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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI MANOJ KUMAR AGGARWAL
आदेश /O R D E R आदेश आदेश आदेश
PER MAHAVIR SINGH, VP:
These two appeals by the Assessee are arising out of two different orders of the the Commissioner of Income Tax (Appeals)-11, Chennai in Appeal No.ITA No.71/CIT(A)-11/2016-17; dated 04.12.2017 and dated 15.07.2019. The Assessment was framed by the Assistant Commissioner of Income Tax,
:: 2 :: I.T.A Nos.:2366 & 2367/CHNY/2019 Corporate Circle – 3(1), Chennai for the assessment year 2013 – 2014, u/s.143(3) of the Income Tax Act, 1961 (hereinafter “the Act”) vide orders dated 30.03.2016. with this appeal of the Assessee. At the outset, it is noticed that this appeal is time barred by 564 days.
The facts are that the order of the Commissioner of Income Tax (Appeals) in is dated 04.12.2017 and as per the Form No.36, the date of service or communication of the order to the Assessee is 04.12.2017 itself. The Assessee had filed this appeal before the Tribunal on 20.08.2019, thereby the delay of 564 days in filing the appeal before the Tribunal.
The Assessee has filed an affidavit along with a condonation petition stating the reasons and the relevant portion of the affidavit reads as under:
:: 3 :: I.T.A Nos.:2366 & 2367/CHNY/2019
“AFFIDAVIT
I, Laxsmanan Natarajan, Son of Shri P.L. Natarajan, Hindu aged about 68 years having Office at 616 – 617, JK Chambers, 6th Floor, Plot No.76, Sector – 17, Vashi, Navi Mumbai – 400 703, Maharashtra do hereby solemnly and sincerely affirm and state as follows:
I am one of the Directors of the Appellant / Petitioner Company herein and am well acquainted with the facts relating to the filing of the above appeal for the Assessment Year 2013-2014 belatedly by 564 days before the Jurisdictional Bench of the Income Tax Appellate Tribunal to challenge the impugned order dated 04.12.2017 of the Commissioner of Income Tax (Appeals) – 11, Chennai in competent to swear to this affidavit.
I state that the appeal was filed belatedly by 564 days before the Jurisdictional Bench of the Income Tax Appellate Tribunal on 04.12.2017 and the said delay was on account of the circumstances beyond the control of the Appellant / Petitioner Company in as much as I state that the dismissal of the issue pertaining to the disallowance of interest payments on the presumption of diversion of borrowed funds to the related concerns for non-business purposes by the First Appellate Authority in the said order dated 04.12.2017 was not appealed against based on the professional advice obtained immediately while the said issue was raked up again by the Office of the Cjhartered Accountants in filing a rectification petition before the First Appellate Authority on 29.05.2019 especially based on the law laid down by the Supreme Court in the case of M/s. S.A. Builders Limited reported in 288 ITR 1 [SC] within the statutorily prescribed time limit of four years. I state that the appeal against the rectification petition was disposed off / dismissed by the Commissioner of Income Tax (Appeals) – 11, Chennai in dated 15.07.2019 received on 03.08.2019 in as much as I state that both the order of the First Appellate Authority, namely the first order passed on 04.12.2017 and the second order passed on 15.07.2019 for professional advice and for filing
:: 4 :: I.T.A Nos.:2366 & 2367/CHNY/2019 further appeal before the Jurisdictional Bench of the Income Tax Appellate Tribunal. I state that based on the analysis of the issue and further based on the narrow scope of rectification proceedings, the Counsel on record advised for filing the belated appeal against the order of the First Appellate Authority dated 04.12.2017 while filing separate appeal against the order of the First Appellate Authority dated 15.07.2019.
I state that the legal complexities involved in understanding the scope of the appeal against the rectification proceedings in contra distinction to the wider scope of the appeal against the original appellate order were not understood while the said complexities in understanding the stand taken by the Counsel on record and the stand taken by the Chartered Accountants at the earlier stage would negate the presumption of latches on the part of the Appellant / Petitioner Company.
I state that the appeal against the order dated 15.07.2019 was filed in the Jurisdictional Bench of the Income Tax Appellate Tribunal in well within the limitation period prescribed for the second appeal under the statute and I state that the simultaneously the other / present appeal was also filed in the Registry belatedly by 564 days as per the advice of the Counsel on record. I state that the legal advice obtained was scrupulously followed while the said distinction between the two proceedings was not properly brought to the notice of the Appellant / Petitioner Company which would constitute reasonable cause for the belated filing against the First Order dated 04.12.2017.
I state that the reasons stated above are TRIE and CORRECT to the best of my knowledge, information and belief and accordingly plead for the favourable consideration of the Bench for admission of the appeal in the interest of justice.
Accordingly, I am pleading before the Bench for admitting the appeal for the Assessment Year 2013- 2014 in condoning the delay of 564 days for the :: 5 :: I.T.A Nos.:2366 & 2367/CHNY/2019 reasons stated above for rendering decision on merits and thus render justice.”
The learned Counsel for the Assessee stated that the Assessee was availing an alternative remedy by filing an application u/s.154 of the Act before the Commissioner of Income Tax (Appeals) and hence has not challenged the order of the Commissioner of Income Tax (Appeals) before the Tribunal. According to the learned Counsel for the Assessee, professional advice was given like this that he can avail remedy u/s.154 of the Act but when a query was raised from the Bench, he could not file any evidences or the affidavit of the legal representative or Chartered Accountant who had advised him like this, and he could not reply.
On the other hand, the learned Senior Departmental Representative strongly opposed the condonation of delay.
:: 6 :: I.T.A Nos.:2366 & 2367/CHNY/2019
We have heard the rival contentions and had gone through the facts and circumstances of the case.
As argued by the learned Counsel for the Assessee, that the Assessee was availing alternative remedy by filing application u/s.154 of the Act, dated 24.05.2019 because the Commissioner of Income Tax (Appeals) has not adjudicated the issue of disallowance of interest payment on the presumption of diversion of borrowed funds to the related concerns for non-business purposes, although the issue comes under the decision of the Hon’ble Supreme Court in the case of S.A.
Builders Limited, 288 ITR 1 (SC). We have gone through the order of the CIT(A) and noted that the CIT(A) has considered this issue and noted that the Assessing Officer has correctly concluded that the above interest free loans and advances given to the related concerns is diversion of interest bearing funds for business purposes. We are not convinced with the :: 7 :: I.T.A Nos.:2366 & 2367/CHNY/2019 argument of the learned Counsel for the Assessee because, firstly the CIT(A) has adjudicated this issue and there is no mistake apparent from record in the order of the CIT(A), and even the plea of applicability of the judgement of the Hon’ble Supreme Court in the case of S.A. Builders Limited (supra) is very much available, even after the Appellate Order passed by the CIT(A) originally. Hence, this plea cannot be accepted and there seems to be no reasonable cause for condonation of delay.
Taking for a moment, the plea of the learned Counsel for the Assessee is correct, what he was waiting for from 03.02.2018 to 29.05.2019, the period between the date of expiry of limitation period for filing of appeal before ITAT, and the date of application u/s.154 of the Act filed before CIT(A). The learned Counsel for the Assessee could not explain about this delay. Hence, we dismiss this appeal of the Assessee.
:: 8 :: I.T.A Nos.:2366 & 2367/CHNY/2019
Coming to the appeal of the Assessee in I.T.A.
No.2367/Chny/2019, it is noted that the Assessee had filed a rectification application u/s.154 of the Income Tax Act, 1961 before the Commissioner of Income Tax (Appeals) and the grounds of rectification before the Commissioner of Income Tax (Appeals) reads as under:
“1. That the Assessee Company has no business transactions with the said three related concerns, whom the interest free loans were advanced. Therefore, the interest free advances to the group concerns is in no way resulting in any income which is liable for tax in hands of the Assessee, under the head income from business.
That the Assessee has not explained as to how advancing the interest free loan to the group concerns is in the business requirement in the hands of the present Assessee Company and thus, cannot be considered for the purpose of business.”
The Commissioner of Income Tax (Appeals) rejected the rectification application by observing in paragraph Nos.4 and 5, as under:
:: 9 :: I.T.A Nos.:2366 & 2367/CHNY/2019
“4. The contents of the rectification application as well as the Appellate order dated 04.12.2017 are perused. It is seen that the learned Commissioner of Income Tax (Appeals) has passed a speaking order taking note of all the submissions of the Assessee. The learned Commissioner of Income Tax (Appeals) has passed a detailed and judicious order justifying this decision with respect to the grounds of the appeal and objections filed by the Assessee. Considering the same, the rectification petition filed on 29.05.2019 is hereby rejected.
5. It is further seen that the Assessee company had failed to appeal against the order of the learned Commissioner of Income Tax (Appeals) dated 04.12.2017 within the required due dates. The Assessee company appears to be attempting to use this order for filing a further appeal against the original Appellate order dated 04.12.2017. The Assessing Officer should take sufficient precaution to object to the same, if and when the same is attempted by the Assessee.”
Aggrieved by the order of the Commissioner of Income Tax (Appeals), the Assessee has now come on appeal before the Tribunal.
We have heard the rival contentions and had gone through the facts and circumstances of the case.
We noted from the adjudication by the CIT(A) in the first round tha,t the CIT(A) has given a categorical findings even on the issues raised in application u/s.154
:: 10 :: I.T.A Nos.:2366 & 2367/CHNY/2019 of the Act, while adjudicating the appeal of the Assessee in the first round. Hence, we find no mistake apparent from record in the order of the CIT(A), i.e. the original order of CIT(A), and hence the appeal of the Assessee is dismissed.
10 In the result, both the appeals of the Assessee in I.T.A Nos.:2366 & 2367/CHNY/2019 are dismissed.