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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: SHRI C.N. PRASAD & SHRI RAMIT KOCHAR
सुनवाई क" तार"ख /Date of Hearing : 01-03-2017 घोषणा क" तार"ख /Date of Pronouncement : 14-03-2017 आदेश / O R D E R
PER RAMIT KOCHAR, Accountant Member
This appeal, filed by the assessee, being 26th March, 2015 passed by learned Commissioner of Income Tax (Appeals)- 40, Mumbai (hereinafter called “the CIT(A)”), for the assessment year 2009-10, the appellate proceedings before the learned CIT(A) arising from the assessment order dated 28th December, 2011 passed by learned Assessing Officer (Hereinafter called “ the AO” ) u/s 143(3) of the Income-tax Act,1961 (Hereinafter called “the Act”).
ITA 5817/Mum/2016 2
The grounds of appeal raised by the assessee in memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called “the tribunal”) read as under:-
“1. It is humbly submitted that as per provisions of the law and the facts and circumstances of the case the Hon'ble CIT(A)-40 erred in holding that: "Since the reassessment order retains the additions made in the original assessment, the appeal filed against the original assessment becomes infructuous" [Para 4 of the order dated 26/03/2015 w.e.f. to Appeal No: CIT(A)-40/ITO-23(3)(1) 2. In the facts and circumstances of the case the Hon'ble CIT(A)- 40 erred by disallowing the commission amount of Rs. 9,75,132 paid to Hind Chemicals. OUR PRAYERS:
1. 1. It is our humble prayer that the commission of Rs. 9,75,132 paid to Hind Chemicals be allowed as a deduction to the assessee.
2. Without prejudice to the above, it is our prayer that the file be restored to the Hon'ble CIT(A) with a direction to verify and adjudicate on the issue of commission of Rs. 9,75,132 paid to Hind Chemicals.
This appeal has peculiar facts and is stated to be filed late by 489 days. The assessee has filed an affidavit dated 27-02-2017 with a request to condone the delay explaining in details reasons for filing this appeal. We have heard rival contentions on condonation of delay , wherein learned counsel for the assessee has strongly supported condonation of delay of 489 days in filing this appeal late, while learned DR has strongly objected to condonation of delay. We have also perused the material on record including case laws relied upon. In this case, assessment was framed u/s 143(3) of 1961 Act by the AO, vide assessment order dated 28th December, 2011, wherein disallowance of commission expenses of Rs. 9,75,132/- was made by the AO on the grounds of being non-genuine/excessive expenditure and accordingly added to the ITA 5817/Mum/2016 3 returned income . The assessee carried the matter before ld. CIT(A) by filing first appeal against aforesaid addition of Rs. 9,75,132/- made in assessment order dated 28-12-2011 passed by AO in first round of litigation, which appeal was filed before learned CIT(A) on 01-02-2012. In the meantime, the assessment of the assessee was reopened by the AO u/s 147 of the Act by the AO by issuing notice dated 30.3.2014 based upon the information received by the AO from Maharashtra Sales Tax Department through DGIT (Inv). The assessee himself represented before the ld. CIT(A) in the appeal proceedings as well during re-assessment proceedings before the AO which fact is emerging from the orders of the authorities below , as it is stated and averred in affidavit dated 27-02-2017 that there were some disagreements with his erstwhile CA counsel.. The A.O. , in the meantime passed an assessment order dated 26.02.2015 u/s 143(3) r.w.s. 147 of the Act , wherein only addition of Rs. 24,341/- was made u/s 69C of 1961 Act towards unexplained expenditure w.r.t. bogus purchases, however , the assessed income vide assessment order dated 28-12-2011 passed u/s 143(3) of 1961 Act was considered and retained in re-assessment order for further enhancing the additions as were made in re-assessment order dated 26-02-2015, while no separate addition of Rs. 9,75,132/- towards disallowance of commission expenses were made in re-assessment orders dated 26-02-2015 passed u/s 143(3) r.w.s. 147 of 1961 Act. This re-assessment order was duly filed before learned CIT(A) in appellate proceedings as is emerging from the appellate order dated 26-03-2015 passed by learned CIT(A) , which appeal was filed against original assessment order dated 28-12-2011 passed by the AO u/s 143(3) of 1961 Act. After receipt of the assessment order dated 26-02-2015 u/s 143(3) r.w.s. 147 of the Act, the assessee filed fresh appeal before the ld.CIT(A) in Form No. 35 dated 31-03-2015 mistakenly challenging both the assessment order dated 28-12-2011 passed by the AO u/s 143(3) of 1961 Act as well re-assessment order dated 26-02-2015 passed by the AO u/s 143(3) r.w.s. 147 of 1961 Act although challenge should have been against re- ITA 5817/Mum/2016 4 assessment order dated 26-02-2015 , which form no 35 dated 31-03-2015 filed with learned CIT(A) on 31-3-2015 itself is placed in paper book page 34 & 35 , whereby the assessee sought relief of Rs. 9,75,132/- towards commission paid to Hind Chemicals to be allowed as business expenses which was originally disallowed vide assessment order dated 28-02-2011 u/s 143(3) of 1961 Act , while no challenge was made in this fresh appeal filed before learned CIT(A) on 31-03-2015 against the additions of Rs. 24,341/- made u/s 69C of 1961 Act towards unexplained expenditure in the reassessment order dated 26-02-2015 passed u/s 143(3) r.w.s. 147 of 1961 Act. The assessee applied for withdrawal of the first appeal before learned CIT(A) which appeal was filed against the assessment order u/s 143(3) of the Act on the grounds that the same addition of disallowance towards commission expenses of Rs. 9,75,132/- paid to Hind Chemicals is retained in the re-assessment order dated 26-02-2015 passed by the AO u/s 143(3) r.w.s. 147 of 1961 Act while perusal of the re-assessment order dated 26-02- 2015 reveals that no separate additions towards disallowance of commission expenses of Rs. 9,75,132/- paid to Hind Chemicals was made by the AO in the said re-assessment order which only retained enhanced assessed income vide original assessment order dated 28-12-2011 passed by the AO u/s 143(3) of 1961 Act as the additions towards disallowance of commission expenses of Rs. 9,75,132/- paid to Hind Chemicals was made only in the original assessment order dated 28-12-2011 passed by the AO u/s 143(3) of 1961 Act . Both the original assessment order dated 28-12-2011 passed u/s 143(3) of 1961 Act as well re-assessment order dated 26-02-2015 passed by the AO u/s 143(3) r.w.s. 147 of 1961 Act were before learned CIT(A). It is pertinent to mention that the assessee himself was representing before learned CIT(A) as well before learned AO in re-assessment proceedings as is emanating from the orders of the authorities below as well as averred in affidavit by the assessee. The learned CIT(A) vide appellate orders dated 26- 03-2015 allowed the assessee to withdraw appeal against original assessment ITA 5817/Mum/2016 5 order dated 28-12-2011 passed by the AO u/s 143(3) of 1961 Act by holding that the appeal has become ‘infructuous’ which appeal was, then, dismissed by learned CIT(A) , while the fact of the matter is that the appeal filed by the assessee before the learned CIT(A) against assessment order dated 28-12- 2011 passed by the AO u/s 143(3) of 1961 , did not became infructuous .The appellate order dated 26-03-2015 passed by earned CIT(A) is reproduced hereunder:-
“4. During appellate proceedings, the assessee submitted that his case was re-opened by issue of notice u/s.148 and an order u/s.143(3) r.w.s. 147 dated 26-02-2015 has been passed. A copy of the re-assessment order was submitted. It was stated that he is in the process of filing an appeal against this re-assessment order, which incorporates the additions made in the original assessment order. Since the re-assessment order retains the additions made in the original assessment, the appeal filed against the original assessment becomes infructuous and the assessee requested that withdrawal of the same may be allowed.
5. I have considered the submission of the appellant. From the re-assessment order dated 26-02-2015, it is seen that the total income has been assessed at Rs. 16,34,592/- which includes the total income assessed u/s.143(3) dated 28-12-2011 at Rs.16,10,251/- and an addition of Rs.24,341/- has further been made. Thus, the additions/disallowances made in the original assessment order have been retained in the re-assessment order against which the assessee is filing an appeal. The present appeal, therefore, becomes infructuous and is allowed to be withdrawn. Grounds of appeal are dismissed.”
The assessee , thereafter , filed an appeal before learned CIT(A) on 31-03- 2015 against the re-assessment order dated 26-02-2015 passed by the AO u/s 143(3) r.w.s. 147 of the Act raising challenge to the additions made towards disallowance of commission expenses to the tune of Rs. 9,75,132/- which addition was made in the original assessment order dated 28-12-2011 passed u/s 143(3) of 1961 Act while no such disallowance was made by the ITA 5817/Mum/2016 6 AO in re-assessment order dated 26-02-2015 passed by the AO u/s 143(3) r.w.s. 147 of 1961 Act, which appeal was rightly dismissed by ld. CIT(A) vide appellate orders dated 29th July, 2016 (placed in paper book/page 39-41) by holding as under:-
5.2 I have considered the submission of the appellate and perused the records. It is undisputed that this appeal has ben filed against order passed u/s. 143(3) r.w.s. 147 dated 26.02.2015 . It is also undisputed that the only addition made in the order against which this appeal has been filed is Rs. 24,341/- on account of bogus purchase , and the appellant has not raised any ground against the aforesaid addition. Therefore it cannot eb said that the appellant is aggrieved with the order passed u/s. 143(3) r.w.s. 147 dated 26.02.2015. As far as disallowance of commission of Rs.9,75,132/- and addition of the same to the total income is concerned, the said disallowance and addition was made during a separate proceedings, in which order u/s 143(3) has been passed by the AO on 28.12.2011. This order u/s 143(3) dated 28.12.2011, wherein the commission payment has been disallowed and added, is appealable order in itself and after filing of appeal, the appellant has withdrawn the said appeal. Since, the disallowance of commission is not emanating from the order u/s 143(3) r. w.s. 147 dated 26/02/2015, which is in before me in the present appeal, therefore it cannot be adjudicated by the undersigned and it cannot be said that the appellant is aggrieved with the order against which this appeal has been filed. In view of the above the appeal filed is dismissed.
Thus, it is the contention of the assessee that the first appeal before learned CIT(A) against the assessment order dated 28-12-2011 passed by the AO u/s 143(3) of the Act was withdrawn and that too the learned CIT(A) advised him to withdraw the said appeal in view of re-assessment order passed by the AO u/s 143(3) r.w.s. 147 of the Act. It was submitted that the assessee was representing himself before learned CIT(A) and was not aware of the nuances of 1961 Act. It was submitted that all appeals were filed in time as even the present appeal before tribunal is filed within sixty days of receiving appellate order dated 29-07-2016 passed by learned CIT(A) albeit passed against re- ITA 5817/Mum/2016 7 assessment order dated 26-02-2015 u/s 143(3) r.w.s. 147 of 1961 Act, while since this appeal before the tribunal is against appellate order dated 26-03- 2015 passed by learned CIT(A) dismissing the appeal as infructuous being withdrawn for which circumstances are highlighted as mentioned above , against the original assessment order dated 28-12-2011 passed by AO u/s 143(3) of the Act , and hence this appeal before tribunal is late by 489 days.The assessee has averred that the assessee was bonafidely and diligently persuing legal remedies but for his not knowing the nuances of 1961 Act as well the wrong advise given by learned CIT(A) which is reflected from para 5 of learned CIT(A) appellate order dated 26-03-2015. The assesse relied upon the decision of Hon’ble Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji, 1987 taxmann.com 1072 (SC) / [1987] 66 STC 228 (SC). The assessee has prayed that the delay may be condoned as there was a sufficient cause which prevented him for filing this appeal in time before the tribunal and which led to filing of this appeal before tribunal late by 489 days. In our considered view , the assessee was diligently persuing the legal remedies bonafidely and the assessee has displayed sufficient cause which prevented assessee from filing this appeal in time keeping in view peculiar facts and circumstances of the case and this delay of 489 days in filing appeal need to be condoned in the interest of justice. Thus, we order condonation of delay of 489 days in filing this appeal late by the assessee and admit this appeal to be adjudicated on merits. We order accordingly.
Now on merits, the ld. Counsel for the assessee submitted that the ld. CIT(A) in his appellate order dated 26th March, 2015 in the appeal against the assessment order dated 28-12-2011 u/s 143(3) of the Act had dismissed the appeal being infructuous and ld. CIT(A) has not dealt with the issues on merits and if the matter is restored to the file of the ld. CIT(A) , then it can be adjudicated by learned CIT(A) on merits after considering the submissions of the assessee on merits. The ld DR supported the orders of authorities below .
ITA 5817/Mum/2016 8 We find substance in the contention of the ld. Counsel for the assessee that issue of disallowance of Rs. 9,75,132/- towards commission paid by the assessee to Hind Chemicals need adjudication on merits by learned CIT(A) after considering submissions of the assessee on merits, as the issue was not adjudicated by ld CIT(A) on merits in first appeal filed by the assessee which was dismissed in limine being infructuous . Therefore, the issue under this appeal is set aside and restored to the file of learned CIT(A) who shall adjudicate the appeal after considering the submissions and evidences filed by the assessee in his defense. The assessee is directed to appear before ld. CIT(A) and produce all evidences and explanations in support of his contentions in his defense. The ld. CIT(A) shall grant opportunity of being heard to the assessee in accordance with principles of natural justice in accordance with law , before de-novo determination of the issue on merits.We order accordingly.
In the result, appeal filed by the assessee in 2009-10 is allowed for statistical purpose.