M/s Mahalakshmi Real Estates, Hyderabad V. ITO, Hyderabad

ITA 991/HYD/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2531 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 08-12-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 09-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H PHANI RAJU
• Assessee Lawyers: A V RAGHURAM
• Keywords: Reasonable cause; Set aside

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL HYDERABAD BENCH 'A' BEFORE SHRI N.R.S.GANESAN AND SHRI CHANDRA POOJARI I.T.A.NO.991/HYD/2009 ASSESSMENT YEAR 2005-06 M/S MAHALAKSHMI REAL ESTATES, HYDERABAD. .. APPELLANT (PAN AAKFM2139A) VERSUS INCOME-TAX OFFICER, WARD 6(3), HYDERABAD. ..RESPONDENT APPELLANT BY : SHRI A.V.RAGHURAM RESPONDENT BY : SHRI H.PHANI RAJU O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT (APPEALS) IV, HYDERABAD, DATED 7-8-2009, AND PERTAI NS TO THE ASST. YEAR 2005- 06. 2. SHRI A.V.RAGHURAM, LEARNED COUNSEL FOR THE ASSES SEE, SUBMITTED THAT THERE WAS A DELAY OF 355 DAYS IN FILING THE APPEAL BEFORE THE CIT (A). ACCORDING TO THE LEARNED COUNSEL, THERE WAS A SURVEY IN THE P REMISES OF THE ASSESSEE IN THE MONTH OF JANUARY 2006. DURING THE COURSE OF SUR VEY OPERATION, THE ASSESSEE DECLARED A SUM OF RS.1,00,00,000 FROM THE ENTIRE VENTURE. ACCORDING TO THE LEARNED COUNSEL, THE ADDITIONAL INCOME WAS O FFERED FOR THE ASST. YEAR 2006-07. HOWEVER, THE ASSESSING OFFICER ESTIMATED T HE PROFIT FOR THE ASST. YEAR 2005-06 AT 13.34%. ACCORDING TO THE LEARNED COUNSEL , WHEN THE ASSESSEE HAS OFFERED ADDITIONAL INCOME OF RS.1,00,00,000, ESTIMA TION OF PROFIT AT 13.34% FOR THE ASST. YEAR 2005-06 WOULD AMOUNT TO DOUBLE ADDIT ION. THEREFORE, A SITUATION 2 HAD ARISEN TO FILE APPEAL AGAINST THE ORDER OF THE AO FOR THE ASST. YEAR 2005-06. ACCORDING TO THE LEARNED COUNSEL, THE DELAY IN FILI NG THE APPEAL IS UNINTENTIONAL AND BEYOND THE CONTROL OF THE ASSESSEE. THE LEARNED COUNSEL PLACED HIS RELIANCE ON THE JUDGMENT OF THE ANDHRA PRADESH HIGH COURT IN THE CASE OF SURYA GENERAL TRADERS V. COMMERCIAL TAX OFFICER, 1997- ALT-3-110, AND SUBMITTED THAT IN THAT CASE THE ASSESSEE ERRONEOUSLY ASSUMED THAT NO APPEA L NEEDS TO BE FILED FOR THE ASST. YEAR 1988-89 AS THE DEMAND RAISED FOR THE YEA R 1987-88 HAD BEEN CHALLENGED AND PENDING BEFORE THE TRIBUNAL. SUBSEQU ENTLY, THE ADVOCATE EXPLAINED THAT APPEAL HAS TO BE FILED IN RESPECT OF EACH YEAR UPON WHICH THE ASSESSEE TOOK STEPS TO FILE THE APPEAL. IN THOSE CI RCUMSTANCES, THE ANDHRA PRADESH HIGH COURT FOUND THAT WHEN A PERSON HAS A G OOD CASE ON MERITS, THE STATE SHOULD NOT TAKE TECHNICAL PLEA OF LIMITATION SO AS TO DEPRIVE HIM OF HIS JUST DUE. ACCORDING TO THE LEARNED COUNSEL, IN VIEW OF T HIS JUDGMENT OF THE ANDHRA PRADESH HIGH COURT, THE DELAY OF 355 DAYS NEEDS TO BE CONDONED. 3. ON THE CONTRARY, SHRI H.PHANI RAJU, LEARNED DEPA RTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE HAD NO REASONABLE CAUSE FOR NOT FILING THE APPEAL WITHIN THE PERIOD PRESCRIBED. REFERRING TO THE DECI SION OF THE CHENNAI BENCH OF THIS TRIBUNAL IN THE CASE OF JCIT V. TRACTORS & FAR M LTD. (2007) 104 ITD 149 (CHENNAI) (TM), THE LEARNED DEPARTMENTAL REPRESENTA TIVE SUBMITTED THAT THE DELAY IN FILING APPEAL DUE TO NEGLIGENCE ON THE PAR T OF THE ASSESSEE CANNOT BE CONDONED. IN THE CASE BEFORE THE CHENNAI BENCH, THE DELAY WAS 310 DAYS. THE TRIBUNAL FOUND THAT THE DELAY WAS DUE TO NEGLIGENCE AND INACTION ON THE PART OF THE ASSESSEE. THEREFORE, IT COULD NOT BE CONDONED. THE LEARNED DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITTED THAT IN CASE THIS TRIBUNAL FEELS THAT THERE WAS 3 REASONABLE CAUSE ON THE PART OF THE ASSESSEE FOR TH E DELAY IN FILING THE APPEAL, THE MATTER MAY BE REMITTED BACK TO THE FILE OF THE CIT (A) FOR CONSIDERING THE APPEAL ON MERITS. 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS ON EITHER S IDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THERE WAS A SURVEY IN THE PREMISES OF THE ASSESSEE IN THE MONTH OF JANUARY 2006. THE ASSE SSEE OFFERED ADDITIONAL AMOUNT OF RS.1,00,00,000 FOR THE ASST. YEAR 2006-07 . THE ASSESSEE CLAIMED THAT HE WAS UNDER THE BONA FIDE IMPRESSION THAT SIN CE THE ADDITIONAL INCOME OF RS.1,00,00,000 WAS OFFERED, THERE WAS NO NEED TO TA KE UP THE MATTER IN APPEAL FOR THE ASST. YEAR 2005-06. HOWEVER, AFTER PASSING OF THE ORDER FOR THE ASST. YEAR 2006-07, A SITUATION HAD ARISEN TO GO ON APPEA L FOR THE ASST. YEAR 2005-06 ALSO. THEREFORE, ACCORDING TO THE LEARNED COUNSEL F OR THE ASSESSEE, THE DELAY WAS UNINTENTIONAL AND BEYOND THE CONTROL OF THE ASS ESSEE. 5. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGMENT OF THE ANDHRA PRADESH HIGH COURT IN THE CASE OF SURYA TRADERS (SUPRA). IN THE CASE BEFORE THE ANDHRA PRADESH HIGH COURT, THERE WAS A DELAY OF 1 YEAR, 5 MONTHS AND 9 DAYS IN FILING THE APPEAL. THE ASSESSEE EXPLAINED THAT HE ERRONEOU SLY ASSUMED THAT NO APPEAL NEEDED TO BE FILED AS THE DEMAND AGAINST HIM FOR TH E EARLIER ASSESSMENT YEAR HAD BEEN CHALLENGED AND WAS PENDING IN APPEAL BEFOR E THE SALES TAX APPELLATE TRIBUNAL AND WHATEVER ORDER THAT WOULD BE PASSED FO R THAT YEAR WOULD AUTOMATICALLY APPLY FOR THE SUBSEQUENT YEAR. HOWEVE R, THE COUNSEL FOR THE ASSESSEE EXPLAINED THAT APPEAL HAS TO BE FILED IN R ESPECT OF EACH YEAR. ON SUCH ADVICE, THE ASSESSEE TOOK STEPS TO FILE THE APPEAL. THE TRIBUNAL FOUND THAT THE ASSESSEE HAD NO SUFFICIENT CAUSE TO WARRANT THE CON DONATION OF DELAY. ON 4 FURTHER APPEAL, THE ANDHRA PRADESH HIGH COURT, AFTE R REFERRING TO THE JUDGMENT OF THE APEX COURT IN THE CASE OF COLLECTOR, LAND AC QUISITION, V. MST. KATIJI, 167 ITR 421, FOUND THAT THE PETITIONER WAS ENTITLED TO RELIEF AS OBTAINED BY HIM FOR THE PREVIOUS YEAR. THE HIGH COURT FURTHER OBSERVED THAT WHEN A PERSON HAS A GOOD CASE ON MERITS, DEFEAT OF HIS CLAIM ON TECHNIC AL PLEA OF LIMITATION WOULD ULTIMATELY LEAD TO INJUSTICE. THE JURISDICTIONAL HI GH COURT HAS ALSO TAKEN NOTE OF THE OBSERVATION MADE BY THE APEX COURT THAT THE STA TE SHOULD NOT STAND BY A TECHNICAL PLEA OF LIMITATION IF A CITIZEN'S CASE WA S OTHERWISE MERITORIOUS. ULTIMATELY, THE ANDHRA PRADESH HIGH COURT CONDONED THE DELAY. 6. IN THE CASE BEFORE US ALSO, THE ASSESSEE OFFERED A SUM OF RS.1,00,00,000 FOR THE ASST. YEAR 2006-07 AND HE WAS UNDER THE BON A FIDE IMPRESSION THAT NO APPEAL NEEDS TO BE FILED FOR THE ASST. YEAR 2005-06 . ONLY AFTER PASSING OF ASSESSMENT ORDER FOR THE ASST. YEAR 2006-07, THE AS SESSEE FOUND THAT THE ESTIMATION OF PROFIT AT 13.34% WOULD AMOUNT TO DOUB LE ADDITION. THEREFORE, AS RIGHTLY POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE, A SITUATION HAD ARISEN FOR FILING THE APPEAL FOR ASST. YEAR 2005-06 BEFORE THE CIT (A) AFTER THE ASSESSMENT ORDER FOR ASST. YEAR 2006-07 WAS PASSED. THEREFORE, IN OUR OPINION, THE JUDGMENT OF THE ANDHRA PRADESH HIGH COURT IN TH E CASE OF SURYA TRADERS (SUPRA) WOULD BE SQUARELY APPLICABLE TO THE FACTS O F THIS CASE. IN VIEW OF THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT, THE DECI SION OF THE CHENNAI BENCH OF THIS TRIBUNAL IN THE CASE OF TRACTORS & FARM LTD. ( SUPRA) MAY NOT BE APPLICABLE TO THE FACTS OF THIS CASE. MOREOVER, THIS BENCH OF THE TRIBUNAL IS BOUND BY THE JUDGMENT OF THE ANDHRA PRADESH HIGH COURT. AS OBSER VED BY THE ANDHRA PRADESH HIGH COURT, WHEN THE ASSESSEE HAS A GOOD CA SE ON MERITS, THE SAME 5 CANNOT BE DEFEATED ON A TECHNICAL PLEA OF LIMITATIO N. MOREOVER, CONSIDERING THE CASE ON MERITS WOULD NOT PREJUDICE THE INTERESTS OF THE REVENUE IN ANY WAY. INCOME-TAX ACT PROVIDES FOR COMPUTATION OF TOTAL TA XABLE INCOME AND LEVY OF TAX ON THAT INCOME. THEREFORE, THE REVENUE CANNOT TAKE ADVANTAGE OF THE TECHNICALITY OF LIMITATION IN COLLECTING TAX FORM T HE CITIZEN WHICH IS NOT OTHERWISE DUE. THEREFORE, IN OUR OPINION, IN VIEW OF THE JUDG MENT OF THE ANDHRA PRADESH HIGH COURT IN THE CASE OF SURYA TRADERS (SUPRA), TH E DELAY OF 355 DAYS IN FILING THE APPEAL BEFORE THE CIT (A) NEEDS TO BE CONDONED AND THE APPEAL OF THE ASSESSEE HAS TO BE CONSIDERED ON MERITS. ACCORDINGL Y, WE SET ASIDE THE ORDER OF THE CIT (A) AND CONDONE THE DELAY OF 355 DAYS IN FI LING THE APPEAL BEFORE THE CIT (A). NOW, THE APPEAL FILED BY THE ASSESSEE BEFO RE THE CIT (A) STANDS RESTORED ON THE FILE OF THE CIT (A). WE DIRECT THE CIT (A) TO CONSIDER THE APPEAL ON MERITS AND DECIDE THE SAME IN ACCORDANCE WITH LA W AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 18-12-09. SD SD (CHANDRA POOJARI) (N.R.S.GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, 18TH DECEMBER, 2009. RRRAO. COPY OF THE ORDER FORWARDED TO:- 1. SHRI K.VASANT KUMAR, ADVOCATE, F.NO.403, MANISHA TO WERS, D.NO.10-1- 18/31, SHYAM NAGAR, HYDERABAD 500 004. 2. ITO, WARD 6(3), HYDERABAD. 3. CIT III, HYDERABAD. 4. CIT (A) IV, HYDERABAD. 5. DR, ITAT, HYDERABAD.