ARYA INVESTMENT AND CONSTRUCTION CO., MUMBAI V. ITO WD 14(1)(4), MUMBAI

ITA 669/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3319 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 24-03-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 24-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M MURLIDR
• Assessee Lawyers: DHIRENDRA M SHAH
• Keywords: Business income; Question of law

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.669/MUM/2013 ASSESSMENT YEAR-2006-07 M/S ARYA INVESTMENT AND CONSTRUCTION COMPANY, C/O- MANGALDAS D. SHAH & CO., 506, LOTUS HOUSE, 33-A NEW MARINE LINES, MUMBAI-400020 / VS. I NCOME T AX OFFICER , W ARD -14(1)(4), EARNEST HOUSE , NARIMAN POINT , MUMBAI -400021 PAN NO. AALFA2919F ( / APPELLANT) ( / RESPONDENT) ! / ASSESSEE BY SHRI DHIRENDRA M. SHAH ' / REVENUE BY SHRI M.MURLI-DR # '$ % !& / DATE OF HEARI NG : 16/03/2016 % !& / DATE OF ORDER: 16/03/2016 ITA NO.669/MUM/2013 M/S ARYA INVESTMENT AND CONSTRUCTION CO. 2 / O R D E R THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 10/10/2012 OF THE LD. FIRST APPELLATE AUTHORI TY, MUMBAI, CONFIRMING PENALTY OF RS.16,39,871/-,LEVIED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). HOWEVER, IT WAS NOTICED THAT THERE WAS DELAY OF FOU R DAYS IN FILING THE APPEAL BEFORE THIS TRIBUNAL. THE ASSESSE E HAS FILED AN APPLICATION FOR CONDONATION OF DELAY. THE LD. DR , CONTENDED THAT DELAY MANY NOT BE CONDONED AS NO PRO PER REASONING FOR THE DELAY HAS BEEN ADDUCED BY THE ASS ESSEE. 2. BEFORE ADVERTING FURTHER, FIRST WE SHALL DECIDE THE ISSUE OF FILING THE APPEAL LATE BY FOUR DAYS . CONSIDERING THE TOTALITY OF FACTS, NO DOUBT FILING OF AN APPEAL IS A RIGHT GRANTED UNDER THE STATUTE TO THE ASSESSEE AND IS NO T AN AUTOMATIC PRIVILEGE, THEREFORE, THE ASSESSEE IS EXP ECTED TO BE VIGILANT IN ADHERING TO THE MANNER AND MODE IN W HICH THE APPEALS ARE TO BE FILED IN TERMS OF THE RELEVAN T PROVISIONS OF THE ACT. NEVERTHELESS, A LIBERAL APPR OACH HAS TO BE ADOPTED BY THE APPELLATE AUTHORITIES, WHERE DELA Y HAS OCCURRED FOR BONA FIDE REASONS ON THE PART OF THE ASSESSEE OR THE REVENUE IN FILING THE APPEALS. IN MATTERS C ONCERNING THE FILING OF APPEALS, IN EXERCISE OF THE STATUTORY RIGHT, A REFUSAL TO CONDONED THE DELAY CAN RESULT IN A MERIT ORIOUS MATTER BEING THROWN OUT AT THE THRESHOLD, WHICH MAY LEAD ITA NO.669/MUM/2013 M/S ARYA INVESTMENT AND CONSTRUCTION CO. 3 TO MISCARRIAGE OF JUSTICE. THE JUDICIARY IS RESPECT ED NOT ON ACCOUNT OF ITS POWER TO LEGALIZE INJUSTICE ON TECHN ICAL GROUNDS BUT BECAUSE IT IS CAPABLE OF REMOVING INJUS TICE AND IS EXPECTED TO DO SO. 2.1. THE HONBLE APEX COURT IN A CELEBRATED DECISI ON IN COLLECTOR, LAND ACQUISITION VS MST. KATIJI & ORS. 1 67 ITR 471 OPINED THAT WHEN TECHNICAL CONSIDERATION AND SUBSTANTIAL JUSTICE ARE PITTED AGAINST EACH OTHER, THE COURTS ARE EXPECTED TO FURTHER THE CAUSE OF SUBSTANTIAL JU STICE. THIS IS FOR THE REASON THAT AN OPPOSING PARTY, IN A DISPUTE, CANNOT HAVE A VESTED RIGHT IN INJUSTICE BEING DONE BECAUSE OF A NON- DELIBERATE DELAY. THEREFORE, IT FOLLOWS THAT WHILE CONSIDERING MATTERS RELATING TO THE CONDONATION OF DELAY, JUDICIOUS AND LIBERAL APPROACH IS TO BE ADOPTED. I F SUFFICIENT CAUSE IS FOUND TO EXIST, WHICH IS BONA -FIDE ONE, AND NOT DUE TO NEGLIGENCE OF THE ASSESSEE, THE DELA Y NEEDS TO CONDONED IN SUCH CASES. THE EXPRESSION SUFFICI ENT CAUSE IS ADEQUATELY ELASTIC TO ENABLE THE COURTS T O APPLY LAW IN A MEANINGFUL MANNER, WHICH SUB-SERVES THE EN D OF JUSTICE- THAT BEING THE LIFE PURPOSE OF THE EXISTEN CE OF THE INSTITUTION OF THE COURTS. WHEN SUBSTANTIAL JUSTIC E AND TECHNICAL CONSIDERATION ARE PITTED AGAINST EACH OTH ER, THE CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERR ED. THIS MEANS THAT THERE SHOULD BE NO MALAFIDE OR DILATORY TACTICS. SUFFICIENT CAUSE SHOULD RECEIVE LIBERAL CONSTRUCTIO N TO ADVANCE SUBSTANTIAL JUSTICE. THE HONBLE APEX COUR T IN ITA NO.669/MUM/2013 M/S ARYA INVESTMENT AND CONSTRUCTION CO. 4 COLLECTOR, LAND ACQUISITION VS MST. KATIJI & ORS. ( 167 ITR 471) OBSERVED AS UNDER:- 3. THE LEGISLATURE HAS CONFERRED THE POWER TO COND ONE DELAY BY ENACTING SECTION 51 OF THE LIMITATION ACT OF 196 3 IN ORDER TO ENABLE THE COURTS TO DO SUBSTANTIAL JUSTICE TO P ARTIES BY DISPOSING OF MATTERS ON DE MERITS. THE EXPRESSION SUFFICIENT CAUSE EMPLOYED BY THE LEGISLATURE IS ADEQUATELY EL ASTIC TO ENABLE THE COURTS TO APPLY THE LAW IN A MEANINGFUL MANNER WHICH SUBSERVES THE ENDS OF JUSTICE THAT BEING THE LIFE-PURPOSE OF THE EXISTENCE OF THE INSTITUTION OF COURTS. IT I S COMMON KNOWLEDGE THAT THIS COURT HAS BEEN MAKING A JUSTIFI ABLY LIBERAL APPROACH IN MATTERS INSTITUTED IN THIS COUR T. BUT THE MESSAGE DOES NOT APPEAR TO HAVE PERCOLATED DOWN TO ALL THE OTHERS COURTS IN THE HIERARCHY. 2.2. FURTHERMORE, THE HON'BLE SUPREME COURT IN THE CASE OF VEDABAI ALIA VAIJAYANATABAI BABURAO PATIL V S. SHANTARAM BABURAO PATIL 253 ITR 798 HELD THAT THE C OURT HAS TO EXERCISE THE DISCRETION ON THE FACTS OF EACH CASE KEEPING IN MIND THAT IN CONSTRUING THE EXPRESSION SUFFICIENT CAUSE, THE PRINCIPLE OF ADVANCING SUBS TANTIAL JUSTICE IS OF PRIME IMPORTANCE. THE COURT HELD THAT THE EXPRESSION SUFFICIENT CAUSE SHOULD RECEIVE LIBERA L CONSTRUCTION. HAVING MADE THE AFORESAID OBSERVATION AND CONSIDERING THE MATERIAL FACTS AVAILABLE ON RECORD AND MORE ITA NO.669/MUM/2013 M/S ARYA INVESTMENT AND CONSTRUCTION CO. 5 SPECIFICALLY THE REASON OF DELAY, AS MENTIONED IN T HE APPLICATION, THE DELAY IS CONDONED. 3. DURING HEARING, THE LD. COUNSEL FOR THE ASSESSE E, SHRI DHIRENDERA M. SHAH, CONTENDED THAT QUANTUM ADDITION WAS DECIDED AGAINST THE ASSESSEE BUT THE H ONBLE HIGH COURT HAS ADMITTED SUBSTANTIAL QUESTION OF LAW , THEREFORE, IN VIEW OF THE DECISION FROM HONBLE JUR ISDICTIONAL HIGH COURT IN CIT VS WANDER PVT. LTD. (2013) 358 IT R 408 (BOM.), THE PENALTY MATTER MAY BE SENT BACK TO THE FILE OF THE ASSESSING OFFICER AND TO TAKE A DECISION IN ACC ORDANCE WITH THE DECISION TO BE TAKEN BY HONBLE HIGH COURT . 3.1. ON THE OTHER HAND, THE LD. DR, SHRI M. MURLI, DEFENDED IMPOSITION AS WELL AS CONFIRMATION OF PENA LTY ON THE PLEA THAT THE ASSESSEE HAS DELIBERATELY CONCEAL ED ITS INCOME/FURNISHED INACCURATE PARTICULARS OF INCOME A ND EVEN THE QUANTUM ADDITION WAS AFFIRMED BY THE TRIBU NAL. 3.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE FILED ITS RETURN ON 18/09/200 6. IN THE YEAR UNDER CONSIDERATION, THE ASSESSEE, SHOWED RS.59 LAKH AS RECEIVED ON SALE OF LAND INVESTMENT AND AFT ER CLAIMING COST OF RS.15,93,804/- AS LAND COST AND RS.9,435/- AS OFFICE MAINTENANCE ATTRIBUTED RS.42,9 6,760/- TOWARDS NET LONG TERM CAPITAL GAIN IN ITS PROFIT & LOSS ACCOUNTS. FOR THE IMPUGNED ASSESSMENT YEAR, THE AS SESSEE ITA NO.669/MUM/2013 M/S ARYA INVESTMENT AND CONSTRUCTION CO. 6 DECLARED NIL INCOME CLAIMING RS.12,94,648/- AS LONG TERM CAPITAL GAIN. DURING ASSESSMENT PROCEEDINGS, THE AS SESSEE WAS ASKED TO SHOW-CAUSE AS TO WHY THE RESULTANT REC EIPT FROM THE SALE OF THE PLOT AMOUNTING TO RS.59 LAKH S HOULD NOT BE HELD AS ADVENTURE IN THE NATURE OF TRADE AND BROUGHT TO TAX. THE ASSESSEE FILED ITS EXPLANATION AS HAS BEEN REPRODUCED IN PARA 2.2 OF THE PENALTY ORDER. THE LD . ASSESSING OFFICER DID NOT AGREE WITH THE EXPLANATIO N ON THE GROUND THAT THE INDENTURE OF PARTNERSHIP (PAGE-2, P ARA-3) CLEARLY STATES THAT THE PARTNERSHIP BUSINESS SHALL BE IN REAL ESTATE DEVELOPMENTS, CONTRACTORS, AGRICULTURIST, BU YING AND SELLING OF LAND AND PROPERTIES OF ALL KIND, MAKING INVESTMENT IN MOVABLE AND IMMOVABLE PROPERTIES OF A NY NATURE OR KIND AND TO ACT AS AN AGENT. CONSIDERING THE TOTALITY OF FACTS, IT WAS NOTICED, BY THE ASSESSING OFFICER, FROM THE WORKING OF LONG TERM CAPITAL GAINS, THAT THE PROPERTY WAS PURCHASED IN 1989 FOR RS.15,93,804/-, WHEREAS, IN THE PURCHASE AGREEMENT, THE SAID PLOT O F LAND, THE TOTAL AMOUNT PAID WAS SHOWN AS RS.6,95,000/- (RS.2,25,000+2,20,000+2,50,000). THE OTHER EXPENSES WERE CLAIMED AT RS.3,33,132/-, THEREFORE, THE COST PRICE WAS TAKEN AT RS.10,28,132/-, INSTEAD OF RS.15,93,804/-, THUS, THIS LESS PROFIT TO THE TUNE OF RS.10,28,132/-. PEN ALTY PROCEEDINGS U/S 271(1)(C) WERE INITIATED AS THE ADD ITION OF RS.48,71,870/- WAS DEEMED TO REPRESENT, THE INCOME IN ITA NO.669/MUM/2013 M/S ARYA INVESTMENT AND CONSTRUCTION CO. 7 RESPECT OF INACCURATE PARTICULARS WERE FURNISHED/IN COME CONCEALED. THE PENALTY OF RS.16,39,871/- WAS IMPOS ED. 3.3. ON APPEAL, BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS), THE PARTNERSHIP DEED WAS CONS IDERED AND SINCE THE TRIBUNAL HAS CONFIRMED THAT THE INCOM E OF THE ASSESSEE WAS LIABLE TO BE ASSESSED AS BUSINESS INCOME, THE APPEAL OF THE ASSESSEE WAS DISMISSED. THE ASSES SEE IS IN FURTHER APPEAL BEFORE THIS TRIBUNAL. 3.4. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN JUXTAPOSITION AND ANALYZED, THE ONLY CLAIM OF THE A SSESSEE BEFORE THIS TRIBUNAL IS THAT SINCE VIDE ORDER DATED 07/12/2011 (ITA NO.6965 OF 2010), THE SUBSTANTIAL QUESTION HAS BEEN ADMITTED BY THE HONBLE HIGH COUR T, THEREFORE, IN VIEW OF THE DECISION FROM HONBLE JUR ISDICTIONAL HIGH COURT IN CIT VS WANDER PVT. LTD. (2013) 358 IT R 408 (BOM.), THE ISSUE OF PENALTY MAY BE SENT BACK TO TH E FILE OF THE LD. ASSESSING OFFICER. IN VIEW OF THE CLAIM OF THE ASSESSEE, RESPECTFULLY FOLLOWING, THE DECISION FROM HONBLE JURISDICTIONAL HIGH COURT IN CIT VS WANDER PVT. LTD . (SUPRA), WE SEND THIS ISSUE TO THE FILE OF THE LD. ASSESSING OFFICER WITH A DIRECTION THAT HE SHALL DECIDE THE I SSUE OF PENALTY AFTER RECEIPT OF DECISION FROM HONBLE HIGH COURT ON ITA NO.669/MUM/2013 M/S ARYA INVESTMENT AND CONSTRUCTION CO. 8 QUANTUM PROCEEDINGS. THUS, THE APPEAL OF THE ASSESS EE IS ALLOWED FOR STATISTICAL PURPOSES ONLY. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES ONLY. THIS ORDER WAS PRONOUNCED IN THE OPEN IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 16/03/2016. SD/- SD/- (RAJENDRA) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER # $ MUMBAI; ) DATED : 16/03/2016 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT (RESPECTIVE ASSESSEE) 2. / THE RESPONDENT. 3. + + # ,! ( ) / THE CIT, MUMBAI. 4. + + # ,! / CIT(A)- , MUMBAI, 5. /'01 !2 , + & 23 , # $ / DR, ITAT, MUMBAI 6. 14 5$ / GUARD FILE. / BY ORDER, /! ! //TRUE COPY// / (DY./ASSTT. REGISTRAR) , # $ / ITAT, MUMBAI