ABZONY SAFETY GLASS LTD. vs. CIT CHANDIGARH

-1- IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH Date of Decision: 7.9.2010 Abzony Safety Glass Ltd. ...Appellant Versus Commissioner of Income Tax, Chandigarh. ...Respondent CORAM: HON’BLE MR. JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE AJAY KUMAR MITTAL Present: Mr. D.K. Goyal, Advocate for Mr. Pankaj Jain, Advocate for the appellant. AJAY KUMAR MITTAL, J.

This appeal under Section 260A of the Income-tax Act, 1961 (for short “the Act’”) has been filed by the assessee against the order dated 29.5.2009, passed by the Income Tax Appellate Tribunal, Chandigarh Bench “A” Chandigarh, (in short “the Tribunal”) in ITA No. 333/CHANDI/2009, in respect of assessment year 2003-2004. The assessee has claimed that following substantial questions of law arise in this appeal:- “i) Whether on the true and correct interpretation of the provisions of section 249, 250 of the Act the decision of CIT (A) on merits can be interpreted as a “satisfaction for an admission of an appeal” filed beyond the period prescribed?

-2- ii) Whether Tribunal in right in law by not assigning any reasoning to the pleadings raised in pursuance to the grounds of appeal? iii) Whether the assessment framed u/s 144 r.w.s. 153A is valid and legal when the required information to form 'reason to believe' u/s 132 of the Act is lacking? iv) Whether on the true and correct interpretations of the provisions of section 254 of the Act Tribunal has the powers for interpreting adversely the order u/s 250 of the Act? v) Whether on the facts and circumstances of the case Tribunal order is sustainable since making contradictory decisions in the hands of different persons qua the same material for delay hence perverse in nature? vi) Whether on the facts and circumstances of the case assessment order is sustainable since additions on account of unexplained bank deposits are based upon surmises and conjecture since very well explainable? In order to mention on record a little backdrop how this appeal came to be filed it is necessary to notice that on 13.2.2004 a search under Section 132 was carried out at the residential premises of the directors of the appellant, namely, Arun Ummat and Sangfeeta Ummat. While conducting a survey under Section 133A of the Act at the business premises of the assessee certain books of accounts and -3- other records concerning the business were seized. As per appellant’s case, a term loan in the sum of Rs. 665 lacs had been sanctioned in its favour, by the Haryana State Industrial Development Corporation Ltd. (HSIDC) out of which a sum of Rs. 421 lacs was paid and the remaining was cancelled as there was some dispute between the two sides over the terms for the release of the loan against the sanctioned terms and conditions. During the course of assessment proceedings, it was intimated that Arun Ummat i.e. the Director of the appellant-company was not in a medically fit condition to attend the proceedings. The assessment was completed under Section 144 read with Section 153A of the Act at an amount of Rs. 24,99,000/- on protective basis, vide order dated 6.3.2006 (Annexure P-2). The said addition was made on account of unexplained bank deposits. The reason for framing assessment under Section 144 of the Act is discerned from the following observations recorded in the assessment order:- “Notice u/s 153A of the I.T. Act, 1961 was issued on 19.8.2005 which was duly served upon the assessee on 20.8.2005 requiring the assessee to file return for the assessment year 2003-04 within a period of 30 days from the date of receipt of the notice u/s 153A. The assessee, however, did not file the return within the time allowed in the said notice. As no return was filed, notice u/s 142(1) was issued on 3.11.2005 along with a detailed questionnaire. The case was fixed for 23.11.2005, Sh. Arun Ummat, Managing Director of the assessee company appeared and -4- requested for adjournment. The case was adjourned to 5.12.2005. On 5.12.2005, neither any return was filed nor anybody appeared. Another opportunity of being heard was afforded to assessee through a notice u/s 142(1) of the I.T. Act, 1961 dated 6.12.2005 along with a detailed letter specifying the broad lines on which assessment was proposed to be framed. The case was fixed for 27.12.2005. On 27.12.2005, neither the assessee nor any written reply was filed. A further opportunity of being heard was provided to the assessee fixing the hearing on 16.1.2006. As this notice too remained uncoupled with, fresh opportunities were given fixing the hearing on 31.1.2006 and 3.3.2006 which too evoked no response. The above sequence of events clearly show that the assessee has no intention of complying with the notices issued to it for filing return of income and get the assessment proceedings finalized. Therefore, in view of circumstance explained above and in the absence of any specific reply to the points raised in the questionnaire, I am left with no other alternative but to frame the assessment u/s 144 read with section 153A to the best of my judgment on the material and information available on record.”

-5- This order was challenged by the assessee by filing appeal before the Commissioner of Income-tax (Appeals) {in short “CIT(A)”}. Since the appeal was filed after 923 days of the expiry of period of limitation, an application for condonation of delay was also filed. The CIT(A) dismissed the application for condonation of delay and dismissed the appeal on merits as well, vide order dated 2.2.2009 (Annexure P-5). The appellant preferred second appeal before the Tribunal. The Tribunal also dismissed the appeal of the assessee-appellant, vide order dated 29.5.2009, Annexure A-7. We have heard learned counsel for the appellant and have also perused the record. There was a colossal delay of 923 days, or in other words, of two years and about ten months in preferring appeal before the CIT (A) by the assessee. The grounds for delay were examined and did not find favour with CIT(A) which came to the conclusion that no sufficient cause was made out for condonation of delay. Hence, the delay was not condoned. The CIT (A), however, proceeded to consider the merits of the appeal as well and accordingly dismissed the same holding it to be devoid of any force by observing as under:- “I have considered the issue in hand. I have deleted the addition of Rs. 24,99,000/- in the case of Sh. Arun Ummat, Director in the A.Y. 03-04 vide my appellate order dated 2.2.2009 in Appeal No. 102/08-09. In my opinion, the addition should be made on substantive basis in the hands -6- of the Company as the Company is an independent assessee. Whatever deposits have been found in the bank account of assessee Company, the same are to be explained by the company. Even though the assessee is single handedly managing the affairs, yet the shares of the Company are held by other share holders also. Therefore, Company becomes independent entity. Thus, this ground of the assessee is dismissed.”

When the matter came up for consideration before the Tribunal, the order of CIT(A) was upheld. The Tribunal has upheld that there was no sufficient ground established before CIT (A) for condonation of delay in filing the appeal. Before us also, the counsel for the assessee re-iterated the submissions that were raised before the authorities below. But no satisfactory cause, not to speak of sufficient cause, has been shown by the assessee that may persuade this Court to differ with the conclusion arrived at by the said authorities. The sole contention on the strength of which the assessee wants this Court to condone the delay, is that the assessee had not been keeping well and hence, he could not pursue and attend the assessment proceedings and file the appeal within time before CIT (A). But this Court is not convinced with the assertion of the assessee, especially when the assessee had not been able to fortify the above cause. The plea of the assessee has not been accepted to be bonafide. Further, the order of the Assessing Officer also clearly shows that the assessee had not been cooperative in getting the assessment finalized and had not even filed the return. The assessee had not been -7- appearing and answering to the questionnaire issued by the Assessing Officer. Thus, in the facts and circumstances, the prayer of the assessee for condonation of delay is without any merit. Moreover, sufficiency or insufficiency of the reason would not constitute any substantial question of law and decision of such a question would depend upon the facts and circumstances of each case.

As regards the other questions claimed to be the questions of law, enumerated in the grounds of appeal, the same do not arise in this appeal from the order of the Tribunal. In view of the above, the appeal is dismissed. (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL) September 7, 2010 JUDGE rkmalik/gbs