SAMARPAN FABRICATORS P. LTD, MUMBAI V. ACIT (OSD) 2(3), MUMBAI

ITA 6106/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8770 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 18-09-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 09-08-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K K MAHAJAN
• Assessee Lawyers: HARSHAVARDHANA DATAR
• Keywords: Ignorance of law
• Section: 143(3); 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI DINESH KUMAR AGARWAL (J.M.) AND SHRI P.M. JAGTAP (A.M.) ITA NO. 6106/MUM/2010 ASSESSMENT YEAR : 2007-08 M/S. SAMARPAN FABRICATORS PVT. LTD., C/O JAYESH SANGHRAJKA & CO., 405-408, HIND RAJASTHAN CENTER, D.S. PHALKE ROAD, DADAR (E), MUMBAI-400 014 PAN AABCS9672C ACIT (OSD) 2(3), MUMBAI. (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI HARSHAVARDHANA DATAR RESPONDENT BY : SHRI K.K. MAHAJAN DATE OF HEARING 18-9-2012 DATE OF PRONOUNCEMENT 26-9-2012 ORDER PER DINESH KUMAR AGARWAL, J.M. THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER DTD. 17-05-2010 PASSED BY THE LD. CIT(A) 6, MUMBA I FOR THE A.Y. 2007- 08. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF PACKAGI NG MACHINES AND SALE OF SPARES FOR PACKAGING MACHINES. THE RETURN OF INCOME WAS FILED DECLARING TOTAL INCOME OF RS. NIL AFTER SET OFF OF BROUGHT FORWARD LOSSES OF RS. 23,16,414/-. HOWEVER, THE ASSESSMENT WAS CO MPLETED UNDER THE ITA NO. 6106/MUM/2012 2 NORMAL PROVISIONS OF THE ACT AT RS. NIL AND U/S 1 15JB OF THE INCOME TAX ACT, 1961 (THE ACT) AT RS. 15,77,458/- VIDE ORDER D TD. 7-12-2009 PASSED U/S 143(3) OF THE ACT. ON APPEAL, THE LD. CIT(A) OB SERVED THAT THE APPEAL FILED BY THE ASSESSEE IS TIME BARRED BY 27 DAYS F OR WHICH THE ASSESSEE HAS MOVED AN APPLICATION FOR CONDONATION OF DELAY. HE FURTHER OBSERVED THAT THE REASON GIVEN FOR THE DELAY IS THAT THE APP ELLANT WAS WRONGLY ADVISED THAT THE BOOK PROFIT U/S 115JB OF THE ACT H AD BEEN CORRECTLY WORKED OUT BY THE A.O., THUS, THE APPELLANT HAVING BEEN ILL-ADVISED AND IGNORANT OF LAW WAS UNDER THE IMPRESSION THAT NO RE MEDY WAS AVAILABLE. HOWEVER, THE LD. CIT(A) AFTER CONSIDERING THE ASSES SEES SUBMISSION HELD THAT THERE IS NO MERIT IN THE REASONS GIVEN BY THE LD. A.R. THAT THEY WERE ILL-ADVISED TO ACCEPT THE ORDER OF THE A.O. AND ACC ORDINGLY THE LD. CIT(A) WHILE DECLINING TO CONDONE THE DELAY, DISMISSED THE APPEAL ON MERIT ALSO. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE ASSESSEE IS IN APPEAL BEFORE US TAKING THE FOLLOWING GROUNDS OF AP PEAL:- 1. ON FACTS, LAW, CIRCUMSTANCES AND JUDICIAL PRONO UNCEMENTS, THE HON. CIT A ERRED IN CONFIRMING THE ACTION OF HON. A SSESSING OFFICER TO MAKE THE ADDITION ON ACCOUNT OF DISALLOWANCE OF EXP ENSES BY INVOKING THE RULE 8D R.W.S. 14A, WHILE COMPUTING THE BOOK PR OFITS FOR THE PURPOSES OF THE MAT U/S 115JB, WHEREAS, THE SAME ADDITION WA S ALREADY DOWN IN COMPUTING THE TOTAL INCOME. SUCH ADDITION OF HON. ASSESSING OFFICER AND ITS CONFIRMATION BY HON. CIT (A) IS BAD IN LAW AND ERRONEOUS IN FACTS AND LIABLE TO BE QUASHED. 2. ON FACTS, LAW, CIRCUMSTANCES AND JUDICIAL PRONOU NCEMENTS, PROVISIONS OF RULE 8D R.W.S. 14A ARE NOT APPLICABLE WHILE COMPUTING THE BOOK PROFITS U/S 115JB, INVOKING SUCH RULE TO EFFEC T THE ADDITION BY HON. ASSESSING OFFICER AND ITS CONFIRMATION BY HON. CIT A IS BAD IN LAW AND ERRONEOUS IN FACTS AND LIABLE TO BE QUASHED. ITA NO. 6106/MUM/2012 3 3. WITHOUT PREJUDICE TO ABOVE, ON FACTS, LAW, CIRCU MSTANCES AND JUDICIAL PRONOUNCEMENTS, HON. CIT A ERRED IN DISMIS SING THE APPEAL BY REFUSING TO CONDONE THE DELAY IN FILING THE APPEAL IN LIMINE, SUCH DISMISSAL IS AGAINST THE PRINCIPLES OF NATURAL JUST ICE AND BAD IN LAW AND ERREONEOUS IN FACTS AND LIABLE TO BE SET ASIDE. 4. AT THE TIME OF HEARING IT HAS BEEN AGREED BY BOT H THE PARTIES THAT SINCE THE LD. CIT(A) DID NOT CONDONE THE DELAY IN F ILING THE APPEAL AND HAS ALSO DECIDED THE APPEAL ON MERITS WHICH IS NO T PERMISSIBLE, THEREFORE, IN THE INTEREST OF JUSTICE THE APPEAL MA Y BE SET ASIDE TO THE FILE OF THE LD. CIT(A) TO DECIDE THE APPEAL ACCORDING TO LAW. 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FI ND MERIT IN THE PLEA OF THE PARTIES. SINCE, THE LD. CIT(A) DID NOT CONDONE THE DELAY, THEREFORE, HE HAS ERRED IN DECIDING THE APPEAL ON MERITS. THE APP EAL ON MERITS CAN BE ADJUDICATED AND DECIDED IF THE DELAY IS CONDONED. 6. THE REASONS FOR DELAY IN FILING THE APPEAL HAS B EEN STATED BY THE ASSESSEE VIDE AFFIDAVIT DTD. 29-1-2010 WHICH READS AS UNDER:- AFFIDAVIT WE M/S SAMARPAN FABRICATORS PRIVATE LIMITED , A COM PANY REGISTERED 51/52 AJAY APARTMENT, S.V. ROAD, SANTACR UZ WEST, MUMBAI 400054 UNDER THE COMPANIES ACT, 1956, HAVING ITS RE GISTERED OFFICE AT THROUGH THE DIRECTOR MR. HARIN PATEL, DO HEREBY SOL EMNLY AFFIRM AND STATE AS UNDER: 1. WE RECEIVED THE ASSESSMENT ORDER ON 7 TH DECEMBER 2009 FOR THE ASSESSMENT YEAR 2007-08 THAT HAS BEEN PASSED BY HON. ASSISTANT COMMISSIONER OF INCOME TAX RANGE 2(3) (OS D) MUMBAI. 2. REGARDING THE ADDITION IN COMPUTING THE BOOK PRO FITS UNDER SECTION 115JB OF INCOME TAX ACT, 1961, WE HAD BEEN ADVISED BY OUR LEGAL CONSULTANTS THAT THE ACTION OF HON. ASSES SING OFFICER IS ITA NO. 6106/MUM/2012 4 GOOD IN LAW. THIS HAPPENED TO BE WRONG ADVICE BY L EGAL CONSULTANTS. 3. IN ADDITION TO ABOVE, IT IS HEREBY SUBMITTED THA T WE WERE NOT FULLY CONVERSANT WITH THE PROVISIONS OF INCOME TAX ACT 1961 DUE TO SUCH IGNORANCE OF LAW; WE ACCEPTED TO THE WR ONG LEGAL OPINION AND COULD NOT SUBMIT THE APPEAL WITHIN THE STIPULATED TIME. 4. WE ARE MAKING THIS AFFIDAVIT TO PRODUCE BEFORE T HE COMMISSIONER OF INCOME TAX (APPEALS) FOR THE CONDON ATION OF DELAY IN FILING THE APPEAL AGAINST THE ASSESSMENT O RDER. WHATEVER STATED HEREINABOVE IS TRUE AND CORRECT TO THE BEST OF OUR KNOWLEDGE, BELIEF AND INFORMATION. SOLEMNLY AFFIRMED AT THANE, ON THIS 29 TH DAY OF JANUARY, 2010. FOR M/S SAMARPAN FABRICATORS PRIVATE LTD. MR. HARIN PATEL SD/- DIRECTOR (DEPONENT) 7. FROM THE READING OF THE ABOVE, WE FIND THAT IT W AS STATED BY THE ASSESSEE THAT HE WAS GIVEN WRONG ADVISE BY THE LEGA L CONSULTANTS THAT THE ACTION OF THE A.O. IS GOOD IN LAW AND, HENCE, COULD NOT FILE APPEAL BEFORE THE LD. CIT(A). 8. IN MAHAVEERPRASAD JAIN V. CIT (1988) 172 ITR 331 (M.P) IT HAS BEEN HELD (HEADNOTE): WHERE AN APPLICANT ENGAGES A COUNSEL, HE WOULD BE JUSTIFIED IN PRESUMING THAT THE COUNSEL WOULD ATTEND TO THE CASE . THE APPLICANT CANNOT BE MADE TO SUFFER FOR THE NEGLIGENCE OF THE COUNSEL. AN APPEAL CANNOT BE DISMISSED BECAUSE THE COUNSEL FAILED TO A PPEAR WHEN THE CASE WAS POSTED FOR HEARING. 9. IN CIT VS. KHEMRAJ LAXMICHAND (1978) 114 ITR 75 (M.P) IT HAS BEEN HELD THAT (HEADNOTES): ITA NO. 6106/MUM/2012 5 HELD, THAT THE QUESTION WHETHER THE MISTAKE OF TH E COUNSEL WAS BONA FIDE BEING ONE OF FACT AND THE TRIBUNAL HAVING COME TO THE CONCLUSION THAT THE LAPSE ON THE PART OF THE COUNSEL WAS BONA FIDE, THE TRIBUNAL WAS JUSTIFIED IN CONDONING THE DELAY AND UPHOLDING THE REGISTRATION OF THE FIRM. 10. RESPECTFULLY FOLLOWING THE RATIO OF THE ABOVE D ECISIONS AND KEEPING IN VIEW THAT THE REASONS GIVEN BY THE ASSESSEE IN H IS AFFIDAVIT WAS NOT CONTROVERTED BY THE REVENUE EVEN AT THIS STAGE, WE ARE OF THE VIEW THAT THERE WAS SUFFICIENT CAUSE AND, HENCE, THE DELAY IN FILING OF THE APPEAL BY 27 DAYS BEFORE THE LD. CIT(A) IS CONDONED. SINCE, W E HAVE CONDONED THE DELAY, THEREFORE, WE ARE OF THE VIEW THAT IN THE IN TEREST OF JUSTICE THE MATTER SHOULD GO BACK TO THE FILE OF THE LD. CIT(A) TO DECIDE THE APPEAL ON MERITS AND ACCORDINGLY, WE SET ASIDE THE ORDER PASS ED BY THE LD. CIT(A) AND RESTORE THE MATTER TO HIS FILE TO DECIDE THE SA ME AFRESH ON MERITS AND ACCORDING TO LAW AFTER PROVIDING REASONABLE OPPORTU NITY OF BEING HEARD TO THE ASSESSEE. THE GROUNDS TAKEN BY THE ASSESSEE ARE , THEREFORE, PARTLY ALLOWED FOR STATISTICAL PURPOSES. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 26.09.2012 SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER SD/- (DINESH KUMAR AGARWAL) JUDICIAL MEMBER MUMBAI, DATED : 26.09.2012 RK ITA NO. 6106/MUM/2012 6 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- 6, MUMBAI 4. COMMISSIONER OF INCOME TAX -2, MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH E, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI