M/s. Vipanchi Chit Fund Ltd., Hyderabad V. Income Tax Officer, Ward-15(3), Hyderabad

ITA 951/HYD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66318 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 15-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K GNANAPRAKASH
• Assessee Lawyers: LAXMINIWAS SHAR MA
• Keywords: Period of limitation; Condonation of delay

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL M EMBER ITA NO.948/HYD/2012 : ASSESSMENT YEAR 2006-07 ITA NO.949/HYD/2012 : ASSESSMENT YEAR 2007-08 ITA NO.950/HYD/2012 : ASSESSMENT YEAR 2008-09 ITA NO.951/HYD/2012 : ASSESSMENT YEAR 2009-10 M/S. VIPANCHI CHIT FUND LTD ., HYDERABAD. ( PAN - AAACV 8243 K ) V/S. INCOME - TAX OFFICER, WARD 15(3), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI LAXMINIWAS SHARMA RESPONDENT BY : SHRI K.GNANA PRAKASH DATE OF HEARING 12.9.2012 DATE OF PRONOUNCEMENT 28.9.2012 O R D E R PER SAKTIJIT DEY, JUDICIAL MEMBER: THIS BUNCH OF FOUR APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST SEPARATE ORDERS OF THE COMMISSIONE R OF INCOME- TAX(APPEALS) II, HYDERABAD DATED 14.5.2012 FOR THE ASSESSMENT YEAR 2007-08 AND DATED 7.5.2012 FOR THE ASSESSMENT YEARS 2006-07, 2008- 09 AND 2009-10, REFUSING TO CONDONE THE DELAY AND A DMIT THE APPEALS FOR HEARING ON MERITS. 2. BRIEFLY THE FACTS OF THE CASE, COMMON IN ALL T HESE APPEALS, AS TAKEN FROM THE APPEAL FOR ASSESSMENT YEAR 2006-0 7, VIZ. ITA NO.948/HYD/2012, ARE THAT THE ASSESSEE COMPANY IS E NGAGED IN CHIT FUND BUSINESS. A SURVEY UNDER S.133A WAS CONDUCTED ON THE BUSINESS ITA NO.948 TO 951/HYD/2012 M/S. VIPANCHI CHIT FUND LTD., HYDERABAD 2 PREMISES OF THE ASSESSEE ON 14.3.2007. DURING THE SURVEY, IT WAS FOUND THAT THE ASSESSEE HAS DISTRIBUTED CHIT DIVIDE ND AMOUNTING TO RS.6,CRORE TO ITS SUBSCRIBERS DURING THE FINANCIAL YEAR 2005-06 WITHOUT DEDUCTING TAX AT SOURCE AS PER THE PROVISIONS OF S. 194A OF THE ACT. TE ASSESSING OFFICER ISSUED A NOTICE TO THE ASSESSEE T O SHOW CAUSE AS TO WHY IT SHOULD NOT BE TREATED AS AN ASSESSEE IN DEF AULT UNDER S.201(1) IN RESPECT OF TAX DEDUCTIBLE ON THE AMOUNT OF DIVID END DISTRIBUTED TO ITS SUBSCRIBERS/MEMBERS UNDER S.194A OF THE ACT. AFTER CONSIDERING THE ASSESSEES REPLY, THE ASSESSING OFFICER PASSED AN O RDER UNDER S.201(1) AND 201(1A) OF THE ACT, COMPUTING TAX AND INTEREST AT RS.66,47,188 AND RS.39,21,840 RESPECTIVELY. 3. THE ASSESSEE CHALLENGED THE CHARGING OF TAX AN D INTEREST UNDER S.201(1) AND 201(1A), BY FILING APPEAL BEFORE THE CIT(A). AS THE APPEALS WERE FILED BEYOND THE PERIOD OF LIMITATION, THE ASSESSEE FILED CONDONATION PETITION SEEKING CONDONATION OF DELAY. IN THE COURSE OF HEARING, THE CIT(A) NOTICED THAT THERE IS A DELAY O F 424 DAYS IN THE FILING OF THE APPEAL BY THE ASSESSEE BEFORE HIM. W HILE EXPLAINING THE CAUSE OF DELAY, THE ASSESSEE FILED AN AFFIDAVIT STA TING THEREIN THAT AS ON IDENTICAL ISSUE, ITS APPEAL FOR ASSESSMENT YEAR 200 5-06 WAS PENDING BEFORE THE CIT(A), THE ASSESSEE WAS WAITING FOR THE OUTCOME OF THE APPEAL. AFTER THE APPELLATE ORDER FOR THE ASSESSME NT YEAR 2005-06 WAS PASSED ON 28.2.2011, THE ASSESSEE FILED THE FIRST A PPEAL FOR THE ASSESSMENT YEAR 2006-07 BEFORE THE CIT(A). THE CIT( A) DID NOT FIND AFORESAID CAUSE SHOWN BY THE ASSESSEE TO BE EITHER REASONABLE OR SUFFICIENT. THE CIT(A), OBSERVING THAT WHEN THE AS SESSMENT ORDER FOR THE ASSESSMENT YEAR 2006-07 WAS PASSED ON 26.2.2010 , IT WAS NOT IN THE KNOWLEDGE OF THE ASSESSEE THAT THE APPELLATE OR DER FOR THE ASSESSMENT YEAR 2005-06 WOULD BE PASSED ON 28.2.201 1. THEREFORE, ITA NO.948 TO 951/HYD/2012 M/S. VIPANCHI CHIT FUND LTD., HYDERABAD 3 THE CONTENTION OF THE ASSESSEE THAT IT WAS WAITING FOR THE APPELLATE ORDER FOR 2005-06 FOR FILING APPEAL FOR THE ASSESSM ENT YEAR 2006-07 IS NOT CREDIBLE. THE CIT(A) FURTHER OBSERVED HAT THE ASSESSEE HAS FAILED TO SHOW HOW OUTCOME OF THE APPEAL FOR THE ASSESSMEN T YEAR 2005-06 WOULD HAVE ANY EFFECT ON THE APPEAL TO BE FILED FOR THE SUBSEQUENT ASSESSMENT YEAR. THE CIT(A) ALSO OBSERVED THAT WHE N THE ASSESSEE HAS NO CONTROL OVER THE OUTCOME OF THE APPEAL AND TIME OF THE ORDER FOR THE ASSESSMENT YEAR 2005-06, BUT HAD CONTROL OV ER FILING OF THE APPEAL OVER THE ASSESSMENT ORDER, IT SHOULD HAVE A CTED WITH DUE DILIGENCE IN FILING THE APPEAL WITHIN THE PRESCRIBE D TIME. THE EXPLANATION SUBMITTED BY THE ASSESSEE WAS ALSO NOT FOUND TO BE WORTHY OF CREDENCE BY THE CIT(A), CONSIDERING THE FACT THA T THOUGH THE APPEAL ORDER FOR THE ASSESSMENT YEAR 2005-06 WAS PASSED ON 28.2.2011, THE ASSESSEE FILED THE APPEAL FOR THE IMPUGNED YEAR ON 1.6.2011. ON THE AFORESAID FINDING, THE CIT(A) DISMISSED THE APPEAL, WITHOUT CONDONING THE DELAY. HENCE, ASSESSEE PREFERRED THE SECOND AP PEAL, ITA NO.948/HYD/2012 FOR THE ASSESSMENT YEAR 2006-07, BE FORE US. 4. FOR THE SUCCEEDING THREE YEARS ARE ALSO IDENTIC AL EXCEPT FOR THE AMOUNTS OF TAX AND INTEREST AND ALSO THE QUANTU M OF DELAY INVOLVED IN THE FILING OF THE APPEALS BEFORE THE CIT(A). HE NCE, FACTS FOR THOSE YEARS ARE NOT SEPARATELY DISCUSSED FOR THE SAKE OF BREVITY. 5. THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE REITERATING THE STAND TAKEN BEFORE THE CIT(A) SUBMI TTED THAT THE ASSESSEE DID NOT FILE THE APPEAL IN TIME, SINCE IT WAS UNDER A BONA FIDE IMPRESSION THAT ITS APPEAL FOR THE EARLIER ASSESSME NT YEAR, WHICH WAS PENDING BEFORE THE CIT(A), IF WILL BE ALLOWED, IT W OULD AUTOMATICALLY BE APPLICABLE TO THE SUBSEQUENT YEARS. IT IS ONLY AFT ER DISCUSSION WITH THE ITA NO.948 TO 951/HYD/2012 M/S. VIPANCHI CHIT FUND LTD., HYDERABAD 4 TAX CONSULTANT, ASSESSEE CAME TO KNOW THAT IT HAS T O FILE APPEALS FOR ALL THE YEARS SEPARATELY. HENCE, APPEALS WERE FILED SE PARATELY FOR EACH YEAR. THE LEARNED AUTHORISED REPRESENTATIVE FOR TH E ASSESSEE SUBMITTED THAT THE CIT(A) COULD NOT HAVE DISMISSED THE APPEALS OF THE ASSESSEE WITHOUT HEARING ON MERITS, AS THE ASSESSEE HAS A VERY GOOD CHANCE OF SUCCEEDING ON MERITS. THE LEARNED AUTHO RISED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE CIT(A) FOR THE ASSESSMENT YEAR 2005-06 HAS PASSED THE ORDER ALLOWI NG THE APPEAL IN FAVOUR OF THE ASSESSEE, BY HOLDING THAT THE CHIT DI VIDEND ARE NOT IN THE NATURE OF INTEREST AS DEFINED UNDER S.2(28A) OF THE ACT. IT HAS BEEN POINTED OUT THAT WHEN THE DEPARTMENT CHALLENGED THE ORDER OF THE CIT(A) FOR THAT YEAR, THE TRIBUNAL VIDE ITS ORDER D ATED 11.8.2011, IN ITA NO.804/HYD/2011, HAS UPHELD THE VIEW TAKEN BY THE C IT(A), DISMISSING THE APPEAL OF THE REVENUE. THE LEARNED AUTHORISED R EPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT WHEN SUBSTANTIAL JUSTIC E AD TECHNICAL CONSIDERATIONS ARE PITTED AGAINST EACH OTHER, THE C AUSE OF SUBSTANTIAL JUSTICE HAS TO BE PREFERRED. IN SUPPORT OF HIS CONT ENTION, LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE RELIED O N THE FOLLOWING DECISIONS- (A) COLLECTOR, LAND ACQUISITION ANANTNAG AND ANR. V/S. MST. KATIJI (AIR 1987 SC 1353); (B) M/S. MAHALAKSHMI REAL ESTATE V/S. ITO (ITA NO.991/HYD/2009) (C) SURYA GENERAL TRADERS V/S. CTO(1997 (3) ALT 110) 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONG LY SUPPORTING THE ORDER OF THE CIT(A) SUBMITTED THAT T HE ASSESSEE HAVING FAILED TO SHOW SUFFICIENT CAUSE FOR THE DELAY IN FI LING THE APPEALS BEFORE ITA NO.948 TO 951/HYD/2012 M/S. VIPANCHI CHIT FUND LTD., HYDERABAD 5 THE CIT(A) BEYOND THE PERIOD OF LIMITATION, THE CIT (A) WAS JUSTIFIED IN REFUSING TO CONDONE THE DELAY. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD. ALL FOUR APPEALS OF THE ASSES SEE HAVE BEEN DISMISSED BY THE CIT(A) ON THE GROUND OF DELAY IN T HE FILING OF THE FIRST APPEALS BY THE ASSESSEE BEFORE HIM. FOR BETTER APPR ECIATION OF THE MATTER, THE RELEVANT DATES ARE GIVEN BELOW- PARTICULARS ASSESSMENT YEAR 2006-07 2007-08 2008-09 2009-10 DATE OF ORDER UNDER S.201 & 201(1A) 26.2.2010 26.2.2010 30.3.2011 30.3.2011 D AT E OF RECEIPT OF ORDER BY ASSESSEE 4.3.2010 4.3.2010 8.4.2011 8 .4.2011 DUE DATE FOR FILING OF APPEAL 3.4.2010 3.4.2010 7.5.2011 7.5.2011 ACTUAL DATE OF FILING OF APPEAL 1.6.2011 1.6.2011 1.6.2011 1.6.2011 NO. OF DAYS OF DELAY IN FILING APPEAL 424 DAYS 424 DAYS 24 DAYS 24 DAYS AS CAN BE SEEN FROM THE ABOVE TABLE, APPEAL FOR THE ASSESSMENT YEAR 2006- 07 AND 2007-08 ARE BARRED BY LIMITATION BY 424 DAYS , WHEREAS THE APPEALS FOR ASSESSMENT YEARS 2008-09 AND 2009-10 ARE FILED WITH A DELAY OF 24 DAYS. 8. S.249 OF THE INCOME-TAX ACT LAYS DOWN THE PROC EDURE FOR FILING OF THE APPEAL BEFORE THE CIT(A). SUB-SECTION (2) OF S. 249 PROVIDES THAT AN APPEAL SHALL BE PRESENTED WITHIN 30 DAYS OF DATE OF SERVICE OF THE DEMAND NOTICE. HOWEVER, SUB-SECTION (3) OF S.249 EMPOWERS THE CIT(A) TO ADMIT THE APPEAL AFTER THE EXPIRY OF 30 DAYS IF THE APPELLANT SHOWS SUFFICIENT CAUSE FOR NOT FILING THE APPEAL WITHIN THE SPECIFIED PERIOD. ITA NO.948 TO 951/HYD/2012 M/S. VIPANCHI CHIT FUND LTD., HYDERABAD 6 9. LAW IS WELL SETTLED THAT THERE IS NO STRAIGHT JACKET FORMULA TO MEASURE WHAT CONSTITUTES SUFFICIENT CAUSE. IT DEPEN DS UPON THE FACTS OF EACH INDIVIDUAL CASE. CONDONATION OF DELAY IS NOT A MA TTER OF EMPTY FORMALITY. THE ASSESSEE IS REQUIRED TO SHOW SUFFICIENT CAUSE T HAT THE ASSESSEE WAS EITHER BONA FIDE OR WAS PREVENTED BY SUFFICIENT CAU SE FROM PURSUING THE REMEDY. THE ASSESSEE HAS TO ESTABLISH THAT THERE WA S NO NEGLIGENCE OR INACTION OR WANT OF BONA FIDE AND THE RIGHT GRANTED UNDER LAW TO CHALLENGE THE ORDER WAS NOT ABANDONED. IN THIS CONTEXT, IT HAS TO BE SEEN WHETHER THE ASSESSEE HAS MADE OUT A SUFFICIENT CAUSE TO THE SAT ISFACTION OF THE CIT(A) FOR CONDONING THE DELAY. AT THIS STAGE, IT WILL BE WOR THWHILE TO LOOK INTO THE CAUSE SHOWN FOR THE DELAY BY THE ASSESSEE, BEFORE T HE FIRST APPELLATE AUTHORITY, WHICH IS IDENTICAL IN ALL THE APPEALS, A ND THE SAME, AS PUT FORTH BY THE ASSESSEE IN THE RESPECTIVE AFFIDAVITS FILED FOR THE YEARS UNDER APPEAL, READS AS FOLLOWS-. THE APPEAL WAS TO BE FILED WITHIN 30 DAYS. AS ON THE IDENTICAL ISSUE THE COMPANYS APPEAL WAS PENDING FOR THE ASSE SSMENT YEAR 2005-06 WITH CIT(A)-II. THE COMPANY WAS WAITING FOR THE OUTCOME OF THE APPEAL. AS THE ORDER FOR THE APPEAL FOR ASSESSM ENT YEAR 2005-06 WAS PASSED ON 28.02.2011. RESPECTFULLY FOLLOWING TH E DECISION OF CIT(A)-II, THE COMPANY IS FILING THE APPEAL FOR ASS ESSMENT YEAR 2006- 07. HENCE THERE IS DELAY IN FILING THE APPEAL. THE CIT(A) DID NOT FIND THE CAUSE SHOWN TO BE SUFFI CIENT FOR CONDONING THE DELAY SINCE THE ASSESSEE WAS DUTY BOUND TO FILE THE APPEAL WITHIN THE PERIOD PRESCRIBED UNDER THE STATUTE IRRESPECTIVE OF THE OU TCOME IN THE APPEAL FOR ANY OTHER YEAR. AS APPARENT FROM THE EXPLANATION, THE ASSESSEES GROUND FOR CONDONATION OF DELAY IS BECAUSE OF THE FACT THAT IT IS AWAITING FOR THE APPELLATE ORDER FOR THE ASSESSMENT YEAR 2005-06 ON THE VERY S AME ISSUE. IT IS SEEN FROM THE RECORD THAT THE APPEAL ORDER OF THE ASSESS MENT YEAR 2005-06 WAS PASSED ON 28.2.2011 AND WAS SERVED ON THE ASSESSEE ON 7.3.2011. HOWEVER, THE ASSESSEE HAS FILED THE APPEALS FOR THE YEARS UNDER CONSIDERATION ONLY ON 1 ST JUNE, 2011. ASSUMING FOR THE MOMENT THAT THE APPE AL WAS NOT ITA NO.948 TO 951/HYD/2012 M/S. VIPANCHI CHIT FUND LTD., HYDERABAD 7 FILED SINCE THE ASSESSEE WAS WAITING FOR THE APPEA L ORDER ON IDENTICAL ISSUE FOR THE ASSESSMENT YEAR 2005-06, EVEN THEN THERE WA S NO REASON WHY THE ASSESSEE DID NOT FILE THE APPEAL IMMEDIATELY AFTER RECEIVING THE APPEAL ORDER ON 7.3.2011 AND WAITED TILL 1 ST OF JUNE, 2011, FOR FILING THE APPEAL. THE ASSESSEE HAS NOT EXPLAINED THIS BEFORE THE CIT(A). THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED BEFORE US THAT SINCE THE ASSESSEE WAS UNDER A BONA FIDE BELIEF THAT THE OUTCOME OF IT S APPEAL BEFORE THE CIT(A) FOR THE ASSESSMENT YEAR 2005-06 WOULD APPLY TO THE SUBSEQUENT YEARS ALSO, HE DID NOT FILE THE APPEAL BEFORE THE CIT(A). HOWE VER, AFTER GETTING PROFESSIONAL ADVICE THAT THE ASSESSEE HAS TO FILE A PPEALS FOR EACH ASSESSMENT YEAR SEPARATELY, ASSESSEE FILED THE FIRST APPEALS B ELATEDLY. WE FIND THAT THIS PART OF THE EXPLANATION WAS NOT EMPHATICALLY MADE O UT BEFORE THE CIT(A). WE ALSO FIND THAT THE JUDGMENTS RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE CANNOT APPLY WITH FULL FORCE TO THE FACTS OF THE PRESENT CASE BECAUSE, AS ALREADY STATED, THE ASSESSEE HAS NOT EXPLAINED T HE CAUSE FOR THE DELAY FOR THE PERIOD SUBSEQUENT TO THE RECEIPT OF THE APPELLA TE ORDER FOR THE ASSESSMENT YEAR 2005-06. THE RATIO LAID DOWN IN A JUDGMENT HAS TO BE READ IN THE CONTEXT IN WHICH THEY APPEAR, SINCE EACH CAS E DEPENDS ON ITS OWN FACTS. CONSIDERING THE FACT THAT THE ASSESSEE HAS NOT SUBSTANTIATED THE CAUSE FOR THE DELAY BEFORE THE CIT(A), WE THINK IT PROPER TO REMIT THE MATER BACK TO THE FILE OF THE CIT(A) FOR GIVING ONE MORE OPPORTUNITY TO THE ASSESSEE TO PROPERLY EXPLAIN THE DELAY IN THE FILING OF THES E APPEALS. ASSESSEE IS AT LIBERTY TO SUBSTANTIATE ITS CLAIM WITH REGARD TO TH E DELAY, BY ADDUCING NECESSARY EVIDENCE AND PUTTING FORTH ITS CONTENTION S AND CASE LAW, IF ANY, ON WHICH IT SEEKS TO PLACE RELIANCE ON THE ISSUE. THE CIT (A) SHALL DECIDE THE ISSUE OF CONDONATION OF DELAY AFRESH AFTER TAKING I NTO CONSIDERATION ASSESSEES EXPLANATION AND THE DECISIONS CITED BY HIM. HE SHAL L OF COURSE GIVE REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE, AND PASS APPROPRIATE ORDERS IN ACCORDANCE WITH LAW. ITA NO.948 TO 951/HYD/2012 M/S. VIPANCHI CHIT FUND LTD., HYDERABAD 8 10. IN VIEW OF OUR DECISION HEREIN ABOVE ON THE IS SUE OF CONDONATION OF DELAY, WE ARE NOT INCLINED TO GO INTO THE OTHER GROUNDS RAISED BY THE ASSESSEE ON THE MERITS OF THE ISSUE, VIZ. LEGALITY AND VALIDITY OF THE ORDERS PASSED UNDER S.201(1) AND S.201(1A) OF THE ACT FOR THE YEARS UNDER APPEAL, SINCE THOSE ARE GROUNDS ARE ONLY OF ACADEMIC NATURE AND RENDERED REDUNDANT. 11. IN THE RESULT, ALL THE FOUR APPEALS OF THE ASS ESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 28.9.2012 SD/- SD/- (CHANDRA POOJARI) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/- 28TH SEPTEMBER, 2012 COPY FORWARDED TO: 1. M/S. VIPANCHI CHIT FUNDS LTD, FLAT NO.5607, BABUKHA N ESTATE, BASHEERBAGH, HYDERABAD. 500 001. 2. 3. 4 INCOME-TAX OFFICER, WARD-15(3), MADANAPALLE. COMMISSIONER OF INCOME-TAX(APPEALS) II HYDERABAD. COMMISSIONER OF INCOME-TAX-I, HYDERABAD. 5 DEPARTMENTAL REP RESENTATIVE, ITAT, HYDERABAD. B.V.S.