M/S. UCIL LEASING LTD, MUMBAI V. THE ACIT CIR 9(3), MUMBAI

ITSSA 135/MUM/2007

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8183 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 23-06-2011
• Assessment Year: misc
• Appeal Filed On: 21-09-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBACHAN RAM
• Keywords: Condonation of delay

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F MUMBAI BEFORE SHRI P.M. JAGTAP (AM) AND SMT. ASHA VIJAYARA GHAVAN (JM) IT (SS)A NO. 135/MUM/2007 AND IT(SS)A NO. 68/MUM/2009 BLOCK PERIOD 1.4.1990 TO 24.10.2000 M/S UCIL LEASING LTD., NO.2, D/2, COURT CHAMBERS, FLAT NO. 5A, 35, NEW MARINE LINES, MUMBAI-400 020 PAN-AAACU 4129P VS. THE ACIT, CIR 9(3) , AAYAKAR BHAVAN, MUMBAI-400 020 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI PARAS SAVLA RESPONDENT BY: SHRI SUBACHAN RAM O R D E R PER ASHA VIJAYARAGHAVAN (JM) IT (SS)A NO. 135/MUM/2007 THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER DT. 18.3.2009 PASSED BY THE LD. CIT(A) CENTRAL-I F OR THE BLOCK PERIOD 1.4.1990 TO 24.10.2000. 2. THERE IS A DELAY OF 188 DAYS IN FILING THE APPEA L AND THE APPLICATION FOR CONDONATION OF DELAY HAS BEEN FILED. IN THE AF FIDAVIT OF THE DIRECTOR OF THE COMPANY IT IS STATED THAT THE DELAY IS DUE TO SHIFTING MOST OF THE OPERATIONS OF THE COMPANY FROM MUMBAI OFFICE TO HYD ERABAD OFFICE. EVEN THE DIRECTORS WERE STATIONED AND WERE REQUESTED TO STAY AT HYDERABAD. THE LD. AR STATED THAT ON ACCOUNT OF CLOSURE OF OPE RATIONS IN MUMBAI, THE ASSESSEE COMPANY WAS UNABLE TO MAINTAIN SKILLED STAFF IN MUMBAI UCIL LEASING LTD. 2 OFFICE RESULTANTLY THE LD. CIT(A)S ORDER WAS NOT C OMMUNICATED TO THE DIRECTORS. 3. THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE FOLLOWING CASE LAWS FOR CONDONATION OF DELAY: 1) N. BALAKRISHNAN VS M. KRISHNAMURTHY (1998) 7 SCC 12 3 2) ANGELA J. KAZI VS ITO (2006) 10 SOT 139 (MUM) 3) STATE OF NAGALAND VS LIPOK AO (2005) 183 ELT 337 (S C) 4. WE HAVE PERUSED THE FACTS OF THE CASE. IN THE C ASE OF COLLECTOR, LAND ACQUISITION VS. MST. KATIJI & ORS. (1987) 167 ITR 471 (SC) WHEREIN IT HAS BEEN HELD AS FOLLOWS: SUFFICIENT CAUSE FOR THE PURPOSE OF CONDONATION O F DELAY SHOULD BE INTERPRETATED WITH A VIEW TO DO EVEN-HANDED JUSTICE ON MERITS IN PREFERENCE TO APPROACH WHICH SCUTTLES A DECISION ON MERITS. THE EXPRESSION SUFFICIENT CAUSE EMPLOYED BY THE LEGIS LATURE IS ADEQUATELY ELASTIC TO ENABLE THE COURTS TO APPLY THE LAW IN A MEANINGFUL MANNER WHICH SUBSERVES THE ENDS OF JUSTICE. FOLLOWING THE ABOVE DECISION, WE CONDONE THE DELAY OF 188 DAYS IN FILING THE APPEAL. 5. ON MERITS, THE ASSESSING OFFICER HAS PASSED AN O RDER U/S. 158BC R.W.S. 263 OF THE I.T. ACT ON 7.12.2004. ON APPEAL BEFORE THE LD. CIT(A), THE CIT(A) BY ORDER DT. 23.2.2007 CONFIRMED THE ACT ION OF THE AO AND DISMISSED THE ASSESSEES APPEAL. HOWEVER, WE FIND THAT THE ASSESSEE HAS COME UP ON APPEAL BEFORE THE TRIBUNAL WITH RESPECT TO THE ORDER DT. 9.7.2003 PASSED U/S. 263 BY CIT(A)-9, MUMBAI RELATI NG TO THE SAME BLOCK PERIOD FROM 1.4.1990 TO 24.10.2000 AND THE HO NBLE J BENCH IN IT(SS)A NO. 653/M/2003 HAS DECIDED AS FOLLOWS: UCIL LEASING LTD. 3 IT HAS BEEN DECIDED IN VARIOUS DECISIONS THAT WHEN THE A.O. HAS TAKEN A POSSIBLE VIEW AND PASSED THE ASSESSMENT ORDER, TH E CIT CANNOT INVOKE THE JURISDICTION U/S.2263 OF THE ACT MERELY BECAUSE HE DOES NOT AGREE WITH THE VIEW TAKEN BY THE A.O. THE A.O. IN T HE INSTANT CASE AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, THE STA TEMENT OF DIRECTOR OF THE ASSESSEE COMPANY AS WELL AS BROTHER OF THE DIRE CTOR AND AFTER CONSIDERING THE SEIZED MATERIAL FOUND DURING THE CO URSE OF SEARCH HAS TAKEN A POSSIBLE VIEW AND COMPLETED THE ASSESSMENT U/S.158 BC(C). THEREFORE, THE ORDER CANNOT BE SAID TO BE ERRONEOUS . IT IS THE SETTLED PROPOSITION OF LAW THAT FOR ASSUMING JURISDICTION U /S.263, THE TWIN CONDITIONS I.E. (I) THE ORDER MUST BE ERRONEOUS AND (II) IT MUST BE PREJUDICIAL TO THE INTERESTS OF REVENUE MUST BE SAT ISFIED. IF ONE IS ABSENT, THE CIT CANNOT ASSUME THE JURISDICTION U/S.253 OF T HE ACT. IN THE INSTANCE CASE, THE ORDER MAY BE PREJUDICIAL TO THE INTEREST OF REVENUE SINCE THE AMOUNT OF RS.15,10,000/- HAS NOT BEEN ADD ED TO THE INCOME OF THE ASSESSEE U/S.68/69(C) AS PER THE OPINION OF CIT. HOWEVER, THE SAME CANNOT BE HELD AS ERRONEOUS SINCE THE A.O. AFT ER DUE APPLICATION OF HIS MIND ON THE BASIS OF VARIOUS DETAILS FURNISH ED BEFORE HIM AND AFTER CONSIDERING THE SEIZED MATERIAL AND STATEMENT S RECORDED FROM THE DIRECTOR AND BROTHER OF THE DIRECTOR HAS PASSED THE ORDER. THEREFORE, IN OUR OPINION, THE CIT WAS NOT JUSTIFIED IN INITIATIN G PROCEEDING U/S.263. THE VARIOUS DECISIONS RELIED ON BY THE LD. DR ARE N OT APPLICABLE TO THE FACTS OF THE PRESENT CASE SINCE THERE IS PROPER ENQ UIRY MADE BY THE AO WHILE PASSING THE ORDER U/S.158 BC(C) OF THE ACT. I N THIS VIEW OF THE MATTER, WE SET ASIDE THE ORDER PASSED BY THE CIT U/ S.263. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 6. THEREFORE, THE ASSESSING OFFICERS ORDER PASSED U/S. 158BC R.W.S. 263 HAS NO LEG TO STAND SINCE THE ORDER U/S. 263 I TSELF HAS BEEN QUASHED BY THE TRIBUNAL IN IT (SS) 653/M/03. HENCE THE ORD ER GIVING EFFECT U/S. 263 IS CONSEQUENTLY QUASHED AND THE ASSESSEES APPE AL IS ALLOWED. IT(SS)A NO. 68/M/2009 7. THE LD. CIT(A) BY ORDER DT. 18.3.2009 CONFIRMED THE PENALTY IMPOSED BY AO U/S. 158BFA(2) PASSED ON 21 ST FEB. 2007. 8. THE ASSESSEE IS IN APPEAL BEFORE US AND HAS RAIS ED THE FOLLOWING GROUND: UCIL LEASING LTD. 4 THE HONBLE CIT(A) HAS ERRED IN CONFIRMING THE ORD ER PASSED BY AO LEVYING PENALTY OF RS. 9,06,000/- U/S. 158BFA (2) OF THE I.T. ACT 1961 ON THE UNDISCLOSED INCOME OF RS. 15,10,000 /- ADDED TO RETURNED INCOME BY PASSING ORDER U/S. 158BC R.W.S. 263 OF I.T. ACT, 1961. IT IS SUBMITTED THAT NO SUFFICIENT OPPORTUNI TY HAS BEEN PROVIDED TO THE APPELLANT TO EXPLAIN FACTS OF THE C ASE. IT IS SUBMITTED THAT THE ADDITION OF UNDISCLOSED INCOME MADE U/S. 1 58BC R.W.S. 263 ITSELF IS MADE ON ASSUMPTIONS/PRESUMPTION AND ACCOR DINGLY, PENALTY U/S. 158BFA(2) SHOULD BE CANCELLED. 9. THE ORDER OF THE AO PASSED U/S. 158 BC R.W.S. 26 3 HAS BEEN QUASHED CONSEQUENT TO THE ORDER U/S. 263 HAVING BEE N QUASHED BY THE ITAT J BENCH. THE ORDER IMPOSING PENALTY HAS NO LEGS TO STAND AS THE QUANTUM ORDER HAS BEEN CANCELLED. THEREFORE THE OR DER PASSED BY THE AO LEVYING PENALTY OF RS. 9,06,000/- U/S. 158BFA(2) AND CONFIRMED BY THE LD. CIT(A) CANNOT BE SUSTAINED. HENCE THE APPE AL FILED BY THE ASSESSEE IS ALLOWED. 9. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASS ESSEE ARE ALLOWED. ORDER PRONOUNCED ON THIS 30 TH DAY OF JUNE, 2011 SD/- SD/- (P.M. JAGTAP) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 30 TH * JUNE, 2011 RJ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR F BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI UCIL LEASING LTD. 5 DATE INITIALS 1 DRAFT DICTATED ON: 24 . 0 6 . 201 1 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 27 .0 6 .2011 ______ SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: _________ ______ JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: _________ ______ JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: _________ ______ SR. PS/PS 6. KEPT FOR PRONOUNCEMENT ON: _________ ______ SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: _________ ______ SR. PS/PS 8. 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK: DATE ON WHICH FILE GOES TO AR _________ ______ 10 . DATE OF DISPATCH OF ORDER: _________ ______