Shri Florence V.Parmar, Baroda V. The CIT-I, Baroda

ITA 806/AHD/2011

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9474 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-01-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 14-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R I PATEL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Revision of order; Period of limitation; Condonation of delay
• Section: 143(3); 10B; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 806/AHD/2011 (ASSESSMENT YEAR: 2007-08) M/S. FLORENCE V. PARMAR, PROP. M/S. IMAT GROUP, 18, VISHRANTI ENCLAVE, BESIDES NANDHIDHAM SOCIETY, NEAR VASNA JAKAT NAKA, VASNA-BHAILI ROAD, BARODA. V/S COMMISSIONER OF INCOME TAX-1, BARODA (APPELLANT) (RESPONDENT) PAN: AHKPP5892L APPELLANT BY : SHRI S. N. SOPARKAR, AR RESPONDENT BY : SHRI R.I. PATEL, CIT/ D.R. ( )/ ORDER DATE OF HEARING : 05 -01-201 7 DATE OF PRONOUNCEMENT : 23 -01-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. WITH THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE C ORRECTNESS OF THE ORDER OF THE LD. CIT DATED 29.09.2010 MADE U/S. 263 OF TH E ACT. ITA NO. 806/ AHD/2011 . A.Y. 2007-08 2 2. THE ASSESSEE IS AGGRIEVED BY THE DIRECTION OF THE L D. CIT FOR THE WITHDRAWAL OF DEDUCTION U/S. 10A OF THE ACT. THE ASSESSEE IS F URTHER AGGRIEVED BY THE DIRECTIONS OF THE LD. CIT TO WITHDRAW THE CLAIM OF DEDUCTION PERTAINING TO ASSESSMENT YEARS 2008-09, 2009-10 & 2010-11. 3. THE APPEAL IS BARRED BY LIMITATION BY 97 DAYS. THE LD. SENIOR COUNSEL DREW OUR ATTENTION TO THE LETTER OF THE ASSESSEE REQUEST ING FOR CONDONATION OF DELAY. THE RELEVANT PART OF THE CONDONATION LETTER READS AS UNDER:- SUB: CONDONATION OF DELAY FOR FILING OF APPEAL REF: ORDER U/S. 263 OF THE I.T. ACT FOR THE A.Y. 2007-08 IN THE CASE OF THE APPELLANT, AN ORDER OF ASSESSMEN T WAS MADE U/S. 143(3) DATED 29.12.2009 ASSESSING THE TOTAL INCOME AT RS. 6,02,6 10/- AS AGAINST THE RETURNED INCOME OF RS. 4,43,330/-. THEREAFTER, THE LD. COMMISSIONER OF INCOME TAX - I, BARODA PASSED AN ORDER U/S 263 DIRECTING THE ASSESSING OFFICER TO RECOMPUTE TH E INCOME BY DISALLOWING THE DEDUCTION OF AN AMOUNT OF RS. 199.69 LAKHS AS PERTA INING TO WEBSITE / SOFTWARE DEVELOPMENT AND ITS MAINTENANCE. THE SAID DIRECTION WAS GIVEN CONSEQUENT UPON CERTAIN CONCESSIONS MADE BY THE APPELLANT IN THE CO URSE OF SURVEY PROCEEDINGS U/S. 133 A. THE APPELLANT HAD MADE THE CONCESSIONS WITHOUT UNDE RSTANDING THE INTRICACIES OF THE BUSINESS AS ALSO THE TECHNICALITIES RELATED THE RETO. SINCE THE ASSESSMENT WAS MADE BASED ON THE FINDINGS OF THE SURVEY AND ON THE BASIS OF THE AGREEMENT AND CONCESSION OF THE APPELL ANT, IT WAS GENUINELY AND BONAFIDELY BELIEVED THAT NO APPEAL COULD BE MADE. THE APPELLANT OUT OF THE GENUINE INTENTION OF UNDER STANDING THE PROVISIONS RELATING TO THE ELIGIBILITY OF THE CLAIM OF DEDUCTI ON U/S. 10A IN RELATION TO THE ACTIVITY OF WEBSITE / SOFTWARE DEVELOPMENT, VERIFIE D THE ACTIVITIES, DOCUMENTS AND ITA NO. 806/ AHD/2011 . A.Y. 2007-08 3 THE RELEVANT MATERIAL IN CONSULTATION WITH THE PERS ONS ACQUAINTED WITH THE TECHNICAL INTRICACIES AND THE BUSINESS CONDUCTED. F OR THIS PURPOSE, THE APPELLANT APPROACHED THE LD. A.O. ON VARIOUS OCCASIONS THROUG H HER AUTHORIZED REPRESENTATIVE FOR FURNISHING THE COPY OF STATEMENT S RECORDED DURING THE COURSE OF SURVEY AND ALSO THE MATERIAL IMPOUNDED. THE COPY OF STATEMENT WAS PROVIDED TO THE APPELLANT IN THE LAST WEEK OF JANUARY 2011 AND THE COPY OF SOME OF THE MATERIAL IS STILL NOT FURNISHED. HOWEVER, ON VERIFICATION OF THE MATERIAL AVAILABLE, IT WAS REALIZED THAT THE CONCESSION AND THE AGREEMENT AS MADE IN THE SURVEY PROCEEDINGS AND THE PROCEEDINGS U/S. 263 WAS ON MISTAKEN ASSUMPTION OF THE FACTS AS WELL AS THE LAW IN THIS REGARD. IT WAS ALSO GATHERED THAT THE LD. CIT WAS DUTY BOUND TO CONSIDER THE VARIOUS MATERIAL AVAILABLE ON RECORD IN RELATION TO THE CLAIM AND ADJUDICATE THE ELIGIBILITY OR OTHERWISE OF THE CLAIM INSTEAD OF ME RELY RELYING ON THE FINDINGS OF THE SURVEY PROCEEDINGS AS WELL AS CONCESSION GIVEN BY T HE APPELLANT. ON REALIZING THE POSITION WITH RESPECT TO THE RIGHT S OF THE APPELLANT IN LAW, THE APPELLANT IS NOW PREFERRING THE PRESENT APPEAL WHIC H IS BELATED ON ACCOUNT OF GENUINE AND BONAFIDE REASONS AS EXPLAINED ABOVE. THE PRESENT APPEAL, IN ACCORDANCE WITH LAW, WAS REQ UIRED TO BE FILED ON OR BEFORE 07.12.2010 I.E. WITHIN 60 DAYS FROM THE DATE OF REC EIPT OF ORDER ON 08.10.2010 (AS PER MEMORY). THE IMPUGNED ORDER WAS MADE FOLLOWING THE ACTION U/S. 263 IS MADE BASED ON THE FINDINGS OF THE SURVEY ON 01.09.2 010 WHEREIN SHRI VIJAY PARMAR, HUSBAND OF THE APPELLANT HAD AGREED TO WITH DRAW THE CLAIM MADE U/S. 10A IN RELATION TO THE ACTIVITY OF WEBSITE / SOFTWA RE DEVELOPMENT IN THE CIRCUMSTANCES, IT IS SUBMITTED THAT THE DELA Y WHICH IS BONAFIDE MAY PLEASE BE CONSIDERED AND THE -APPEAL MAY BE ADMITTED BY IT S CONDONATION. YOUR APPELLANT SUBMITS THAT A LIBERAL APPROACH BE TAKEN IN CONDONING THE DELAY OF 73 DAYS CAUSED ON ACCOUNT THE PECULIAR CIRCUMSTANCES A ND THE INTRICACIES OF THE BUSINESS ACTIVITY OF THE APPELLANT. 4. THE LD. D.R. STRONGLY OBJECTED FOR THE CONDONATION OF THE DELAY. IT IS SAY OF THE LD. D.R. THAT IT IS ON THE INSTANCE OF THE ASSE SSEE, THE LD. CIT INVOKED THE ITA NO. 806/ AHD/2011 . A.Y. 2007-08 4 POWERS VESTED UPON HIM U/S. 263 OF THE ACT AND WITH DREW THE CLAIM OF DEDUCTION. THE LD. D.R. CONTINUED BY STATING THAT S INCE THE ASSESSEE VOLUNTARILY ACCEPTED THE WITHDRAWAL, SHE SHOULD NOT HAVE ANY GRIEVANCE AND MORE OVER, SHE SHOULD NOT HAVE FILED ANY APPEAL . ACCORDING TO THE LD. D.R. THE DELAY IN FILING THE APPEAL IS NOT OUT OF A NY BONA FIDE REASON, THEREFORE, SHOULD NOT HAVE CONDONED. 5. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE LET TER REQUESTING FOR THE CONDONATION OF THE DELAY QUA THE OBJECTIONS RAISED BY THE LD. D.R. IN OUR UNDERSTANDING OF THE LAW, IT IS A CARDINAL PRINCIPL E OF LAW THAT NORMALLY BY AND LARGE, THE APPEALS ARE REQUIRED TO BE DECIDED O N MERITS RATHER THAN DISMISSING THE SAME ON TECHNICAL GROUND LIKE DELAY ETC. UNLESS IT IS FOUND THAT THERE WAS GROSS NEGLIGENCE ON THE PART OF THE ASSESSEE AND/OR THERE WAS ANY MALA FIDE INTENTION ON THE PART OF THE ASSE SSEE IN NOT PREFERRING THE APPEAL WITHIN THE PERIOD OF LIMITATION AND/OR I N FILING THE APPEALS BELATEDLY. FOR THIS PROPOSITION, WE DRAW SUPPORT FR OM THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT OF GUJARAT IN THE CASE OF JAYVANTSING N. VAGHELA 40 TEAXMANN.COM 491 IN TAX APPEAL NO. 853 & 854 OF 2013. 6. THE HONBLE SUPREME COURT IN THE CASE OF COLLECTEOR , LAND ACQUISITION, ANANTNAG VS. MST. KATIJI [1987] 2 SCC 107 HAS OBSER VED THAT ORDINARILY A LITIGANT DOES NOT STAND TO BENEFIT BY LODGING AN AP PEAL LATE. REFUSING TO CODONE THE DELAY CAN RESULT IN A MERITORIOUS MATTER BEING THROWN OUT AT THE VERY THRESHOLD AND CAUSE OF JUSTICE BEING DEFEATED. AS AGAINST THIS WHEN ITA NO. 806/ AHD/2011 . A.Y. 2007-08 5 DELAY IS CONDONED THE HIGHEST THAT CAN HAPPEN IS TH AT A CAUSE WOULD BE DECIDED ON MERITS AFTER HEARING THE PARTIES. 7. IN THE LIGHT OF THE AFOREMENTIONED OBSERVATIONS OF THE HONBLE SUPREME COURT, WE CONDONE THE DELAY ON MERITS OF THE CASE, RIVAL SUBMISSIONS WERE HEARD AT LENGTH AND WITH THE ASSISTANCE OF THE LD. SENIOR COUNSEL, WE HAVE PERUSED THE RELEVANT DOCUMENTARY EVIDENCES BROUGHT ON RECORD IN THE LIGHT OF RULE 18(6) OF THE ITAT RULES. 8. THERE IS NO DISPUTE THAT DURING THE COURSE OF SURVE Y OPERATION CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE. STATEMENT WA S RECORDED BY WHICH THE ASSESSEE STATED TO HAVE WITHDRAWN THE CLAIM OF DEDUCTION U/S. 10A OF THE ACT. IT IS ALSO TRUE THAT THE ASSESSEE REQUESTE D TO THE A.O. AND THE A.O. SENT A PROPOSAL TO THE LD. CIT TO ISSUE DIRECTIONS FOR REVISING THE ASSESSMENT ORDER U/S. 263 OF THE ACT. 9. THE CONTENTIOUS ISSUE BEFORE US IS TO SEE WHETHER T HE CLAIM OF THE ASSESSEE WAS NOT AS PER THE PROVISIONS OF THE LAW WHICH PROM PTED HER TO WITHDRAW THE SAID CLAIM. 10. A PERUSAL OF THE STATEMENT OF SHRI VIJAY PARMAR EXH IBITED AT PAGES 5 TO 34 OF THE PAPER BOOK SHOW THAT THE ASSESSEE IS HIS WIF E AND HE IS WORKING AS AN EMPLOYEE. WHEN SHRI VIJAY PARMAR WAS CONFRONTED WIT H THE STATEMENT OF HIS WIFE (ASSESSEE) THAT SHE HAS STATED THAT SHE KN OWS NOTHING ABOUT THE AFFAIRS OF IMAT GROUP. SHRI VIJAY PARMAR STATED THA T HE IS LOOKING AFTER THE ITA NO. 806/ AHD/2011 . A.Y. 2007-08 6 OPERATION. A FURTHER PERUSAL OF THE STATEMENT SHOWS THAT AT EVERY STAGE, THE DEPONENT ACCEPTED THE BUSINESS ACTIVITIES AND E XPLAINED IN DETAIL HOW THE WEB PORTAL OF THE ASSESSEE OPERATES. 11. WE ALSO FIND THAT THE SOFTWARE TECHNOLOGY PARKS OF INDIA (AN AUTONOMOUS SOCIETY UNDER DEPARTMENT OF INFORMATION TECHNOLOGY) , HAS ISSUED A REGISTRATION CERTIFICATE TO THE ASSESSEE AS EXHIBIT ED AT PAGES 41 TO 51 OF THE PAPER BOOK. 12. IN THE LIGHT OF THE NATURE OF ACTIVITIES EXPLAINED IN THE STATEMENT RECORDED DURING THE COURSE OF THE SURVEY PROCEEDINGS. LET US NOW CONSIDER THE NOTIFICATION NO. 890(E) ISSUED BY THE GOVERNMENT IN REFERENCE TO SECTION 10A(B)(I)(2), 10B(B)(I)(2) AND 80HHE(B) AND THE SAM E READS AS UNDER:- NOTIFICATION: 890(E) SECTION(S) REFERRED: S. 10A(B)(I)(2) ,S. 10B(B)(I)(2) ,S. 80HHE(B) STATUT E : INCOME TAX DATE OF ISSUE: 26/9/2000 IN EXERCISE OF THE POWERS CONFERRED BY CLAUSE (B) O F ITEM (I) OF EXPLANATION 2 OF SECTION 10A, CLAUSE (B) OF ITEM (I) OF EXPLANATION 2 OF SECTION 10B AND CLAUSE (B) OF EXPLANATION TO SECTION 80HHE OF THE INCOME-TAX ACT, 1961 (43 OF 1961), THE CENTRAL BOARD OF DIRECT TAXES HEREBY SPECIFIES THE FOLLOWING INFORMATION TECHNOLOGY ENABLED PRODUCTS OR SERVICES, AS THE CAS E MAY BE, FOR THE PURPOSE OF SAID CLAUSES, NAMELY : (I) BACK-OFFICE OPERATIONS ; (II) CALL CENTRES ; (III) CONTENT DEVELOPMENT OR ANIMATION ; (IV) DATA PROCESSING; ITA NO. 806/ AHD/2011 . A.Y. 2007-08 7 (V) ENGINEERING AND DESIGN ; (VI) GEOGRAPHIC INFORMATION SYSTEM SERVICES ; (VII) HUMAN RESOURCES SERVICES ; (VIII) INSURANCE CLAIM PROCESSING ; (IX) LEGAL DATABASES ; (X) MEDICAL TRANSCRIPTION; (XI) PAYROLL; (XII) REMOTE MAINTENANCE; (XIII) REVENUE ACCOUNTING; (XIV) SUPPORT CENTRES, AND; (XV) WEB-SITE SERVICES. [NOTIFICATION NO. 11521/F. NO. 142/49/2000-TPL] 13. WE FIND THAT THE BUSINESS ACTIVITIES OF THE ASSESSE E FIT INTO THE ELIGIBILITY CRITERIA FOR CLAIMING THE IMPUGNED DEDUCTION AS PER THE ABOVE NOTIFICATION. WE FIND THAT ON THE BASIS OF CERTAIN DISCUSSION AT THE TIME OF SURVEY PROCEEDINGS, THE ASSESSEE FORMED A BELIEF THAT SHE IS TECHNICALLY WRONG IN CLAIMING EXEMPTION U/S. 10A OF THE ACT WHICH TRIGGE RED FOR HER REQUEST OF WITHDRAWAL OF THE CLAIM OF DEDUCTION. 14. IN OUR UNDERSTANDING OF THE FACTS RELATING TO THE B USINESS ACTIVITIES OF THE ASSESSEE QUA THE STATEMENT RECORDED AT THE TIME OF SURVEY, THE ASSESSEE UNDER A MISTAKEN BELIEF HAS ACCEPTED TO WITHDRAW TH E CLAIM OF DEDUCTION WHICH SHE WAS OTHERWISE LEGALLY ENTITLED. ITA NO. 806/ AHD/2011 . A.Y. 2007-08 8 15. IT WOULD BE PERTINENT TO REFER TO THE OBSERVATIONS OF THE HONBLE HIGH COURT OF GUJARAT GIVEN IN THE CASE OF S. R. KOSHTI IN 276 ITR 165 AND THE SAME READS AS UNDER:- THE AUTHORITIES UNDER THE INCOME-TAX ACT, 1961 ARE UNDER AN OBLIGATION TO ACT IN ACCORDANCE WITH LAW. TAX CAN BE COLLECTED ONLY AS P ROVIDED UNDER THE ACT. IF AN ASSESSEE, UNDER A MISTAKE, MISCONCEPTION OR ON NOT BEING PROPERLY INSTRUCTED, IS OVER-ASSESSED, THE AUTHORITIES UNDER THE ACT ARE RE QUIRED TO ASSIST HIM AND ENSURE THAT ONLY LEGITIMATE TAXES DUE ARE COLLECTED. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS O F THE REVENUE. WHEN AN ASSESSING OFFICER HAS ADOPTED ONE OF THE COURSES PE RMISSIBLE IN LAW, WHICH HAS RESULTED IN LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE VIEW, WITH WHICH THE COMMISSI ONER DOES NOT AGREE, THE ORDER CANNOT BE TREATED TO BE ERRONEOUS AND PREJUDI CIAL TO THE INTERESTS OF THE REVENUE. ONCE AN ASSESSEE IS IN A POSITION TO SHOW THAT HE H AS BEEN OVER-ASSESSED UNDER THE PROVISIONS OF THE ACT, REGARDLESS OF WHETHER TH E OVER-ASSESSMENT IS AS A RESULT OF THE ASSESSEE'S OWN MISTAKE OR OTHERWISE, THE COM MISSIONER HAS THE POWER TO CORRECT SUCH AN ASSESSMENT UNDER SECTION 264(1) OF THE INCOME-TAX ACT, 1961. IF THE COMMISSIONER REFUSES TO GIVE RELIEF TO THE ASSE SSEE, HE WOULD BE ACTING DE HORS THE POWERS UNDER THE ACT. 16. IN THE LIGHT OF THE AFORE-STATED OBSERVATIONS OF TH E HONBLE JURISDICTIONAL HIGH COURT, WE CAN SAY THAT THE LD. COMMISSIONER SH OULD NOT HAVE INVOKED THE POWERS VESTED UPON HIM U/S. 263 OF THE ACT MERE LY ON THE STRENGTH OF THE STATEMENT RECORDED AT THE TIME OF SURVEY PROCEE DINGS. A CONSPECTUS READING OF THE STATEMENT RECORDED AT THE TIME OF SU RVEY SHOWS THAT THERE IS NO CONCESSION ON FACT. THE CONCESSION IS ONLY IN RE LATION TO THE LAW AND THAT ITA NO. 806/ AHD/2011 . A.Y. 2007-08 9 TOO WAS UNDER A WRONG BELIEF. AS OBSERVED BY THE HO NBLE JURISDICTIONAL HIGH COURT (SUPRA), THE LD. COMMISSIONER SHOULD NOT HAVE REVISED THE COMPLETED ASSESSMENT MADE U/S. 143(3) OF THE ACT. T HE LD. COMMISSIONER FURTHER ERRED IN DIRECTING THE A.O. TO WITHDRAW THE CLAIM OF DEDUCTION IN SUBSEQUENT ASSESSMENT YEARS ALSO I.E. A.YS. 2008-09 , 2009-10 & 2010-11. 17. IN OUR CONSIDERED OPINION, THE LD. CIT OUGHT TO HAV E VERIFIED INDEPENDENTLY THE ELIGIBILITY OF THE CLAIM AND THE DEDUCTION PERM ISSIBLE TO THE ASSESSEE. CONSIDERING THE BUSINESS ACTIVITIES OF THE ASSESSEE AS EXPLAINED DURING THE COURSE OF THE SURVEY PROCEEDINGS, IN OUR UNDERSTAND ING OF THE LAW, THE ASSESSEE WAS VERY MUCH ELIGIBLE FOR THE CLAIM OF DE DUCTION U/S. 10A OF THE ACT WHICH IS WELL SUPPORTED BY THE NOTIFICATION EXH IBITED ELSEWHERE. CONSIDERING THE FACTS IN TOTALITY, WE SET ASIDE THE ORDER OF THE LD. CIT AND RESTORE THAT OF THE A.O. 18. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 23- 01- 20 17 SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 23/01/2017 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD.