MENNED FINANCIAL SERVICES LTD, MUMBAI V. ITO 9(20(3), MUMBAI

ITA 5753/MUM/2010

• Counselvise Citation: 575319914 RSA 2010
• Duration Of Justice: 3 year(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 29-07-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 15-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: O P SINGH
• Assessee Lawyers: BEHARILAL
• Keywords: Opportunity of being heard; Period of limitation; Reasonable cause; Condonation of delay
• Section: 143(3)

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , ,, , , ! ! ! ! '# $% '# $% '# $% '# $% , ,, , & & & & ' ' ' ' BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER . / ITA NO. 5753/MUM./2010 ( &) * !+* / ASSESSMENT YEAR : 200203 ) MENNEN FINANCIAL SERVICES LTD. 501, ACME INDUSTRIAL PARK WESTERN EXPRESS HIGHWAY GOREGAON (W), MUMBAI 400 063 .. ,- / APPELLANT ) V/S INCOME TAX OFFICER WARD9(2)3, MUMBAI .... ./,- / RESPONDENT , ./ PERMANENT ACCOUNT NUMBER AAACM3164A &) *1# 2 3 / ASSESSEE BY : MR. BEHARILAL ! 2 3 / REVENUE BY : MR. O.P. SINGH )! 2 # / DATE OF HEARING 01.08.2013 $ 4+ 2 # / DATE OF ORDER 14.08.2013 $ $ $ $ / ORDER '# $% '# $% '# $% '# $% , ,, , & & & & 5 5 5 5 / PER AMIT SHUKLA, J.M. THE PRESENT APPEAL IS PREFERRED BY THE ASSESSEE CHA LLENGING THE IMPUGNED ORDER DATED 3 RD FEBRUARY 2006, PASSED BY THE LEARNED COMMISSIONER (APPEALS)IX, MUMBAI, FOR THE ASSESSME NT YEAR 200203, FOR MENNEN FINANCIAL SERVICES LTD. 2 THE QUANTUM PROCEEDINGS PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ). 2. THE AFORESAID APPEAL IS BARRED BY LIMITATION BY 1,5 63 DAYS I.E., MORE THAN FOUR YEARS. THE REASONS GIVEN BY THE ASSESSEE FOR THE CONDONATION OF DELAY IS THAT THE TAX AUDITOR M/S. K.V. SHANKARAN A SSOCIATES WERE LOOKING AFTER ALL THE INCOME TAX PROCEEDINGS AND THE STATUT ORY COMPLIANCE. THESE AUDITORS HAVE NOT BROUGHT THE COMMISSIONER (APPEALS )S ORDER TO THE KNOWLEDGE OF THE ASSESSEE AND, THEREFORE, THE APPEA L COULD NOT BE FILED ON TIME. ALONG WITH THE APPEAL, AN AFFIDAVIT OF MR. DI NESH MENON, DIRECTOR OF THE ASSESSEE COMPANY HAS ALSO BEEN FILED REITERATING TH E SAME ALLEGATION ABOUT THE STATUTORY AUDITORS M/S. K.V. SHANKARAN ASSOCIAT ES. THE MAIN ALLEGATION HAS BEEN THAT ALL THE BOOKS OF ACCOUNT AND DOCUMENT S WERE HANDLED BY THESE AUDITORS AND THEY COULD NOT MANAGE THE AFFAIR PROPE RLY. THE AVERMENTS MADE IN THE AFFIDAVIT ARE AS UNDER: THE AUDITORS / TAX CONSULTANTS OF THE COMPANY M/S K V SHANKARAN & ASSOCIATES (AUDITORS) WERE LOOKING AFTER ALL THE STATUTORY COMPLIANCES TO BE MADE BY THE COMPANY AND THE AUDITORS NEVER BROUGHT TO THC NOTICE OF THE MANAGEMENT OF THE COMPANY ABOUT THE OUTCOME OF THE LEARNED COMMISSIONER OF INCOME TAX APPEALS IX AND IT IS ONL Y BECAUSE OF MISLEADING / MI INFORMATION BY THE AUDITORS THAT THE APPELLANT C OULD NOT FILE AN APPEAL WITH ITAT TIME. THE AUDITORS OF THE COMPANY HAD TAKEN CARE OF THE A SSESSMENT PROCEEDINGS BEFORE THE LEARNED ASSESSING OFFICER AND APPEAL PRO CEEDINGS BEFORE THE LEARNED COMMISSIONER OF INCOME TAX APPEALS IX (CIT A) WITHOUT INTIMATING TO THE MANAGEMENT OF THE COMPANY ABOUT THE STATUS A ND THE OUTCOME OF THE APPEAL PROCEEDINGS BEFORE THE LD. CIT (A). THAT THE AUDITOR WAS APPOINTED AS AUDITOR FOR ALL T HE COMPANIES UNDER MENNEN GROUP VIS--VIS MENNEN FINANCIAL SERVICES LI MITED (MFSL), MENNEN AVIATION & HOSPITALITY LIMITED (MAHL) AND MENNEN INFOTECH INDIA LIMITED (MILL) AND SINCE THEY WERE AUDITORS FOR THE ENTIR E GROUP THE MANAGEMENT OF THE COMPANY IN GOOD FAITH HAD ALLOWED THE AUDITOR T O TAKE TH BOOKS OF ACCOUNTS OF THE COMPANY ALONGWITH THE BOOKS OF ACCO UNTS OF THE SISTER CONCERNS WITH HIM TO HIS OFFICE, TAKING ADVANTAGE O F WHICH THE AUDITOR NEVER RETURNED THE BOOKS OF ACCOUNTS OF THE COMPANIES HE HAD TAKEN TILL DATE INFACT THE AUDITORS HAVE ALSO NOT GIVEN THE FINANCIALS OF THE MENNEN GROUP OF COMPANIES TO THE MANAGEMENT FOR APPROVAL IN CERTAIN FINANCIAL YEARS. IN THIS REGARD I HAVE TO STATE THAT ONE OF THE GROUP COMPAN Y MENNEN AVIATION AND HOSPITALITY LIMITED HAD FILED A POLICE COMPLAINT WI TH THE SUB DIVISION POLICE OFFICER, MAPUCA POLICE STATION, MAPUCA, BARDEZ, GOA 403 507 ALSO I HAD MENNEN FINANCIAL SERVICES LTD. 3 FILED COMPLAINT AGAINST THE AUDITORS TO VARIOUS AUT HORITIES THROUGH MY ADVOCATE. I DUE TO MY BUSINESS SCHEDULES HAD TO TRAVEL A LOT TO VARIOUS PARTS OF THE COUNTRY BECAUSE OF WHICH I USED TO KEEP A FEW SIGNE D CHEQUES WITH THE EXECUTIVES OF THE COMPANY SO THAT THE BUSINESS ACTI VITY WAS CARRIED OUT WITHOUT ANY HINDRANCE IN MY ABSENCE, THE ABOVE SCEN ARIO WAS KNOWN TO THE AUDITORS OF THE COMPANY AND AS THE AUDITORS FOUND A N OPPORTUNITY THEY USED THE SIGNED CHEQUES COMMITTING A CRIMINAL OFFENCE. THE AUDITOR OF THE COMPANY HAD NEVER INFORMED THE M ANAGEMENT ABOUT THE DETAILS REQUIRED BY THE LEARNED ASSESSING OFFICER B ECAUSE OF WHICH WE COULD NOT SUBMIT THE SUPPORTING PROOFS / VOUCHERS INSPITE OF THE SAME BEING READILY AVAILABLE WITH US. THE AUDITOR OF THE COMPANY HAD A LSO MISLED THE MANAGEMENT OF THE APPELLANT COMPANY ABOUT THE OUTCO ME OF THE CIT (APPEALS) BECAUSE OF WHICH THE APPELLANT COMPANY HA D NOT FILED ANY APPEAL WITH THE INCOME TAX APPELLATE TRIBUNAL ON TIME. IT WAS ONLY ON PURE TRUST AND BELIEF THAT I HAD ALL OWED THE AUDITORS TO TAKE CARE OF ALL MY FINANCIAL AND TAX RELATED MATTERS, T AKING ADVANTAGE OF THE MY TRUST, BELIEF AND THE SITUATION H MISUSED / MISMANA GED ALL MY FINANCE, ACCOUNTS AND TAX RELATED MATTERS BECAUSE OF WHICH I HAVE LANDED INTO SUCH A MESS. WHEN I HAD CHANGED MY AUDITORS AND WHEN THE NEW OF FIRM CHARTERED ACCOUNTANTS ENTERED WE TIED TO RECTIFY ALL THE EARL IER MISTAKES DONE BY THE EARLIER AUDITORS M/S. K.V. SHANKARAN & ASSOCIATES A ND IMMEDIATELY FILED AN APPEAL WITH, THE INCOME TAX APPELLATE TRIBUNAL ALON GWITH CONDONATION OF DELAY. I ONCE AGAIN REQUEST YOUR HONOURS FOR THE SA KE OF NATURAL, JUSTICE TO KINDLY CONDONE THE DELAY ON THE BASIS OF THE ABOVE FACT AND GRANT US A FAIR OPPORTUNITY TO BE HEARD. 3. BEFORE US, THE LEARNED COUNSEL REITERATED THE CONTE NTIONS AS HAVE BEEN RAISED IN THE AFFIDAVIT. AT THE TIME OF HEARING, IT WAS POINTED OUT BY THE BENCH THAT BEFORE THE ASSESSING OFFICER ONE MR. V.S . SINGHAL, C.A. WAS AUTHORIZED BY THE ASSESSEE COMPANY TO CONDUCT THE A SSESSMENT PROCEEDINGS AND BEFORE THE LEARNED COMMISSIONER (APPEALS), MR. R.P. SINGH, ADVOCATE HAS CONDUCTED THE APPELLATE PROCEEDINGS AND, THEREF ORE, HOW THE AUDITORS WERE RESPONSIBLE FOR THE DELAY IN FILING OF THE APP EAL. IN RESPONSE TO THIS, THE LEARNED COUNSEL HAS FILED THE SECOND AFFIDAVIT OF T HE DIRECTOR MR. DINESH MENON, WHEREIN IT HAS BEEN STATED THAT THESE TWO PE RSONS WERE INTRODUCED BY THE AUDITORS M/S. K.V. SHANKARAN ASSOCIATES ONLY AND, THEREFORE, THE ASSESSEE HAD A BONAFIDE REASON FOR NOT FILING THE A PPEAL IN TIME AS THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) ITSELF WAS NO T COMMUNICATED TO THE ASSESSEE. MENNEN FINANCIAL SERVICES LTD. 4 4. ON THE OTHER HAND, THE LD. D.R. STRONGLY OBJECTED T O THE CONDONATION OF DELAY ON THE GROUND THAT THE REASONS STATED BY THE ASSESSEE DOES NOT APPEAR TO BE BONAFIDE GROUND OR THERE BEING ANY REASONABLE CAUSE FOR NOT FILING THE APPEAL WITHIN THE STATUTORY TIME LIMIT OF SIXTY DAY S FROM THE DATE OF COMMUNICATION OF THE LD. CIT(A)S ORDER. 5. WE HAVE CAREFULLY CONSIDERED THE MATERIAL PLACED ON RECORD AND ALSO THE TWO AFFIDAVITS FILED BY THE DIRECTOR OF THE ASS ESSEE COMPANY. THE MAIN CONTENTION OF THE ASSESSEE HAS BEEN THAT THERE HAD BEEN LATCHES ON THE PART OF THE AUDITORS M/S. K.V. SHANKARAN ASSOCIATES, WHO WERE HANDLING THEIR BOOKS OF ACCOUNT AND AFFAIRS OF THE COMPANY. IT IS SEEN FROM THE RECORDS THAT THE ASSESSMENT PROCEEDINGS WERE ATTENDED BY SHRI V. K. SINGHAL, C.A. AND THE APPELLATE PROCEEDINGS WERE ATTENDED BY AN ADVOC ATE MR. R.P. SINGH. THESE PROFESSIONALS WERE AUTHORIZED BY THE DIRECTOR OF THE ASSESSEE COMPANY TO CONDUCT THESE APPEALS. ONCE THEY ARE INDEPENDENT PROFESSIONALS, THE STATUTORY AUDITORS HAVE NO RESPONSIBILITY EITHER FO R THE APPELLATE PROCEEDINGS OR FOR RECEIVING OF THE ORDER. NOWHERE IT HAS BEEN SATISFACTORILY EXPLAINED BEFORE US THAT HOW THE SAID AUDITORS WERE RESPONSIB LE FOR NON COMMUNICATION OF THE CIT(A)S ORDER AND THE ENTIRE ALLEGATION IS WITH REGARD TO THE MISMANAGEMENT IN MAINTENANCE OF BOOKS OF ACC OUNT & MISCONDUCT BY THE AUDITORS AND ALSO SOME COMPLAINT HAS BEEN FILED AGAINST THEM. IT HAS NOT BEEN BROUGHT ON RECORD THAT THE ORDER OF THE CIT(A) WAS SERVED UPON THE AUDITORS ONLY AND THEY HAVE NOT COMMUNICATED TO THE ASSESSEE. WE HAVE ALSO GIVEN OPPORTUNITY TO THE LD. COUNSEL TO SHOW B EFORE US TO WHOM THE ORDER OF THE CIT(A) WAS SERVED. THIS HAS NOT BEEN S HOWN. IN SUCH A SITUATION, IT IS A NORMAL PRESUMPTION THAT THE ORDE R MUST HAVE BEEN RECEIVED BY THE A.R., MR. SINGH, ADVOCATE, OR MUST HAVE BEEN SENT THROUGH POST AT THE ADDRESS OF THE ASSESSEE AS MENTIONED IN THE FOR M NO.35, WHICH IN THE PRESENT CASE, GIVES THE ADDRESS OF THE ASSESSEE. IT APPEARS THAT THE ASSESSEE HAS TRIED TO PUT BLAME ON THE PART OF THE AUDITORS ON THE LATCHES WHICH OCCURRED ON BEHALF OF THE ASSESSEE. WE DO NOT F IND ANY BONAFIDE REASON OR MENNEN FINANCIAL SERVICES LTD. 5 REASONABLE CAUSE FOR CONDONING THE DELAY OF MORE TH AN FOUR YEARS. THUS, THE REASONS GIVEN BY THE ASSESSEE FOR CONDONING THE DEL AY IN FILING THE APPEAL ARE HEREBY REJECTED, AS THE SAID APPEAL PREFERRED I S BEYOND THE PERIOD OF LIMITATION AND, THEREFORE, APPEAL IS DISMISSED, BEI NG BARRED BY LIMITATION. 6. 1 #6 &) *1# 2 1 ) # 789 6. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS D ISMISSED. $ 2 + : ;)6 14 TH AUGUST 2013 2 < 9 ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH AUGUST 2013 SD/- SANJAY ARORA ACCOUNTANT MEMBER SD/- '# '# '# '# $% $% $% $% & & & & AMIT SHUKLA JUDICIAL MEMBER MUMBAI, ;) ;) ;) ;) DATED: 14 TH AUGUST 2013 $ 2 .&#'= >=+# / COPY OF THE ORDER FORWARDED TO : (1) &) *1# / THE ASSESSEE; (2) ! / THE REVENUE; (3) ? () / THE CIT(A); (4) ? / THE CIT, MUMBAI CITY CONCERNED; (5) =!B< .&#&) , , / THE DR, ITAT, MUMBAI; (6)