Shree Dharma Sastha Sewa Samajam, Delhi V. ITO (E), New Delhi

ITA 5249/DEL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61603 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 03-04-2012
• Assessment Year: 1998-1999
• Appeal Filed On: 25-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NAN DITA
• Keywords: Charitable institution; Opportunity of being heard; Condonation of delay; Ignorance of law
• Section: 143(3); 154; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `G NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.5249/DEL/2010 ASSESSMENT YEAR : 1998-99 SHREE DHARMA SASTHA SEWA SAMAJAM, VS INCOME TAX OFFICER, AYYAPPA TEMPLE PREMISES, T RUST WARD-II, CSC-9, OPP. F-26, SECTOR-7, NEW DELHI. ROHINI, DELHI - 110085 (PAN AABTS4980J) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI RAJAN BHATIA RESPONDENT BY : SMT. NAN DITA, DR O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER DATED 22.9.2010 PASSED BY CIT(A)-XXI, NEW DELHI BY WHICH THE LD. CIT(A)-XXI DISMISSED THE APPEAL OF THE ASSESSEE BY HOLDING THA T THE DELAY IN FILING RECTIFICATION APPLICATION CANNOT BE CONDONED. THE CASE WAS PERTAINING TO A.Y. 1998-99. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE INCOME TAX OFFICER, TRUST WARD-II, NEW DELHI, PASSED AN ASSESSMENT ORDE R U/S 143(1)(A) OF THE INCOME TAX ACT, 1961(HEREINAFTER REFERRED TO THE A CT) DATED 30.3.1999. AGAINST THE ABOVE ORDER OF THE AO, THE ASSESSEE FIL ED A RECTIFICATION ITA 5249/D/2010 2 APPLICATION U/S 154 OF THE ACT, WHICH WAS REJECTED BY HIM WITH THE OBSERVATION THAT: (I) THE APPLICATION FOR RECTIFICA TION WAS FILED BEYOND THE STIPULATED TIME OF FOUR YEARS FROM THE END OF RELEV ANT ASSESSMENT YEAR AND (II) SECONDLY, ON FACTS THAT THE RECTIFICATION APPL ICATION WAS NOT MAINTAINABLE BECAUSE IT WAS MANDATORY TO FILE FROM NO.10 WITHIN THE TIME AS PRESCRIBED U/S 139 OF THE ACT. 3. THE ASSESSEE FILED AN APPEAL BEFORE CIT(A)-XXI, NEW DELHI, WHICH WAS REJECTED WITH THE OBSERVATION THAT APPLICATION OF RECTIFICATION SHOULD BE FILED WITHIN FOUR YEARS FROM THE DATE OF ORDER SOUG HT TO BE RECTIFIED. HE FURTHER OBSERVED THAT THE DELAY IN FILING RECTIFICA TION APPLICATION CANNOT BE CONDONED. BEING AGGRIEVED BY THE ABOVE ORDERS, THE ASSESSEE FILED THIS APPEAL ON FOLLOWING GROUNDS:- 1. THAT THE ORDER OF LD.CIT(A) IS BAD BOTH IN LAW AND ON FACTS OF THE CASE; 2, THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ORDER PASSED BY LD. AO U/S 154 OF THE I.T.ACT, 1961; 3. THAT THE LD. CIT(A) HAS ERRED ON FACTS AND CIRCUMSTANCES OF THE CASE AND CONFIRMING THE ADJUSTMENT MADE U/S 154 OF THE ACT AMOJTING TO RS.2,74,270/- 4. THAT THE LD. CIT(A) ERRED IN NOT DEALING WITH THE VARIOUS CONTENTIONS RAISED BEFORE HIM AND AFFIDAVIT FILED BEFORE HIM (REGARDING NON-SERVICE O F ITA 5249/D/2010 3 INTIMATION U/S 143(1)(A) AND PASSED A NON REASONED, NON-SPEAKING, MECHANICAL ORDER IGNORING MATERIAL ON RECORD; 5. THAT THE ORDER PASSED U/S 143(1)(A) WAS (A) NON-EST AND A NULLITY (B) BARRED BY TIME AND THE LD. CIT(A) ERRED IN UPHOLDING THE ACTION OF THE AO IN NOT CANCELLING DEMAND RAISED OF RS.71,028/- AND ADDITION OF RS.2,74,270/- 6. THAT THE LD. CIT(A) HAS ERRED IN HOLDING THAT RECTIFICATION APPLICATION WAS FILED BEYOND TIME. 7. THAT THE LD. CIT(A) AND AO HAVE ERRED IN HOLDING THAT: (A) FORM 10 WAS NOT FILED WITH THE RETURN; (B) REQUIREMENT TO FILE FORM 10 WITH RETURN IS MANDATORY. 8. THAT ADJUSTMENT MADE IN ORDER U/S 143(1)(A) OF RS.2,74,270/- WAS WITHOUT JURISDICTION AND NOT PRIM A- FACIE ADJUSTABLE IN NATURE AND BOTH A.O. AND CIT(A) ERRED IN NOT CANCELLING SUCH ADJUSTMENT AND IN IGNORING MATERIAL ON RECORD. 9. THAT THE LD. AO ERRED IN MAKING ADDITIONS U/S 143(1)(A) WITHOUT ISSUE OF NOTICE U/S 143(2) AND TH US VITIATED SUCH ORDER; 10. THAT THE INTIMATION PASSED U/S 143(1)(A) WAS I N EFFECT AND UNREALITY AND ORDER PASSED U/S 143(3) AN D WAS VITIATED IN LAW INTER ALIA ON ACCOUNT NON ISSUE OF NOTICE U/S 143(2) AND BOTH THE AO AND THE CIT(A) ERRED IN NOT CANCELLING THE ORDER PASSED AND THE DEMAND RAISED. 11. THAT THE APPEAL IS WITHIN TIME AS THE ORDER OF THE LD. CIT(A) WAS RECEIVED ON 27 TH SEPTEMBER, 2010. ITA 5249/D/2010 4 12. THAT THE ASSESSEE MAY BE ALLOWED TO ADD, SUBST ITUTE, SUPPLEMENT, DELETE ANY OF THE GROUNDS RAISED HEREINABOVE. 4. BROADLY, THE ABOVE GROUNDS COVER FOLLOWING ALLEG ATIONS:- (I) THAT THE LD. CIT(A)-XXI WAS NOT JUSTIFIED IN CONFIR MING THE ORDER OF AO ON THE GROUNDS THAT THE APPLICATION HAS BEEN FILED BEYOND LIMITATION AND DELAY IN FILING THE SAM E CANNOT BE CONDONED. (II) THAT, AGAIN THE LD. CIT(A)-XXI WAS NOT JUSTIFIED IN UPHOLDING THE ACTION OF AO MAKING ADDITION OF RS.2,74,270 AND, CONSEQUENTLY, IN RAISING DEMAND OF RS.70,028/- TAX FROM THE ASSESSEE MERELY ON THE GRO UND THAT FROM NO.10 WAS NOT FILED ALONG WITH THE RETURN OF INCOME. 5. THE COUNSEL APPEARING FOR THE ASSESSEE ARGUED TH AT THE AO SIMPLY PASSED AN ORDER U/S 143(1)(A) AND KEPT IN THE FILE WITHOUT SENDING THE COPY OF ASSESSMENT ORDER TO THE ASSESSEE AND ON RECEIPT OF DEMAND OF TAX NOTICE, THE ASSESSEE CAME TO KNOW ABOUT THE SAID ORDER OF ASSES SMENT. THE AR PLACED HIS RELIANCE ON THE JUDGMENT OF HONBLE GUJARAT HIG H COURT IN THE CASE OF KANUBHAI M. PATEL (HUF) VS HIREN BHATT OR HIS SUCCE SSORS TO OFFICE AND OTHERS REPORTED AS (2011) 334 ITR 25 (GUJ). IN THIS CASE, HONBLE GUJARAT ITA 5249/D/2010 5 HIGH COURT HELD THAT MERE SIGNING OF THE NOTICE IS NOT SUFFICIENT; THE DATE OF ISSUE OF NOTICE WOULD BE THE DATE ON WHICH THE NOTI CE WAS HANDED OVER FOR SERVICE TO THE PROPER OFFICER. IN THE PRESENT CASE , THE LD. DR DID NOT DISPUTE THIS POINT THAT THE ASSESSEE CAME TO KNOW ABOUT THE ASSESSMENT ORDER ON RECEIPT OF DEMAND DRAFT TAX NOTICE BUT HE OBJECTED TO THE LEGAL COURSE ADOPTED BY THE ASSESSEE STATING THAT THE ASSESSEE ADOPTED A WRONG LEGAL REMEDY BY FILING RECTIFICATION APPLICATION U/S 154 OF THE ACT . THE ASSESSEE COULD FILE THE APPEAL BEFORE THE CIT(A) AGAINST THE ASSESSMENT ORD ER. IN THIS REGARD, WE HOLD THAT IF AN AGGRIEVED PARTY ADOPTING A WRONG LE GAL REMEDY DUE TO IGNORANCE OF LAW OR FOLLOWING A WRONG LEGAL ADVICE, THEN THE TIME TAKEN IN THIS WRONG REMEDIAL ACTION MAY BE ACCOUNTED FOR WHI LE DEALING WITH THE CONDONATION OF DELAY IN FILING OF PETITION BEFORE P ROPER FORUM. IN THE PRESENT CASE, WE OBSERVE THAT THE AO DID NOT SEND THE COPY OF ASSESSMENT ORDER TO THE ASSESSEE, NEITHER WITHIN THE PRESCRIBED LIMIT N OR BEYOND THAT. THEREFORE, THE ASSESSEE WAS DEPRIVED OF THE OPPORTUNITY TO BE HEARD. 6. LD. COUNSEL FOR THE ASSESSEE FURTHER PLACED HIS RELIANCE ON THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT OF DE LHI IN THE CASE OF S.R.F. CHARITABLE TRUST VS UNION OF INDIA & OTHERS REPORTE D AT (1992) 193 ITR 95 (DELHI) WHERE THE HONBLE HIGH COURT HELD THAT UNDER CLAUS E (III) TO THE FIRST PROVISO TO SECTION 143(1)(A) OF THE ACT WHERE IT IS EVIDENT FROM THE RETURN ITA 5249/D/2010 6 FILED, ALONG WITH DOCUMENTS IN SUPPORT THEREOF, THE CLAIM OF ASSESSEE CAN BE CONSIDERED BUT WHEN PROOF IN SUPPORT OF THE CLAIM I S NOT FURNISHED BY THE ASSESSEE, THEN, FOR LACK OF PROOF, NO DISALLOWANCE OR ADJUSTMENTS CAN BE MADE UNILATERALLY. IN CONCLUSION, THE HONBLE HIGH COURT MADE IT CLEAR THAT IF NO PROOF IN SUPPORT OF THE CLAIM WAS AVAILABLE W ITH THE ITO, HE COULD HAVE ISSUED A NOTICE U/S 143(2) OF THE ACT BUT HE CAN NO T UNILATERALLY MAKE A DISALLOWANCE BY SEEKING TO INVOKE THE PROVISIONS OF FIRST PROVISO TO SECTION 143(1)(A) OF THE ACT. 7. IN THE PRESENT CASE, THE AO COULD HAVE ISSUED A NOTICE U/S 143(2) OF THE ACT TO THE ASSESSEE TRUST FOR SUBMISSION OF FOR M NO.10 BUT THE SAME WAS NOT GIVEN TO THE ASSESSEE AND THE ASSESSMENT ORDER WAS PASSED UNILATERALLY AND EVEN THE COPY OF THE SAID ASSESSMENT ORDER WAS NOT SENT TO THE ASSESSEE AS PER REQUIREMENT OF THE STATUTE AND PROCEDURE. T HEREFORE, IN THE LIGHT OF JUDGMENT OF HONBLE HIGH COURT OF DELHI IN CASE OF S.R.F. CHARITABLE TRUST (SUPRA), THE AO WAS NOT JUSTIFIED IN PROCEDURE ADOP TED BY HIM WHILE PASSING THE ASSESSMENT ORDER. 8. ON THE BASIS OF CAREFUL PERUSAL OF RECORD AND CO NSIDERATION OF ARGUMENTS OF BOTH SIDES, WE ALSO OBSERVE THAT THE A SSESSEE OPTED TO FILE A RECTIFICATION APPLICATION U/S 154 OF THE ACT BEFORE THE AO INSTEAD OF CHALLENGING THE ASSESSMENT ORDER AND ITS VALIDITY O N ACCOUNT OF NOT ISSUING ITA 5249/D/2010 7 THE NOTICE U/S 143(2) OF THE ACT, ASKING THE ASSESS EE TO FILE FORM NO. 10 AND NON-RECEIPT OF COPY OF THE ORDER. IN CONSEQUENCE, THE RECTIFICATION APPLICATION WAS DISMISSED BY THE AO AND APPEAL AGAI NST THE SAID DISMISSAL WAS REJECTED BY THE CIT(A) WITH THE FINDING THAT DE LAY IN FILING RECTIFICATION APPLICATION CANNOT BE CONDONED IN APPEAL. 9. LD. DR SUBMITTED THAT THE ASSESSEE COULD HAVE TA KEN A PROPER RECOURSE BY FILING AN APPEAL BEFORE THE CIT(A) AGAINST THE A SSESSMENT ORDER BUT DUE TO ADOPTING A WRONG REMEDY, THE LEGAL FIGHT CAME UP TO THE TRIBUNAL. 10. THE AR HAS SUBMITTED BEFORE US THAT THE ASSESSE E IS WILLING TO TAKE A PROPER RECOURSE OF LEGAL REMEDY FILING EITHER BY SU BMITTING FORM NO.10 BEFORE THE AO OR BY AN APPEAL BEFORE THE CIT(A) AGA INST THE ORIGINAL ASSESSMENT ORDER, IF THE ASSESSEE IS GIVEN AN OPPOR TUNITY TO BE HEARD ON MERITS EITHER BY AO OR BY THE FIRST APPELLATE AUTHO RITY I.E. CIT(A). 11. IT IS A GENERAL RULE OF JURISPRUDENCE ABOUT CON DONATION OF DELAY THAT IF A PERSON AGGRIEVED HAS TAKEN WRONG RECOURSE OR REME DIAL ACTION, THE TIME TAKEN OR WASTED IN THE SAME CAN BE ACCOUNTED FOR WH ILE DEALING WITH THE MATTER OF CONDONATION OF DELAY. WE RESTRAIN OURSEL VES FROM GIVING A FINDING ON THE CONDONATION OF DELAY BUT IN THE INTEREST OF JUSTICE AND CONSIDERING THE ARGUMENTS ADVANCED BY BOTH THE PARTIES, WE FIND IT JUST AND PROPER THAT AN OPPORTUNITY TO FILE FORM NO.10 BEFORE THE AO SHOULD BE GIVEN TO THE ITA 5249/D/2010 8 ASSESSEE FOR PROPER ADJUDICATION OF THE ALLEGATIONS OF THE ASSESSEE AGAINST THE ASSESSMENT ORDER. 12. WE, THEREFORE, CONCLUDE TO DISPOSE OF THE APPEA L OF THE ASSESSEE WITH THE OBSERVATION THAT THE ASSESSEE WOULD BE AT LIBER TY TO FILE FORM NO.10 BEFORE THE AO AND HE WOULD DECIDE THE MATTER AFRESH GIVING AN OPPORTUNITY TO BE HEARD TO THE ASSESSEE. WITH THE ABOVE DIRECT IONS, THE ASSESSMENT ORDER DATED 30.3.1999 PASSED BY AO IS SET ASIDE. THE ASS ESSEE IS FURTHER DIRECTED TO TAKE APPROPRIATE ACTION BEFORE THE LD. AO WITHIN 30 DAYS FROM THE DATE OF RECEIPT OF THIS ORDER. 13. WITH THE ABOVE OBSERVATIONS AND DIRECTIONS, TH E APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 12.4.2012. SD/- SD/- (SHAMIM YAHYA) (CHANDRA MOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 12TH APRIL, 2012 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR ITA 5249/D/2010 9