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Income Tax Appellate Tribunal, MUMBAI BENCH “F”, MUMBAI
Before: SHRI VIKAS AWASTHY, HONBLE & SHRI S. RIFAUR RAHMAN, HONBLE
O R D E R PER S. RIFAUR RAHMAN (AM) 1. These appeals are filed by the assessee against different orders of the Learned Commissioner of Income Tax (Appeals)–53, Mumbai [hereinafter in short “Ld.CIT(A)”] dated 26.08.2019 for the A.Ys. 2012-13, 2013-14 and 2014-15.
2 2196 & 2197/MUM/2021 Shri Jayesh Vinodkumar Tanna 2. Since the issues raised in all the appeals are identical, therefore, for the sake of convenience, these appeals are clubbed, heard and disposed off by this consolidated order.
The present appeals are filed by the assessee with a delay of 743 days and assessee also filed an affidavit in this regard and prayed for condonation of delay. Assessee filed an affidavit dated 28.04.2022 and submitted as under: - “That in my case as an individual assessment for AY 2012-13 was completed u/s 143(3) of the Act, on 31.03.2015 against which had filed an appeal before the Ld. CIT(A) on 29-04-2015. Which was decided on 26-08-2019 and that the order of CIT(A) was received by me on 19-09-2019. That for AY 2013-14 assessment was completed on 30-03-2016 against which appeal was filed on 29-04-2016 which is decided by the Id. CIT(A) vide order dated 26-08-2019 received by me on 19-09-2019. That for A.Y. 2014-05 assessment was completed on 30-11-2016 and order was received by me on 28-12-2016 against which an appeal was filed on 25-01-2017 which is also decided on 26-08-2019 which was received by me on 19-09-2019. Against these orders of Ld. CIT(A) have filed second appeal before hon'ble ITAT on 30-11-2021 for all the three years, which is delayed for the reasons that I am a patient of severe diabetic condition and also suffering from high blood pressure and hyper tension. That during the month of November 2019 was admitted to hospital i.e. I was hospitalized from 11-11-2019 to 15-11.2011 and I was advised complete bed rest. During this period, I had asked my staff to co-ordinate with our chartered Accountants and do the needful for all these matters and to file an appeal as may be required. However due the reasons that my the then chartered accountant was not appearing before the Hon'ble ITAT he did not file an appeal in time allowed under the Act, further since from March onwards there was complete lockdown and as I was diabetic and also suffering from 3 2196 & 2197/MUM/2021 Shri Jayesh Vinodkumar Tanna high blood pressure was not allowed to move out of my residence and was always been restricted to move out even for my routine work. Further due to this complete sedentary / hibernation life style was also suffering from nostalgia and hyper tension more so since when actually started moving out, was infected from Covid-19 during the month of April 2021 and was put once again in seclusion/ isolation. Further was also admitted in the hospital for kidney stone operation in the month of October, 2021. Post my recovery inquired about status of Income tax matter, where came to know about non filing of appeals. Thus, in the month of November, 21, when it came to my knowledge, I immediately appointed some other CA to file my appeals which were ultimately filed on 30.11.2021. Thus, there is a delay of 154 days excluding Covid - 19 extensions allowed till 31-10-2021. Since the delay caused is not due to any neglect but due to circumstances beyond my control and under wrong impression, I depose this statement to support my application for delay in filing appeal before the Hon'ble ITAT Mumbai to condone the delay and hear my appeal on merit.”
4. Ld. AR of the assessee also filed medical records and prayed for condonation of delay.
Ld. DR objected for the condonation of delay and however, he has not filed any submissions against the affidavit as well as the facts described in the above affidavit.
Considered the submissions of both parties, we found that the reasons brought on record by the assessee are relating to his health and the misconduct and unprofessional behavior of his counsel. It is fact on record that assessee has failed to file the appeal in time. For the sake of overall justice, the Hon'ble Supreme Court in the case of Collector, Land Acquisition v. MST. Katiju and others, [1987]167 ITR 471, held as under:-
4 2196 & 2197/MUM/2021 Shri Jayesh Vinodkumar Tanna “3. The legislature has conferred the power to condone delay by enacting s. 5 of the Limitation Act of 1963 in order to enable the Courts to do substantial justice to parties by disposing of matters on "merits". The expression "sufficient cause" employed by the legislature is adequately elastic to enable the Courts to apply the law in a meaningful manner which subserves the ends of justice—that being the life-purpose of the existence of the institution of Courts. It is common knowledge that this Court has been making a justifiably liberal approach in matters instituted in this Court. But the message does not appear to have percolated down to all the other Courts in the hierarchy.
And such a liberal approach is adopted on principle as it is realized that:
1. 1. Ordinarily, a litigant does not stand to benefit by lodging an appeal late.
2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. 3. "Every day's delay must be explained" does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common sense and pragmatic manner.
4. When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a non- deliberate delay.
5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk.
6. It must be grasped that the judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.”
Respectfully following the ratio laid down in the above judgment, we condone the delay in filing the appeal and decide the appeals on merits.
5 2196 & 2197/MUM/2021 Shri Jayesh Vinodkumar Tanna 8. At the time of hearing, Ld. AR submitted that first he would like to argue the appeal filed for the A.Y. 2014-15 in which assessee has raised basically two issues for consideration. First, disallowance of adhoc depreciation by the Assessing Officer, from the record we noticed that assessee has claimed depreciation of ₹.9,33,866/- on motor cars and scooter. The Assessing Officer observed that there is personal element involved in utilization of the motor vehicles, accordingly, he disallowed approximately 1/3rd of the depreciation claimed by the assessee and the same is confirmed by the Ld.CIT(A). Before us, Ld. AR submitted that no doubt there may be some utilization of personal use but he prayed that the disallowance made by the authorities are way too high. He prayed that lesser percentage may be considered.
With regard to disallowance made u/s. 14A r.w. Rule 8D of I.T.Rules, Ld. AR submitted that Assessing Officer has invoked Rule 8D(2)(iii) of I.T. Rules to disallow the administrative expenses @0.5% of the total investment made by the assessee and disallowed ₹.23,40,685/-. He submitted that the assessee has claimed indirect expenses to the extent of ₹.7,27,981/- and accordingly, Assessing Officer restricted the disallowance to the extent of indirect expenses claimed by the assessee, the same is confirmed by the Ld.CIT(A) observing that assessee has 6 2196 & 2197/MUM/2021 Shri Jayesh Vinodkumar Tanna earned no dividend income, however, assessee has earned share of profit from the firm, therefore the disallowance has to be sustained.
In this regard Ld. AR submitted that the disallowance should be restricted to the exempt income earned by the assessee and only those investments which actually earned the exempt income. In support of the above contention Ld. AR relied on the decision of the Vireet Investment (P) Ltd [82 taxmann.com 415] and prayed that proper direction may be given.
Ld.DR relied on the order of the Ld.CIT(A) and prayed that the order of the Ld.CIT(A) be sustained.
Considered the rival submissions and material placed on record, we observe from the record that the Assessing Officer has disallowed 1/3rd of the expenses claimed for the usage of the motor car and scooter. It is fact on record that the motor vehicles are utilized for the business as well as for the personal use. But it is difficult to separate the same as it is subjective. It is not right to presume at such high level as presumed by Assessing Officer. Therefore, in our considered view, it should be 10% to be fair and just. Therefore, we partly allow the Ground No. 1 raised by the assessee.
7 2196 & 2197/MUM/2021 Shri Jayesh Vinodkumar Tanna 13. With regard to Ground No. 2, disallowance of administrative expenses of 0.5% on the total investment, it should be restricted to the investments which has derived the exempt income. In the given case, the assessee has not earned any dividend from the investments made in shares/Mutual funds. Therefore, all the investments made in shares should be excluded. Assessing Officer should consider only the investments made in firm, from which assessee has earned share of profit, which has earned exempt income. Therefore, we are inclined to allow the ground raised by the assessee and direct the Assessing Officer to follow the above direction as per law.
ITA.No. 2196/MUM/2021 (A.Y. 2013-14)
Assessee has raised following grounds in its appeal: - “1. On the facts and circumstances of the Appellant's case and in law the Ld. Commissioner of Income Tax (Appeals) erred in confirming the ad-hoc disallowance of Rs. 6,08,109/- being 25% of the total indirect expenses of Rs.24,32,436/- claimed for the year under consideration.
2. On the facts and circumstances of the Appellant's case and in law the Ld. Commissioner of Income Tax (Appeals) erred in confirming the ad- hoc disallowance of depreciation on Motor Car and Scooter of Rs. 2,10,190/- being 1/3rd of the total depreciation on Motor Car and Scooter of Rs.6,00570/- claimed for the year under consideration.
3. On the facts and circumstances of the Appellant's case and in law the Ld. Commissioner of Income Tax (Appeals) erred in confirming the addition of Rs.2,041/- on account of short deduction and short payment of TDS.
4. On the facts and circumstances of the Appellant's case and in law the Ld. Commissioner of Income Tax (Appeals) erred in confirming the 8 2196 & 2197/MUM/2021 Shri Jayesh Vinodkumar Tanna addition of Rs. 18,24,327/- being expenditure incurred for earning exempt income by invoking provisions of Section 14A rwr 8D of the Act. 5. The Appellant craves leaves to add, to amend, alter, modify and / or withdraw any or all of the above grounds of appeal, each of which are without prejudice to one another.”
15. Ground No. 1 is with regard to confirming the ad-hoc disallowance of ₹.6,08,109/- being 25% of the total indirect expenses of ₹.24,32,436/- claimed by the assessee, it is fact on record that these vouchers were not supported but certainly incurred for the purpose of business. Therefore, there is no basis for disallowing @25%. In our considered view, the estimation of disallowance @25% is on higher side and to meet the ends of justice we direct Assessing Officer to restrict it to 10% of the total indirect expenses. Accordingly, Ground No.1 raised by the assessee is partly allowed.
Ground No. 2 and 4 are similar to Ground No. 1 and 2 of grounds of appeal raised for the A.Y. 2014-15 and the decision taken therein shall apply mutatis-mutandis to the appeal for the A.Y. 2013-14. We order accordingly.
17. With regard to Ground No. 3 which is in respect of confirming the addition of ₹.2,041/- on account of short deduction and short payment of TDS, Ld.AR submitted that the tax effect relating to this ground is meager and this ground is not pressed. Considering the submissions of the assessee, we dismiss the ground as not pressed.
In the result, appeal filed by the assessee is partly allowed.
Assessee has raised following grounds in its appeal: - “1. On the facts and circumstances of the Appellant's case and in law the Ld. Commissioner of Income Tax (Appeals) erred in confirming the ad-hoc disallowance of Rs. 3,25,356/- being 25% of the total indirect expenses Rs.13,01,425/- claimed for the year under consideration.
2. On the facts and circumstances of the Appellant's case and in law the Ld. Commissioner of Income Tax (Appeals) erred in confirming the ad-hoc disallowance of depreciation on Motor Car and Scooter of Rs. 1,97,667/- being 1/3rd of the total depreciation on Motor Car and Scooter of Rs.6,22,376/- claimed for the year under consideration.
3. On the facts and circumstances of the Appellant's 'case and in law the Ld. Commissioner of Income Tax (Appeals) erred in confirming the addition made by Ld. AO amounting to Rs.23,00,000/- by invoking provisions of Section 68 of the Act treating the same as unexplained credit.
4. On the facts and circumstances of the Appellant's case and in law the Ld. Commissioner of Income Tax (Appeals) erred in confirming the addition of Rs. 5,06,623/- being expenditure incurred for earning exempt income by invoking provisions of Section 14A rwr 8D of the Act.
5. The Appellant craves^ leaves to add, to amend, alter, modify and / or withdraw any or all of the above grounds of appeal, each of which are without prejudice to one another.”
Ground No. 1, 2 and 4 are similar to Ground No. 1, 2 and 4 of grounds of appeal raised for the A.Y. 2013-14 and the decision taken therein shall apply mutatis-mutandis to the appeal for the A.Y. 2012-13. We order accordingly.
10 2196 & 2197/MUM/2021 Shri Jayesh Vinodkumar Tanna 21. With regard to Ground No. 3 which is in respect of confirming the addition made by Assessing Officer amounting to ₹.23,00,000/- by invoking provisions of Section 68 of the Act treating the same as unexplained credit. Ld. AR of the assesse, at the time of hearing, filed petition along with additional evidences and prayed for admission of additional evidences. Ld. Counsel for the assessee furnished additional evidences in the form of confirmation from the loan creditors. Ld. AR submitted that since these additional evidences go to the root of the matter the same may be admitted and remitted to the file of the Assessing Officer for examination.
Ld. DR has no serious objections in sending back the matter to the file of the assessing officer.
We have heard the submissions and perused the orders of the authorities below. On a perusal of the additional evidences furnished before us, we are of the view that these evidences go to the root of the matter, accordingly the same are admitted. These evidences have to be examined by the Assessing Officer as these evidences were not available for verification. Thus, we restore all these additional evidences and the issue in hand to the file of the Assessing Officer for denovo adjudication
11 2196 & 2197/MUM/2021 Shri Jayesh Vinodkumar Tanna in accordance with law. The assessee may file all these evidences before the assessing officer to substantiate its claim. Needless to say that the assessee shall cooperate with the assessment proceedings before the Assessing Officer and the Assessing Officer shall provide adequate opportunity of being heard to the assessee. Ground raised by the assessee is allowed for statistical purpose.
In the result, appeal filed by the assessee is partly allowed for statistical purpose.
To sum-up, appeals filed by the assessee for the A.Y. 2014-15 and 2013-14 are partly allowed and appeal for the A.Y.2012-13 is partly allowed for statistical purpose.
Order pronounced in the open court on the 07th November, 2022