PUSHPA M KHONA, MUMBAI V. ITO 20(2)(3), MUMBAI

ITA 6391/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8297 (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: 2006-2007
• Appeal Filed On: 28-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Search and seizure; Opportunity of being heard; Principle of natural justice; Period of limitation; Time period of passing order; Condonation of delay
• Section: 143(3); 148; 6

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL H, BENCH MUM BAI , , , BEFORE SHRI RAJENDRA, AM AND SHRI RAM LAL NEGI, JM ./ ITA NO.6390/MUM/2016 ( / ASSESSMENT YEAR: 2009-10) MR. DUSHYANT M. KHONA. M/S. VSS & ASSOCIATES, CHARTERED ACCOUNTANTS, 306, DALAMAL CHAMBERS, NEW MARINE LINES, MUMBAI- 400 020. VS. THE ITO, 20(2)(1), MUMBAI. ! ./ ' ./ PAN/GIR NO. : AACPK4146M ( !# / APPELLANT ) .. ( $%!# / RESPONDENT ) & ./ ITA NO.6391/MUM/2016 ( / ASSESSMENT YEAR: 2006-07) MRS. PUSHPA M. KHONA. M/S. VSS & ASSOCIATES, CHARTERED ACCOUNTANTS, 306, DALAMAL CHAMBERS, NEW MARINE LINES, MUMBAI- 400 020. VS. THE ITO, 20(2)(3), MUMBAI. ! ./ ' ./ PAN/GIR NO. : AARPK6482H ( !# / APPELLANT ) .. ( $%!# / RESPONDENT ) & '( /ASSESSEE BY : SHRI. PRAKASH JHUNJHUNWALA & SANJA Y JAIN /REVENUE BY : SHRI. M.C. OMI NINGSHEN ) * + ( , / DATE OF HEARING : 13/02/2017 -./0 + ( , / DATE OF PRONOUNCEMENT 22/02/2017 2 ITA NO 6390-91/MUM/2016 ASSESSMENT YEAR: 2006-07 & 2009-10 !' / O R D E R PER BENCH:- THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE MR. DUSHYANT M. KHONA & HIS WIFE MRS. PUSHPA M. KHONA AGAINST TWO SEPARAT E ORDERS DATED 05/08/2016 PASSED BY THE LD. CIT(APPEALS)-36, MUMBA I PERTAINING TO THE ASSESSMENT YEAR 2006-07, 2009-10 RESPECTIVELY, WHER EBY THE LD. CIT DISMISSED BOTH THE APPEALS FILED BY THE ASSESSEE AGAINST ASSE SSMENT ORDER DATED 22/03/2014 & 25/03/2014 PASSED U/S 143(3) R.W.S. 14 7 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT), BY REJECTING THE A PPLICATION FOR CONDONATION OF DELAY IN FILING THE SAIS APPEALS. SINCE THE ISSUES INVOLVED IN BOTH THE APPEALS ARE COMMON, BOTH THE APPEALS WERE CLUBBED, HEARD TO GETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CO NVENIENCE. ITA NO. 6390/MUM/2016 ASST. YEAR 2009-10 BRIEF FACTS OF THIS CASE ARE THAT THE ASSESSEE FIL ED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 DECLARING THE TOTAL INC OME OF RS. 6,99,740/- THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT WAS CO MPLETED, DETERMINING THE TOTAL INCOME OF RS. 8,33,380/-. THE CASE WAS LATER ON REOPENED AS DURING THE SEARCH AND SEIZURE OPERATION CARRIED OUT IN THE CAS E OF M/S MAHASAGAR SECURITIES PVT. LTD. AND ITS RELATED GROUP COMPANIE S AND SHRI MUKESH CHOKSI STATED THAT HE AND HIS GROUP THROUGH THE MAHANAGAR SECURITIES PRIVATE LTD AND ITS RELATED GROUP OF 34 COMPANIES USED TO GIVE ACCO MMODATION ENTRIES IN ORDER TO ENABLE THE CLIENTS TO DECLARE SPECULATION PROFIT /LOSS, SHORT TERM CAPITAL GAIN/LOSS, LONG TERM CAPITAL GAIN/LOSS PROFIT ON AC COUNT OF COMMODITY TRADING, INTRODUCE SHARE APPLICATION MONEY OR INTRODUCE MONE Y IN THE FORM OF GIFTS. SHRI MUKESH CHOKSI IDENTIFIED THE NAMES OF THE BENEFICIA RIES INCLUDING THE ASSESSEE IN THE PRESENT CASE WHO AVAILED FINANCIAL ACCOMMODA TION ENTRIES FOR BOGUS 3 ITA NO 6390-91/MUM/2016 ASSESSMENT YEAR: 2006-07 & 2009-10 CAPITAL GAIN/LOSS FOR SHARES OF MAHA POLYBUTE AND I TS DEPOSITORY WAS DURING THE FINANCIAL YEAR 2008-09 RELEVANT TO THE ASSESSMENT Y EAR 2009-10. ACCORDINGLY, THE ASSESSEE WAS ASKED TO FURNISH DETAILS OF ALL TR ANSACTIONS CARRIED OUT WITH M/S ALLIANCE INTERMEDIARIES & NETWORK PRIVATE LTD. THE EXPLANATION FILED BY THE ASSESSEE WAS NOT ACCEPTED BY THE AO AND HOLDING THA T THE SALE OF SHARES: PROFIT AMOUNTING TO RS.8,93,724/-WAS OUT OF UNDISCLOSED SO URCES OF INCOME, MADE ADDITION OF RS. 8,93,724/-TO THE INCOME OF THE ASSE SSEE AND ASSESSED THE TOTAL INCOME AT RS. 17,27,110/-(ROUNDED OFF). 2. FELLING AGGRIEVED, BY THE ASSESSMENT ORDER THE ASSESSEE FILED THE APPEAL AGAINST THE SAID ORDER. HOWEVER, THE APPEAL WAS FIL ED AFTER THE EXPIRY OF LIMITATION PERIOD. THE LD. CIT(A) RELYING ON THE DE CISION OF HONBLE DELHI HIGH COURT PASSED IN THE CASE OF SURINDER KUMAR BOVEJA VS. CWT 287 ITR 52 AND DECISION OF HONBLE SUPREME COURT IN THE CASE OF RA NKAK AND OTHERS VS. REWA COALFIELDS LTD. REPORTED AT AIR 1962 SC 361 , DISMISSED THE APPLICATION FOR CONDONATION OF DELAY SUBMITTED BY THE ASSESSEE AND DISMISSED THE APPEAL IN LIMINE . THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGA INST IMPUGNED ORDER PASSED BY THE LD. CIT(A) ON THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL:- 1. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE LEARNED CIT(A) HAS NOT GRANTED THE CONDONATION OF DELAY AND DISMISSED THE APPEAL AGAINST THE PRINCIPAL OF NATURAL JUSTICE. 2. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE LEARNED CIT(A) HAS CONFIRMED ASSESSED INCOME AT RS. 17,27,1 10/- AGAINST INCOME ASSESSED AS PER ORDER U/S. 143(3) OF THE INC OME TAX ACT, 1961 DATED 15.12.2011 RS. 8,33,380/-. 3. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE LEARNED CIT(A) HAS CONFIRMED ADDITIONS OF RS. 8,93,724/- AS UNDISCLOSED INCOME IN SHARES OF M/S. MAHA POLYBUTE WITHOUT CONS IDERING THE FACTS OF THE CASE THAT NO SUCH SHARES HAVE BEEN PUR CHASED BY THE APPELLANT. 4 ITA NO 6390-91/MUM/2016 ASSESSMENT YEAR: 2006-07 & 2009-10 4. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE LEARNED CIT(A) HAS NOT CONSIDERED THE REOPENING OF ASSESSME NT U/S 148 UNREASONABLE AND WRONG INFORMATION. 3. AT THE VERY OUTSET THE LD. COUNSEL FOR THE ASSES SEE SUBMITTED THAT THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE BY WRONGLY REJECTING THE APPLICATION FOR CONDONATION OF DELAY. THE ASSESSEE WAS PREVENTED FROM FILING THE FIRST APPEAL WITHIN LIMITATION PERIOD DUE TO SUFFIC IENT REASONS MENTIONED IN THE APPLICATION WHICH IS DULY SUPPORTED BY AN AFFIDAVIT . 4. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESEN TATIVE (DR), SUBMITTED THAT THE LD. CIT(A) HAS RIGHTLY REJECTED THE APPLIC ATION FOR CONDONATION OF DELAY AS THE ASSESSEE HAS FAILED TO PROVE THE SUFFICIENT CAUSE WHICH PRESENTED THE ASSESSEE TO FILE THE APPEAL WITHIN THE LIMITATION P ERIOD. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PER USED THE MATERIAL PLACED ON RECORD IN THE LIGHT OF THE RIVAL SUBMISSI ONS. IN SUPPORT OF THE APPLICATION FOR CONDONATION OF DELAY THE ASSESSEE H AS FURNISHED AN AFFIDAVIT BEFORE THE LD. CIT(A) THE RELEVANT PORTION OF WHICH READS AS UNDER:- THAT, THE APPEAL ORDER PASSED BY LD. ITO, WD-20(2) (1), MUMBAI DATED25/03/2014 WAS SERVED TO ME ON31/03/2014 AND 1 ST APPEAL OUGHT TO HAVE BEEN FILED BEFORE 30/04/2014. HOWEVER, THE SAID APPEAL COULD NOT BE FILED ON 30/04/2014 WHICH IS LATE BY 30 DAYS. TH E DELAY IN FILING OF THE APPEAL HAS OCCURRED UNDER THE BONAFIDES REASONS AN D COMPELLING CIRCUMSTANCES BEYOND MY CONTROL SINCE I WAS REQUIRE D TO RE-VERIFY THE SEVERAL DOCUMENTS RELATING TO THE PERIOD OVER 5YEAR S. DUE TO SHIFT OF MY RESIDENCE FROM VILE PARLE(EAST), MUMBAI TO ANDHERI( EAST), MUMBAI, THE VARIOUS DOCUMENTS RELATED TO ASST. YEAR 2009 10 G OT MIXED UP AND WERE MUTILATED. ON RECEIPT OF THE ASSESSMENT ORDER DATED 25/03/2014 , MY 5 ITA NO 6390-91/MUM/2016 ASSESSMENT YEAR: 2006-07 & 2009-10 CHARTERED ACCOUNTANT ASKED ME TO FURNISH ALL PURCHA SE BILLS, SALE BILLS, SHREYAS AGGREGATES, D-MAT STATEMENTS, BANK STATEMEN TS AND OTHER DOCUMENTS AND TWO RE-VERIFY THE FACT THAT I HAD NOT ENTERED INTO ANY TRANSACTION OF PURCHASE AND SALES OF SHARES OF M/S MAHASAGAR POLUBUTE LTD TO ENABLE HIM TO DRAFT THE GROUNDS OF APPEAL AN D FACTS OF THE CASE. AS I WAS REQUIRED TO RE-VERIFY THE OLD DOCUMENTS, THUS T HE 1 ST APPEAL WOULD NOT BE FILED IN TIME. FURTHER, MY REGULAR CHARTERED ACC OUNTANT MR. JAYPRAKASH TIWARI WAS NOT HANDLING THE APPEAL MATTER AND IT TO OK CERTAIN TIME TO APPOINT A NEW COUNSEL NAMED MR. SANJAY JAIN, CHARTE RED ACCOUNTANT TO HIGHLY APPEAL. 6. 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 AFFIDAVIT 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 JUSTI CE BEING DEFEATED. AS AGAINST THIS WHEN DELAY IS CONDONED THE HIGHEST THA T CAN HAPPEN IS THAT A CAUSE WOULD BE DECIDED ON MERITS 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 HOUR'S DELAY , EVERY SECOND'S 6 ITA NO 6390-91/MUM/2016 ASSESSMENT YEAR: 2006-07 & 2009-10 DELAY? THE DOCTRINE MUST BE APPLIED IN A RATIONAL C OMMON SENSE PRAGMATIC MANNER. 4. WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERA TIONS ARE PITTED AGAINST EACH OTHER, CAUSE OF SUBSTANTIAL JUSTICE DESERVES T O BE PREFERRED FOR THE OTHER SIDE CANNOT CLAIM TO HAVE VESTED RIGHT IN INJ USTICE BEING DONE BECAUSE OF A NON-DELIBERATE DELAY. 5. THERE IS NO PRESUMPTION THAT DELAY IS OCCASIONED DELIBERATELY, OR ON ACCOUNT OF CULPABLE NEGLIGENCE, OR ON ACCOUNT OF MA LA FIDES. A LITIGANT DOES NOT STAND TO BENEFIT BY RESORTING TO 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 GROUNDS BU T BECAUSE IT IS CAPABLE OF REMOVING INJUSTICE AND IS EXPECTED TO DO SO. 7. IN VIEW OF THE PRINCIPLES OF LAW LAID DOWN BY TH E HONABLE APEX COURT, 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. ITA NO. 6391/MUM/2016 ASST. YEAR 2006-07 BRIEF FACTS OF THE CASE ARE THAT ON THE BASIS OF AI R INFORMATION THAT DURING THE FINANCIAL YEAR 200506 RELEVANT ASSESSMENT YEAR 2006-07 THE ASSESSEE HAD MADE PAYMENTS FOR ACQUIRING SHARES OF DIFFERENT COM PANIES HOWEVER AS PER ITD SYSTEM SINCE THE APPELLANT HAD NOT FILED RETURN OF INCOME THE SAID TRANSITION COULD NOT BE VERIFIED. ACCORDINGLY THE ASSESSMENT W AS REOPENED UNDER SECTION 7 ITA NO 6390-91/MUM/2016 ASSESSMENT YEAR: 2006-07 & 2009-10 147 OF THE ACT AND AFTER RECEIVING EXPLANATIONS FRO M THE ASSESSEE THE CLAIM OF EXEMPTED LONG TERM CAPITAL GAIN WAS REJECTED BY THE AO AND THE SAME WAS A DATE TO THE TOTAL INCOME OF THE APPELLANT. 2. FELLING AGGRIEVED, BY THE ASSESSMENT ORDER THE A SSESSEE FILED THE APPEAL AGAINST THE SAID ORDER. HOWEVER, THE APPEAL WAS FIL ED AFTER THE EXPIRY OF LIMITATION PERIOD. THE LD. CIT(A) RELYING ON THE DE CISION OF HONBLE DELHI HIGH COURT PASSED IN THE CASE OF SURINDER KUMAR BOVEJA VS. CWT 287 ITR 52 AND DECISION OF HONBLE SUPREME COURT IN THE CASE OF RA NKAK AND OTHERS VS. REWA COALFIELDS LTD. REPORTED AT AIR 1962 SC 361 , DISMISSED THE APPLICATION FOR CONDONATION OF DELAY SUBMITTED BY THE ASSESSEE AND DISMISSED THE APPEAL IN LIMINE . THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGA INST IMPUGNED ORDER PASSED BY THE LD. CIT(A) ON THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL:- 1. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED CIT(A) HAS NOT GRANTED THE CONDONATION OF DELAY AND DISMISSED THE APPEAL AGAINST THE PRINCIPAL OF NATURAL JUSTICE. 2. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE LEARNED CIT(A) HAS CONFIRMED ASSESSED INCOME AT RS. 40,00,8 42/- AGAINST RETURNED INCOME OF RS. 9,29,502/-. 3. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE LEARNED CIT(A) HAS NOT CONSIDERED THE REOPENING OF ASSESSME NT U/S. 148 AS UNREASONABLE AND ON WRONG INFORMATION, THEREFORE RE OPENING IS BAD IN LAW. 4. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE LEARNED CIT(A) CONFIRMED IN TREATING THE LONG TERM CAPITAL GAINS OF RS. 30,71,340/- AS NORMAL INCOME AND NOT ALLOWED THE EX EMPTION U/S 10(38) OF THE INCOME TAX ACT, 1961. 3. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITTE D THAT THE LD. CIT(A) HAS DISMISSED THE APPEAL WITHOUT GIVING AN OPPORTUNITY OF BEING HEARD BY REJECTING 8 ITA NO 6390-91/MUM/2016 ASSESSMENT YEAR: 2006-07 & 2009-10 THE APPLICATION FOR CONDONATION OF DELAY. THE ASSES SEE WAS PREVENTED FROM FILING FORM THE FIRST APPEAL DUE TO THE SUFFICIENT CAUSE M ENTIONED IN THE APPLICATION DULY SUPPORTED BY AN AFFIDAVIT. HENCE, THE ORDER IS LIABLE TO BE SET ASIDE. 4. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESEN TATIVE (DR), SUBMITTED THAT THE LD. CIT(A) HAS RIGHTLY REJECTED THE APPLIC ATION FOR CONDONATION OF DELAY AND DISMISSED THE APPEAL AS THE ASSESSEE HAS FAILED TO PROVE THE SUFFICIENT CAUSE WHICH PRESENTED THE ASSESSEE TO FILE THE PRES ENT APPEAL WITHIN THE LIMITATION PERIOD. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PER USED THE MATERIAL PLACED ON RECORD IN THE LIGHT OF THE RIVAL SUBMISSI ONS. WE NOTICE THAT THE FACTS AND CIRCUMSTANCES UNDER WHICH THE LD. CIT(A) HAS DI SMISSED THE APPEAL BY REJECTING THE APPLICATION FOR CONDONATION OF DELAY, IN ITA NO 6390/MUM/2016 ASST. YEAR 2009-10 ARE IDENTICAL TO THE FACTS AND C IRCUMSTANCES OF THE PRESENT CASE AND THE REASONS MENTIONED IN THE AFFIDAVITS I N BOTH THE CASES ARE SIMILAR. SINCE WE HAVE SET ASIDE THE IMPUGNED ORDER IN ITA N O6390/MUM/2016 AFORESAID, ON THE SAME REASONING WE ALSO SET ASIDE THE IMPUGNED ORDER PASSED IN THE PRESENT CASE AND SENT THE APPEAL BACK TO THE LD. CIT(A) FOR DECIDING THE APPEAL ON MERITS AFTER AFFORDING A REASONABLE OPPOR TUNITY OF BEING HEARD TO THE ASSESSEE. 6. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE S FOR ASST. YEAR 2006-07 & 2009-10 ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND FEBRUARY, 2017 SD/- SD/- ( RAJENDRA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER ) 1* MUMBAI; 2 DATED:22/02/2017 9 ITA NO 6390-91/MUM/2016 ASSESSMENT YEAR: 2006-07 & 2009-10 !'#$%&'&$ / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT. 3. ) 4( ( ) / THE CIT(A)- 4. ) 4( / CIT 5. 78 $(9& , , 9&0 , ) 1* / DR, ITAT, MUMBAI 6. : ; * / GUARD FILE. !' / BY ORDER, % 7( $( //TRUE COPY// ()*+ (DY./ASSTT. REGISTRAR) , ) 1* / ITAT, MUMBAI PRAMILA