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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: SHRI MAHAVIR SINGH & SHRI RAMIT KOCHAR
सुनवाई क" तार"ख /Date of Hearing : 10-04-2017 घोषणा क" तार"ख /Date of Pronouncement : 20-04-2017 आदेश / O R D E R PER RAMIT KOCHAR, Accountant Member These are three appeals filed by the assessee, out of which two appeals namely and 1932/Mum/2017 pertain to assessment year 2011-12 and one appeal namely ITA 1929/Mum/2017, 2 ITA 1930/Mum/2017 & ITA 1932/Mum/2017 SA no. 204 & 205/Mum/2017 (arising out of 1929 & 1930/Mum/2017 pertains to assessment year 2012-13. Out of two appeals for assessment year 2011-12, one appeal bearing is filed against the appellate order dated 18-01-2016 passed by learned Commissioner of Income-tax(Appeals)- 37, Mumbai, the appellant proceedings before learned CIT(A) arising from the assessment order dated 28-03-2014 passed by learned Assessing Officer (hereinafter called “ the AO” ) u/s 143(3) of Income-tax Act, 1961 (hereinafter called “the Act”) and another appeal bearing ITA no. 1932/Mum/2017 for assessment year 2011-12 is filed by the assessee against order dated 22-03-2016 passed by learned Principal Commissioner of Income-tax -25, Mumbai u/s 263 of the Act. The third appeal bearing 2012-13 is filed against the appellate order dated 05-01-2017 passed by learned Commissioner of Income-tax(Appeals)- 37, Mumbai, the appellant proceedings before learned CIT(A) arising from the assessment order dated 30-03-2015 passed by learned Assessing Officer (hereinafter called “ the AO” ) u/s 144 of the Act . These appeals were heard together and disposed of by this single order for the sake of convenience.
There are also two stay applications filed by the assessee bearing SA no. 204/Mum/2017 (arising out of for assessment year 2011-12 and SA no. 205/Mum/2017 (arising out of 2012-13 which are also disposed of vide this common order.
First we shall take up assessee’s appeal for assessment year 2011-12 being . 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:-
ITA 1929/Mum/2017, 3 ITA 1930/Mum/2017 & ITA 1932/Mum/2017 SA no. 204 & 205/Mum/2017 (arising out of 1929 & 1930/Mum/2017 “1. The Learned CIT(A) erred in passing an order exparte and thereby confirming all the additions made by the Assessing Officer.
2. The Learned CIT(A) violated the principles of Natural Justice in passing the order u/s. 250 of the 1. T. Act, 1961.
3. The Learned A.O. erred in making an addition of Rs. 61,25,000/- deposited in the Bank account as unexplained money u/s. 69A of the Act and the Learned CIT(A) erred in confirming the same.
4. The Learned CIT(A) erred in confirming the A.O.'s action in not allowing the deduction for the cost of acquisition of the residential flat transferred while computing the income under the head "Short Term Capital Gain."
5. The Learned CIT(A) erred in confirming the action of the A.O. in determining the ALV of the properties held by the appellant at Rs. 15,79,543/-.
6. The Learned CIT(A) erred in confirming the action of the A.O. in making the addition of Rs. 5,11,00,704/- being the amount of Unsecured loans reflected in the personal Balance Sheet of the appellant as on 31.03.2015.
7. The Learned CIT(A) erred in confirming the action of the A.O. in disallowing 40% of the expenses debited to Profit & Loss a/c inspite of the expenses being incurred wholly and exclusively for the purpose of business.
It is prayed that the additions made may please be deleted or in the alternative, the assessment be cancelled/set aside.
This appeal in for assessment year 2011-12 filed by the assessee is filed with tribunal late by 300 days beyond the time prescribed u/s 253(3) of 1961 Act. The assessee prayed that there has been sufficient and bonafide cause which prevented assessee from filing this appeal with tribunal in time as there were various causalities/deaths and medical contingencies of the persons who were connected with the assesseee to represent its case before relevant authorities including filing of this appeal, which adversely affected the assessee leading to delay in filing of this appeal with the tribunal within time prescribed under the statute. The relevant averments of the assessee as contained in the application for condonation of ITA 1929/Mum/2017, 4 ITA 1930/Mum/2017 & ITA 1932/Mum/2017 SA no. 204 & 205/Mum/2017 (arising out of 1929 & 1930/Mum/2017 delay which is duly supported by an affidavit dated 03-04-2017 which are placed in file, are as under:-
It is submitted that the assessee's Incometax matters were being attended to by a Senior Chartered Accountant, viz. Mr. P. H. Dave, and unfortunately he expired in April 2013 at the age of 52 years. The appellant then continued with his partner, Mr. Deepak Sangoi, C.A. As the assessee's work was not properly being attended to by the said C.A., the matter was taken out of his hand. Ultimately, the matter was being looked after by my younger brother Shri. Premji Satra. Unfortunately even he expired at the age of 45 years. Subsequently the papers were handed over to an Advocate namely, Shri. Vijay Kothari. The assessee was under the impression that the appeals were filed. However, it is learnt later only that he did not file the appeals. Unfortunately, he expired on 5th November, 2016. Besides, during the aforesaid period the assessee Shri. Pravin Satra was suffering from heart diseases and ultimately he underwent angiography in August 2015. Besides, Mr. Pravin Satra's mother expired on July 15th , 2015. In the meantime a new C. A. viz. Mr. Purav Gindra was appointed in November 2016. Unfortunately he met with an accident and was bedridden for three months. He was able to walk only sometime in February, 2017 end and then the matter was pursued by him and the appeal was ultimately filed on 20th March, 2017. However the delay if any was unintentional and hence it is prayed that the assessee may be pardoned for any lapse on their part for not being alert and pursuing with the counsels for filing the appeal in time. The delay in filing the appeal may please be condoned and the appeal be admitted.
Thus, it is prayed by the assessee that the delay in filing of this appeal with the tribunal beyond the time prescribed by statute was unintentional and there was a sufficient and bonafide cause which prevented assessee in filing this appeal within time as provided by statute as contained in Section 253(3) of 1961 Act , and hence the delay in filing of this appeal with the tribunal late ITA 1929/Mum/2017, 5 ITA 1930/Mum/2017 & ITA 1932/Mum/2017 SA no. 204 & 205/Mum/2017 (arising out of 1929 & 1930/Mum/2017 by 300 days be condoned and the appeal be admitted and adjudicated on merits. The learned counsel for the assessee made statement before us about truthfulness and correctness of the averments as contained in the affidavit dated 03-04-2017 filed by the assessee. In support of his contention, the assessee relied upon the judgment of Hon’ble Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji & Ors, 167 ITR 471, and the case of N. Balakrishnan v. M. Krishnamoorthy, (AIR 1998 S.C. 3222) to make home his point that the delay in filing this appeal by the assessee be condoned.
The ld. D.R., on the other hand, objected to the condonation application filed by the assessee but keeping in view of extra ordinary situations faced by the assessee as averred by the assessee duly supported by an affidavit and statement made by learned counsel for the assessee about truthfulness and correctness of averment of the assessee as contained in affidavit, he fairly agreed that the matter is left to the discretion of the bench to be decided on merits w.r.t. condoning of delay of 300 days in filing this appeal by the assessee beyond the time prescribed u/s 253(3) of 1961 Act.
We have considered rival contentions and also perused material placed on record. We have observed that the assessee has sufficiently explained that the assessee was prevented by sufficient and bonafide cause in filing this appeal within time prescribed by law , which appeal in the instant case was in-fact filed late by 300 days beyond the time prescribed u/s 253(3) of 1961 Act. There were several tragedies and medical contingencies as averred and explained by assessee duly supported by an affidavit executed by the assessee and statement made by learned counsel for the assessee before the tribunal, which occurred during the relevant time which prevented assessee in filing this appeal within prescribed time as stipulated u/s 253(3) of 1961 Act. The learned counsel has made statement before us w.r.t. to bonafide and truthfulness of the assessee averments which are also supported by an ITA 1929/Mum/2017, 6 ITA 1930/Mum/2017 & ITA 1932/Mum/2017 SA no. 204 & 205/Mum/2017 (arising out of 1929 & 1930/Mum/2017 affidavit dated 03-04-2017 executed by the assessee. The relevant averments of the assessee as contained in application for condonation of delay duly supported by an affidavit dated 03-04-2017, are reproduced as under:-
It is submitted that the assessee's Incometax matters were being attended to by a Senior Chartered Accountant, viz. Mr. P. H. Dave, and unfortunately he expired in April 2013 at the age of 52 years. The appellant then continued with his partner, Mr. Deepak Sangoi, C.A. As the assessee's work was not properly being attended to by the said C.A., the matter was taken out of his hand. Ultimately, the matter was being looked after by my younger brother Shri. Premji Satra. Unfortunately even he expired at the age of 45 years. Subsequently the papers were handed over to an Advocate namely, Shri. Vijay Kothari. The assessee was under the impression that the appeals were filed. However, it is learnt later only that he did not file the appeals. Unfortunately, he expired on 5th November, 2016. Besides, during the aforesaid period the assessee Shri. Pravin Satra was suffering from heart diseases and ultimately he underwent angiography in August 2015. Besides, Mr. Pravin Satra's mother expired on July 15th , 2015. In the meantime a new C. A. viz. Mr. Purav Gindra was appointed in November 2016. Unfortunately he met with an accident and was bedridden for three months. He was able to walk only sometime in February, 2017 end and then the matter was pursued by him and the appeal was ultimately filed on 20th March, 2017. However the delay if any was unintentional and hence it is prayed that the assessee may be pardoned for any lapse on their part for not being alert and pursuing with the counsels for filing the appeal in time. The delay in filing the appeal may please be condoned and the appeal be admitted.
The application filed by the assessee for condonation of delay as well Affidavit dated 3rd April, 2017 executed by the assessee to this effect are also placed on record in file. Keeping in view the sufficient and bona-fide cause as explained by the assessee which is duly supported by an affidavit executed by assessee , ITA 1929/Mum/2017, 7 ITA 1930/Mum/2017 & ITA 1932/Mum/2017 SA no. 204 & 205/Mum/2017 (arising out of 1929 & 1930/Mum/2017 statement made by learned counsel for the assessee before us and in the substantial interest of justice, we are of the considered view that this delay of 300 days in filing this appeal late by the assessee beyond the prescribed time as stipulated u/s 253(3) of 1961 Act in filing this appeal needs to be condoned as the assessee has explained a sufficient and bona-fide cause which prevented him from filing this appeal in time , hence , we hereby condone the delay in filing of this appeal late by assessee by 300 days beyond time stipulated u/s 253(3) of 1961 Act and the appeal is hereby directed to be admitted for adjudication on merits. We order accordingly.
Similarly, we have observed that the appeal in for assessment year 2011-12 was filed with tribunal late by the assessee by 295 days beyond the time prescribed by statute. In this case also, the assessee has made similar averments for condonation of delay in filing the appeal late by 295 days supported by an affidavit dated 03-04- 2017 which is placed in file, as were made for condonation of delay in ITA No. 1929/Mum/2017 , and the assessee has prayed for condonation of the delay on similar grounds. We have already condoned delay in filing of appeal in ITA no. 1929/Mum/2017 for assessment year 2011-12 vide our orders in preceding para’s of this order. Thus, we are of the considered view that delay in filing of this appeal in ITA no. 1932/Mum/2017 with tribunal late by 295 days also need to be condoned and this appeal is also directed to be admitted for adjudication on merits. Thus, this appeal in ITA no. 1932/Mum/2017 is also admitted and the delay in filing this appeal with tribunal is hereby condoned. We order accordingly.
Now, coming to the merits of the case in the learned counsel of the assessee submitted before us that there was a change in Chartered Accountant representing assessee in tax matters due to an unfortunate demise of the CA who was attending to the income tax matters of ITA 1929/Mum/2017, 8 ITA 1930/Mum/2017 & ITA 1932/Mum/2017 SA no. 204 & 205/Mum/2017 (arising out of 1929 & 1930/Mum/2017 the assessee which had prevented the assessee in presenting his case before the respective authorities properly. The new CA did not represent the assessee properly before the authorities. There was also death of his brother who was handling the tax-matter. It was submitted by learned counsel for the assessee that only accountant of the assessee appeared before the AO , who could not explain the case of the assessee properly before the AO. The details of all these events as averred by the assessee are reproduced in preceding para’s of this orders . It is submitted that several additions have been made by the AO in the assessment order dated 28-03-2014 passed u/s 143(3) of 1961 Act. It is submitted that during assessment proceedings u/s 143(3) r.w.s. 143(2) of 1961 Act, the Accountant of the assessee who appeared before the A.O. could not explain the case of the assessee to the AO properly , and the income declared in the return of income filed with the Revenue which was at Rs. 57,15,640/- was enhanced by the AO to Rs. 11,15,14,120/- vide high pitched assessment framed by the AO u/s 143(3) of 1961 Act vide orders dated 28-03-2014, which assessment order dated 28-03-2014 of the AO was upheld by the ld. CIT(A) who passed an ex parte appellate order dated 18-01- 2016. It is submitted that several additions have been made which are mainly due to non-explanation of the assessee before the A.O. as well as before ld. CIT(A). It is pointed out that even the opening balances of loans as appearing in books of accounts were added to the income of the assessee leading to huge addition of Rs. 5,11,00,704 . It was submitted that the entire cash deposit of Rs. 61,25,000/-- in Cosmos Co-operative Bank Limited was added by the AO to the income of the assesse. It was also submitted that the deduction on account of cost of acquisition of the property sold by the assessee was not allowed and the entire sale proceed of the asset was subjected to capital gain tax which caused serious prejudice to the assessee and is against all cannons of law and fair play. Thus, the assessee in nut- shell prayed that one more opportunity may be granted to the assessee to explain its case and the matter / issues arising out of this appeal may be set ITA 1929/Mum/2017, 9 ITA 1930/Mum/2017 & ITA 1932/Mum/2017 SA no. 204 & 205/Mum/2017 (arising out of 1929 & 1930/Mum/2017 aside and restored to the file of the A.O. for de-novo determination on merits of all the issues which arise out of assessment so that the assessee can explain the matter properly before the AO who can then decide the issue de- novo on merits in accordance with law.
The ld. D.R. relied on the orders of the authorities below and prayed that the delay is deliberate and orders of the authorities below be confirmed
We have considered rival contentions and perused the material on record. We have observed that the assessee has faced certain extra ordinary situations which were explained by the assessee in application for condonation of delay duly supported with the affidavit dated 03-04-2017 filed before the tribunal and also by the statement made by learned counsel for the assessee before the tribunal about the truthfulness and bonafide of the averments made by the assessee. As could be seen from the assessment order dated 28-03-20114, only the Accountant of the assessee appeared before the A.O. during the course of assessment proceedings u/s 143(3) r.w.s. 143(2) of 1961 Act and it is clearly visible that the accountant of the assessee could not explain the case of the assesseee before the AO properly. The A.O. had assessed the total income at Rs. 11,15,14,120/- while assessment order dated 28-03-2014 passed u/s 143(3) of 1961 Act, while the total income declared by the assessee in the return of income filed with the Revenue was Rs. 57,15,640/- which in our considered view is a high pitched assessment framed by the Revenue. The AO has made several additions which are contained in the assessment order dated 28-03-2014 u/s 143(3) of 1961 Act, which order was affirmed by learned CIT(A) in an ex-parte appellate order dated 18-01-2016. Large number of documents are filed by assessee vide paper book filed before the tribunal running into 613 pages in support of his contentions and in his defense , which needs examination, enquiry and verifications on merits. Looking into peculiar facts and circumstances of the ITA 1929/Mum/2017, 10 ITA 1930/Mum/2017 & ITA 1932/Mum/2017 SA no. 204 & 205/Mum/2017 (arising out of 1929 & 1930/Mum/2017 case without commenting on the merits of the additions so made by authorities below and in the interest of substantial justice and fair play, we are of considered view that the assessee need to be given one more opportunity and all the issues arising out of this appeal are set aside and restored to the file of the A.O. for de-novo determination of all the issues by the AO on merits in accordance with the law. We would like to clarify that this is an open remand whereby the AO is free to consider all the issues which had arisen in the first round or may arise in the course of framing de-novo assessment on merits in accordance with law for the impugned assessment year. Needless to say that proper and adequate opportunity of being heard shall be granted by the A.O. to the assessee in accordance with principles of natural justice in accordance with law. The assessee will be allowed by the AO to file all relevant material and explanations in his defense which shall be admitted by the AO in the interest of justice. We order accordingly.
For A.Y. 2012-13 also, similar situation have arisen which we have discussed and adjudicated in for assessment year 2011-12 , whereby the assessee could not explain the matter before the authorities below and the AO framed an ex-parte assessment order dated 30- 03-2015 u/s 144 of 1961 Act, which was later confirmed by learned CIT(A) in an ex-parte appellate order dated 05-01-2017. In the return of income for 2012-13 filed by the assessee with Revenue, the assessee had declared total income of Rs. 26,78,730/-, whereas the A.O. assessed the total income at Rs. 27,64,64,330/- by making a high pitch assessment u/s 144 of the Act. The AO has made several additions which are contained in the ex-parte assessment order dated 30-03-2015 passed by the AO u/s 144 of 1961 Act, which order was later affirmed by learned CIT(A) in an ex-parte appellate order dated 05-01-2017. Large number of documents are filed by assessee ITA 1929/Mum/2017, 11 ITA 1930/Mum/2017 & ITA 1932/Mum/2017 SA no. 204 & 205/Mum/2017 (arising out of 1929 & 1930/Mum/2017 vide paper book filed before the tribunal running into 241 pages in support of his contentions , which needs examination, enquiry and verifications on merits. Keeping in view of the same circumstances of the case as were prevailing in ITA no. 1929/Mum/2017 adjudicated by us vide this order in preceding para’s, in this case also, we are of the considered view that the assessee may be given one more opportunity in this appeal also and all the issues arising out of this appeal are set aside and restored to the file of the A.O. for de-novo determination of all the issues on merits in accordance with the law. We would like to clarify that this is an open remand whereby the AO is free to consider all the issues which had arisen in the first round or may arise in the course of framing de-novo assessment on merits in accordance with law for the impugned assessment year. Needless to say that proper and adequate opportunity of being heard shall be granted by the A.O. to the assessee in accordance with principles of natural justice in accordance with law. The assessee will be allowed by the AO to file all relevant material and explanations in his defense which shall be admitted by the AO in the interest of justice. We order accordingly.
ITA No. 1932/Mum/2017 for A.Y. 2011-12
This appeal is preferred by the assessee against the order dated 22-03- 2016 passed by the ld. Pr. CIT u/s 263 of the Act. We have observed that the Ld. Pr. CIT has considered the assessment order of the A.O. dated 28th March, 2014 passed u/s 143(3) of the Act as erroneous and prejudicial to the interest of Revenue, as in the opinion of ld Pr. CIT , the A.O. has allowed 40% deduction of the expenses claimed as business expenses without any documentary support. Since we have already set aside and restored all the issues arising out of the assessment order dated 28-03-2014 passed by the A.O. u/s 143(3) of the Act for A.Y. 2011-12 to the file of the AO for de-novo determination of all the issues on merits by the AO, arising in 1929/Mum/2017, 12 ITA 1930/Mum/2017 & ITA 1932/Mum/2017 SA no. 204 & 205/Mum/2017 (arising out of 1929 & 1930/Mum/2017 1929/Mum/2017 for assessment year 2011-12 as contained in preceding para’s of this order , the order dated 22-03-2016 passed by Pr. CIT u/s 263 of the Act has become infructuous and will not accordingly survive as we have made an open remand to the AO with liberty to adjudicate on the issues which had arisen in the first round or which may arise during the course of framing de-novo assessment orders in set aside proceedings , hence, we quash the order passed by ld. Pr. CIT dated 22-03-2016 u/s 263 of 1961 Act as ‘infructuous’ . The appeal of the assessee in ITA no. 1932/Mum/2017 is allowed in terms indicated above. We order accordingly.
SA No. 204/Mum/2017 (arising out of for assessment year 2011-12 and SA no. 205/Mum/2017(arising out of 2012-13
Since we have already set aside and restored all the issues arising in appeal in for assessment year 2011-12 and in 2012-13 to the file of the AO for de-novo determination of all the issues arising in these appeals de-novo on merits in accordance with law, vide our orders in preceding para’s of this order. The stay applications in SA no. 204/Mum/2017(arising out of appeal in ITA no. 1929/Mum/2017) for assessment year 2011-12 and SA No. 205/Mum/2017(arising out of appeal in ITA no. 1930/Mum/2017) for assessment year 2012-13 have become infructuous and are hereby accordingly dismissed. We order accordingly.
In the result, appeal filed by the assessee in for assessment year 2011-12 and 2012-13 are allowed for statistical purposes, while the appeal in ITA no. 1932/Mum/2017 filed by the assessee is allowed in terms indicated above. Both the stay applications filed by the assessee in SA no. ITA 1929/Mum/2017, 13 ITA 1930/Mum/2017 & ITA 1932/Mum/2017 SA no. 204 & 205/Mum/2017 (arising out of 1929 & 1930/Mum/2017 204/Mum/2017(arising out of appeal in ITA no. 1929/Mum/2017) for assessment year 2011-12 and SA No. 205/Mum/2017(arising out of appeal in 2012-13 are dismissed. We order accordingly. Order pronounced in the open court on 20th April, 2017. आदेश क" घोषणा खुले "यायालय म" "दनांकः 20-04-2017 को क" गई । sd/- (MAHAVIR SINGH) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER मुंबई Mumbai; "दनांक Dated 20-04-2017 [ व."न.स./ R.K. R.K. R.K., Ex. Sr. PS R.K.