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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI MAHAVIR SINGH & SHRI RAMIT KOCHAR
PER RAMIT KOCHAR, Accountant Member
This appeal, filed by the assessee, being 31.10.2013 passed by learned Commissioner of Income Tax (Appeals)-33, Mumbai (hereinafter called “the CIT(A)”), for assessment year 2009-10, the appellate proceedings had arisen before learned CIT(A) from penalty order dated 26.06.2012 passed by learned Assessing Officer (hereinafter called “the AO”) u/s 271(1)(c) of the Income-tax Act, 1961 (hereinafter called “the Act”) for AY 2009-10.
The grounds of appeal
raised by the assessee in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called “the tribunal”) read as under:- “1. On the facts and circumstances and in law, the Learned Commissioner of Income-Tax (Appeals)-33, Mumbai erred in dismissing the appeal of the Appellant against penalty levied of Rs. 10,63,417/- u/s.271(1)( c) of the I.T. Act 1961 and therefore, penalty levied be deleted/ cancelled.
2. On the facts and circumstances and in law, the Learned Commissioner of Income-Tax (Appeals)-33, Mumbai erred disposing the appeal without giving adequate opportunity of being heard.
3. On the facts and circumstances and in law, the Learned Commissioner of Income-Tax (Appeals)-33, Mumbai erred in disposing the appeal by issuing notice of hearing which were never served on the appellant.
4. On the facts and circumstances and in law, the Learned Commissioner of Income-Tax (Appeals)-33, Mumbai erred in drawing the conclusion that the appellant shifted from the premises without leaving anything about the whereabouts when in reality the appellant had affixed the notice indicating the new address at conspicuous place of the premises and the shifting was also for a temporary period.
5. On the facts and circumstances and in law, the Learned Commissioner of Income-Tax (Appeals)-33, Mumbai erred in disposing the appeal without considering the grounds of appeals and statement of facts submitted on merits.
6. On the facts and circumstances and in law, the Learned Commissioner of Income-Tax (Appeals)-33, Mumbai erred in dismissing the appeal filed against penalty levied of Rs.10.63.4l7/- on income estimated on the basis of certain presumptions and assumptions without considering the merits of the case and therefore, penalty levied be deleted/ cancelled.
7. The Appellant craves to add, alter or modify any grounds of appeal during the appellate proceedings”.
3. The brief facts of the case are that the assessee is a partnership firm which is in the business of providing security guards, vehicle escort etc. for corporate offices, factories, societies and banks. The assessee had filed return of income and after the case was selected for scrutiny wherein notices u/s. 143(2) and 142(1) of the 1961 Act were already issued by Revenue, the assessee came forward and revised its income not by filing revised return of income but by filing revised computation of income before the AO declaring revised income of Rs.
48,19,660/- as against income of Rs. 24,20,078/- originally declared in return of income filed with Revenue . The main reason stated by assessee for filing the said revised computation of income during the course of assessment proceedings before the AO was on account of alleged misappropriation by accountant wherein the said accountant did not accounted for certain receipts and expenses related thereto in the books of accounts of the assessee . This addition so declared by the assessee in revised computation of income filed during the course of assessment proceedings , made the AO make the scrutiny assessment completed u/s. 144 of the Act by framing best judgment assessment vide assessment order dated 07.12.2011 after rejecting books of accounts and estimating net profit at 7% of the gross receipts of Rs. 9.53 crores. It is also pertinent to mention that the assessee declared gross receipts of Rs. 6.75 crores in the return of income filed with the Revenue which was later enhanced to Rs. 9.53 crores in the revised computation of income filed before the AO during the course of assessment proceedings . This led to the levy of penalty u/s. 271(1)(c) of the 1961 Act by the AO vide penalty orders dated 26.06.2012, passed u/s 271(1)(c) of the 1961 Act wherein penalty of Rs. 10,63,417/- was levied by the AO on the assessee for filing inaccurate particulars of income . The AO held that filing revised computation of income before the AO during the course of assessment proceedings post issuance of notice u/s 143(2) and 142(1) of the 1961 Act by Revenue is not a voluntary act but rather when the assessee was cornered by Revenue , the assessee came forward by filing revised computation of income declaring income of Rs. 48,19,660/- as against income of Rs. 24,20,078/- declared originally in the return of income filed with Revenue.
On being aggrieved by levy of penalty of Rs.10,63,417/- by the AO u/s 271(1)(c) of the 1961 Act vide orders dated 26.06.2012, the assessee filed first appeal with Ld. CIT(A) which was dismissed by learned CIT(A) ex-parte in the absence of the assessee . The assessee did not entered appearance before Ld. CIT(A) who dismissed the appeal of the assessee ex-parte and confirmed the penalty levied by the AO u/s 271(1)(c) of the 1961 Act, vide appellate order dated 31.10.2013.
Aggrieved by the ex-parte dismissal of its appeal by learned CIT(A) and consequently confirmation of penalty by learned CIT(A) in appellate proceedings vide orders dated 31.10.2013, the assessee has now come in an appeal before the tribunal .
We have observed that this appeal before the tribunal has been filed late by the assessee by 35 days beyond the time stipulated u/s 253(3) of the 1961 Act . We have observed that the assessee has filed condonation application praying for condonation of delay of 35 days in late filing of this appeal beyond the time stipulated u/s 253(3) of the 1961 Act which is supported by an affidavit filed by the assessee. We have observed that the assessee has explained that it’s due to delay in getting proper advice from his legal consultant which led to the delay in filing of this appeal. We are of the view after hearing Ld. DR and perusing the material on record that the assessee appeal need to be admitted in the interest of substantial justice as the assessee has brought on record sufficient cause for such delay. The decision of the Hon’ble Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji [1987] 167 ITR 471 (SC) is relevant. When technicalities are pitted against substantial justice, the course which advances substantial justice is to be preferred vis-à-vis technicalities. The doors of justice cannot be shut on grounds of mere technicalities but by adoption a course of substantial justice at the best the issues raised by the tax-payer will be decided on merits in accordance with law which will not in any case prejudice the Revenue. Thus we are condoning the delay in filing of this appeal by assessee late by 35 days beyond the time stipulated u/s 253(3) of the 1961 Act and admit this appeal to be adjudicated on merits in accordance with law. We order accordingly. 4
The assessee has in grounds of appeal and statement of facts filed with the tribunal , inter-alia, raised the plea that notice of hearing stated to be issued by learned CIT(A) on 09.07.2013 and 18.10.2013 were never served on the assessee. . It is also averred in appeal filed before tribunal that principles of natural justice are breached by learned CIT(A) as the appellate order is passed by learned CIT(A) without providing an adequate opportunity of being heard to the assessee and it is claimed that finding of learned CIT(A) are perverse so far as it states that the assessee had left the premises /address stated in form no 35 without informing its whereabouts which is stated to be factually incorrect. The claim is made that assessee shifted its address as is stated in form no. 35 for a short period of time and proper affixture was put at conspicuous place indicating new address and it will be wrong to say that the assessee left the premises as stated in form no 35 without intimating new address. It is averred that learned CIT(A) erred in holding that the assessee is not interested in persuing its appeal. There is no appearance of the assessee even before us when the appeal was called for hearing. The Ld. DR on the other hand relied upon the appellate order of Ld. CIT(A) and admitted that the said appellate order is an ex-parte order passed by Ld. CIT(A) in the absence of the assessee. The learned DR prayed for confirmation of penalty as was levied by the AO u/s 271(1)(c) of the 1961 Act and later confirmed by learned CIT(A) in his appellate order by contending that the act of the assessee in filing revised computation of income during the course of assessment proceedings post issuance of notices u/s 143(2) and 142(1) of the 1961 Act is not a voluntary act but it is only when the assessee was cornered the assessee came forward by filing revised computation of income and not even revised return of income was filed.
We have considered rival contentions and carefully perused the material on record including orders of the authorities below. We have observed that the assessee is in the business of providing security guards, vehicle escort etc. for corporate offices, factories, societies and banks. We have observed that the assessee filed its return of income declaring income of Rs.24,20,078/- with Revenue which income was later revised to Rs. 48,19,660/- by filing of the revised computation of income before the AO. It is undisputed that the assessee did not filed revised return of income and it is also equally undisputed that the said revised computation of income enhancing the income was filed subsequent to the issuance of notices u/s. 143(2) and 142(1) of the 1961 Act by the AO. The reasons stated for said revision of the income during the assessment stage was the misappropriation by accountant of the assessee who is stated to have concealed certain income as well expenses which were not incorporated in books of accounts of the assessee. The AO rejected the books of accounts and framed assessment u/s 144 by estimating income @7% of the gross receipts. The gross receipts from business was also enhanced from Rs. 6.75 crores to Rs. 9.53 crores in the revised computation of income so filed with the AO by the assessee during the course of assessment proceedings. The AO initiated penalty proceedings u/s 271(1)(c) of the 1961 Act for furnishing of inaccurate particulars of income which culminated into penalty levied by the AO to the tune of Rs. 10,63,417/- u/s. 271(1)(c) of the 1961 Act vide penalty orders dated 26.06.2012 which was later confirmed by learned CIT(A) vide an ex- parte appellate order dated 31.10.2013 dismissing appeal of the assessee, mainly on grounds of non appearance and also that the learned CIT(A) disbelieved the version of the assessee that it voluntarily filed revised computation of income during assessment proceedings before the AO. The assessee is now before us and none has appeared on behalf of the assessee before us when the appeal was called for hearing. In grounds of appeal as well statement of facts, the pleas of the assessee as to non serving of the notices for hearing issued by learned CIT(A) , his shifting of place after affixing new address at the address stated in form no 35, the breach of principle of natural justice by learned CIT(A) in not giving proper opportunity to the assessee before dismissal of his appeal and passing of the appellate order ex-parte in haste can be made out from the grounds of appeal and statement of fact before us . The learned CIT(A) had infact decided the appeal exparte in the absence of assessee mainly on the grounds of his non appearances and disbelieving the contention that the assessee voluntarily filed revised computation of income before the AO post issuance of notice u/s 143(2) and 142(1) by the AO during scrutiny proceedings. Keeping in view totality of the circumstances and entire factual matrix of the case, we are inclined to set aside and restore the matter to the file of learned CIT(A) for fresh adjudication of all the issues arising in this appeal on merits in accordance with law. Therefore, the appellate order of learned CIT(A) is set aside and all the issues restored to file of the learned CIT(A) to decide all issues afresh on merits in accordance with law. Needless to say that the onus is on the assessee to adduce necessary evidences in its defence . The Ld. CIT(A) shall be free to decide the issues arising in appeal afresh in accordance with law on merits as we would like to clarify that we have not commented on the merits of the issues arising in this. The appeal of the assessee is allowed for statistical purposes. We order accordingly.
In the Result, the appeal of the assessee is allowed for the statistical purposes.