) WITHIN 30 DAYS ON RECEIPT OF THE NOTICE, COPY OF WHICH IS FIL ED BY THE ASSESSEE IN THE APPEAL PAPERS. THE LEARNED DR THEREFORE, SUBMIT TED THAT THE ASSESSEE HAS NO REASONABLE CAUSE FOR EXPLAINING THE DELAY IN PREFERRING APPEAL BEFORE THE LEARNED CIT(A). THEREF ORE, DELAY SHOULD NOT BE CONDONED IN THE MATTER. 6. THE LEARNED COUNSEL FOR THE ASSESSEE IN THE REJO INDER SUBMITTED THAT THE ASSESSEE WAS AWARE AT THE TIME O F PASSING OF THE ASSESSMENT ORDER THAT SIMPLICITOR CHARGING OF INTER EST WOULD NOT BE APPEALABLE AND BENEFICIAL TO THE ASSESSEE, THEREFOR E, THE ASSESSEE WAS RIGHTLY INFORMED TO FILE PETITION FOR WAIVER OF INTEREST BEFORE THE LEARNED CCIT. HE HAS SUBMITTED THAT SINCE THE INCOM E OF INTEREST OF RS.9,20,252/- WHICH WAS ADDED IN THE ASSESSMENT ORD ER WAS NOT SUBJECTED TO TAX AND WAS DEBATABLE ISSUE, THEREFORE , THE ASSESSEE PREFERRED THE APPEAL BEFORE THE LEARNED CIT(A) NOW. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIAL AVAILABLE ON RECORD. ACCORDING TO SECTION 249 (2) O F THE IT ACT THE APPEAL COULD BE PREFERRED BEFORE THE LEARNED CIT(A) WITHIN 30 DAYS FROM THE DATE OF SERVICE OF THE DEMAND NOTICE RELAT ING TO ASSESSMENT OR PENALTY. ACCORDING TO SUB-CLAUSE (3), THE LEARNE D CIT(A) MAY ADMIT AN APPEAL AFTER EXPIRY OF THE SAID PERIOD IF HE IS SATISFIED THAT THE ITA NO.512/AHD/2009 CHARMS INDUSTRIES LTD. VS ITO, CO. WARD 7(1), AHMED ABAD 5 ASSESSEE HAD SUFFICIENT CAUSE IN NOT PRESENTING IT WITHIN THAT PERIOD. SUFFICIENT CAUSE WOULD MEAN WHICH PREVENTS A REASON ABLE MAN OF ORDINARY PRUDENCE ACTING UNDER NORMAL CIRCUMSTANCES WITHOUT NEGLIGENCE OF INACTION OR WANT OF BONA FIDE. IN THI S CASE THE AO PASSED THE ASSESSMENT ORDER U/S 143(3) READ WITH SE CTION 148 OF THE IT ACT ON 23-03-2000. THE ASSESSEE IN RESPONSE TO T HE NOTICE U/S 148 OF THE IT AC FILED RETURN OF INCOME BELATEDLY D ECLARING INCOME OF RS.9,20,252/- AND OFFERED THE SAID INTEREST INCOME FOR THE PURPOSE OF TAXATION. THEREFORE, THE AO RIGHTLY CHARGED INTERES T U/S 234A OF THE IT ACT, FOR NOT FILING THE RETURN IN TIME AND ALSO CHA RGED INTEREST U/S 234B AND 234C OF THE IT ACT. INTEREST U/S 234B AND 234C OF HE IT ACT AS PER THE AMENDED PROVISIONS SHALL HAVE TO BE CHARGED ON ASSESSED INCOME WHICH ARE NOW MANDATORY AND CONSEQUENTIAL IN NATURE AS IS HELD IN CATENA OF AUTHORITIES. THEREFORE, THE LEARN ED COUNSEL FOR THE ASSESSEE RIGHTLY CONTENDED THAT THE ASSESSEE WAS AW ARE AT THE TIME OF PASSING OF THE ASSESSMENT ORDER THAT SIMPLICITOR CHARGING OF INTEREST MAY NOT BE APPEALLABLE BEFORE THE LEARNED CIT(A). THE ASSESSEE, THEREFORE, RIGHTLY EXPLAINED THAT THE TAX CONSULTANTS ADVISED THAT INTEREST CAN BE WAIVED BY THE LEARNED CCIT AND NO APPEAL WAS REQUIRED TO BE PREFERRED IN THE MATTER. THE ASSESSE E ALSO EXPLAINED IN THE CONDONATION PETITION THAT FILING OF APPEAL BEFO RE THE LEARNED CIT(A) WAS NOT BENEFICIAL TO THE ASSESSEE. ULTIMATE LY, THE LEARNED CCIT REJECTED THE APPLICATION FOR WAIVER OF THE INT EREST. THESE FACTS WOULD CLEARLY DISCLOSE THAT THE ASSESSEE WAS AWARE OF FILING OF THE APPEAL BEFORE THE LEARNED CIT(A) WITHIN 30 DAYS FRO M THE RECEIPT OF THE DEMAND NOTICE/ASSESSMENT ORDER. THIS FACT IS AL SO MENTIONED BY THE AO IN THE DEMAND NOTICE AND IT WAS BROUGHT TO T HE NOTICE OF THE ITA NO.512/AHD/2009 CHARMS INDUSTRIES LTD. VS ITO, CO. WARD 7(1), AHMED ABAD 6 ASSESSEE THAT APPEAL COULD BE PREFERRED BEFORE THE LEARNED CIT(A) WITHIN 30 DAYS FROM THE RECEIPT OF THE DEMAND NOTIC E ATTACHED WITH THE ASSESSMENT ORDER. THE ASSESSEE WAS AWARE AT THA T TIME THAT NO APPEAL IS TO BE PREFERRED BY THEM BECAUSE WAIVER OF INTEREST COULD BE DONE BY THE LEARNED CCIT ONLY. THE ASSESSEE WAS ALS O AWARE OF THE FACT THAT APPEAL WOULD NOT BE BENEFICIAL TO THE ASS ESSEE. THIS FACT SHOWS THAT THE ASSESSEE NEVER INTENDED TO PREFER AN Y APPEAL BEFORE THE LEARNED CIT(A) AND DELIBERATELY DID NOT FILE AP PEAL BEFORE THE LEARNED CIT(A) ON THE MATTER IN ISSUE. THUS, THE AS SESSEE ACTED ON CORRECT ADVICE GIVEN BY THE TAX CONSULTANTS. THE AS SESSEE THUS ACTED UNDER NORMAL CIRCUMSTANCES BY PREFERRING THE PETITI ON BEFORE THE LEARNED CCIT FOR WAIVER OF INTEREST, BUT DID NOT CH ALLENGE THE ORDER OF THE LEARNED CCIT BEFORE THE HIGH COURT DELIBERATELY . ONCE, INTEREST INCOME IS DECLARED IN RESPONSE TO THE NOTICE U/S 14 8 OF THE IT ACT, IT COULD NOT HAVE BEEN REVISED BY THE ASSESSEE AT THE STAGE OF FILING THE APPEAL BEFORE THE LEARNED CIT(A). THESE FACTS WOULD SHOW THAT THE ASSESSEE HAS NOT DISCLOSED ANY SUFFICIENT CAUSE FOR NOT PREFERRING THE APPEAL BEFORE THE LEARNED CIT(A) WITHIN THE PERIOD OF LIMITATION. THE ASSESSEE PREFERRED ONE OF REMEDY AVAILABLE TO HIM A GAINST FILING OF APPEAL BEFORE THE LEARNED CIT(A). NO CASE OF SUFFIC IENT CAUSE IS MADE OUT BEFORE THE LEARNED CIT(A). 8. IN THE CASE OF VEDABHAI ALIAS VIJAYANATABAI BABU RAO PATIL VS. SHANTARAM BABURAO PATIL (2002) 253 ITR 798 (SC), WH ERE IT WAS HELD THAT WHILE EXERCISING DISCRETION UNDER SECTION 5 OF THE LIMITATION ACT, 1963, TO CONDONE DELAY FOR SUFFICIENT CAUSE IN NOT FILING THE APPEAL WITHIN THE PERIOD PRESCRIBED, COURTS SHOULD ADOPT A PRAGMATIC ITA NO.512/AHD/2009 CHARMS INDUSTRIES LTD. VS ITO, CO. WARD 7(1), AHMED ABAD 7 APPROACH. A DISTINCTION MUST BE MADE BETWEEN A CASE WHERE THE DELAY IS INORDINATE AND A CASE WHERE DELAY IS OF A FEW DAYS. THE COURT OBSERVED THAT WHEREAS IN THE FORMER CONSIDERA TION OF PREJUDICE TO THE OTHER SIDE WILL BE RELEVANT FACTOR AND CALLS FOR A MORE CAUTIOUS APPROACH. IN THE LATTER CASE NO SUCH CONSIDERATION MAY ARISE AND SUCH A CASE DESERVES A LIBERAL APPROACH. 9. IN THE CASE OF CIT V. RAM MOHAN KABRA (2002) 257 ITR 773, THE HONBLE PUNJAB & HARYANA HIGH COURT HAS HELD AN D OBSERVED THAT WHERE THE LEGISLATURE SPELLS OUT A PERIOD OF LIMITA TION AND PROVIDES FOR POWER TO CONDONE THE DELAY AS WELL, SUCH DELAY CAN ONLY BE CONDONED ONLY FOR SUFFICIENT AND GOOD REASONS SUPPO RTED BY COGENT AND PROPER EVIDENCE. IT IS A SETTLED PRINCIPLE OF L AW THAT PROVISIONS RELATING TO THE SPECIFIED PERIOD OF LIMITATION MUST BE APPLIED WITH THEIR RIGOUR AND EFFECTIVE CONSEQUENCES. IN THIS CASE DEL AY FOR FILING THE APPEAL LATE FOR ONLY A FEW DAYS WAS NOT CONDONED. 10. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF THE ABOVE DECISIONS, IT IS CLEAR THAT IN THE PRESENT CASE DEL AY IS NOT OF FEW DAYS BUT OF ABOUT 7 YEARS. BESIDES, THERE IS ABSOLUTELY NO VALID EXPLANATION/REASON FOR DELAY. WE, THEREFORE, HOLD T HAT THE LEARNED CIT(A) WAS JUSTIFIED IN HOLDING THAT THE DELAY IN F ILING THE APPEAL WAS NOT DUE TO SUFFICIENT CAUSE. THE LEARNED CIT(A), TH EREFORE, RIGHTLY DID NOT CONDONE THE DELAY IN FILING THE APPEAL BEFORE H IM BELATEDLY. THE DECISION IN THE CASE OF RAYALA CORPORATION PVT. LTD . (SUPRA) IS ON ITS OWN FACTS AND WOULD NOT SUPPORT THE CASE OF THE ASS ESSEE. WE ACCORDINGLY, DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) ITA NO.512/AHD/2009 CHARMS INDUSTRIES LTD. VS ITO, CO. WARD 7(1), AHMED ABAD 8 IN DISMISSING THE APPEAL OF THE ASSESSEE BEING TIME BARRED. WE CONFIRM HIS ORDER AND DISMISS THE APPEAL OF THE ASS ESSEE. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 4-02-2011 SD/- SD/- (D. C. AGRAWAL) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 4-02-2011 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD