M/s Wipro Chandrika Private Limited , Bangalore V. Assistant Commissioner of Income TAx Circle-7(1)(2), Bangalore

ITA 788/BANG/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 8208 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 14-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P V SRINIVASAN
• Keywords: Condonation of delay
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI JASON P. BOAZ , ACCOUNTANT MEMBER I TA NO. 788/BANG/2018 ASSESSMENT YEAR : 2013 - 14 WIPRO CHANDRIKA PRIVATE LTD., C BLOCK, CCLG, SARJAPUR ROAD, DODDAKANNELLI, BANGALORE 560 035. PAN: AAACW 3976A VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 7(1)(2), BANGALORE. APP EL L ANT RESPONDENT APP ELL ANT BY : SHRI P.V. SRINIVASAN, CA RE SPONDENT BY : SHRI VIKAS K. SURYAWAMSHI, ADD L .CIT(DR)(ITAT), BENGALURU. DATE OF HEARING : 18.12. 201 8 DATE OF PRONOUNCEMENT : 04 .01. 201 9 O R D E R PER N.V. VASUDEVAN, VICE PRESIDENT THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 05.01.2018 OF THE CIT(APPEALS)-7, BENGALURU RELATING TO ASSESS MENT YEAR 2013-14. 2. THE ASSESSEE IS A COMPANY WHICH IS A SUBSIDIARY OF WIPRO ENTERPRISES LTD. AN ORDER OF ASSESSMENT DATED 28.0 3.2016 FOR AY 2013-14 WAS PASSED BY THE AO U/S. 143(3) OF THE INCOME-TAX ACT, 1961 [THE ACT]. AGGRIEVED BY THE ADDITION MADE IN THE AFORESAID ORD ER OF ASSESSMENT, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(APPEALS). THE APPEAL BEFORE THE CIT(APPEALS) OUGHT TO HAVE BEEN FILED BY THE ASSESS EE ON 10.03.2017. ITA NO.788/BANG/2018 PAGE 2 OF 5 THERE WAS A DELAY OF ABOUT 309 DAYS IN FILING THE A PPEAL BEFORE THE CIT(APPEALS). THE ASSESSEE FILED AN APPLICATION FO R CONDONATION OF DELAY BEFORE THE CIT(APPEALS), BUT THE SAME WAS NOT ACCEP TED THE CIT(A). THE REASONS GIVEN BY THE ASSESSEE BEFORE THE CIT(APPEAL S) WAS THAT PURSUANT TO A SCHEME OF ARRANGEMENT ('THE SCHEME') UNDER SEC TION 391 TO 394 OF THE COMPANIES ACT, 1956, WIPRO LIMITED HAD DEMERGED ITS NON IT BUSINESS COMPRISING CONSUMER CARE AND LIGHTING, INFRASTRUCTU RE ENGINEERING AND OTHER NON IT BUSINESS SEGMENTS INTO WIPRO ENTERPRIS ES LIMITED (THE HOLDING COMPANY OF THE ASSESSEE). THE ASSESSEE WAS BEING SU PPORTED FOR A SHORT PERIOD BY AN EMPLOYEE OF WIPRO LIMITED, AS A PART O F THE TRANSITION MEASURE. HOWEVER, THE PERSON ASSISTING THE ASSESSEE (FROM WIPRO LIMITED) HAD SUBMITTED HIS RESIGNATION IN MARCH 201 6 AND WAS RELIEVED THEREAFTER. IT WAS ONLY IN SEPTEMBER 2016 THAT A PE RSON WAS APPOINTED TO OVERSEE THE TAX FUNCTION. THE PERSON APPOINTED TO O VERSEE TAX MATTERS, TOOK A SHORT WHILE TO FILE THE APPEAL SINCE HE HAD TO (I) ACQUAINT HIMSELF WITH THE DIVERSE BUSINESS AND THE RELEVANT FACTS AND (B) CLEAR THE BACK-LOG IN WORK ACCUMULATED OVER A PERIOD. WHILE REVIEWING PAS T ORDERS, THE TAX MANAGER HAPPENED TO STUMBLE ON THE ASSESSMENT ORDER PASSED BY THE LEARNED AO AND IMMEDIATELY THEREAFTER TOOK STEPS FI LING THE APPEAL. THE ASSESSEE ALSO SUBMITTED THAT THE DELAY WAS ONLY BEC AUSE OF THE DEMERGER AND THE NEED TO BUILD A SEPARATE TEAM. IT WAS ALSO SUBMITTED THAT THE DELAY IS NOT OCCASIONED DELIBERATELY, OR ON ACCOUNT OF MALA FIDES AND THAT THE ASSESSEE DOES NOT STAND TO BENEFIT BY RESO RTING TO DELAY. IT WAS FURTHER SUBMITTED THAT INTEREST EXPENSES THAT WAS D ISALLOWED WAS OFFERED TO TAX BY THE HOLDING COMPANY. THE ASSESSE E HAD BORROWED LOANS FOR ACQUISITION OF BRAND CHANDRIKA AND PAID INTEREST ON SUCH LOAN. THE INTEREST EXPENSE WAS DISALLOWED FOR THE REASON THAT THE ASSESSEE DID NOT EARN ANY INCOME FROM USE OF THE BR AND. IT WAS SUBMITTED BY THE ASSESSEE THAT THE FACT THAT SUCH I NTEREST INCOME HAS ITA NO.788/BANG/2018 PAGE 3 OF 5 BEEN OFFERED TO TAX IN THE BOOKS OF THE HOLDING COM PANY SUPPORTS THE CASE OF THE ASSESSEE. 3. THE CIT(A) HOWEVER DID NOT ACCEPT THE AFORESAID PLEA OF THE ASSESSEE FOR THE FOLLOWING REASONS:- 4.7 IN THE INSTANT CASE THE 'SUFFICIENT CAUSE' AS STATED BY THE APPLICANT IS THAT THE EMPLOYEE RESPONSIBLE FOR TAX MATTERS RESIGNED AND HIS SUBSTITUTE WAS PUT IN PLACE AFTER A GAP WHO FURTHER TOOK TIME TO ACQUAINT HIMSELF WITH FACTS AN D CLEAR THE BACKLOG OF PENDING MATTERS. NO EVIDENCE IS BROUGHT ON RECORD TO SUPPORT THIS CLAIM BY THE APPELLANT. FURTHER, THE A PPELLANT IS A COMPANY OF A WELL KNOWN GROUP BEING MANAGED PROFESS IONALLY BY COMPETENT EXECUTIVES AND MANAGERS. IT IS BEYOND COMPREHENSION AS TO HOW DEPARTURE OF ONE EMPLOYEE C REATED SUCH A DISRUPTION IN THE MANAGEMENT OF TAXATION MATTERS THAT FILING OF APPEAL WAS FORGOTTEN FOR NEARLY A YEAR. HENCE, THIS EXPLANATION CANNOT BE ACCEPTED AS A SUFFICIENT REASON FOR THE F AILURE ON THE PART OF THE APPELLANT TO FILE APPEAL IN TIME BECAUS E ACCEPTING THIS KIND OF EXPLANATION TO CONDONE THE DELAY WILL TRIVI ALIZE THE VERY PURPOSE OF THE PROVISION PRESCRIBING SUCH A STIPULA TION FOR FILING APPEAL. AND ALSO SUCH AN EXPLANATION OF NEGLIGENCE, IF ACCEPTED, CAN EXPLAIN ANY DELAY IN FILING THE APPEAL LEADING TO DEFEAT OF THE VERY PURPOSE AND RATIONALE OF THE PROVISION. IN VIE W OF THE ABOVE, I AM OF THE CONSIDERED OPINION THAT THE APPELLANT H AS FAILED TO GIVE THE SUFFICIENT REASON FOR THE DELAY OF FILING OF APPEAL AND HENCE, THE DELAY IN FILING THE APPEAL CANNOT BE CON DONED. CONSEQUENTLY, THE APPEAL OF THE APPELLANT IS TREATE D AS INVALID. 4. AGGRIEVED BY THE ORDER OF CIT(APPEALS), THE A SSESSEE HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. AN AFFIDAV IT HAS BEEN FILED BEFORE US BY THE AUTHORISED SIGNATORY OF THE ASSESS EE GIVING THE SAME REASONS AS WERE GIVEN BEFORE THE CIT(APPEALS). THE LD. COUNSEL FOR THE ASSESSEE WHILE REITERATING THE CONTENTIONS OF THE A FFIDAVIT, AND MADE A STATEMENT ACROSS THE BAR THAT ON 27.04.2016, THE PE RSON LOOKING AFTER THE ITA NO.788/BANG/2018 PAGE 4 OF 5 TAX AFFAIRS OF ASSESSEE RESIGNED. THE NEW PERSON I N CHARGE OF TAX AFFAIRS JOINED THE SERVICE IN AUGUST, 2016 AND IT TOOK SOME TIME FOR HIM TO FILE THE APPEAL AND AN APPEAL WAS FILED ULTIMATELY IN THE MO NTH OF MARCH, 2017. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE RE IS NO WILLFUL OR INTENTIONAL DELAY AND RELIED ON THE DECISIONS WHICH WERE CITED BEFORE THE CIT(APPEALS). IT WAS SUBMITTED BY HIM THAT A LIBER AL APPROACH SHOULD BE ADOPTED IN THE MATTER OF CONDONATION OF DELAY IN WH ICH REGARD, HE RELIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CA SE OF N. BALAKRISHNAN V. M. KRISHNAMURTHY DATED 03.09.1998. THE LD. DR RELIED ON THE ORDER OF CIT(APPEALS). 6. AT THE OUTSET, WE OBSERVE THAT THE HONBLE SUPRE ME COURT, IN THE CASE OF COLLECTOR, LAND ACQUISITION V. MST. KATIJI & ORS. ( 1987) 167 ITR 471 AND ALSO IN THE CASE OF CONCORD OF INDIA INSURANCE CO. LTD. V. SMT. NIRMALA DEVI AND ORS. 118 ITR 507.MST. KATIJI (SUPRA) , HAS EXPLAINED THE PRINCIPLES THAT NEED TO BE KEPT IN MIND WHILE CONSIDERING AN A PPLICATION FOR CONDONATION OF DELAY. THE HONBLE APEX COURT HAS EM PHASIZED THAT SUBSTANTIAL JUSTICE SHOULD PREVAIL OVER TECHNICAL C ONSIDERATIONS. THE COURT HAS ALSO EXPLAINED THAT A LITIGANT DOES NOT STAND T O BENEFIT BY LODGING THE APPEAL LATE. THE COURT HAS ALSO EXPLAINED THAT EVER Y DAYS DELAY MUST BE EXPLAINED DOES NOT MEAN THAT A PEDANTIC APPROACH SH OULD BE TAKEN. THE DOCTRINE MUST BE APPLIED IN A RATIONAL COMMON SENSE AND PRAGMATIC MANNER. KEEPING IN MIND THE AFORESAID JUDICIAL PRO NOUNCEMENT, I AM OF THE VIEW THAT THE DELAY IN FILING THE APPEAL SHOULD BE CONDONED. THE CIRCUMSTANCES EXPLAINED IN THE AFFIDAVIT SHOWS THAT THERE HAS BEEN NO EXTRANEOUS REASONS FOR FILING THE APPEAL BELATEDLY. AS EXPLAINED BY THE HONBLE SUPREME COURT IN THE CASE OF M.KRISHNAMURTHY (SUPRA) , LACK OF EXTRA VIGILANCE SHOULD BE A GROUND TO DEPICT A LITI GANT IRRESPONSIBLE. WE THEREFORE DIRECT THAT THE DELAY IN FILING APPEAL BE FORE CIT(A) BE CONDONED. SINCE THE CIT(A) HAS NOT DECIDED THE APPEAL ON MERI TS, WE REMAND THE ITA NO.788/BANG/2018 PAGE 5 OF 5 GROUNDS RAISED BY THE ASSESSEE ON MERITS BEFORE CIT (A) FOR CONSIDERATION BY CIT(A) ON MERITS AFTER AFFORDING ASSESSEE OPPORT UNITY OF BEING HEARD. 7. THE APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. PRONOUNCED IN THE OPEN COURT ON THIS 04 TH DAY OF JANUARY, 2019. SD/- SD/- ( JASON P. BOAZ ) ( N.V. VASUDEVAN ) ACCO UNTANT MEMBER VICE PRESIDENT BANGALORE, DATED, THE 04 TH JANUARY, 2019. / D ESAI S MURTHY / COPY TO: 1. THE APP ELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD F ILE BY ORDER ASSISTANT REGISTRAR / SENIOR PRIVATE SECRETARY ITAT, BANGALORE.