GLOBAL WOOL ALLIANCE PRIVATE LIMITED ,THANE vs. ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-2(4), KOLKATA

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ITA 2222/MUM/2023Status: DisposedITAT Mumbai29 January 2024AY 2010-1111 pages
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What did the Tribunal hold?

The Tribunal condoned the delay of 105 days in filing the appeal. It reasoned that the delay arose due to a genuine jurisdictional issue, as confirmed by the ITAT, Kolkata Bench, which had granted liberty to file the appeal before the appropriate bench with a prayer for condonation of delay. The Tribunal found the explanation reasonable and in the interest of justice. Regarding the substantive grounds (Issues 2), the Tribunal noted that the additions/disallowances pertained to normal business transactions. It acknowledged the assessee's submission that due to restructuring and change in management, proper documentation could not be furnished earlier. The Tribunal found that no prejudice would be caused to the revenue by granting another opportunity. Therefore, the issues raised in Ground Nos. 3 to 10 were remanded back to the Assessing Officer for adjudication afresh, with a direction to the assessee to provide proper explanations and documents. Ground Nos. 1, 2, and 11 were dismissed as infructuous. The Assessing Officer was granted liberty to conduct further inquiry as per law. The appeal was allowed for statistical purposes in terms of the remand.

What were the facts?

The assessee, Global Wool Alliance Private Limited, filed an appeal before the Income Tax Appellate Tribunal (ITAT), Mumbai Bench, for Assessment Year 2010-11. The appeal was delayed by 105 days. The assessee's original appeal before the ITAT, Kolkata Bench, was dismissed due to improper jurisdiction, as the assessment order was passed by an officer in Thane, and the Supreme Court in Pr. CIT vs. ABC Paper Ltd. held that jurisdiction for appeal lies with the High Court where the AO passed the order. The Kolkata Bench granted liberty to file a fresh appeal before the appropriate bench (Mumbai) and condone the delay. The assessee contended that due to restructuring and change in management, proper representation and documentation could not be provided during assessment and first appellate proceedings. The Assessing Officer had passed an assessment order under Section 143(3) on 30/03/2014, which was partly confirmed by the CIT(A) on 05/01/2023.

What were the issues?

1. Whether the delay of 105 days in filing the present appeal before the Mumbai ITAT Bench should be condoned, considering the procedural history involving jurisdictional issues and the liberty granted by the Kolkata ITAT Bench. - Assessee's Contention: The delay is attributable to the jurisdictional issue and the subsequent dismissal and refiling of the appeal, as per the liberty granted by the ITAT, Kolkata Bench, following the Supreme Court's decision in Pr. CIT vs. ABC Paper Ltd. The delay is reasonable under these circumstances. - Revenue's Contention: Not recorded. 2. Whether the additions/disallowances confirmed by the CIT(A) are sustainable, particularly the addition of Rs. 2,81,82,420 under Section 69A for unexplained sundry creditors and the disallowance of labour charges of Rs. 15,86,210. - Assessee's Contention: The Assessing Officer passed the assessment order without judicious application of mind and in haste, violating principles of natural justice. The additions for sundry creditors are unfounded as documentary evidence was provided, and corresponding purchases/expenses were recorded and accepted. The disallowance of labour charges was erroneous as complete details and TDS deduction were provided. - Revenue's Contention: The assessee failed to comply and cooperate during assessment and appellate proceedings, not providing requested details/documents even when granted opportunities by the CIT(A). Therefore, the CIT(A) was correct in confirming the additions/disallowances.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 69A

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Income Tax Appellate Tribunal, G BENCH, MUMBAI

on record. We note that the CIT(A) has rejected the ground challenging additions/disallowances made by the Assessing Officer primarily on the ground that the Appellant had failed to furnish any explanation or documents to rebut the conclusion drawn by the Assessing Officer. On perusal of the order passed by the Assessing Officer and the CIT(A), it can be seen that the expenses/credits in respect of which addition/disallowances have been made by the Assessing Officer appear to be related to normal business operations such as sundry creditors, labour charges, repair & maintenance expenses, sales commission, etc. It appears that both the Assessing Officer and CIT(A) drew adverse inference since the Appellant could not provide proper explanation and relevant details and documents. Mr. Sanjeev Mohta, the Director of the Appellant- Company, appearing before us, had stated the facts and circumstances under which the Appellant was not able to efficiently prosecute the appeals and furnish relevant documents/details. In our view, in the facts and circumstances of the present case, no prejudice would be cause to the Revenue, in case another opportunity is granted to the Appellant to present its case before the Assessing Officer as the Assessing Officer would be at liberty to examine the issues afresh as per law. Accordingly, keeping in view the interest of justice, the issues raised in the present appeal vide Ground No. 3 to 10 are remanded back to the file of Assessing Officer for adjudication afresh after giving Appellant a reasonable opportunity of being heard. The Appellant is directed to file proper explanation and furnish all relevant details/documents on which the Appellant wishes to place reliance forthwith on getting intimation/information of hearing before the Assessing Officer without seeking any unnecessary adjournments. It is also clarified that the Assessing Officer would be at liberty carry out inquiry/investigation into the issues remanded as per law. In terms of the aforesaid, Ground No. 3 to 10 are allowed for statistical purposes while Ground No. 1, 2 and 11 are dismissed as being infructuous.

In result, the present appeal preferred by the Assessee is partly 7. allowed.

Order pronounced on 29.01.2024.

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