M/s Indore Dugdh Sangh Sahakari Maryadit, V. The TAX RECOVERY OFFICER-1,

ITA 98/IND/2008

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8705 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 23-07-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 12-03-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: SURESH KIMTEE
• Keywords: Opportunity of being heard; Period of limitation; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI N.K.SAINI, A.M. AND SHRI BHAVNESH SAINI, J.M. PAN NO. : AAAJI0016N I.T.A.NO.98/IND/2008. A.Y. : 2004-05 INDORE DUGDH SANDH SAHAKARI MYDT, TAX RECOVERY OFFICER-I/ COMMISSIONER APPEALS-I, TALAWALI CHANDA, VS INDORE MANGLIYA APPELLANT RESPONDENT APPELLANT BY : SHRI SURESH KIMTEE, C. A. RESPONDENT BY : SMT. APARNA KARAN, D. R. O R D E R PER N. K. SAINI, A.M. THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)-I, INDORE, ON 31.12.2007 FOR THE ASSESS MENT YEAR 2004-05. 2. FOLLOWING GROUNDS HAVE BEEN TAKEN IN THIS APPEAL :- 1. THE LD.CIT(A)-I HAS ERRED IN DISMISSAL OF 1 ST APPEAL ON THE GROUND THAT THE APPEAL DOCUMENTS WERE SIGNED BY THE GENERAL MANAGER WHO IS NOT AUTHORIZED TO SIGN AN -: 2 :- 2 APPEAL U/S 249 OF INCOME-TAX ACT, 1961,, THOUGH HE IS PRINCIPLA OFFICER IN TERMS OF RULE 45 OF THE INCOME-TAX ACT, 1961,, THOUGH HE IS PRINCIPAL OFFICER IN TERMS OF RULE 45 OF INCOME TAX RULES, 1962, AND AS PER PROVISIONS OF SECTION 140(E) OF THE INCOME-TAX ACT, 1961. 2. THE LD. AO HAS ERRED IN DISALLOWING INTEREST EXPENDITURE TO THE EXTENT OF RS. 5,91,79,456/- OVERLOOKING THE FACT THAT SUCH INTEREST WAS DEBITED AS PER THE REAL LIABILITY OF THE INTEREST ON BORROWED CAPITAL, WAS ACCOUNTED FOR, IN THE BOOKS OF ACCOUNT. 3. THE LD. AO IS ARBITRARY AND BAD IN LAW, IN HIS ACTION OF DISALLOWING INTEREST EXPENSES OVER LOOKING THE FACT THAT THE SAME WAS CLAIMED AS PER THE MERCANTILE SYSTEM OF ACCOUNTING. 4. THE LD. AO HAS BEEN ARBITRARY IN HIS ACTION OF DISTINGUISHING THE INTEREST LIABILITY WITH -: 3 :- 3 THE OTHER LIABILITIES AND NOT CONSIDERING THAT THE SAME ACCOUNTING TREATMENT WAS APPLIED IN THE BOOKS OF ACCOUNT. 5. THE LD. AO OUGHT TO HAVE CONSIDERED THAT THE PAYMENT OF THE LIABILITY IS NOT OF IMPORTANCE IN THE MERCANTILE SYSTEM OF ACCOUNTING IN AS MUCH AS DUE TO SHORT OF LIQUID FUND, THEPAYMENT MAYB E DELAYED. 6. THE LD. AO ERRED IN DISALLOWING PAST PERIOD EXPENSES FOR RS. 3,75,844/-. 3. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH THE P ARTIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON REC ORD. 4. WE HAVE ALREADY DECIDED THE APPEAL ON IDENTICAL FA CTS IN THE CASE OF NARMADA HYDRO ELECTRIC DEVELOPMENT CORP ORATION LIMITED VIDE OUR ORDER DATED 22 ND JULY, 2009, PASSED IN I.T.A.NOS. 491 TO 493/IND/2008 RELATING TO ASSESSMENT YEARS 2 003-04 TO 2005- 06, IN WHICH WE HAVE HELD AS UNDER :- -: 4 :- 4 2. WE HAVE HEARD THE LEARNED REPRESENTATIV ES OF THE PARTIES AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND THE MATERIAL AVAILABLE ON RECORD. 3. THE LEARNED COUNSEL FOR THE ASSESSEE FILED APPRO VAL OF COD BEFORE PROCEEDING WITH THE MATTER. 4. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) NOTED THAT ALL THE APPEAL MEMOS HAVE BEEN VERIFIED BY THE GENE RAL MANAGER FINANCE OF THE ASSESSEE CORPORATION IN VIOL ATION OF THE RULES READ WITH SECTION 140(C) OF THE ACT. THE APPEALS OF THE ASSESSEE WERE ACCORDINGLY TREATED AS INVALID AN D DISMISSED ON THIS GROUND ALONE. THE LEARNED COMMISSIONER OF I NCOMETAX (APPEALS) DESPITE HOLDING THE APPEALS INVALID, PROC EEDED TO DECIDE THE APPEALS OF THE ASSESSEE ON MERIT AND EVE N ON MERIT, THE APPEALS HAVE BEEN DISMISSED. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE DEFECT IN THE SIGNATURE IN FILING THE APPEALS IS A CURABLE MISTAKE AND THE MISTAKE COMMITTED BY THE LEARNED COUNSEL FOR TH E ASSESSEE SHOULD HAVE BEEN ALLOWED TO BE RECTIFIED BY GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. HE SUBMITTED THAT THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) ERRED IN NOT AL LOWING THE OPPORTUNITY TO THE ASSESSEE TO CURE THE SAID DE FECT/MISTAKE. -: 5 :- 5 THEREFORE, THE MATTER REQUIRES RECONSIDERATION AT T HE LEVEL OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS). H E HAS FURTHER SUBMITTED THAT ONCE THE APPEALS HAVE BEEN H ELD TO BE INVALID, THERE WAS NO JUSTIFICATION TO PROCEED WITH THE APPEALS TO DECIDE ON MERITS. 6. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REP RESENTATIVE RELIED UPON THE IMPUGNED ORDER 7. ON CONSIDERATION OF THE RIVAL SUBMISSIONS AND TH E MATERIAL ON RECORD, WE ARE OF THE VIEW THAT THE MATTER REQUIRE S RECONSIDERATION AT THE LEVEL OF THE LEARNED COMMISS IONER OF INCOMETAX (APPEALS). HON'BLE HIGH COURT OF DELHI I N THE CASE OF REMFRY & SONS; V. CIT; 276 ITR 1 HELD THAT AP PEAL TO COMMISSIONER (A00EALS). MEMORANDUM OF APPEAL FILED BY ASSESSEE FIRM. NOT SIGNED BY MANAGING PARTNER/PARTN ER. CURABLE DEFECT. THERE IS DISTINCTION BETWEEN ILLEG ALITY AND IRREGULARITY. HON'BLE HIGH COURT OF DELHI FURTHER HELD - THAT THE IRREGULARITY COMMITTED BY THE ASSESSEE W AS CURABLE AND COULD BE RECTIFIED ON THE DATE OF ITS FILING AN D EVEN SUBSEQUENT THERETO, AS THE APPEAL ADMITTEDLY WAS FI LED WITHIN THE PERIOD OF LIMITATION. THE ORDER PASSED BY THE TRIBUNAL AS -: 6 :- 6 WELL AS THE ORDER PASSED BY THE COMMISSIONER (APPE ALS) WERE LIABLE TO BE SET ASIDE. WE MAY FURTHER ADD THAT THE HON'BLE HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF CIT V. O.C.M. (INDIA); 291 I TR 96 HELD THAT APPEALS TO THE APPELLATE TRIBUNAL. DEFECT IN MEMORANDUM OF APPEAL. EFFECT OF SECTION 292B. APPE AL CANNOT BE DISMISSED ON THE GROUND OF A TECHNICAL DE FECT IN MEMORANDUM OF APPEAL. IN THIS CASE FORM NO. 36 BEIN G THE STATUTORY FORM WAS SIGNED BY THE INSPECTING ASSISTA NT COMMISSIONER OF INCOMETAX WHEREAS IN THE RELIEF CLA USE IT WAS STATED THAT THE SAME IS AS PER GROUNDS OF APPEAL WH ICH WERE SIGNED BY THE COMMISSIONER. THE TRIBUNAL DISMISSED THE APPEAL. HOWEVER, VIEW OF THE TRIBUNAL WAS HELD TO BE NOT LEGALLY SUSTAINABLE. THE TRIBUNAL IS DIRECTED TO HE AR THE APPEAL ON MERITS. 8. CONSIDERING THE ABOVE DECISIONS AND THE FACT THAT T HE GENERAL MANAGER FINANCE OF THE ASSESSEE CORPORATION SIGNED THE APPEAL PAPERS INSTEAD OF THE AUTHORIZED PERSON, IT WAS A CURABLE DEFECT ,THEREFO RE, THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) SHOULD HAVE ALLOWED OPPORTUNITY TO THE ASSESSEE TO -: 7 :- 7 CURE THE SAID DEFECT/MISTAKE IN THE APPEAL PAPERS BEFORE DISMISSING THE APPEAL OF THE ASSESSEE. WE MAY ALSO ADD HERE THAT THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT NO SUCH OPPORTUNITY HAS BEE N GIVEN TO RECTIFY THE DEFECT AND SUCH SUBMISSION OF THE ASSESSEE HAS NOT BEEN DISPUTED THROUGH ANY MATERIAL ON RECORD. WE MAY FURTHER NOTE THAT THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) DESPITE HOLDING THAT THE APPEALS ARE INVALID, HAS FURTHER PROCEEDED TO DECIDE THE APPEALS ON MERITS. ONCE THE APPEALS ARE DISMISSED ON TECHNICAL REASONS , THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) COULD NOT GET ANY JURISDICTION TO DECIDE THE APPEAL S ON MERIT. IN THIS VIEW OF THE MATTER, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND RESTORE ALL THE APPEALS OF THE ASSESSEE TO HIS FILE WITH THE DIRECT ION TO REDECIDE ALL THE APPEALS OF THE ASSESSEE ON MERI T BY GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE TO CURE THE DEFECT/MISTAKE IN THE APPE AL MEMOS. THEREAFTER, THE LEARNED COMMISSIONER OF -: 8 :- 8 INCOMETAX (APPEALS) SHALL DECIDE THE APPEALS ON MERIT IN ACCORDANCE WITH LAW. 5. RESPECTFULLY FOLLOWING THE ABOVE DECISION, THE APPE AL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER HAS BEEN PRONOUNCED ON 23 RD JULY, 2009. SD/- SD/- (BHAVNESH SAINI) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 23 RD JULY, 2009. CPU*