G Galaxy Infra Space Pvt. Ltd., Ahmedabad V. The Dy.CIT, Circle-2(1)(1), Ahmedabad

MA 331/AHD/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8424 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 09-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 15-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVETIA
• Keywords: Principle of natural justice; Reasonable cause; Capital expenditure
• Section: 40A(3); 250; 254(2); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER G. GALAXY INFRA SPACE PVT. LTD. 102, FIRST FLOOR, ABHIJEET 4 OPP. MAYOR BUNGALOW MITHAKHALI CROSS ROADS, AHMEDABAD - 380009 PAN: AADCG6607P (APPELLANT) VS THE D CIT , CIRCLE - 2 ( 1 ) (1) , AHMEDAB AD (RESPONDENT) REVENUE BY : S H RI DILEEP KUMAR , SR. D . R. ASSESSEE BY: SHRI S.N. DIVETIA , A.R. DATE OF HEARING : 20 - 12 - 2 019 DATE OF PRONOUNCEMENT : 09 - 01 - 2 020 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS MISCELLANEOUS APPLICATIO N IS ARISING OUT OF ITA NO. 237/AHD/2014 ASSESSMENT YEAR 2012 - 13 VIDE ORDER DATED 10 - 06 - 2019 WHICH IS REPRODUCED AS UNDER: - 1. THE APPLICANT ABOVE NAMED SUBMITS PRESENT MI SCELLANEOUS APPLICATION UNDER SECTION 254(2) OF THE IT ACT 1961 (FOR SHORT 'THE ACT') FOR RESTORATION OF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD BENCH - A, AT AHMEDABAD PASSED ON 10 - 6 - 2019 WHEREBY THE APPEAL OF THE APPLICANT HAS BEEN DISMI SSED. M.A. NO. 331 /AHD/2019 (IN I T A NO . 237 / A HD/20 16 ) A SS ESSMENT YEAR 2012 - 13 M.A. NO. 331/AHD/2019 ( I.T.A NO. 237 /AHD/20 16) A.Y. 2012 - 13 PAGE NO G. GALAXY INFRA SPACE PVT. LTD. VS. D CIT 2 2. THE APPLICANT SUBMITS THAT BEING AGGRIEVED AND DISSATISFIED WITH THE ORDER PASSED U/S 250 OF THE ACT ON 15 - 10 - 2015 BY CIT (A) - 7 AHMEDABAD, IT HAD PREFERRED AN APPEAL BEFORE THE APPELLATE TRIBUNAL WHEREIN THE APPLICANT HAD CHALLENGED THE VARIOUS A DDITIONS/ DISALLOWANCES AS UNDER A. FOREIGN TRAVELLING EXP. RS. 6,68,500 B. LOAN PROCESSING CHARGES, RS. 12,33,673 C. CASH PAYMENTS U/S 40A(3) RS. 1,98,700 D. INTEREST EXP. U/S 36(1 )(III) RS. 14,80,736 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE APPLICANT COMPANY IS ENGAGED IN THE BUSINESS AS DEVELOPMENT OF RESIDENTIAL HOUSES. IT HAD FILED ITS RETURN OF INCOME FOR A.Y. 2012 - 13 ON 9 - 3 - 2 013 DECLARING TOTAL INCOME OF RS . 8 9,85,180/ - WAS SELECTED FOR SCRUTINY AND THE REGULAR ASSESSMENT WAS MADE UNDER SECTION I - 3L3) ON 20 - 2 - 2015 ON THE TOTAL INCOME OF RS. 1,25,66,160/ - AFTER MAKING ADDITIONS/DISALLOWANCES AS ABOVE SAID AGGREGATING TO RS. 35,80,979/ - . THE BUSINESS OF THE APPLICANT COMPANY WAS LOOKED AFTER AT THE RELEVANT TIME BY ITS DIRECTORS SHRI KANA KSINH RANA AND SHRI UDAY BHATT. 4. BEING AGGRIEVED, THE APPLICANT HAD FILED APPEAL BEFORE CJT(A) - 7 AHMEDABAD WHO VIDE HER ORDER DATED 15 - 10 - 2015 DISMISSED THE SAME AND UPHELD THE IMPUGNED ADDITION/DISALLOWANCES MAINLY FOR THE REASON THAT NOBODY HAD APPEARE D DURING APPELLATE PROCEEDINGS IN RESPONSE TO THE FOUR NOTICES ISSUED. 5. BEING AGGRIEVED THE APPLICANT FILED APPEAL BEFORE THE TRIBUNAL BEING ITA NO.237/AHD/2018 WHICH WAS DISPOSED OF EX - PARTE ON 7 - 3 - 2019 FOR NON - APPEARANCE ON THE DATE OF HEARINGS. 6. THE REFORE THE APPLICANT FILED MISCELLANEOUS APPLICATION BEING NO. 232/AHD/2018 WHICH WAS DISPOSED OF BY ORDER DATED 7 - 3 - 2019 WHEREBY THE MAIN APPEAL WAS RECALLED AND THE DATE OF HEARING WAS INTIMATED TO THE AR OF THE APPLICANT IN OPEN COURT AS 3 - 6 - 2019. 7. NO W ON THAT DATE OF HEARING, NOBODY APPEARED HENCE THE MAIN APPEAL WAS DECIDED EX - PARTE AGAIN AND ON MERITS THE IMPUGNED ADDITION/DISALLOWANCES WERE UPHELD. 8. THE APPLICANT SUBMITS THAT THERE WAS SUFFICIENT CAUSE FOR NON - ATTENDANCE OR NON - COMPLIANCE TO THE SAID DATE OF HEARING ON 3 - 6 - 2019 AS UNDER: A) THE AFFAIRS OF THE APPLICANT COMPANY WERE LOOKED AFTER BY THE AFORESAID TWO DIRECTORS BUT BOTH THE GROUPS SEPARATED AND THE \ BUSINESS IN NAME OF THE APPLICANT COMPANY WAS TAKEN OVER BY SHRI KANAKSINH RANA WHO OPERATED FROM THE ABOVE SAID ADDRESS. WHEREAS SHRI UDAY BHATT GROUP CONTINUED TO OPERATE HIS BUSINESS AT THE OLD ADDRESS OF THE APPLICANT COMPANY I.E. F - 14, G. GALAXY COMPLEX, OPP. GALAXY CINEMA NARODA. THE APPELLATE AUTHORITY INCLUDING HON. TRIBUNAL USED TO ISSUE NOTICES AT THE OLD ADDRESS OF G.GALAXY COMPLEX. SIMILARLY, THERE WAS ALSO CHANGE IN THE TAX CONSULTANT IN AS MUCH AS ONE SHRI PARAG SHAH USED TO PRESENT THE APPLICANT COMPANY AND HAD APPEARED DURING THE ASSESSMENT PROCEEDINGS BEFORE AO BUT LATER ON THE TAXATION WORK WAS ENTRUSTED TO SHRI DIPAK SONI CA. SHRI DIPAK SONI HAD FILED THE APPEAL BEFORE CIT(A) - 2, AHMEDABAD AND ALSO MADE COMMUNICATIONS IN RESPECT OF THE SAID APPEAL WHICH IS EVIDENT FROM SOME OF THE LETTERS FILED WITH THE APPELLATE AUTHORI TY ON BEHALF OF THE APPLICANT COMPANY, EVEN, THE. APPEAL BEFORE HON'BLE TRIBUNAL WAS FILED BY SAID SHRI DIPAK SONI CA AND HAD ALSO APPEARED AT THE TIME OF HEARING OF MISCELLANEOUS APPLICATION NO. 232/AHD/2018 ON 15.02.2019 WHEN HE WAS INFORMED THE DATE OF HEARING ON 03.06.2019 WHICH IS EXPLICITLY MENTIONED IN THE SAID ORDER RECALLING MA. HOWEVER, THE APPLICANT COMPANY NOR ANY OF THE PRESENT M.A. NO. 331/AHD/2019 ( I.T.A NO. 237 /AHD/20 16) A.Y. 2012 - 13 PAGE NO G. GALAXY INFRA SPACE PVT. LTD. VS. D CIT 3 DIRECTORS/EMPLOYEES WERE INFORMED ABOUT THE SAID DATE OF HEARING. THUS, THE APPLICANT COMPANY WAS TOTALLY UNAWARE ABOU T THE FRESH DATE OF HEARING FIXED ON 03.06.2019. RECENTLY, WHEN THE ORDER PASSED BY THE APPELLATE TRIBUNAL ON 10.06.2019 WAS RECEIVED BY RANA GROUP OF MANAGEMENT FROM BHATT GROUP TO WHOM IT WAS SERVED, IT CAME IN KNOWLEDGE THAT NOBODY HAD ATTENDED ON 03.06 .2019 AND THE ENTIRE APPEAL HAS BEEN DISPOSED OFF EX - PARTE BY CONFIRMING THE DISALLOWANCES MADE BY AO. THE APPLICANT COMPANY WAS ALL THROUGHOUT UNDER A GENUINE AND BONAFIDE IMPRESSION THAT SHRI SONI WAS DILIGENTLY ATTENDING TO THE TAXATION WORK OF THE COMP ANY. THEREFORE APPLICANT COMPANY HAS CHANGE THE SAID AR AND ENTRUSTED THE INCOME TAX MATTER TO CA PINAKIN RAVAL WHO HAS IMMEDIATELY MADE ALTERATION IN THE PAN CARD DATABASE RELATING TO THE CURRENT ADDRESS OF THE APPLICANT COMPANY AND TRIED TO TAKE UP THREA D FROM WHERE THE PREVIOUS AR LEFT. UNDER THE AFORESAID CIRCUMSTANCES, THE APPLICANT SUBMITS THAT THE NON - ATTENDANCE ON THE DATE OF HEARING ON 03.06.2019 WAS NEITHER ATTRIBUTABLE TO THE APPELLANT COMPANY NOR INTENTIONAL NOR WARRANTED AND IF THE ORDER IS NOT RECALLED, THE APPLICANT WILL SUFFER IRREPARABLE LOSS AND INJURY. ON THE OTHER HAND, IF THE ORDERIS RECALLED, THE RESPONDENT WILL NOT SUFFER IN ANY WAY. THEREFORE, THE NON - ATTENDANCE CAUSED DUE TO GENUINE AND BONA FIDE REASONS IS REQUIRED TO BE CONDONED IN THE INTEREST OF JUSTICE AND EQUITY. 9. EVEN, OTHERWISE, THE SAID HEARING WAS THE SINGLE OPPORTUNITY ALLOWED TO THE APPLICANT WHICH CONSIDERING THE PRINCIPLES OF NATURAL JUSTICE AND EQUITY, APART FROM THE COMPLEX FACTS INVOLVED IN THE APPEAL, A FURTHER OPP ORTUNITY OUGHT TO HAVE BEEN ALLOWED. THE APPLICANT IS VERY MUCH ANXIOUS TO CONDUCT THE APPEAL. HENCE, THE PRESENT APPLICATION. 10. THE APPLICANT SUBMITS WI TH UTMOST RESPECT THAT THE HON'BLE TRIBUNAL HAS COMMITTED AN ERROR IN CONFIRMING THE IMPUGNED DISALL OWANCES MAINLY ON THE GROUND THAT THERE WAS NO COMPLIANCE BEFORE CIT(A). HOWEVER, THE APPLICANT COMPANY HAD FILED WRITTEN SUBMISSIONS ON 19.10.2015 WHEREAS ON THE IMPUGNED ORDER WAS PASSED ON 15.10.2015 BUT SERVED AFTER ABOUT 45 DAYS ON 30.11.2015. SECONDL Y, THE DISALLOWANCE OF LOAN PROCESSING CHARGES OF RS.12,33,673/ - IS NOT JUSTIFIED IN VIEW OF THE DECISION OF HON SUPREME COURT IN CASE OF INDIA CEMENT LTD. (___I TR ___) AN THE GROUND THAT THE SAME PERTAIN TO TH E WORKING CAPITAL PROJECT LOAN SANCTIONED BY T HE BANK. THIRDLY, THE DISALLOWANCE OF INTEREST EXPENSES OF RS.14,80,736/ - IS NOT JUSTIFIED BECAUSE THE APPLICANT COMPANY, ADMITTEDLY WAS ENGAGED IN THE BUSINESS OF CONSTRUCTION ACTIVITY WHEREIN IT IS CUSTOMARY TO GIVE ADVANCE TOWARDS PURCHASE OF LAND AND T HE BORROWED FUNDS WERE UTILIZED FOR THE PURPOSE OF THE BUSINESS SO THAT THE INTEREST EXPENSES COULD NOT BE SAID TO BE CAPITAL EXPENDITURE. LASTLY, THE DISALLOWANCE U/S.40A(3) OF RS.1,98,070/ - WAS NOT JUSTIFIED BECAUSE THE SAID PAYMENTS WERE MADE WERE IN NA TURE OF LEGAL EXPENSES INCURRED IN CONNECTION WITH NA AND OTHER CHARGES PAYABLE TO GOVERNMENT AUTHORITIES WHICH IS APPARENT FROM PARA - 5 AT PAGE - 7 OF THE ASSESSMENT ORDER. 11. UNDER THE ABOVE FACTS AND CIRCUMSTANCES, THE APPLICANT SUBMITS THAT THERE WAS REA SONABLE CAUSE FOR NON - APPEARANCE, THE IMPUGNED ORDER MAY BE RECALLED. 12. NEEDLESS TO SAY FOR THIS ACT OF KINDNESS, THE APPLICANT AS IN DUTY BOUND SHALL FOREVER PRAY AND REMAIN GRATEFUL. ' M.A. NO. 331/AHD/2019 ( I.T.A NO. 237 /AHD/20 16) A.Y. 2012 - 13 PAGE NO G. GALAXY INFRA SPACE PVT. LTD. VS. D CIT 4 2. IN THE LIGHT OF THE ABOVE FACTS ELABORATED IN THE MISC. APPLICA TION, IT IS OBSERVED THAT BECAUSE OF SEPARATION OF THE DIRECTORS, THE ASSESSEE HAS NOT RECEIVED THE COMMUNICATION OF THE DATE OF HEARING FIXED IN THIS CASE WHICH APPEARS TO BE A REASONABLE CAUSE FOR NOT MAKING COMPLIANCE AT THE TIME OF HEARING OF THE CASE. CONSIDERING THE ABOVE, WE RECALL THE IMPUGNED ORDER DATE D 10 - 06 - 2019 UNDER RULE 24 OF THE ITAT RULE , 1963. THE REGISTRY IS DIRECTED TO LIST THIS CASE FOR HEARING ON 12 - 03 - 2020 AND ISSUE FRESH NOTICES TO BOTH THE PARTIES. THEREFORE, THE MISCELLANEOUS AP PLICATION IS ALLOWED. 3. IN THE RESULT, THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE IS ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 09 - 01 - 20 20 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 09 /01/2020 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,