Imperial Cables Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 5898/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4129 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 23-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY
• Assessee Lawyers: P N CHAWLA
• Keywords: Capital asset converted into stock in trade
• Section: 45(2)

Judgement Text

ITA NO.5896/DEL/2010 & OTHERS IN THE INCOME TAX APPELLAT E TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA, VICE PRESIDENT AND SHRI I.P. BANSAL, JUDICIAL MEMBER ITA NO.5896/DEL/2010 ASSTT. YEAR: 1998-99 ITA NO.5897/DEL/2010 ASSTT. YEAR: 2005-06 ITA NO.5898/DEL/2010 ASSTT. YEAR: 2006-07 IMPERIAL CABLES PVT. LTD., VS INCOME TA X OFFICER, D-12/1, WARD 11(3), OKHLA INDUSTRIAL AREA-II, NEW D ELHI. NEW DELHI. (PAN NO. AAAC12428M) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI P.N. CHAWLA RESPONDENT BY: SMT. MONA MOH ANTY O R D E R PER G.E. VEERABHADRAPPA, V.P. ALL THESE APPEALS FILED BY THE ASSESSEE ARISE OUT OF THE ORDER OF CIT(A)-XI, NEW DELHI DATED 11.10.2010 FOR ASSTT. YEARS 1998-99, 2005- 06 AND 2006-07. 2. THE ASSESSEE IS A RESIDENT COMPANY. AGGRIEVED B Y THE ORDERS OF THE ASSESSING OFFICER, THE APPEALS WERE FILED BUT IT WA S NOTICED BY THE CIT(A) THAT THE MEMO OF APPEALS WAS SIGNED BY ONE SHRI NAR ESH AGGARWAL, ITA NO.5896/DEL/2010 & OTHERS 2 ACCOUNTS MANAGER OF THE ASSESSEE COMPANY. THE SAID ACCOUNTS MANGER HAS ALSO SIGNED THE VERIFICATION. AN OPPORTUNITY WAS G IVEN TO THE ASSESSEE TO EXPLAIN. IT WAS EXPLAINED THAT MEMO OF APPEAL WAS SIGNED BY SHRI NARESH AGGARWAL WHO WAS DULY AUTHORIZED BY A BOARD RESOLUT ION DATED 12.1.2008 WHICH WAS SIGNED BY BOTH THE DIRECTORS AND THE DIRE CTORS WERE NOT AWARE OF THE LEGAL PROVISIONS AND HENCE THE APPEALS WERE FIL ED BY THE ACCOUNTS MANAGER. THE ASSESSEE REQUESTED THE CIT(A) TO ALLO W AN OPPORTUNITY TO RECTIFY THE MISTAKE. APART FROM THAT, THE ASSESSEE APOLOGIZED FOR THE MISTAKE AND FILED ALL THE DOCUMENTS ALONG WITH THE GROUNDS OF APPEAL AND THE STATEMENT OF FACTS DULY SIGNED BY THE DIRECTOR ON T HE DATE OF HEARING AND REQUESTED THAT APPEALS BE DISPOSED OF ON MERITS. H OWEVER, THE CIT(A) WAS NOT IMPRESSED. HE QUOTED THE PROVISIONS OF SECTION 140 OF THE INCOME TAX ACT AND PROVISIONS OF RULE 45(2) OF INCOME TAX RULE S 1962 AND WAS OF THE VIEW THAT THE STATUTE HAS VESTED THE POWER OF FILIN G APPEAL WITH THE DIRECTOR OF THE ASSESSEE COMPANY AND UNDER NO STRETCH OF IMA GINATION, SUCH POWER CAN BE DELEGATED TO ANY EMPLOYEE OF THE COMPANY OF THE RANK OF MANAGER ACCOUNTS. THE ASSESSEE COMPANY WAS A RESIDENT COMP ANY AND BOTH THE DIRECTORS WERE HUSBAND AND WIFE, WHO WERE ALSO RESI DENTS IN INDIA. DELEGATION OF SUCH POWER ACCORDING TO HIM WAS BEYON D THE PROVISIONS OF THE ITA NO.5896/DEL/2010 & OTHERS 3 STATUTE. HE TOOK NO COGNIZANCE OF THE CORRECTED AP PEAL MEMO. ALL THE APPEALS WERE REJECTED. 3. BEFORE US, LD. COUNSEL FOR THE ASSESSEE HEAVILY RELIED UPON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CA SE OF REMFRY AND SONS VS CIT 276 ITR 1. IN THIS CASE, ACCORDING TO HIM, MEM O OF APPEAL WAS FILED BY THE FIRM NOT THROUGH ITS PARTNERS BUT THE SAME WAS SIGNED BY A PARTNER OF A CHARTERED ACCOUNTANT FIRM WHO IS STATED TO BE THE A UTHORIZED REPRESENTATIVE OF THE FIRM. THE DELHI HIGH COURT OPINED THAT THE LAW RELATING TO PROCEDURES IS TO BE CONSTRUED SOMEWHAT LIBERALLY SO AS TO MAKE IT MORE EFFECTIVE RETROSPECTIVELY OR RETROACTIVELY. IT WAS EXPLAINED THAT IT IS A SETTLED PRINCIPLE OF LAW THAT THE PROCEDURES ARE PRESUMED TO BE RETRO SPECTIVE, UNLESS A CONSTRUCTION IS TEXTUALLY INADMISSIBLE. IT FURTHER OPINED THAT IT IS A SETTLED CANON OF INTERPRETATION OF PROCEDURAL LAW THAT NORM ALLY ITS NON-ADHERENCE DOES NOT RESULT IN ILLEGALITY WHICH WOULD RENDER TH E APPEAL INCOMPETENT, UNLESS SUCH NON-COMPLIANCE RELATED TO A SUBSTANTIVE PROVISION AND HAD CAUSED PREJUDICE TO THE OTHER PARTY AND MAY HAVE TH E EFFECT OF TAKING AWAY A SETTLED RIGHT. THEREFORE, IN THE LIGHT OF THIS BIND ING DECISION, THE CIT(A) SHOULD BE DIRECTED TO ACCEPT THE APPEAL MEMO DULY F URNISHED TO HIM BY THE DIRECTOR AND HE BE DIRECTED TO DECIDE THE ISSUE ON MERIT. ITA NO.5896/DEL/2010 & OTHERS 4 4. LD. DR, ON THE OTHER HAND, DREW OUR ATTENTION TO THE PLAIN PROVISIONS OF SECTION 140 OF THE I. T. ACT 1961 R/W RULE 45(2) OF THE I.T.ACT 1961. HE STRONGLY JUSTIFIED THE VIEW OF THE CIT(A) IN THE LI GHT OF THE CLEAR PROVISIONS OF LAW IN THIS REGARD. 5. WE HAVE CAREFULLY GONE THROUGH THE RECORD AND TH E DECISION OF DELHI HIGH COURT IN THE CASE OF REMFRY AND SONS VS CIT CI TED SUPRA. THEIR LORDSHIPS OF DELHI HIGH COURT HAVE CLEARLY EXPLAINE D THE PROVISIONS AND HELD THAT THE PROCEDURAL DEFECTS WHICH DO NOT GO TO THE ROOT OF THE MATTER SHOULD NOT BE PERMITTED TO DEFEAT A JUST CAUSE. THEY HAVE RELIED UPON THE DECISION IN THE CASE OF UNITED BANK OF INDIA VS NARESH KUMAR (1997) 90 COMP CASES 329 (1996) 6SCC 660. THE FACTS OF THIS CASE ARE ALMOST IDENTICAL WITH THOSE IN THE CASE OF DELHI HIGH COURT DECISION CITE D SUPRA. IN THE LIGHT OF THE BINDING PRECEDENT, WE DIRECT THE CIT(A) TO TAKE THE MEMO OF APPEAL AS DULY SIGNED BY THE DIRECTOR, FILED BY THE ASSESSEE DURIN G THE COURSE OF HEARING ON RECORD AND PROCEED TO DISPOSE OF THE APPEAL ON MERI TS. 6. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 29.04.2011 SD/- SD/- (I.P. BANSAL ) (G.E. VEERABHADRAPPA) JUDICIAL MEMBER VICE PRESIDENT DT. 29TH APRIL 2011 GS ITA NO.5896/DEL/2010 & OTHERS 5 COPY FORWARDED TO: 1. IMPERIAL CABLES PVT. LTD., NEW DELHI. 2. ITO, WARD 11(3), NEW DELHI. 3. CIT(A) 4. CIT 4. DR BY ORDER DY. REGISTRAR