PAWAN PHARMACEUTICALS P. LTD, NAVI MUMBAI V. ITO 1(2)(4), MUMBAI

ITA 5591/MUM/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3960 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 27-10-2010
• Assessment Year: 1997-1998
• Appeal Filed On: 14-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T T JACOB
• Keywords: Business income; Business expenditure; Opportunity of being heard; Condonation of delay
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER I.T.A.NO . ASSESSMENT YEAR 5591/MUM/2009 1997-1998 5592/MUM/2009 1998-1999 5593/MUM/2009 1999-2000 5594/MUM/2009 2000-2001 5564/MUM/2009 2003-2004 M/S. PAWAN PHARMACEUTICALS PVT. LTD., GRAIN MERCHANT CO-OP. HSG. SOC.LTD., E-51/52, SECTOR 17, VASHI, NAVI MUMBAI 400 703. PAN: AAACP3571 A VS. THE INCOME-TAX OFFICER-1(2)(4), MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI BHUPENDRA SHAH RESPONDENT BY : SHRI T.T. JACOB O R D E R PER BENCH: ALL THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGA INST THE FOLLOWING ORDERS OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, MUMB AI: ITA NO ASST. YEAR ORDER OF THE CIT(A) DATED 5591/MUM/2009 1997-1998 12.05.2006 5592/MUM/2009 1998-1999 09.03.2006 5593/MUM/2009 1999-2000 09.03.2006 5594/MUM/2009 2000-2001 09.03.2006 5564/MUM/2009 2003-2004 09.03.2006 THERE IS A DELAY OF ABOUT 1174 DAYS IN FILING IN IT A NO. 5591/M/2009 AND DELAY OF 1242 DAYS IN FILING THE OTHER APPEALS. 2. THE ASSESSEE IS A COMPANY. THE MAIN SOURCE OF IN COME OF THE ASSESSEE IS RECEIPT OF COMPENSATION ON SUB-LETTING OF PREMISES. ACCORDING TO THE ASSESSEE THE RECEIPTS HAVE TO BE ASSESSED AS BUSINESS INCOME. A CCORDING TO THE REVENUE THE RECEIPTS HAVE TO BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES. CONSEQUENT TO THE CHANGE OF HEAD OF INCOME, THERE W ILL BE AN EFFECT ON THE EXPENSES THAT HAVE TO BE ALLOWED AGAINST THE INCOME WHICH WILL HAVE A BEARING ON ITA NOS.5591-5594 &5564/M/09 2 THE TOTAL INCOME OF THE ASSESSEE. THIS IS THE DISP UTE BETWEEN THE ASSESSEE AND THE DEPARTMENT IN ALL THESE APPEALS. THE ASSESSMENT WAS COMPLETED BY THE ASSESSING OFFICER EX PARTE UNDER SECTION 144 OF THE ACT TO T HE BEST OF HIS JUDGMENT IN ALL THE YEARS. THE CIT(A) ALSO DECIDED THE APPEALS EX PARTE IN ALL THE YEARS. THE ASSESSEE HAS FILED APPEALS IN ALL THESE YEARS BEFORE THE TRI BUNAL. 3. AS ALREADY STATED, THERE IS A DELAY IN FILING TH E APPEALS BY THE ASSESSEE. THE REASONS FOR FILING THE APPEAL BELATEDLY HAVE BEEN E XPLAINED IN AN AFFIDAVIT FILED BY SHRI SUBHASH DOSHI, DIRECTOR OF THE ASSESSEE. IN A LL THESE APPEALS THE ASSESSEE HAS ALSO PRAYED THAT THE ASSESSMENT FRAMED UNDER SECTIO N 144 OF THE ACT SHOULD BE SET ASIDE AND THE ASSESSEE SHOULD BE AFFORDED AN OPPORT UNITY OF BEING HEARD. THE REASONS FOR CONDONATION OF DELAY IN FILING THESE AP PEALS WILL ALSO HOLD GOOD WITH REGARD TO THE PRAYER OF THE ASSESSEE FOR SETTING AS IDE THE ASSESSMENT FRAMED UNDER SECTION 144 OF THE ACT AND REMANDING THE SAME FOR M AKING IT AFRESH AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 4. THE DIRECTOR OF THE ASSESSEE HAS FILED AN AFFIDA VIT EXPLAINING THE REASONS AS TO WHY THE ASSESSEE COULD NOT PARTICIPATE IN THE AS SESSMENT PROCEEDINGS AS WELL AS THE PROCEEDINGS BEFORE THE CIT(A) AND AS TO WHY THE APPEAL WAS FILED BELATEDLY. THE ASSESSEE WAS BED RIDDEN FROM MARCH 2006 AND WAS ADM ITTED IN JASLOK HOSPITAL ON 1.4.2006. THE HOSPITAL RECORDS HAVE BEEN FILED AS A NNEXURE A TO THE AFFIDAVIT FILED. THE ASSESSEE WAS HOSPITALIZED ON VARIOUS OCCASIONS DUE TO VARIOUS AILMENTS. IT WAS ONLY IN DECEMBER 2008 HIS CONDITION STARTED IMPROVI NG. THE ASSESSEE DID NOT HAVE ANY REGULAR STAFF TO LOOK AFTER THE DAY TO-DAY AFFA IRS OF THE COMPANY. THEREFORE, THE DIRECTOR AFTER IMPROVEMENT OF THE HEALTH CONDITION STARTED TO REVIVE THE COMPANY WITH THE HELP OF FRIENDS AND RELATIVES. THE DIRECTO R THEREAFTER STARTED COMPILING VARIOUS NOTICES/CORRESPONDENCES AND ORDERS RECEIVED BY THE COMPANY DURING THE PERIOD OF HIS ILLNESS AND ATTEMPTED TO STREAMLINE T HE ACTIVITIES OF THE COMPANY. IN DOING SO, THE ASSESSEE CAME ACROSS THE ORDERS OF TH E CIT(A) IN ALL THE AFORESAID ITA NOS.5591-5594 &5564/M/09 3 ASSESSMENT YEARS. THEREAFTER, THE ASSESSEE HAD CONS ULTED HIS CHARTERED ACCOUNTANT WHO ADVISED THAT APPEAL SHOULD BE FILED BEFORE THE TRIBUNAL. IT IS IN THESE CIRCUMSTANCES THAT THE ASSESSEE HAS PRAYED THAT THE DELAY IN FILING THE APPEALS SHOULD BE CONDONED. 5. THE LEARNED COUNSEL FOR THE ASSESSEE AFTER NARRA TING THE AFORESAID FACTS RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF IMPROVEMENT TRUST V. UJAGAR SINGH, WHEREIN THE HONBLE SUPREME COURT HAS HELD THAT JUSTICE HAS TO BE DONE IN ACCORDANCE WITH LAW RATHER THAN TO DI SPOSE CASES ON TECHNICALITIES AND THAT TOO AT THE THRESHOLD. THE COURT HAS FURTHER L AID DOWN THAT FOR CONDONATION OF DELAY IN FILING THE APPEAL, THERE IS NO STRAIT JACK ET FORMULA. THE COURT HAS LAID DOWN THAT UNLESS MALAFIDES ARE WRIT LARGE ON THE CONDUCT OF THE PARTY, GENERALLY AS A NORMAL RULE, DELAY SHOULD BE CONDONED. 6. THE LEARNED COUNSEL ALSO BROUGHT TO OUR NOTICE T HAT THE EXPENSES DISALLOWED BY THE A.O. CONSEQUENT TO THE CHANGE OF HEAD OF INCOME AND DISALLOWANCE OF BUSINESS EXPENSES ALSO DESERVES TO BE CONSIDERED AND IN THIS REGARD HAS RAISED ADDITIONAL GROUNDS. 7. THE LEARNED COUNSEL ALSO FILED BEFORE US COPY O F THE ORDER OF THE ITAT MUMBAI IN THE CASE OF M/S.VANGUARD BUSINESS SYSTEMS PVT.LTD. VS. THE ITO WARD 5(3)-3, MUMBAI, IN THE CASE OF A SISTER COMPANY OF THE ASSE SSEE, WHEREIN ON IDENTICAL FACTS, THE TRIBUNAL HAS PARTLY ACCEPTED THE PLEA OF THE AS SESSEE WITH REGARD TO ALLOWANCE OF EXPENSES AGAINST IDENTICAL INCOME. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO FILED A COPY OF THE ORDER OF THE AO IN ASSESSEES O WN CASE FOR A.Y. 96-97, WHEREIN THE AO HAS ACCEPTED THE INCOME OFFERED BY THE ASSES SEE AS INCOME FROM BUSINESS AND ALLOWED ALL EXPENSES IN ASSESSMENT U/S.143(3) O F THE ACT. IT WAS ALSO BROUGHT TO OUR NOTICE THAT THE ITAT IN ITA NO.2122/MUM/2005 FOR AY 01-02 HAS DELETED PENALTY IMPOSED ON THE ASSESSEE U/S.271(1) ( C) OF THE ACT, CONSEQUENT TO CHANGE OF HEAD OF INCOME AND DISALLOWANCE OF EXPENSES, HOL DING THAT THE BELIEF ENTERTAINED ITA NOS.5591-5594 &5564/M/09 4 BY THE ASSESSEE REGARDING THE HEAD OF INCOME WAS BO NAFIDE IN VIEW OF THE PAST ASSESSMENT IN ASSESSEES CASE. ON SIMILAR REASON T HE PENALTY IMPOSED FOR A.Y. 98- 99 WAS ALSO CANCELLED BY THE CIT(A), A COPY OF THE SAID ORDER WAS ALSO FILED BEFORE US. IN THESE CIRCUMSTANCES, THE LEARNED COUNSEL F OR THE ASSESSEE MADE A PRAYER THAT THE DELAY IN FILING THE APPEALS SHOULD BE COND ONED AND THE ORDER OF CIT(A) SHOULD BE SET ASIDE AND THE AO SHOULD BE DIRECTED T O MAKE AN ASSESSMENT AFRESH AFTER AFFORDING ASSESSEE OPPORTUNITY OF BEING HEARD . 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED O N THE ORDER OF THE CIT(A). 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN OUR VIEW THE REASONS GIVEN IN THE AFFIDAVIT ARE SUFFICIENT TO CONDONE THE DELAY I N FILING THE APPEALS BY THE ASSESSEE. IN OUR VIEW, THE REASONS GIVEN IN THE AFFIDAVIT ARE ALSO SUFFICIENT TO GIVE THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. IN THE CIRCUMSTANCES , WE SET ASIDE THE ORDERS OF THE CIT(A) AND REMAND THE ISSUES RAISED BY THE ASSESSEE IN THESE APPEALS (INCLUDING THE GROUNDS RAISED IN THE FORM OF ADDITIONAL GROUNDS) T O THE A.O. FOR FRESH CONSIDERATION. THE ASSESSEE WILL DULY ATTEND THE PROCEEDINGS BEFOR E THE A.O. AND CO-OPERATE IN COMPLETING THE ASSESSMENTS IN ACCORDANCE WITH LAW. THE A.O. WILL AFFORD AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND ALSO OPPORTUNITY OF FILING THE EVIDENCE IN SUPPORT OF THE ASSESSEES CASE AND THER EAFTER DECIDE THE ISSUES IN ACCORDANCE WITH LAW. 10. FOR STATISTICAL PURPOSES THE APPEALS ARE TREATE D AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS _4 TH DAY OF OCTOBER, 2010. SD. SD. (RAJENDRA SINGH) (N.V. VASUDEVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED THE_ 4 TH NOVEMBER, 2010. KN ITA NOS.5591-5594 &5564/M/09 5 COPY TO: 1. THE ASSESSEE 2. THE REVENUE 3. THE CIT-I, MUMBAI 4. THE CIT(A)-I, MUMBAI 5. THE DR C BENCH, MUMBAI BY ORDER /TRUE COPY/ ASST. REGISTRAR, ITAT, MUMBAI