M/S. RUDRA CONSTRUCTION,BARODA vs. THE DY. CIT, CIRCLE-1(2), BARODA

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ITA 1439/AHD/2017Status: DisposedITAT Ahmedabad15 October 2019AY 2012-134 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that since the assessee discharged its tax liability along with interest during the pendency of the appeal and provided plausible reasons for the delay, the CIT(A) should not have dismissed the appeal on technical grounds. The appeal should have been decided on merits.

What were the facts?

The assessee filed an appeal before the CIT(A) but failed to pay the self-assessment tax before filing. The assessee later paid the tax along with interest during the pendency of the appeal, citing financial difficulties. The CIT(A) dismissed the appeal for being defective and time-barred.

What were the issues?

Whether the CIT(A) erred in not condoning the delay in filing the appeal due to non-payment of self-assessment tax, and consequently confirming the addition made by the AO.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD - BENCH ‘D’

Before: SHRI RAJPAL YADAV & SHRI AMARJIT SINGH

Hearing: 26/08/2019Pronounced: 15/10/2019

PER RAJPAL YADAV, JUDICIAL MEMBER:

1.

Assessee is in appeal before the Tribunal against order of ld.CIT(A)- 2, Baroda dated 30.3.2017 passed for the assessment year 2012-13.

2.

Assessee has taken two grounds of appeal whereby it has pleaded that the ld.CIT(A) has erred in not condoning the delay in filing the appeal of 677 days, and thereby confirmed the addition of Rs.35,34,100/- which was added by the AO under section 68 of the Income Tax Act, 1961.

3. With the assistance of the ld.representatives, we have gone through the record. It emerges out from the record that the assessee has filed appeal before the ld.CIT(A) on 28.4.2015. However, it failed to pay self- assessment tax of Rs.23,87,220/- before filing the appeal before the CIT(A). It also merges out that during the course of pendency of the appeal before the ld.CIT(A), the assessee has paid self-assessment tax along with interest. The details of such payments are noticed by the ld.CIT(A) on page 3 which reads asunder: Date Particulars Amount Rs. 18.03.2015 Tax on Regular Assessment 6,36,430/- 11.02.2016 Tax on Regular Assessment 2,50,000/- 06.03.2017 Tax on Regular Assessment 20,00,000/-

Rs. 28,86,430/- Total

5.

The assessee thereafter filed an application for condonation of delay, pleading therein that non-payment of self-assessment tax beyond control of the assessee, and therefore, it be taken as plausible explanation for not filing the appeal within the period stipulated in the Act. Such application has been reproduced by the ld.CIT(A), which reads as under: “3.2. Subsequently, vide letter dated 15.03.2017 the Ld. Authorized Representative has filed an application for condonation of delay in payment of taxes as well as in removing the defects in the appeal.

This written submission is also reproduced as under:- "In the above mentioned reference and subject, further to submission dated 07.03.2017, it is submitted that the delay in payment of admitted tax liabilities was due to the fact that your appellant was facing acute financial crisis, as the appellant has under taken massive expansion of the production capacity in the FY 2010-11 and 2011-12 and taken Bank Loans for the expansion purpose. The appellant firm could not achieve the projected sales turnover to match the capacity expansion badly effecting its financial position. Consequently , - Could not pay installments of loans in prescribed time and required to pay penal interest for late payment of installments. - The installments often become overdue for payments.

There are also number of incidents, were the cheque issued by your appellant return unpaid due to the reason of insufficient of funds or excess arrangement of funds. - The firm also required to have Temporary Overdrafts to meet the liabilities toward routine expenditures. - In the endeavor of achieving of projected sales, the appellant has made credit sales to the parties. However at this front also the appellant faced problems of timely realization of dues from the parties and in the results the receivable level has increased considerably. - The appellant firm also could not make timely payments to its creditors. - The appellant firm even could not make timely payments to Government Dues like Royalties and VAT. Furthermore some parties have also defaulted in payment of dues and consequently your appellant required to file recovery proceedings and FIR where in some cases defaulter parties has become insolvent and hence your appellant had required to write off as bad debts in the FY 2015-16. In addition to the above your appellant has also faced slackness in the market and hence the turnover of the firm has reduced considerably. In support of the above your appellant encloses the following documents for perusal - Copy of sanction letter for Term Loan and Cash Credit - Term Loan Statements from April 2012 to till date - Year wise Comparative statement of Sales, Trade Receivable, Trade Payable, Statutory Dues and Profit/Loss. - Copies of Balance Sheet and Profit & Loss A/c. for the FY 2011- 12 to 2015-16. Considering the above it is prayed that the delay in payment of admitted tax liabilities may be condoned and the present appeal may be admitted for final hearing on merits."

6.

The ld.CIT(A) was no satisfied with the explanation of the assessee, and observed that the assessee has sufficient profit before the depreciation and taxes. It could easily discharge its liability of payment of taxes, and therefore, there is no bona fide explanation in the conention of the assessee. The ld.CIT(A) has dismissed the appeal vide order dated 30.3.2017 on the ground that a valid appeal was not filed by the assessee within the time limit. It was a defective one.

7.

On due consideration of the above facts and circumstances, we are of the view that once during the pendency of appeal, the assessee has discharged the tax liability on self-assessment taxes along with interest, then the ld.CIT(A) ought to have not dismissed the appeal being defective and time barred. Quasi-judicial authorities are being respected not on account of their power to legalize injustice on technicalities, rather on account of their power to remove such injustice. Once taxes have been paid and plausible reasons has been shown of its non-payment, more so during the pendency of appeal, then the appeal ought to have been decided on merit. We allow the appeal of the assessee and direct the ld.CIT(A) to decide the appeal on merit.

The observations made by us will not impair or injure the case of the AO and will not cause any prejudice to the defence/explanation of the assessee.

8.

In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the Court on 15th October, 2019 at Ahmedabad.

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