SPYKAR LIFESTYLES P.LTD, MUMBAI V. ASST CIT 8(2)(2), MUMBAI

ITA 7000/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0564 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 30-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Assessee Lawyers: JISHANN JAIN
• Keywords: Unexplained cash credit; Sale consideration of property below Jantri Value; Period of limitation; Condonation of delay
• Section: 143(3); 50C; 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH E, MU MBAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 7000 & 7001/MUM/2016 (ASSESSMENT YEAR-2012- 13) M/S SPYKAR LIFESTYLES PVT. LTD. 19 TH FLOOR, A WING, LOTUS CORPORATE PARK, JAY COUCH JUNCTION, OFF WESTERN EXPRESS HIGHWAY, GOREGOAN EAST, MUMBAI- 400063. PAN: AAECS3455N VS. DCIT-8(2)(2), MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI YOGESH A. THAR WITH MS. MOKSHA MEHTA AND MR. JISHANN JAIN (AR) REVENUE BY : SHRI RAM TIWARI (DR) DATE OF HEARING : 27.12.2017 DATE OF PRONOUNCEMENT : 07.02.2018 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THESE TWO APPEAL BY ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS OF COMMISSIONER (APPEALS)-14, MUMBAI DATED 27 TH SEPTEMBER 2016 FOR ASSESSMENT YEAR 2012-13, WHICH IN TURN ARISES FROM THE ASSESSMENT ORDER PASSED BY ASSESSING OFFICER UNDER SECTION UNDER SEC TION 143(3) DATED 31 ST MARCH 2015 AND ORDER OF PENALTY LEVIED UNDER SECTIO N 271(1)(C) DATED 18 TH SEPTEMBER 2015. IN ITA NO.7000/M/2016, THE APPEAL IN QUANTUM ASSESSMENT THE ASSESSEE HAS RAISED FOLLOWING GROUND S OF APPEAL; GROUND I: ITA NO. 7000 & 7001/M/2016- M/S SPYKAR LIFESTYLES PVT. LTD. 2 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE CIT(A) ERRED IN REJECTING THE APPELLANT'S APPLICATION FOR CONDONATI ON OF DELAY IN FILING THE APPEAL TO THE CIT(A) WITHOUT GIVING PROPER REASON 1 JUSTIFICATION. 2. THE CIT(A) REJECTED THE CONDONATION MERELY BY ST ATING THAT SUBMISSION MADE BY THE APPELLANT IS NOT CONVINCING AND DEVOID OF ANY EVIDENCE. 3. THE CIT(A) OUGHT TO HAVE EXPLAINED AS TO HOW THE SUBMISSION OF THE APPELLANT IS NOT CONVINCING/WHAT EVIDENCE THE APPEL LANT OUGHT TO HAVE GIVEN. 4. THE APPELLANT PRAYS THAT THE REJECTION OF CONDON ATION BY CIT(A) BE QUASHED. WITHOUT PREJUDICE TO GROUND I GROUND II: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE ASSISTANT COMMISSIONER OF INCOME TAX 8(2)(2) ('THE ACT)') ERR ED IN MAKING ADDITION OF RS. 16,95,000/- BEING CASH DEPOSITED IN BANK ACCOUN T BY THE APPELLANT ON THE ALLEGED GROUND THAT THE CASH DEPOSITS MADE WERE NON -BONAFIDE AND UNEXPLAINED. 2. THE AO FAILED TO APPRECIATE AND OUGHT TO HAVE HE LD THAT THE CASH WAS DEPOSITED BY THE APPELLANT IN ITS NORMAL COURSE OF BUSINESS AND WAS DULY EXPLAINED IN THE ASSESSMENT PROCEEDINGS 3. THE APPELLANT PRAYS THAT THE SAID ADDITION ON AC COUNT OF THE ALLEGED UNEXPLAINED CASH CREDIT BE DELETED. WITHOUT PREJUDICE TO GROUND I GROUND III: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE AO ERRED IN DISALLOWING AN AMOUNT OF RS. 4,39,00,000/- ON ACCO. UNT OF THE PROVISION OF RATE DIFFERENCE ON THE ALLEGED GROUND THAT THE ENTI RE PROVISION IS ESTIMATED AND THEREFORE DISTORTS THE INCOME UNDER CONSIDERATION A ND THUS CORRECT INCOME IS NOT REPORTED. 2. THE AO OUGHT TO HAVE HELD THAT PROVISION FOR RAT E DIFFERENCE WAS MADE WITH PROPER BASIS AND WAS IN COMPLIANCE WITH THE ACCOUNT ING PRINCIPLES AND THUS IT IS ALLOWABLE AS AN EXPENSE U/S. 37(1) OF THE ACT. 3. THE APPELLANT PRAYS THAT THE SAID DISALLOWANCE O F PROVISION ON ACCOUNT OF RATE DIFFERENCE BE DELETED. WITHOUT PREJUDICE TO GROUND I GROUND IV: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE AO ERRED IN NOT COMPLYING WITH THE PROVISIONS OF SUB-SECTION (2 ) TO SECTION 50C. ITA NO. 7000 & 7001/M/2016- M/S SPYKAR LIFESTYLES PVT. LTD. 3 2. THE AO OUGHT TO HAVE REFERRED THE VALUATION OF T HE PROPERTY TO A VALUATION OFFICER AS THE APPELLANT HAD SUBMITTED THAT IT WAS A DISTRESS SALE AND THEREFORE FAIR VALUE WAS LESS THAN THE STAMP DUTY VALUE. 3. THE APPELLANT PRAYS THAT AS THE AO HAS FAILED TO FOLLOW THE MANDATE OF THE ACT, THE ADDITION MADE UNDER SECTION 50C OF THE ACT BE HELD AS BAD IN LAW. 4. WITHOUT PREJUDICE TO THE ABOVE, THE APPELLANT PR AYS THAT THE AO MAY BE DIRECTED TO FOLLOW THE PROCEDURE OF SECTION 50C(2) BY REFERRING THE VALUATION OF THE PROPERTY TO A VALUATION OFFICER. GROUND V: THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER AND TO AMEND ABOVE GROUNDS OF APPEAL AT THE TIME OF HEARING. 2. IN ITA NO. 7001/M/2016, THE APPEAL AGAINST THE CONF IRMATION OF PENALTY LEVIED UNDER SECTION 271(1)(C) THE ASSESSEE HAS RA ISED FOLLOWING GROUNDS OF APPEAL. GROUND I: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE COMMISSIONER OF INCOME TAX (APPEALS)-14, MUMBAI ('THE CIT') ERRED I N UPHOLDING THE VALIDITY OF THE PENALTY ORDER PASSED BY THE DY. COMMISSIONER OF INCOME TAX-8(2)(2) ('THE AO'). 2. HE FAILED TO APPRECIATE AND INTER-ALIA OUGHT TO HAVE HELD THAT: A. THE AO HAS PASSED PENALTY ORDER BY INTER-ALIA DI SCUSSING THE FACTS NOT PERTAINING TO THE APPELLANT'S CASE AND THEREFORE TH E PENALTY ORDER WAS PASSED WITHOUT PROPER APPLICATION OF MIND AND COMPLETELY I N HASTE AND WITHOUT ANY BASIS. B. NO CLEAR SATISFACTION FOR LEVY OF PENALTY HAS BE EN RECORDED BY THE AO IN THE ASSESSMENT ORDER. C. NO CLEAR CHARGE HAS BEEN ALLEGED BY THE AO ON TH E PENALTY NOTICE RENDERING THE NOTICE TO BE INVALID. D. THE AO HAS FAILED TO GIVE ANY FINDINGS ON MERITS FOR LEVY OF PENALTY IN THE PENALTY ORDER 3. THE APPELLANT PRAYS THAT THE PENALTY ORDER BE HE LD AS VOID-AB-INITIO AND BE QUASHED ACCORDINGLY. WITHOUT PREJUDICE TO GROUND I GROUND 11: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE CIT ERRED IN CONFIRMING THE ACTION OF THE AO IN LEVYING PENALTY IN RESPECT OF DISALLOWANCE ON ACCOUNT OF THE PROVISION OF RATE DIFFERENCE AMOUNTI NG TO RS. 4,39,00,000/-. ITA NO. 7000 & 7001/M/2016- M/S SPYKAR LIFESTYLES PVT. LTD. 4 2. HE FAILED TO APPRECIATE AND OUGHT TO HAVE HELD T HAT THE APPELLANT HAS EXPLAINED THE NECESSITY AND BASIS OF MAKING THE PRO VISION AND COMPLETE AND TRUE DISCLOSURES WERE MADE BY THE APPELLANT IN ITS RETUR N OF INCOME AND COMPUTATION OF INCOME. 3. BRIEF FACTS OF THE APPEALS ARE THAT ASSESSEE IS A P RIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING AND SELLIN G OF BRANDED READY- MADE GARMENTS, APPARELS AND ACCESSORIES THROUGH NET WORK OF MULTI-BRANDED OUTLET, EXCLUSIVE BRAND OUTLETS CONSISTING OF LARGE RETAIL CHAINS, FILED ITS RETURN OF INCOME FOR RELEVANT ASSESSMENT YEAR ON 28 TH SEPTEMBER 2012 DECLARING NIL INCOME. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 31 ST MARCH 2015. THE ASSESSING OFFICER WHILE PASSING AS SESSMENT ORDER BESIDES OTHER ADDITIONS, MADE ADDITIONS ON ACCOUNT OF CASH DEPOSIT OF RS. 16,95,000/-, DISALLOWED RS. 4,39,00,000/-ON ACCOUNT OF DISALLOWANCE. AS NO APPEAL AGAINST VARIOUS ADDITIONS IN THE ASSESSMENT ORDER WAS FILED BY ASSESSEE WITHIN PRESCRIBED PERIOD OF LIMITATION. TH E ASSESSING OFFICER AFTER SERVICE OF NOTICE UNDER SECTION 274RWS 271(1)(C), L EVIED THE PENALTY ON THE DISALLOWANCE MADE IN THE ASSESSMENT ORDER. THE ASSE SSING OFFICER LEVIED THE PENALTY UNDER SECTION 271(1) (C) , @ 100% OF T AX SOUGHT TO BE EVADED VIDE ORDER DATED 18 SEPTEMBER 2015. THE ASSESSING O FFICER WORKED OUT THE PENALTY OF RS.2,14,88,357/-. ON APPEAL BEFORE COMMI SSIONER (APPEALS) THE ORDER PENALTY WAS CONFIRMED. 4. IN QUANTUM ASSESSMENT THE ASSESSEE FILED APPEAL BEF ORE COMMISSIONER (APPEALS) ON 21 ST OCTOBER 2015. THE APPEAL WAS FILED BELATEDLY. ALON G WITH ITA NO. 7000 & 7001/M/2016- M/S SPYKAR LIFESTYLES PVT. LTD. 5 THE APPEAL THE ASSESSEE FILED AN APPLICATION FOR CO NDONATION OF DELAY OF 166 DAYS IN FILING OF APPEAL. THE COMMISSIONER (APPEALS ) DISMISSED THE APPLICATION FOR CONDONATION OF DELAY; CONSEQUENT UP ON THE APPEAL WAS NOT ADMITTED. WITH THIS BACKGROUND THE ASSESSEE HAS PRE FERRED BOTH THE APPEALS BEFORE THE TRIBUNAL. 5. WE HAVE HEARD LEARNED AR OF THE ASSESSEE AND LD. DR FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. A R OF THE ASSESSEE ARGUED THAT BEFORE THE LEARNED COMMISSIONER (APPEALS) THE ASSESSEE FILED AN APPLICATION FOR CONDONATION OF DELAY. THE DELAY WAS PROPERLY EXPLAINED BY THE ASSESSEE. THE LEARNED COMMISSIONER (APPEALS) DI SMISSED THE APPLICATION BY PASSING NON-SPEAKING ORDER. IT WAS S UBMITTED THAT THE DELAY IN FILING APPEAL IN QUANTUM ASSESSMENT WAS DUE TO I NAPPROPRIATE ADVICE GIVEN BY THEIR REPRESENTATIVE WHO WERE LOOKING AFTE R THE INCOME TAX ASSESSMENT PROCEEDINGS. THE ASSESSEE WAS ADVISED TH AT ASSESSEE IS NOT SUPPOSED TO FILE APPEAL BECAUSE THE NIL DEMAND WAS RAISED IN NOTICE UNDER SECTION 156 ISSUED BY ASSESSING OFFICER. FURTHER DE LAY WAS OCCURRED DUE TO CHANGES OF MANAGEMENT AND ITS STRUCTURE AND DUE TO NON AVAILABILITY OF CHIEF FINANCING OFFICER WHO COULD TAKE THE DECISION ON HIGH-LEVEL MATTERS. IT WAS SUBMITTED THAT THE NON FILING OF APPEAL WITH IN THE STATUTORY PERIOD OF LIMITATION WAS NOT INTENTIONAL AND DELIBERATE BUT D UE TO ILL-ADVISED OF CONSULTANT OF ASSESSEE. THE ASSESSEE HAS GOOD CASE ON MERIT AND LIKELY TO SUCCEED IF THE APPEAL OF THE ASSESSEE IS DECIDED ON MERIT. IN SUPPORT OF HIS ITA NO. 7000 & 7001/M/2016- M/S SPYKAR LIFESTYLES PVT. LTD. 6 SUBMISSION THE LD AR OF THE ASSESSEE RELIED UPON TH E DECISION OF HONBLE BOMBAY HIGH COURT IN CASE OF VIJAY VISHIN MEGHANI V ERSUS DCIT [2017] 86 TAXMAN.COM 98 (BOMBAY). ON THE CONTRARY THE LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF COMMISSIONER (APPEALS). IT W AS SUBMITTED THAT THE ASSESSEE FAILED TO EXPLAIN THE DELAY IN FILING APPE AL BEYOND THE PRESCRIBED PERIOD OF LIMITATION. THE EXPLANATION FURNISHED BEF ORE THE COMMISSIONER (APPEALS) WAS NOT PLAUSIBLE AND ADEQUATE. THE LEARN ED COMMISSIONER (APPEALS) CONSIDERED THE SUBMISSIONS OF THE ASSESSE E, AND AFTER CONSIDERING THE CONTENTS OF APPLICATION FOR CONDONATION OF DELA Y, DISMISSED THE SAME. THE ASSESSEE IS A CORPORATE ENTITY AND MAY HAVE BEE N ADVISED BY SEASONED CONSULTANTS. THE ASSESSEE CANNOT TAKE A LAME EXCUSE OR SHIFT THE BURDEN BY MAKING VAGUE ALLEGATIONS AGAINST THE CONSULTANT. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND PERUSED THE MATERIAL AVAILABLE ON RECORD CAREFULLY. WE HAVE NOT ICED THAT ASSESSMENT ORDER UNDER SECTION 143(3) WAS PASSED ON 31 MARCH 2 015. THE NOTICE OF DEMAND UNDER SECTION 156 WAS RECEIVED BY ASSESSEE O N 9 APRIL 2015. THE ASSESSEE WAS REQUIRED TO FILE APPEAL ON OR BEFORE 8 MAY 2015. THE APPEAL BEFORE THE LD. COMMISSIONER (APPEALS) WAS FILED ON 21 OCTOBER 2015, THUS APPEAL WAS FILED 166 DAYS BEYOND THE PRESCRIBED PER IOD OF LIMITATION. ALONG WITH APPEAL THE ASSESSEE FILED AN APPLICATION FOR C ONDONATION OF DELAY, COPY OF WHICH IS PLACED BEFORE THE TRIBUNAL (PAGE NO.226 OF PB). IN THE APPLICATION FOR CONDONATION OF DELAY THE ASSESSEE H AS CONTENDED THE SAME ITA NO. 7000 & 7001/M/2016- M/S SPYKAR LIFESTYLES PVT. LTD. 7 FACT AS SUBMITTED BY LD AR FOR THE ASSESSEE BEFORE US. HOWEVER, THE PERUSAL OF ORDER PASSED BY LD. COMMISSIONER (APPEALS) SHOWS THAT THE ORDER IS NON- SPEAKING ORDER. THE LEARNED COMMISSIONER (APPEALS) PASSED SINGLE LINE ORDER THAT SUBMISSION MADE BY APPELLANT IS NOT CONVINCING IN N ATURE AND DEVOID OF ANY EVIDENCE . 7. THE HONBLE SUPREME COURT IN CONCORD OF INDIA INSUR ANCE CO. LTD. V. SMT. NIRMALA DEVI AIR 1979 SC 1666, HAS HELD THAT A LEGA L ADVICE TENDERED BY A PROFESSIONAL AND THE LITIGANT ACTING UPON IT ONE WA Y OR THE OTHER COULD BE A SUFFICIENT CAUSE TO SEEK CONDONATION OF DELAY AND C OUPLED WITH THE OTHER CIRCUMSTANCES AND FACTORS FOR APPLYING LIBERAL PRIN CIPLES AND THEN SAID DELAY CAN BE CONDONED. EVENTUALLY, AN OVERALL VIEW IN THE LARGER INTEREST OF JUSTICE HAS TO BE TAKEN. NONE SHOULD BE DEPRIVED OF ADJUDIC ATION ON MERITS UNLESS THE COURT OF LAW OR THE TRIBUNAL/APPELLATE AUTHORIT Y FINDS THAT THE LITIGANT HAS DELIBERATELY AND INTENTIONALLY DELAYED FILING O F THE APPEAL THAT HE IS CARELESS, NEGLIGENT AND HIS CONDUCT IS LACKING IN B ONA FIDES . WE ARE CONSCIOUS OF THE FACTS THAT WHEN TECHNICALITIES AND SUBSTANTIAL JUSTICE ARE PITTED AGAINST EACH OTHER, THE TECHNICALITIES MUST BE AVOIDED. CONSIDERING THE FACTS OF THE PRESENT CASE WE HAVE SEEN THAT SUB STANTIAL RIGHT OF THE ASSESSEE IS AN INVOLVED IN THE APPEALS, HENCE, WE D EEM IT APPROPRIATE TO CONDONE THE DELAY IN FILING APPEAL IN QUANTUM ASSES SMENT BEFORE LEARNED COMMISSIONER (APPEALS) AND SET ASIDE THE IMPUGNED O RDER AND RESTORED BACK THE APPEAL TO THE FILE OF LEARNED COMMISSIONER (APPEALS) TO DECIDE THE ITA NO. 7000 & 7001/M/2016- M/S SPYKAR LIFESTYLES PVT. LTD. 8 SAME ON MERIT IN ACCORDANCE WITH LAW. NEEDLESS TO S AY THAT LEARNED COMMISSIONER (APPEALS) SHALL AFFORD SUFFICIENT AND ADEQUATE OPPORTUNITY TO THE ASSESSEE BEFORE PASSING THE ORDER ON MERIT. IN THE RESULT THE APPEAL OF ASSESSEE (ITA NO.7000/M/2016) ON QUANTUM ASSESSMENT IS ALLOWED FOR STATISTICAL PURPOSE. 8. SINCE WE HAVE ALREADY REMANDED THE APPEAL OF THE AS SESSEE IN QUANTUM ASSESSMENT TO THE FILE OF LD. COMMISSIONER (APPEALS ), AS THE PENALTY WAS LEVIED ON THE SIMILAR DISALLOWANCE, HENCE, WE ALSO DEEM IT APPROPRIATE TO RESTORE THE APPEAL (ITA NO. 7001/M/2016) TO THE FI LE OF LD COMMISSIONER (APPEALS) TO DECIDED THE APPEAL AFRESH, AFTER DECID ING THE QUANTUM APPEAL ON MERIT. 9. IN THE RESULT, BOTH THE APPEAL FILED BY ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH DAY OF FEBRUARY 2018. SD/- SD/- (R.C.SHARMA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 07/02/2018 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/