KARAN NARAINDAS SUKHANI, MUMBAI V. ITO 15(3)(3), MUMBAI

ITA 7697/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2809 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 26-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bonafide belief; Condonation of delay

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC , MUMBAI BEFORE S HRI G.S.PANNU, (AM) ITA NO. 7697 /MUM/ 201 4 ASSESSMENT YEAR: 200 9 - 10 SHRI. KARAN NARAINDAS SUKHANI, C/O SHRI. SURESH N. OTWANI, ADVOCATE, 305, 3 RD FLOOR, ADAMJI BUILDING, 413 KA THA BAZAAR, MASJID BUNDER, MUMBAI - 400 009. PAN - A ZIPS3380G VS. THE ITO 15(3 ) (3) , ROOM NO. 117, MATRU MANDIR, TARDEO, MUMBAI - 400 007. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. SURESH OTWANI RESPONDENT BY : SHRI . SANTOSH MANKOSKAR DATE OF HEARING: 2 1 /06 /2016 DATE OF PRONOUNCEMENT: 30 / 0 6 /2016 O R D E R PER G.S.PANNU , AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST ORDER DT. 2 2/10/2014 PASSED BY THE LD. CIT(APPEALS) - 26, M UMBAI FOR THE ASSESSMENT YEAR 2009 - 10, THEREIN DECLINING TO CONDONE THE DELAY INVOLVED IN FILING OF THE APPEAL AND THUS DISMISSING THE SAME AS BEING NOT MAINTAINABLE ON THE SAID COUNT. 2. THE ASSESSEE CHALLENGING THE ORDER OF THE LD. CIT(A), HAD RAISED T HE FOLLOWING GROUNDS OF APPEAL : - 2 ITA NO. 7697 /MUM/201 4 ASSESSMENT YEAR: 200 9 - 10 BEING AGGRIEVED BY THE COMMISSIONER OF INCOME TAX (APPEALS ) - 26 , THIS APPEAL PETITION IS BEING SUBMITTED ON THE FOLLOWING GROUNDS WHICH IS PRAYED MAY BE CONSIDERED WITHOUT PREJUDICE TO ONE ANOTHER. 1) THE CIT(A) - 26 ERRED IN DISMISSING THE APPEAL ON ACCOUNT OF DELAY IN FILING APPEAL. 2) THE CIT(A) - VI ERRED IN NOT CONSIDERING THE APPLICATION FOR CONDONATION OF DELAY IN PRINCIPAL. 3) THE CIT(A) - VI ERRED IN NOT TAKING NOTE OF FINDING OF ASSESSING OFFICER POINTED O UT BY A.R DURING THE A PPELLATE PROCEEDINGS ON PAGE NO. 3 RELEVANT TO CONDONATION OF DELAY IN FILING APPEAL. 4) THE APPEAL IS IN TIME AND ORDER. 5) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY OF THE GROUNDS ON OR BEFORE THE FINAL DATE OF HEARI NG. PRAYER THE APPELLANT THEREFORE PRAYS THAT THE ORDER OF CIT(A) DISMISSING THE A PPEAL FILED ON ACCOUNT OF DELAY MAY BE CANCELLED AND CIT(A) MAY BE ASKED TO RE - HEAR A PPEAL CONDONING THE DELAY OR ANY OTHER RELIEF MAY BE GRANTED AS MAY BE DEEMED FI T AND JUST, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. ' 2. 1 THE ASSESSEE FIL ED HIS 'RETURN OF INCOME' ON 30/06/ 2009, DECLARING INCOME OF RS. 1,66,510/ - , WHICH WAS PROCESSED AS SUCH U/S 143(1) OF THE ACT . THE 3 ITA NO. 7697 /MUM/201 4 ASSESSMENT YEAR: 200 9 - 10 ASSESSEE ALONG WITH HIS MOTHER MRS . SUMITA N. SUKHANI, BOTH HAVING EQUAL SHARE EACH, JOINTLY OWNED A PROPERTY MARKED AS FLAT N O. 601, 6TH FLOOR, BIRCHWOOD, RAHEJA WILLOWS, AKURL I ROAD, KANDIVALI (E), MUMBAI - 400101, (HEREINAFTER REFERRED TO AS 'FLAT') WHICH WAS ACQUIRED BY THEM ON THE BAS IS O F AN ALLOTMENT LETTER DATED: 26/01/2005 OF M/ S K. RAHEJA UNIVERSAL PVT. LTD. (HEREINAFTER REFERRED TO AS 'DEVELOPER'), WHEREIN THE COMPLETE DETAILS AS REGARDS THE FLAT, TERMS AND CONDITIONS REGULATIN G THE PAYMENTS TO BE MADE, LIST OF AMENITIES, AS WELL AS THE OBLIGATIONS OF THE BUYERS AND THE DEVELOPER STOOD MENTIONED. THEREAFTER AN 'AGREEMENT FOR SALE' WAS EXECUTED BETWEEN THE 'BUYER S' AND THE 'DEVELOPER' AS ON 27/03/ 2007, FOR A CO NSIDERATION OF RS. 36,49,650/ - , WHICH WAS REGISTERED WITH THE REGISTRAR OF STAMP DUTY ON 25/04/ 2007. THAT PART OF THE PURCHASE CONSIDERATION AMOUNTING TO RS. 23,35,775/ - WAS PAID BY THE BUYERS PRIOR TO THE EXECUTION OF THE 'AGREEMENT TO SELL', WHILE FOR THE BALANCE CONSIDERATION OF RS. 13,13,875/ - WAS TO BE PAID AS PER ANNEXUR E 5 OF THE SAID AGREEMENT. 2. 2 THE ASSESSEE AND HIS MOTHER SOLD THE AFORESAID 'FLAT'(SUPRA) VIDE A REGISTERED' AGREEMENT TO SELL DATED: 10/10/ 2008. THE ASSESSEE BY ADOPTING THE DATE OF ALLOTMENT OF THE AFORESAID 'FLAT', I.E 26/0L/ 2005 (SUPRA), ON WHICH DATE THE ASSESSEE HAD ALSO MADE PAYMENT TOWARDS THE 'FIRST INSTALLMENT ' OF THE PURCHASE CONSIDERATION , AS THE DATE OF ACQUISITION OF THE AFORESAID PROPERTY, THEREIN REFLECTED THE AFORESAID SALE TRANSACTION UNDER THE HEAD 'LONG TERM CAPITAL GAINS' ('LTCG') IN HIS 'RETURN OF INCOME'. THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , THE AFORESAID COMPUTATION OF THE INCOME UNDER THE HEAD 'L TCG' DID NOT FIND FAVOUR WITH THE A.O, WHO THEREIN OBSERVED THAT AS THE OWNERSHIP OF THE 'FLAT'(SUPRA) WAS TRANSFERRED IN THE NAME OF THE ASSESSEE ONLY AS ON 25/04/ 2007, I.E ON THE BASIS OF THE REGISTERED 'AGREEMENT TO SELL', THEREFORE THE PERIOD OF HOLDING OF THE SAID PROPERTY W AS TO BE RECKONED FROM THE SAID DATE, AND THUS AS THE SAME WAS SOLD BY THE ASSESSEE WITHIN A P ERIOD OF 36 MONTHS, THEREFORE THE SAID 'TRANSFER' TRANSACTION, AS PER THE A.O WAS LIABLE TO BE 4 ITA NO. 7697 /MUM/201 4 ASSESSMENT YEAR: 200 9 - 10 ASSESSED UNDER THE HEAD 'SHORT TERM CAPITAL GAIN' ('STCG'). THAT BEING IMPRESSED BY THE AFORESAID OBSERVATION OF THE A.O, THE REPRESENTATIVE OF THE ASSESSEE DURI NG THE COURSE OF THE ASSESSMENT PROCEEDINGS, VIDE HIS LETTER DATED 07/09/ 2013, REVISED THE 'COMPUTATION OF INCOME' AND REFLECTED THE SALE TRANSACTION OF THE AFORE SAID PROPERTY UNDER THE HEAD 'STCG'. THE A.O THEREAFTER ACCEDING TO THE REQUEST OF THE ASSESSE E THAT THE BROUGHT FORWARD 'SHORT TERM CAPITAL LOSS' OF RS. 45,342/ - MAY BE ADJUSTED AGAINST THE 'STCG' OF RS. 20,62,706/ - , THEREIN PROCEEDED WITH AND COMPUTED THE NET 'STCG' AT AN AMOUNT OF RS. 20,17,364/- AND ASSESSED THE INCOME OF THE ASSESSEE AT RS. 21 ,83,870/ - . 2. 3 THAT SUBSEQUENT TO THE CULMINATION OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED AN APPEAL WITH THE CIT(A), THEREIN CHALLENGING THE ASSESSING OF THE SALE OF THE AFORESAI D 'FLAT'(SUPRA) UNDER THE HEAD 'STCG' BY THE A.O. THE ASSESSEE EXP LAINING HIS AFORESAID CONDUCT, THEREIN SUBMITTED THAT THOUGH THE AFORESAID 'SALE TRANSACTION' WAS RIGHTLY REFLECTED BY HIM IN HIS RETURN OF INCOME UNDER THE HEAD 'LTCG', BUT HOWEVER HIS COUNSEL SH RI . ASHOK MANGHNANI WHO WAS EARLIER REPRESENTING HIS CASE, WRONGLY ACCEPTED THE VIEW OF THE A.O AND GOT THE 'SALE TRANSACTION' ASSESSED UNDER THE HEAD 'STCG'. IT WAS FURTHER AVERRED BY THE ASSESSEE THAT IT WAS ONLY WHEN PENALTY PROCEEDINGS W .R.T THE AFORESAID ISSUE WERE INITIATED BY THE A.O AND THE ASSESSEE APPRO ACHED ANOTHER COUNSEL SH RI . SURESH N. OTWANI, THAT THE LATTER INFORMED HIM ABOUT THE CORRECT POSITION OF LAW, AS PER WHICH AS THE 'FLAT'(SUPRA) HAD BEEN ACQUIRED BY THE ASSESSEE ON THE BASIS OF THE ALLOTMENT LETTER, THEREFORE THE DATE OF ACQUISITION WAS TO BE TAKEN ON THE BASIS OF THE SAID DATE, I.E 26/01/ 2005 (SUPRA), PURSUANT WHERETO THE SAID SALE TRANSACTION WAS STATUTORILY LIABLE T O BE ASSESSED UNDER THE HEAD 'L TCG'. 2. 4 THAT IT WAS FURTHER AVERRED BY THE ASSESSEE THAT PROMPTED BY THE WRONG ADVISE OF HIS EARLIER COUNSEL, THE SALE TRANSACTION OF THE 'FLAT'(SUPRA) WAS 5 ITA NO. 7697 /MUM/201 4 ASSESSMENT YEAR: 200 9 - 10 WRONGLY REVISED AND GO T ASSESSED UNDER THE HEAD 'STC G', AND BY THE TIME THE ASSESSEE LEARNT ABOUT THE CORRECT POSITION OF LAW, THE TIME LIMIT CONTEMPLATED UNDER THE LAW FOR FILING OF AN AP PEAL WITH THE CIT(A) HAD ALREADY LAPSED, PURSUANT WHERE TO DELAY WAS INVOLVED IN THE FILING OF THE APPEAL, FOR CONDONING OF WHICH AN APPLICATION WAS FILED BY THE ASSESSEE WITH THE CIT(A). 2. 5 . THE CIT(A) AFTER REFERRING TO THE FACTS OF THE CASE, THEREIN NOT FINDING FAVOUR WITH THE EXPLANATION OF THE ASSESSEE AS REGARDS THE REASONS WHICH HAD LED TO A DELAY OF ABOUT 16 MONTHS IN FILING OF THE APPEAL, THUS DECLINED TO CONDONE THE DELAY AND DISMISSED THE APPEAL AS BEING NOT MAINTAINABLE. 3. THE ASSESSEE BE ING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAD FILED THE PRESENT APPEAL. THE A.R OF THE ASSESSEE EXPLAINING THE REASON LEADING TO DELAY IN FILING OF THE APPEAL WITH THE CIT(A), THEREIN SUBMITTED THAT THOUGH HE HAD CORRECTLY REFLECTED THE SALE TRANSACTION O F THE PROPERTY UNDER THE HEAD 'LTCG' IN HIS 'RETURN OF INCOME', BUT HOWEVER HE HAD SUFFERED ON ACCOUNT OF ILL ADVISE OF HIS EARLIER COUNSEL, WHEREIN THE LATTER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS HAD ERRONEOUSLY YIELDED AND SUBSCRIBED TO THE MI SCONCEIVED VIEW OF THE A.O THAT THE PERIOD OF HOLDING OF THE 'FLAT'(SUPRA) WAS TO BE RECKONED FROM THE DATE OF THE REGISTERED' AGREEMENT TO SELL', WHICH AS PER THE OBSERVATION OF THE A.O WAS THE DATE WHEN THE OWNERSHIP OF THE SAID PROPERTY GOT VESTED WITH THE ASSESSEE. IT WAS FURTHER SUBMITTED BY THE A.R THAT THE ASSESSEE WHO REMAINED UNDER A BONAFIDE BELIEF AS REGARDS THE VIEW TAKEN BY HIS EARLIER COUNSEL, HOWEVER THEREAFTER ON BEING MADE CONVERSANT AS REGARDS THE CORRECT POSITION OF LAW, AS PER WHICH THE PERIOD OF ACQUISITION OF THE PROPERTY WAS TO BE RECKONED FROM THE DATE OF THE ALLOTMENT LETTER AND WAS RIGHTLY REFLECTED BY HIM IN HIS 'RETURN OF INCOME', THEREIN IMME DIATELY AS PER THE ADVICE OF HI S NEW COUNSEL, IN ORDER TO BRING THE ASSESSMENT ORDER IN C ONFORMITY WITH THE PROVISIONS OF LAW, THUS WIT HOUT ANY FURTHER LOSS OF TIME FI LED AN APPEAL WITH THE CIT(A). IT WAS THUS SUBMITTED BY THE A.R THAT KEEPING IN VIEW THE AFORESAID SET 6 ITA NO. 7697 /MUM/201 4 ASSESSMENT YEAR: 200 9 - 10 OF CIRCUMSTANCES LEADING TO DELAY IN FILING OF THE APPEAL BY THE ASSESSEE W ITH THE CIT(A), THE ORDER OF THE CIT(A) DISMISSING THE APPEAL OF THE ASSESSEE AS HAVING BEEN FILED B EYOND THE STIPULATED TIME PERIOD, MAY THEREIN BE SET ASIDE AND THE CIT(A) BE DIRECT ED TO CONDONE THE DELAY AND DISPOSE OF THE APPEAL OF THE ASSESSEE ON MERI TS. 4. THE D.R ON THE OTHER HAND RELIED ON THE ORDER OF THE CIT(A) AND SUBMITTED THAT IN LIGHT OF THE INORDINATE DELAY INVOLVED IN FILING OF THE APPEAL, THE LATTER HAD RIGHTLY DISMISSED THE APPEAL OF THE ASSESSEE, AS BEING NOT MAINTAINABLE . 5 . I HAVE CAREFULLY PERUSED THE FACTS OF THE CASE AND HAVE CONSIDERED THE RIVAL SUBMISSIONS AND RELEVANT MATERIAL ON RECORD, INCLUDING THE ORDERS OF THE AUTHORITIES BELOW. THOUGH IT REMAINS AS A MATTER OF FACT THAT A DELAY OF ABOUT 16 MONTHS WA S INVOLVED IN FILING O F THE APPEAL BY THE ASSESSEE BEFORE THE CIT(A), HOWEVER IN LI GHT OF THE ATTENDING CIRCUMSTANCES LEADING TO DELAY IN FILING OF THE SAID APPEAL, WHICH CAN SAFELY BE HELD TO BE BEYOND THE CONTROL OF THE ASSESSEE, AS THE LATTER HAD REMAINED UNDER A BONAFIDE B E LIEF AS REGARDS THE CONDUCT OF HIS EARLIER COUNSEL WHO HAD REPRESENTED HIM IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. THE LEGAL POSITION BEING CANVASSED BY THE ASSESSEE DESERVES TO BE TESTED BASED ON THE RELEVANT PRINCIPLES, AND IT COULD NOT BE SHUT - OUT BY NOT CONDONING THE DELAY IN FILING OF APPEAL. T HE CIT(A) WHILE DISPOSING OF THE APPLICATION OF THE ASSESSEE SEEKING CONDONATION OF DELAY IN FILING OF THE APPEAL , KEEPING IN VIEW THE PECULIAR SITUATION WHICH CONTRIBUTED TO THE DELAY IN FILING THE APPEAL BY THE ASSESSEE, SHOULD NOT HAVE ADOPTED A TECHNICAL APPROACH AND RATHER THE DELAY SHOULD HAVE BEEN CONDONED ON SUBSTANTIVE CONSIDERATIONS . THUS IN LIGHT OF THE AFORESAID OBSERVATIONS, THE APPEAL IS RESTORED TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATIO N WITH A DIRECTION THAT THE APPLICATION FILED BY THE ASSESSEE SEEKING CONDONATION OF DELAY INVOLVED IN FILING OF THE APPEAL, BE DISPOSED OF AFRESH , SUBJECT TO FIL ING OF AN 'AFFIDAVIT' BY THE 7 ITA NO. 7697 /MUM/201 4 ASSESSMENT YEAR: 200 9 - 10 ASSESSEE WITH THE CIT(A), THEREIN DEPOSING THE FACTS AS HAD BEEN AVERRED BY HIM I N SUPPORT OF THE EXPLANATION AS REGA RDS THE DELAY IN FILING OF THE APPEAL. 4 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSE , AS ANNOUNCED IN THE COURT AT THE CONCLUSION OF THE HEARING . ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JU NE , 2016 SD/ - ( G.S.PANNU ) ACCOUNTANT MEMBER MUMBAI ; DATED: 30 /0 6 /2016 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, M UMBAI PRAMILA