M/s. Brijlaxmi Leasing & Finance Ltd., Baroda V. The ACIT, Circle-1(1), Baroda

ITA 858/AHD/2015

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 0763 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 10-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MEHUL K PATEL
• Keywords: Condonation of delay
• Section: 143(3)

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SMT. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. NOS. 858 & 859/AHD/2015 ( ASSESSMENT YEAR : 2003-04) M/S. BRIJLAXMI LEASING & FINANCE LTD. 204, STERLING CENTRE, R. C. DUTT ROAD, BARODA -390007 / VS. ASSTT. COMMISSIONER OF INCOME TAX CIRCLE-1(1), BARODA - 390007 / / PAN/GIR NO. : AABCB9524F ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI MEHUL K. PATEL, A.R. / RESPONDENT BY : SHRI MUDIT NAGPAL, SR. D.R. DATE OF HEARING 19/09/2018 !'# / DATE OF PRONOUNCEMENT 08/10/2018 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL IN ITA NO.858/AHD/2015 ARISES FROM THE ORDER OF THE CIT(A) DATED 20.01.2015 IN RELATION TO ASSESSMENT ORDER PASSED UNDER S.143(3) OF THE INCOME TAX ACT, 1961 ( THE ACT) DATED 25.01.2016 CONCERNING AY 2003-04. THE APPEAL IN IT A NO. 859/AHD/2015 CONCERNS IMPOSITION OF PENALTY UNDER S .271(1)(C) OF THE ACT ARISING FROM THE ORDER OF THE CIT(A) DATED 20.0 1.2015 IN RELATION TO PENALTY ORDER PASSED BY THE AO DATED 20.06.2007 UNDER S.271(1)(C) OF THE ACT CONCERNING AY 2003-04. I.T.A. NOS. 858 & 859/AHD/15 [M/S. BRIJLAXMI LEASIN G & FINANCE LTD. VS. ACIT] A.Y. 2003-04 - 2 - 2. WE SHALL FIRST TAKE UP QUANTUM APPEAL IN ITA NO. 858/AHD/2015 FOR ADJUDICATION PURPOSES. 3. WHEN THE MATTER WAS CALLED FOR HEARING, THE LEAR NED AR SUBMITTED THAT THE ASSESSEE IS AGGRIEVED BY THE DIS ALLOWANCE ON ACCOUNT OF LOSS ON SALE OF CERTAIN INVESTMENTS AMOU NTING TO RS.29,31,239/-. THE LEARNED AR HOWEVER IN THE SAME VAIN, POINTED OUT THAT THE CIT(A) HAS DISMISSED THE APPEAL OF THE ASS ESSEE AS NON MAINTAINABLE ON THE GROUNDS OF LACK OF JURISDICTION . THE LEARNED AR ADVERTED TO THE PECULIAR FACTS OF THE CASE TO SUBMI T THAT THE ASSESSEE FILED RETURN OF INCOME ON 30.11.2003 DECLARING TOTA L INCOME OF RS.17,56,577/-. HOWEVER, THE RETURN WAS FILED WITH OUT PAYMENT OF TAXES DUE AS DETERMINED ON THE INCOME RETURNED BY T HE ASSESSEE. THE RETURN WAS SUBJECTED TO SCRUTINY ASSESSMENT AND CER TAIN ADDITIONS/DISALLOWANCES MADE BY THE AO. THE ASSESS EE PREFERRED APPEAL AGAINST THE AFORESAID ORDER OF THE AO PASSED UNDER S.143(3) OF THE ACT DATED 16.11.2007 BEFORE THE CIT(A). THE CI T(A) HOWEVER DISMISSED THE APPEAL OF THE ASSESSEE ON THE GROUND ON NON-COMPLIANCE OF THE STATUTORY NOTICE VIDE ORDER DATED 03.01.2007 . THEREAFTER, THE ASSESSEE FILED ANOTHER APPEAL BEFORE THE CIT(A) AGA IN AND ALONGWITH PETITION FOR CONDONATION OF DELAY ON THE PREMISE TH AT THE EARLIER APPEAL WAS NOT MAINTAINABLE AT ALL IN VIEW OF THE MANDATOR Y PROVISIONS OF SECTION 249(4)(A) OF THE ACT. THE CIT(A) HOWEVER D ID NOT ENTERTAIN THE APPEAL FILED FOR THE SECOND TIME BEFORE HIM ON THE GROUND THAT CIT(A) IS NOT COMPETENT TO ENTERTAIN SUCH ANOTHER A PPEAL WITHOUT JURISDICTION AND SUCH ACTION TANTAMOUNTS TO REVIEW. IN THIS BACKDROP, THE LEARNED AR FOR THE ASSESSEE REFERRED TO THE PRO VISIONS OF SECTION 249(4)(A) OF THE ACT AND SUBMITTED THAT NO APPEAL B EFORE THE CIT(A) CAN BE ADMITTED UNLESS THE ASSESSEE HAS PAID TAX DU ES ON THE INCOME RETURNED. IT IS AN ADMITTED POSITION THAT THE ASSE SSEE HAD NOT PAID TAX DUES ON THE RETURNED INCOME AT THE TIME OF FILING T HE APPEAL TILL THE I.T.A. NOS. 858 & 859/AHD/15 [M/S. BRIJLAXMI LEASIN G & FINANCE LTD. VS. ACIT] A.Y. 2003-04 - 3 - DISPOSAL OF THE APPEAL DATED 03.01.2007. THUS, THE AFORESAID APPEAL IN THE FIRST ROUND WAS NON-EST AND NOT MAINTAINABLE AT THE THRESHOLD. WHEN THE FIRST ORDER ON A NON-MAINTAINABLE APPEAL I S NON-EST, THE CIT(A) OUGHT TO HAVE ENTERTAINED THE APPEAL FILED F OR ADJUDICATION AGAIN AFTER PAYMENT OF TAXES IN THE SECOND ROUND OF PROCEEDINGS. THERE IS NO REVIEW IN THE PRESENT CASE AS THE FIRST ORDER WAS NON-EST AT THE THRESHOLD AND WAS NOT PASSED ON MERITS. THE LE ARNED AR ALSO POINTED OUT THAT THE CIT(A) HAS TAKEN A CONTRADICTO RY STAND AND REJECTED THE APPEAL FILED BEFORE THE CIT(A) IN QUAN TUM PROCEEDINGS ON THE GROUND OF DISPOSAL OF APPEAL EARLIER; WHEREAS I N THE SIMILAR CIRCUMSTANCES AND FOR THE SAME CAUSE OF ACTION, THE CIT(A) AGREED WITH THE PLEA OF THE ASSESSEE THAT APPEAL FILED BEF ORE THE CIT(A) EARLIER COULD NOT LIE BEFORE THE CIT(A) IN THE ABSE NCE OF PAYMENT OF ADMITTED TAX AS PER RETURNED INCOME IN VIEW OF THE MANDATORY PROVISIONS OF SECTION 249(4)(A) OF THE ACT AND PROC EEDED TO ADJUDICATE THE APPLICABILITY OF PENALTY UNDER S.271(1)(C) OF T HE ACT ON MERITS ON THE APPEAL FILED AGAIN. THE LEARNED AR ACCORDINGLY URGED FOR SETTING ASIDE THE QUANTUM APPEAL IN ITA NO.858/AHD/2015 TO THE FILE OF THE CIT(A) FOR ADJUDICATION OF ITS APPEAL ON MERITS. I N THE SAME VAIN, THE LEARNED AR SUBMITTED THAT ITA NO.859/AHD/2015 CONCE RNS PENALTY EMANATING FROM THE QUANTUM PROCEEDINGS AND THEREFOR E ALSO REQUIRES TO BE SET ASIDE TO BE ADJUDICATED AFRESH BY THE CIT (A) IN THE LIGHT OF THE OUTCOME OF QUANTUM APPEAL AND IN ACCORDANCE WIT H LAW. 4. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON T HE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. THE OVERRIDING POINT FOR ADJUDICATION IN THE PRESENT CA SE IS MAINTAINABILITY OF APPEAL BEFORE THE CIT(A) RE-FILED YET AGAIN AFTE R DISPOSAL OF THE EARLIER APPEAL ON THE GROUND THAT EARLIER APPEAL CO ULD NOT LIE BEFORE THE I.T.A. NOS. 858 & 859/AHD/15 [M/S. BRIJLAXMI LEASIN G & FINANCE LTD. VS. ACIT] A.Y. 2003-04 - 4 - CIT(A) AT THE FIRST INSTANCE IN VIEW OF THE MANDATO RY FETTERS PLACED BY SECTION 249(4)(A) OF THE ACT WHEREBY THE ASSESSEE I S BOUND TO PAY ADMITTED TAX ON THE RETURNED INCOME FOR ADMISSION O F THE APPEAL BEFORE THE CIT(A) FOR EFFECTIVE DISPOSAL. IT IS THE CASE OF THE ASSESSEE THAT IN VIEW OF THE MANDATORY PROVISIONS UNDER S. 249(4)(A) OF THE ACT, THE EARLIER APPEAL (DISPOSED OF BY THE CIT(A) FOR NON P ROSECUTION) WAS NON-EST AND AN INHERENTLY INADMISSIBLE APPEAL HAVIN G REGARD TO THE FACT THAT THE ASSESSEE FAILED TO COMPLY WITH THE STIPULA TIONS MADE IN SECTION 249(4)(A) OF THE ACT TOWARDS PAYMENT OF ADM ITTED TAX. THE APPEAL ONCE AGAIN FILED BEFORE THE CIT(A) AFTER BRO AD COMPLIANCE OF SECTION 249(4)(A) OF THE ACT IS THEREFORE THE EFFEC TIVE APPEAL MAINTAINABLE BEFORE THE CIT(A) FOR ADJUDICATION ON MERITS. THIS POSITION TAKEN BY THE ASSESSEE HAS BEEN ACCEPTED BY THE CIT(A) ALBEIT IN PENALTY APPEAL. THE RELEVANT OPERATIVE PARA OF THE ORDER OF THE CIT(A) IN PENALTY APPEAL IS REPRODUCED HEREUNDER FO R READY REFERENCE: 5. I HAVE CONSIDERED THE FACTS OF THE CASE AS WELL AS THE ORDER OF THE AO AND THE SUBMISSION OF THE AR OF THE APPELLAN T. THE FACTS INVOLVED IN THE CASE OF APPELLANT ARE THAT IN ITS C ASE ASSESSMENT ORDER U/S 143(3) R.W.S. 144OF THE ACT DATED 25/01/2 006 WAS PASSED BY THE AO FOR THE YEAR UNDER CONSIDERATION BY DISALLOW ING THE LOSS ON SALE OF SHARES OF RS.29,31,329/-. WHILE COMPLETING THE ASSESSMENT U/S 143(3), THE AO ALSO INITIATED PENALTY PROCEEDING U/ S 271(1)(C) OF THE IT. ACT. SUBSEQUENT TO PASSING OF ORDER U/S 143(3)/ THE AO PASSED PENALTY ORDER U/S 271(1)(C) LEVYING THE PENALTY OF RS. 10,78,000/- FOR THE YEAR UNDER CONSIDERATION. THE APPELLANT HAD FIL ED APPEAL TO THE CIT(A)-1, BARODA AGAINST THIS PENALTY ORDER U/S 271 (1)(C) DATED 20/06/2007 AS PASSED BY THE AO. HOWEVER, THE LD. CI T(A)-1, BARODA (I.E. MY PREDECESSOR) DISMISSED THE APPEAL OF THE A PPELLANT ON THE GROUND THAT THE APPELLANT HAD NOT PAID TAX DUE ON T HE RETURNED INCOME IN FULL BEFORE FILING THE APPEAL. AS PER THE LD. CIT(A) THE SELF ASSESSMENT TAX U/S 40A WAS NOT PAID IN THE CASE OF APPELLANT FOR THE YEAR UNDER CONSIDERATION IN FULL AND ALSO THE INSTA LLMENTS GRANTED I.T.A. NOS. 858 & 859/AHD/15 [M/S. BRIJLAXMI LEASIN G & FINANCE LTD. VS. ACIT] A.Y. 2003-04 - 5 - WERE NOT ADHERE TO. IN VIEW OF THIS FACT THE APPEAL OF THE APPELLANT WAS NOT ADMITTED BY THE LD. CIT(A) U/S 2.49(4) (A). HOWEVER, THE APPELLANT HAS SUBSEQUENTLY PAID THE ENTIRE SELF ASS ESSMENT TAX AMOUNTING TO RS.9,21,701/- ON VARIOUS DATES. BASED ON THIS, THE APPELLANT HAS PRAYED THAT THE APPEAL MAY BE RESTORE D FOR FRESH HEARING. 5.1 THE ABOVE PLEA OF THE APPELLANT IS FOUND TO BE ACCEPTABLE IN VIEW OF DECISION OF HON'BLE ITAT, AHMEDABAD IN THE CASE OF ITO AHMEDABAD VS. ANKUSH FIN STOCK LTD. 21 TAXMANN.COM 119. IN THIS PARTICULAR CASE THE QUESTION BEFORE THE HON'BLE ITA T AROSE AS TO WHETHER CIT(A) CAN NOT ADMIT AN APPEAL U/S 249(4) I N CASE OF DEFAULT OF NOT PAYMENT OF TAX, BUT ON REMOVABLE OF DEFECT O F NONPAYMENT OF TAX AN APPEAL DESERVES TO BE ADMITTED. THE HON'BLE ITAT HAS REPLIED THIS QUESTION IN AFFIRMATIVE I.E. YES. AS PER THE H ON'BLE ITAT ON REMOVABLE OF DEFECT ON NONPAYMENT OF TAX AN APPEAL CAN BE ADMITTED. THE HON'BLE ITAT, AHMEDABAD, BENCH WC' AFTER FOLLOW ING THE DECISION OF HON'BLE ITAT, MUMBAI IN THE CASE OF SAI KRUPA CONSTRUCTION COMPANY, 13 SOT 459 HAS HELD THAT IF A N APPEAL HAS BEEN FILED AFTER MAKING PAYMENT OF UNPAID TAXES, IT CANNOT BE SAID THAT THE REQUIREMENT OF SECTION 249(4) HAS NOT BEEN COMPLIED WITH AND THE ONLY REQUIREMENT OF SECTION 249(4) IS PAYME NT OF TAX DUE ON RETURNED INCOME. FOLLOWING THIS DECISION OF HON'BLE ITAT, AHMEDABAD IN THE CASE OF ITO VS. ANKUSH FIN STOCK L TD., THE APPEAL OF THE APPELLANT IS ADMITTED AND ACCORDINGLY THE AP PEAL OF THE APPELLANT IS DECIDED ON MERITS. 6. A BARE READING OF SECTION 249(4)(A) OF THE ACT G IVES AN INFALLIBLE IMPRESSION THAT THE APPEAL BEFORE THE CI T(A) WOULD LIE FOR ADJUDICATION ON MERITS ONLY ON SATISFACTION OF THE MANDATORY CONDITION TOWARDS PAYMENT OF TAX DETERMINED AS PER THE INCOME RETURNED. A WAIVER OF SUCH MANDATORY PROVISION FOR ADJUDICATION OF APPEAL ON MERITS WITHOUT COMPLIANCE THEREOF IS TOTALLY IMPERM ISSIBLE. THUS, THE I.T.A. NOS. 858 & 859/AHD/15 [M/S. BRIJLAXMI LEASIN G & FINANCE LTD. VS. ACIT] A.Y. 2003-04 - 6 - JURISDICTION COULD NOT BE CONFERRED ON THE CIT(A) T O ADJUDICATE THE APPEAL ON MERITS EVEN IF ACQUIESCENCED OR ESTOPPEL OR THE BAR OF RES JUDICATA BEING ATTRACTED BECAUSE THE ORDER IN SUCH CASE WOUL D LACK INHERENT JURISDICTION UNLESS THE CONDITIONS PRECEDE NT ARE FULFILLED. THE ORDER PASSED IN THE FIRST INSTANCE IN CONTRAVENTION OF SECTION 249(4)(A) OF THE ACT IS THUS A VOID ORDER AND HENCE A NULLITY IN THE EYES OF LAW. BESIDES, THE CIT(A) ITSELF, IN A SIMILARLY PLACED S ITUATION, HAS TAKEN A FAVOURABLE VIEW IN THE PENALTY PROCEEDINGS BEFORE I T. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE APPELLATE ORDER PASSED BY THE CIT(A) PURSUANT TO AP PEAL FILED BY THE ASSESSEE PRIOR TO NON-PAYMENT OF ADMITTED TAX IS A NONEST ORDER AND DESERVES TO BE QUASHED. THE APPEAL RE-FILED BY THE ASSESSEE BEFORE THE CIT(A) THUS REQUIRES TO BE RESTORED AND REVIVED AS A REGULAR APPEAL FOR ADJUDICATION ON ALL ASPECTS AS RAISED OR SOUGHT TO BE RAISED BEFORE THE CIT(A) INCLUDING CONDONATION OF DELAY. THEREFORE, WE ADMIT THE PRAYER OF THE ASSESSEE FOR RESTORATION OF APPEAL FI LED SECOND TIME FOR ITS DISPOSAL IN ACCORDANCE WITH LAW. CONSEQUENTLY, WHILE THE ORDER OF THE CIT(A) DATED 03.01.2007 IS QUASHED, THE SECOND ORDER OF THE CIT(A) DATED 20.01.2015 WHICH IS SUBJECT MATTER OF THE APPEAL BEFORE US, IS SET ASIDE AND RESTORED AND ALL THE ISSUES IN RELATION TO THE APPEAL CONNECTED ARE REMANDED BACK TO THE FILE OF THE CIT( A) FOR ITS CONSIDERATION AFRESH AND ADJUDICATION IN ACCORDANCE WITH LAW. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO. 858/AHD/2015 IS ALLOWED FOR STATISTICAL PURPOSES. 8. AS THE QUANTUM APPEAL IN ITA NO.858/AHD/2015 IS BEING RESTORED BACK TO THE FILE OF THE CIT(A) FOR ADJUDIC ATION, THE APPELLATE ORDER PASSED IN THE CONSEQUENTIAL PENALTY PROCEEDIN GS DATED 20.01.2015 WHICH IS THE SUBJECT MATTER OF THE APPEA L IN ITA NO.859/AHD/2015 ALSO REQUIRES TO BE RESTORED AS A L OGICAL COROLLARY I.T.A. NOS. 858 & 859/AHD/15 [M/S. BRIJLAXMI LEASIN G & FINANCE LTD. VS. ACIT] A.Y. 2003-04 - 7 - THEREOF. CONSEQUENTLY, ORDER OF THE CIT(A) APPEALE D AGAINST IN ITA NO.859/AHD/2015 IS ALSO SET ASIDE AND RESTORED BACK TO THE FILE OF THE CIT(A) FOR ADJUDICATION ON CORRECTNESS OF ACTION TO WARDS IMPOSITION OF PENALTY UNDER S.271(1)(C) OF THE ACT IN THE LIGHT O F THE OUTCOME IN THE QUANTUM PROCEEDINGS AND IN ACCORDANCE WITH LAW. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IN I.T.A. NO. 859/AHD/2015 IS ALSO ALLOWED FOR STATISTICAL PURPOSES. 13. IN THE COMBINED RESULT, BOTH CAPTIONED APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. SD/- SD/- (MADHUMITA ROY) (PRADIP K UMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 08/10/2018 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- & / REVENUE 2 / ASSESSEE ( ) *+ , / CONCERNED CIT 4 ,- / CIT (A) / 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7 289 : / GUARD FILE. BY ORDER / 4 / 5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 08/10/2018