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Income Tax Appellate Tribunal, “C” Bench, Mumbai
Before: Shri Shamim Yahya & Shri Ravish Sood
Appellant by: Shri Madhur Agarwal, A.R Respondent by: Shri Uodal Raj Singh, D.R Date of Hearing: 05.10.2020 Date of Pronouncement: 06.10.2020 O R D E R
PER RAVISH SOOD, JM
The present appeal filed by the assessee is directed against the order passed by the CIT(A)-17, Mumbai, dated 03.10.2018, which in turn arises from the order passed by the A.O under Sec. 271(1)(c) of the Income Tax Act, 1961 (for short „Act‟), dated 15.03.2016 for A.Y. 2011-12. The assessee has assailed the impugned order on the following effective grounds of appeal before us: “Ground - 1: Dismissing the appeal petition on account of compliance default On the facts and in the circumstances of the case, the Learned Commissioner of Income Tax (Appeals) ['CIT(A)'] has legally erred in dismissing the appeal petition on the basis of alleged compliance default of not having filed electronically.
Om Swami Smaran Developers Pvt. Ltd. Vs. The ITO-8(2)(4)
It is prayed that the order passed by the Learned CIT(A) dismissing the appeal to be held to be bad in law and be quashed. Ground - 2: Penalty order is bad in law On the facts and in the circumstances of the case, the Learned CIT(A) has legally erred in upholding the order passed by the Learned Income Tax Officer 8(2)(4), Mumbai ('AO') under Section 271(1)(c) of the Income-tax Act, 1961 ('the Act').”
Briefly stated, the assessee company which is engaged in the business of construction and development had e-filed its return of income for A.Y. 2011- 12 on 30.09.2011, declaring its total income at Rs. nil under the normal provisions of the Act and under Sec.115JB at Rs.1,48,66,701/-. The return of income filed by the assessee company was processed as such under Sec.143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec.143(2) of the Act.
During the course of the assessment proceedings it was observed by the A.O that the assessee had claimed a deduction under Sec.80IB(10) amounting to Rs. 1,48,66,701/- in respect of its profits from development of a slum project at Vile Parle known as “Ajinkya Durga”. Observing, that the conditions prescribed in clause (f) of sub-section (10) of Sec.80IB had been violated by the assessee, the A.O called upon the assessee to explain as to why its claim for deduction under Sec.80IB(10) may not be disallowed. As the reply filed by the assessee that its claim for deduction under Sec. 80IB(10) was in order did not find favour with the A.O, therefore, he disallowed the aforesaid claim of deduction and assessed its income at Rs.1,48,66,700/-, vide his order passed under Sec.143(3), dated 31.01.2014. The A.O while culminating the assessment also initiated penalty proceedings under Sec.271(1)(c) of the Act. 4. Aggrieved, the assessee assailed the disallowance of its aforesaid claim of deduction under Sec. 80IB(10) before the CIT(A). However, the CIT(A) not finding favour with the contentions advanced by the assessee, dismissed its appeal vide his order dated 19.06.2014.
Om Swami Smaran Developers Pvt. Ltd. Vs. The ITO-8(2)(4)
The A.O after confirming of the disallowance of the assessee‟s claim for deduction under Sec.80IB(10) by the CIT(A), therein imposed a penalty under Sec. 271(1)(c) of Rs.44,60,010/-, vide his order dated 15.03.2016.
Aggrieved, the assessee assailed the order passed by the A.O under Sec. 271(1)(c), dated 15.03.2016 before the CIT(A). In the course of the appellate proceedings, it was observed by the CIT(A) that the appeal was filed by the assessee in a manual form on 21.04.2016 against the order passed by the A.O under Sec.271(1)(c) of the Act. It was observed by the CIT(A) that as per Notification No. S.O 637(E) [No. 11/2016 (F.No. 149/150/2015-TPL)], dated 1st March, 2016 issued by the Central Board of Direct Taxes, New Delhi, Rule 45 of the Income Tax Rules, 1962 was amended, therein making it mandatory for all the persons who were required to furnish their return of income electronically to e-file their appeals before the appellate commissioner with effect from 01.03.2016. In the backdrop of his aforesaid observations, the CIT(A) concluded that as the appeal that was manually filed by the assessee in paper form was not in conformity with Rule 12(3) of the Income Tax Rules, 1962, the same thus was not maintainable and could not be admitted. Accordingly, the CIT(A) dismissed the appeal filed by the assessee in limine. 7. The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. It was submitted by the ld. Authorized Representative (for short „A.R‟) for the assessee that the appeal before the CIT(A) was manually filed within the stipulated time period on 21.04.2016. It was submitted by the ld. A.R that as the amendment in rules regarding filing of appeal in electronic format was very new, therefore, inadvertently on account of a sheer ignorance the appeal could not be filed as per amended form. It was averred by the ld. A.R that as the non-compliance with the procedure of filing of appeal in electronic form was just a procedural lapse, the non- admission of the appeal for the said default had caused great hardship to the assessee. In the backdrop of his aforesaid contention, it was submitted by the ld. A.R that as the assessee had thereafter electronically filed the appeal with Om Swami Smaran Developers Pvt. Ltd. Vs. The ITO-8(2)(4)
the CIT(A), the matter in all fairness may therefore be restored to his file with a direction for adjudication on merits.
Per contra, the ld. Departmental Representative (for short „D.R‟) did not raise any objection to the aforesaid submission of the counsel for the assessee.
We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record. On a perusal of the order of the CIT(A), we find that the appeal of the assessee was dismissed for the reason that the same not having been filed electronically was thus not in conformity with Rule 12(3) of the Income Tax Rules, 1962. We have deliberated at length on the issue under consideration and find that the issue herein involved is squarely covered by an order of a coordinate bench of the Tribunal in the case of All India Federation of Tax Practitioner, Mumbai, Vs. ITO (E)-1(2), Mumbai [ITA No. 7134/Mum/2017, dated 04.05.2018]. In the aforementioned case the Tribunal observing that the default on the part of the assessee in filing the appeal in paper form was merely a technical defect which could not be allowed to overshadow the cause of substantial justice, has held as under:
“6. We have heard the counsels for both the parties and we have also perused the material placed on record as well as orders passed by the revenue authorities. From the records we noticed that electronically filing of the appeals was introduced for the first time vide rule 45 of I.T. Rules 1962, mandating compulsory e-filing of appeals before appellate Commissioner with effect from 1stMarch 2016. We noticed that in this respect, there is no corresponding amendment in any of the provisions of the substantive law i.e I.T. Act, 1961. As per the facts of the present case, the assessment in the above case was completed u/s 143(3) of the I.T. Act 1961. However the assessee has filed appeal before Ld. CIT(A) in paper form as prescribed under the provisions of I.T. Act 1961 within the prescribed period of limitation. But the same was dismissed by Ld. CIT(A) by holding that assessee had not filed appeal through electronic form, which is mandatory as per I.T. Rules 1962. After having considered the entire factual position, we find that Hon‟ble Supreme Court in the case of „State of Punjab Vs. Shyamalal Murari and others reported in AIR 1976 (SC) 1177’ has categorically held that courts should not go strictly by the rulebook to deny justice to the deserving litigant as it would lead to miscarriage of justice. It has been reiterated by the Hon‟ble Supreme Court that all the rules of procedure are handmaid of Justice. The language employed by the draftsman of procedural law may be liberal or stringent, but the fact remains that the object of prescribing procedure is to advance the cause of Justice.
Om Swami Smaran Developers Pvt. Ltd. Vs. The ITO-8(2)(4)
The Hon‟ble Apex Court has said in an „adversarial‟ system, no party should ordinarily be denied the opportunity of participating in the process of Justice dispensation.
The Hon‟ble Supreme Court in its judgement reported as AIR 2005 (SC) 3304 in the case of „Rani Kusum Vrs. Kanchan Devi,’ reiterated that, a procedural law should not ordinarily be construed as mandatory, as it is always subservient to and is in aid of Justice. Any interpretation, which eludes or frustrates the recipient of Justice, is not to be followed. From the facts of the present case, we gathered that the assessee had already filed the appeal in paper form, however only the e-filing of appeal has not been done by the assessee and according to us, the same is only a technical consideration. In this respect, we rely upon the judgement of Hon‟ble Supreme Court, wherein the Hon‟ble Supreme Court has reiterated that if in a given circumstances, the technical consideration and substantial Justice are pitted against each other, then in that eventuality the cause of substantial Justice deserves to be preferred and cannot be overshadowed or negative by such technical considerations. Apart from above we have also noticed that the Coordinate Bench of Hon‟ble ITAT Delhi Bench in appeal in case titled Gurinder Singh Dhillon Vrs. ITO had restored the matter to the file of Ld. CIT(a) under identical circumstances with a direction do decide appeal afresh on merit, after condoning the delay, if any. Since in the present case, we find that appeal in the paper form was already with Ld. CIT(A), therefore in that eventuality the Ld. CIT(A) ought not to have dismissed the appeal solely on the ground that the assessee has not filed the appeal electronically before the appellate Commissioner. Keeping in view the facts and circumstances as well as the case laws discussed and relied upon above, we are of the considered view that the cause of Justice would be served in case, we set aside the orders of Ld. CIT(A) & allow the present appeal. While seeking the compliance, we direct the assessee to file the appeal electronically within 10 days from the date of receipt of this order. In case, the directions are followed then in that eventuality, the delay in e-filing the appeal shall stand condoned. Ld. CIT(A) is further directed to consider the appeal filed by the assessee on merits by passing a speaking order. Resultantly, we allow the appeal filed by the assessee.
In the net result the appeal filed by the assessee is allowed.”
We have perused the aforesaid order of the Tribunal and finding ourselves as being in agreement with the view therein taken, respectfully follow the same. In the backdrop of the facts involved in the case before us, the appeal in all fairness and in the very interest of justice is restored to the file of the CIT(A). The CIT(A) is directed to consider the appeal which was electronically filed by the assessee as having been filed on the date on which the same was manually filed in paper form on 21.04.2016, and dispose it off on merits by way of a speaking order. Needless to say, the CIT(A) while disposing off the appeal shall afford a reasonable opportunity of being heard to the assessee. The order of the CIT(A) is set aside in terms of our aforesaid observations.
Om Swami Smaran Developers Pvt. Ltd. Vs. The ITO-8(2)(4)