PURVAG COMMODITIES & DERIVATIVES P.LTD, MUMBAI V. ASST CIT CEN CIR-38, MUMBAI

ITA 6387/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8302 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2009-2010
• Appeal Filed On: 28-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHENDR
• Assessee Lawyers: NEELKANTH KHANDELWALAR
• Keywords: Opportunity of being heard; Period of limitation; Reasonable cause; Time period of passing order; Condonation of delay
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL H, BENCH, MUMBA I , , , BEFORE SHRI RAJENDRA, AM AND SHRI RAM LAL NEGI, JM ./ ITA NO.6387/MUM/2016 ( / ASSESSMENT YEAR: 2009-10) M/S. PURVAG COMMODITIES & DERIVATIVES PVT. LTD. 301-308, BHAGWATI HOUSE, PLOT A/19, VEERA DESAI ROAD, ANDHERI (W), MUMBAI 400 058. VS. THE A SSISTANT COMMISSIONER OF INCOME TAX- CENTRAL CIRCLE 38, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI. ./ ./ PAN/GIR NO. : AAACS5626H ( / APPELLANT ) .. ( !' / RESPONDENT ) $%& /ASSESSEE BY : SHRI. NEELKANTH KHANDELWAL(AR) /REVENUE BY : SHRI. M.C. OMI NINGSHEN(DR) ' ( ) &* / DATE OF HEARING : 13/02/2017 +,-. ) &* / DATE OF PRONOUNCEMENT 22/02/2017 !' / O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST ORDER DATED 01/07/2016 PASSED BY THE LD. CIT (A), 54, MUMBAI PE RTAINING TO THE ASSESSMENT YEAR 2009-10, WHEREBY THE LD. CIT (A) DI SMISSED THE APPEAL FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDER PASSED BY ASSESSING OFFICER U/S 143 (3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY FILED ITS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR DECLARING T HE TOTAL INCOME AS RS. NIL. 2 ITA NO. 6387/MUM/2016 ASSESSMENT YEAR: 2009-10 THE RETURN OF INCOME WAS PROCESSED U/S 143 (1) OF T HE ACT. THE CASE WAS IDENTIFIED FOR SCRUTINY AND ACCORDINGLY ASSESSMENT ORDER U/S 143 (3) OF THE ACT WAS PASSED DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. NIL AFTER MAKING ADDITION OF RS. 24,02,674/- I.E. 0.5% OF AVE RAGE VALUE OF INVESTMENTS U/S 14A OF THE ACT, R.W.S. RULE 8D OF THE INCOME TA X RULES. 3. AGGRIEVED, THE ASSESSEE CHALLENGED THE ASSESSMEN T ORDER BEFORE THE CIT (A) RAISING THE FOLLOWING GROUNDS OF APPEAL:- 1. THE COMMISSIONER OF INCOME TAX (APPEALS) 54 ( HEREINAFTER REFERRED TO AS THE CIT (A) ERRED IN NOT CONDONING THE DELAY IN FILING THE APPEAL AGAINST THE ORDER OF THE ASSISTAN T COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 38, MUMBAI (HEREINAF TER REFERRED TO AS THE ASSESSING OFFICER). THE APPELLANTS CONTEND THAT ON THE FACTS AND IN TH E CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) IN THE INTEREST OF JUSTICE, OUGHT TO HAVE CONDONED THE DELAY OF ONLY 37 DAYS IN FILIN G THE APPEAL AGAINST THE ORDER OF THE ASSESSING OFFICER. 2. THE CIT (A) ERRED IN NOT DISPOSING OF THE FOLLO WING GROUNDS OF APPEAL ON MERITS- (A) ASSESSING OFFICER ERRED IN MAKING DISALLOWANCE U/S 14A OF RS. 24,02,674/- WHEREAS THE APPELLANT HAS NOT EARNE D ANY DIVIDEND INCOME OR EXEMPTED INCOME DURING THE YEAR. (B) ASSESSING OFFICER SHOULD NOT HAVE EVOKED PROVI SIONS OF SECTION 14A OF I.T. ACT 1961 R.W. RULE 8D OF I.T. R ULES 1962. THE APPELLANTS CRAVE LEAVE TO ADD, TO, ALTER OR AM END THE ABOVE STATED GROUND OF APPEAL. THE APPELLANTS CRAVE LEAVE TO ADD, TO, ALTER OR AME ND THE ABOVE STATED GROUND OF APPEAL. 4. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE LD. CIT (A) HAS WRONGLY DISMISSED THE APPEAL FILED BY THE ASSES SEE BY REJECTING THE 3 ITA NO. 6387/MUM/2016 ASSESSMENT YEAR: 2009-10 APPLICATION FOR CONDONATION OF DELAY IN FILING THE APPEAL AGAINST THE ASSESSMENT ORDER AND SINCE THE CASE HAS NOT BEEN HEARD ON MERI TS GREAT INJUSTICE HAS BEEN DONE TO THE ASSESSEE. THE LD. COUNSEL FURTHER SUBMI TTED THAT DELAY IN FILING OF APPEAL WAS NOT INTENTIONAL BUT IT HAD HAPPENED DUE TO THE REASONS MENTIONED IN THE APPLICATION DULY SUPPORTED BY THE AFFIDAVITS SWORN BY THE CONCERNED PERSONS. THE LD. COUNSEL FURTHER SUBMITTED THAT THE IMPUGNED ORDER MAY BE SET ASIDE AND THE APPEAL OF THE ASSESSEE MAY BE ALL OWED. 5. ON THE OTHER HAND THE LD. DEPARTMENTAL REPRESENT ATIVE (DR) SUBMITTED THAT THE LD. CIT (A) HAS RIGHTLY REJECTED THE APPLI CATION FOR CONDONATION OF DELAY AND DISMISSED THE APPEAL OF THE ASSESSEE, AS THE ASSESSEE HAS FILED TO FURNISH THE SUFFICIENT CAUSE OF DELAY IN FILING APP EAL AGAINST THE ASSESSMENT ORDER. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED ON RECORD. WE NOTICE THAT THE ASSESSEE APPELLANT HA D FILED AN APPLICATION FOR CONDONATION OF DELAY ALONG WITH THE APPEAL. THE CON TENTS OF WHICH READ AS UNDER:- THE APPELLANT IS A PRIVATE LIMITED COMPANY ENGAGED IN BUSINESS AS SHARE BROKER AND IS TRADING MEMBER OF VARIOUS ST OCK EXCHANGES VIZ. NCDEX, MCX, NMCE, NSEL, ACE & ICEX. THE RELEVANT ASSESSMENT YEAR FOR APPLICATION OF CONDONA TION IS A.Y. 2009-10. THE RETURN OF INCOME WAS PROCESSED U/S 143 (1). THEN CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSING OF FICER HAS COMPLETED THE ASSESSMENT U/S 143 (3) WITH DISALLOWA NCE U/S 14A OF RS. 24,02,674/- VIDE HIS ORDER DTD. 16.12.20 11. THE ASSESSMENT ORDERS WERE RECEIVED BY THE ACCOUNT ANT MR. NARENDRA KOTHARI WHO IS IN EMPLOYMENT OF APPELLANT AS AN ACCOUNTANT SINCE MANY YEARS. HE WAS HANDLING ALL TH E WORK IN RESPECT OF ACCOUNTING AND INCOME TAX INCLUDING CO-O RDINATION WITH CHARTERED ACCOUNTANT FOR FILING RETURN OF INCOME AS WELL AS A REPLY TO NOTICES AND PREPARATION OF DETAILS OF ASSESSMENT S ETC. ON 4 ITA NO. 6387/MUM/2016 ASSESSMENT YEAR: 2009-10 RECEIPT OF ASSESSMENT ORDER SAME WERE SENT TO OUR C HARTERED ACCOUNTANTS, M/S SUNDARLAL, DESAI & KANODIA. THE FI RM OF CHARTERED ACCOUNTANTS VERIFIED THE ORDER AND ASKED MR. NARENDRA KOTHARI FOR VERIFICATION OF TAX CALCULATION, CREDIT S OF TAXES PAID. HE WAS ASKED TO REVERT BACK WITH THE DETAILS OF VARIAN CE IN INCOME, DISALLOWANCE TO BE DISPUTED ETC. IN CONSULTATION WI TH DIRECTOR FOR PREPARATION OF THE APPEAL. THESE PAPERS WERE NOT PU T UP BEFORE DIRECTOR DISCUSSED ANY TIME BY SAID EMPLOYEE MR. NA RENDRA KOTHARI. RECENTLY, MR. MUKUL DESAI PARTNER OF OUR CHARTERED ACCOUNTANTS M/S SUNDARLAL, DESAI & KANODIA WAS CALLED UPON BY T HE ASSESSING OFFICER TO INQUIRE ABOUT THE DETAILS OF P AYMENT OF THE DEMAND CREATED ON COMPLETION OF ASSESSMENT AND THEN THESE ORDERS CAME TO KNOWLEDGE OF DIRECTOR WHO IMMEDIATEL Y FOLLOWED UP WITH OUR CHARTERED ACCOUNTANTS M/S SUNDARLAL, DE SAI & KANODIA. WE WERE ADVISED THAT APPEAL NEEDS TO BE FI LED AGAINST THE ASSESSMENT ORDER PASSED BY ASSESSING OFFICER. T HUS IT WAS AT THIS TIME ON INQUIRY FOR OUTSTANDING ARREAR THE APP ELLANT CAME TO KNOW ABOUT THE ORDERS WHICH APPEAL WAS REQUIRED TO BE PREPARED AND FILED. THUS COMPANY WAS NOT AWARE OF THE FACT T HAT APPEAL WAS NOT PREPARED AND FILED ON DUE DATE. IN VIEW OF ABOVE FACT THE APPELLANT PLEAD BEFORE YO UR HONOUR TO KINDLY CONDONE THE DELAY IN FILING APPEAL BEFORE YO UR HONOUR AND MAY ACCEPT THE APPEAL WHICH INVOLVES POINTS OF LAW. THE ORDER APPEALED AGAINST ALSO INVOLVES THE DEMAND NEEDS TO BE REPLIED FOR. CONSIDERING ALL THIS CIRCUMSTANCES WE REQUEST ONCE AGAIN TO YOUR HONOUR TO CONDONE THE DELAY IN FILING THE APPE AL. 7. THE LD. CIT (A) REJECTED THE REQUEST FOR CONDONATIO N OF DELAY IN FILING THE APPEAL AND DISMISSED THE APPEAL HOLDING THAT APPELL ANT HAS NOT MADE OUT ANY CASE THAT IT WAS PREVENTED BY REASONABLE CAUSE FOR NOT FILING APPEAL WITHIN THE STATUTORY TIME LIMIT. WE FURTHER NOTICE THAT THE AS SESSEE ALSO SUBMITTED AFFIDAVITS SWORN BY SH. HARENDRA D. SHAH, DIRECTOR OF THE ASSESSEE COMPANY, SHRI NARENDER KOTHARI, GROUP ACCOUNTANT AND SH. MUK UL DESAI, PARTNER M/S. SUNDERLAL DESAI & KANODIA CHARTERED ACCOUNTANTS IN SUPPORT OF THE APPLICATION FOR CONDONATION FOR DELAY. 5 ITA NO. 6387/MUM/2016 ASSESSMENT YEAR: 2009-10 8. THE LAW OF LIMITATION IS PRESCRIBED BY THE ACT, UNDER SECTION 249(3) WHICH ENVISAGES THAT THERE SHOULD HAVE BEEN A SUFFICIENT CAUSE FOR NOT PRESENTING THE APPEAL WITHIN THE PRESCRIBED PERIOD AND WHERE THE A PPELLANT FAILS TO SHOW SUFFICIENT CAUSE FOR CONDONATION OF DELAY THE APPLI CATION FOR CONDONATION OF DELAY IS LIABLE TO BE REJECTED. FROM THE CONTENTS O F THE APPLICATION IT DOES NOT APPEAR THAT THE DELAY IS PROLONGED AND THE ASSESSEE HAS FAILED TO SHOW THAT THE DELAY HAD OCCURRED IN SPITE OF EXERCISE OF DUE ATTE NTION AND DILIGENCE. HONBLE SUPREME COURT IN THE CASE OF COLLECTOR LAND ACQUISI TION VS. MST. KATIJI & OTHERS, 1987 AIR 1353 HAS LAID DOWN THE PARAMETERS TO BE FOLLOWED WHILE DECIDING THE APPLICATION FOR CONDONATION OF DELAY I N FILING AN APPEAL. THE RELEVANT PART OF THE JUDGMENT READS AS UNDER: 1. ORDINARILY A LITIGANT DOES NOT STAND TO BENEFIT BY LODGING AN APPEAL LATE. 2. REFUSING TO CONDONE DELAY CAN RESULT IN A MERITO RIOUS MATTER BEING THROWN OUT AT THE VERY THRESHOLD AND CAUSE OF JUSTICE BEING DEFEATED. AS AGAINST THIS WHEN DELAY IS CONDONED TH E HIGHEST THAT CAN HAPPEN IS THAT A CAUSE WOULD BE DECIDED ON MERI TS AFTER HEARING THE PARTIES. 3. 'EVERY DAY'S DELAY MUST BE EXPLAINED' DOES NOT M EAN THAT A PEDANTIC APPROACH SHOULD BE MADE. WHY NOT EVERY HOU R'S DELAY, EVERY SECOND'S DELAY? THE DOCTRINE MUST BE APPLIED IN A RATIONAL COMMON SENSE PRAGMATIC MANNER. 4. WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERA TIONS ARE PITTED AGAINST EACH OTHER, CAUSE OF SUBSTANTIAL JUS TICE DESERVES TO BE PREFERRED FOR THE OTHER SIDE CANNOT CLAIM TO HAV E VESTED RIGHT IN INJUSTICE BEING DONE BECAUSE OF A NON-DELIBERATE DE LAY. 5. THERE IS NO PRESUMPTION THAT DELAY IS OCCASIONED DELIBERATELY, OR ON ACCOUNT OF CULPABLE NEGLIGENCE, OR ON ACCOUNT OF MALA FIDES. 6 ITA NO. 6387/MUM/2016 ASSESSMENT YEAR: 2009-10 A LITIGANT DOES NOT STAND TO BENEFIT BY RESORTING T O DELAY. IN FACT HE RUNS A SERIOUS RISK. 6. IT MUST BE GRASPED THAT JUDICIARY IS RESPECTED N OT ON ACCOUNT OF ITS POWER TO LEGALIZE INJUSTICE ON TECHNICAL GROUND S BUT BECAUSE IT IS CAPABLE OF REMOVING INJUSTICE AND IS EXPECTED TO DO SO. 9. IN VIEW OF THE PRINCIPLES OF LAW LAID DOWN BY TH E HONBLE SUPREME COURT, WE ARE OF THE CONSIDERED OPINION THAT THE DELAY IN FILING THE APPEAL WAS NEITHER INTENTIONAL NOR DUE TO NEGLIGENCE ON HIS PART AND T HE ASSESSEE WAS PREVENT FROM FILING THE APPEAL WITHIN LIMITATION PERIOD DUE TO THE CIRCUMSTANCES BEYOND HIS CONTROL. THEREFORE, IN THE INTEREST OF JUSTICE THE ASSESSEE SHOULD GET AN OPPORTUNITY TO PRESENT HIS CASE ON MERITS. WE THERE FORE, SET-ASIDE THE IMPUGNED ORDER PASSED VIDE WHICH THE LD. CIT(A) REJ ECTED THE APPLICATION OF THE ASSESSEE FOR CONDONATION OF DELAY AND DISMISSED THE APPEAL, AND SEND THE APPEAL BACK THE LD. CIT(A), TO DECIDE THE SAME ON M ERITS AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2009-10 IS ALLOWED FOR THE STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND FEBRUARY, 2017. SD/- SD/- (RAJENDRA) (RAM LAL NEGI) ACCOUNTANT MEMBER JUDICIAL MEMBER ' /( MUMBAI; 0 DATED: 22/02/2017 ALINDRA, PS 7 ITA NO. 6387/MUM/2016 ASSESSMENT YEAR: 2009-10 !'#$%&'&$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. ' 2& ( ) / THE CIT(A)- 4. ' 2& / CIT 5. 56 !&7$ , * 7$. , ' /( / DR, ITAT, MUMBAI 6. 9 :( / GUARD FILE. !' / BY ORDER, '5& !& //TRUE COPY// ()*+ (DY./ASSTT. REGISTRAR) , ' /( / ITAT, MUMBAI