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Income Tax Appellate Tribunal, “A” BENCH: KOLKATA
Before: Shri M. Balaganesh, AM & Shri S. S. Viswanethra Ravi, JM]
IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH: KOLKATA [Before Shri M. Balaganesh, AM & Shri S. S. Viswanethra Ravi, JM]
I.T.A No.1396/Kol/2016 Assessment Year: 2010-11
Shri Gobindo Chatterjee Vs. Income-tax Officer, Wd-50(3), Kolkata (PAN:AQRPC8877G) (Appellant) (Respondent)
Date of hearing: 07.03.2017 Date of pronouncement: 10.03.2017
For the Appellant: Shri Subash Agarwal, Advocate For the Respondent: Shri Sallong Yaden, Addl. CIT, Sr. DR
ORDER Per Shri M. Balaganesh, AM: This appeal by assessee is arising out of order of CIT(A)-15, Kolkata vide appeal No. 28/CIT(A)-15/14-15/Wd-50(3)/Kol dated 12.01.2015. Assessment was framed by ITO, Ward-50(3), Kolkata u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for Assessment Year 2010-11 vide his order dated 22.03.2013. 2. At the outset, there is a delay of 471 days in filing the appeal by the assessee before us. The assessee had stated the following in his condonation petition :-
That your petitioner is a senior citizen and aged about 65 years and is suffering form multiple medical ailments since several years. Your petitioner is suffering from heart problem and has also gone through surgeries in prostate gland and fistula. Your petitioner has also undergone angiograms owing to mycardia and a diabetic person. On several dates during checkup with doctors he was advised bed rest. 3. That the condition become unbearable for the assessee when Smt Milly Chatterjee (wife) became more critical than before – she is suffering from psychiatric disorder from past several years and is under heavy medication. She is undergoing treatment under Dr. Ashish Mukherjee, Head of the Psychiatry Department of National Medical College. The Doctor advised your petitioner to monitor her as she could not be left alone at any point of time. Your assessee had to keep constant vigilance on her all the time to avoid unfortunate instances as she had a suicidal tendency. Copies of the medical prescriptions of Shri Gobinda Chatterjee and his wife Smt Molly Chatterjee along with medical reports are enclosed herewith and collectively marked as annexure ‘A’. 4. That the above facts kept your petitioner mostly confined to his home. 5. That the petitioner after facing all the difficulty and after the situation came under control approached Shri Subash Agarwal, Advocate on 24.06.2016.
2 ITA No.1396/Kol/2016 Gobindo Chatterjee, AY 2010-11
That my appeal was prepared by the said Shri Subash Agarwal, Advocate by 27.06.2016 and the appeal was filed on 28.06.2016. 7. That a delay of around 471 days may please be condoned.”
2.1. We have gone through the reasons stated in the condonation petition together with its evidences comprising of various medical reports of assessee and his wife which, in our considered opinion, prevented the assessee from looking after his affairs much less taxation affairs . Hence we feel that the assessee was genuinely prevented from preferring the appeal in time before us. We find that the Coordinate Bench of this Tribunal recently in the case of G.G. Super Cement Pvt. Ltd. Vs. ACIT in ITA No. 696/Kol/2015, AY 2008-09 dated 02.03.2016 had held on condonation of delay as under: “……..it is observed that the Hon’ble Supreme Court in the case of Collector Land Acquisition –vs.- Mst. Katiji & Others reported in 1987 AIR 1353 and the Hon’ble Calcutta High Court in the case of Indian Oil Corporation Limited –vs.- CEGAT & Others 2002 (104) ECR 609 have laid down the following guidelines for evaluating the applications for condonation of such delay:-
Guidelines laid down by the Hon’ble Supreme Court in the case of Collector Land Acquisition –vs.- Katiji & Others: “The legislature has conferred the power to condone delay by enacting Section 51 of the Indian Limitation Act of 1963 in order to enable the Courts to do substantial justice to parties by disposing of matters on 'merits'. The expression "sufficient cause" employed by the legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice -that being the life-purpose for the existence of the institution of Courts. It is common knowledge that this Court has been making a justifiably liberal approach in matters instituted in this Court. But the message does not appear to have percolated down to all the other Courts in the hierarchy. And such a liberal approach is adopted on principle as it is realized that:- "Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period”. 1. Ordinarily a litigant does not stand to benefit by lodging an appeal late. 2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties.
3 ITA No.1396/Kol/2016 Gobindo Chatterjee, AY 2010-11 3. "Every day's delay must be explained" does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common sense pragmatic manner.
When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay.
There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk.
It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
Guidelines laid down by the Hon’ble Calcutta High Court in the case of Indian Oil Corporation Limited – vs.- CEGAT & Others:- “11. Rules of limitation are not meant to destroy the rights of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. The law of limitation fixes a life span for such legal remedy for the redress of the legal injury so suffered. Time is precious and wasted time would never revisit. During the efflux of time, newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So a lifespan must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. The law of limitation is thus founded on public policy. It is enshrined in the maxim 'interest reipublicae up sit finislitium' (it is for the general welfare that a period be put to litigation). Rules of limitation are not meant to destroy the rights of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time.
A court knows that refusal to condone delay would result in foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the Court is always deliberate. This Court has held that the words "sufficient cause" under Section 5 of the Limitation Act should receive a liberal constitution so as to advance substantial justice vide Shakuntala Devi Jain v. Kuntal Kumari and State of W.B. v. Administrator, Howrah Municipality.
It must be remembered that in every case of delay, there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy, the Court must show utmost consideration to the suitor. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time, then the court should lean against acceptance of the explanation. While condoning the delay, the court should not forget the opposite party altogether. It must be borne in mind that he is a loser and he too would have incurred quite large litigation expenses. It would be a salutary guideline
4 ITA No.1396/Kol/2016 Gobindo Chatterjee, AY 2010-11 that when courts condone the delay due to latches on the part of the applicant, the Court shall compensate the opposite party for his loss”.
2.2. We find that there is also nothing on record to show that such delay is occasioned deliberately or on account of culpable negligence or on account of malafide. There is also nothing to show that the assessee has resorted to dilatory tactics. Keeping in view all these facts of this case and the guidelines laid down by the Hon’ble Supreme court and Hon’ble Calcutta High Court and appreciating the facts and circumstances of the case, we deem it fit and appropriate to direct the ld CITA, to condone the delay of 471 days in preferring appeal by the assessee before us. Accordingly the delay of 471 days is hereby condoned and we admit the appeal for adjudication in the interest of substantial justice.
The only issue to be decided in this appeal is as to whether the ld CITA was justified in upholding the additions made in the sums of Rs. 2,26,86,028/- towards proprietor’s capital account ; Rs. 1,50,29,071/- towards sundry creditors and Rs. 23,26,409/- towards commission expenditure, in the facts and circumstances of the case.
The brief facts of this issue is that the assessee is a teacher by profession and trains law students, inter alia , from training / teaching centre at Salt Lake. He is a M.Com ., M.B.A. and L.L.B. and runs a law training /teaching centre under the name & style of M/s Law Education Point in Salt Lake, Kolkata. The return of income for the Asst Year 2010- 11 was filed on 25.5.2011 declaring total income of Rs. 1,57,944/-. The case was selected for scrutiny under CASS with a direction to verify the genuineness of commission income and accordingly notice u/s 143(2) of the Act was served on the assessee. Notice u/s 142(1) of the act was also issued and served on the assessee. In response thereto, the assessee furnished a written submission dated 10.10.2012 stating that he was suffering from prostrate problem and admitted to Apollo Hospital , Kolkata and that he had neither submitted any income tax returns before any income tax authority nor any balance sheet and profit and loss account , as his income is below the maximum amount not chargeable to income tax. Accordingly, it was pleaded that he had not submitted any income tax returns. It was also mentioned that he handed over a Xerox copy of PAN card and voter ID card to a consultant to arrange some unsecured loan from financial institution. The consultant failed to do so and handed him back the Xerox copy of PAN card and voter ID
5 ITA No.1396/Kol/2016 Gobindo Chatterjee, AY 2010-11 card. The assessee stated that he suspected that the consultant might have deposited a false return in his name without his consent and without his signature. Accordingly he denied whatever has been reported in the said return and the balance sheet and profit and loss account. The ld AO also obtained the copy of the acknowledgement of returns in ITR – V for the Asst Years 2010-11 and 2011-12 in order to verify the signature on the e filing return to find out the truth. The ld AO concluded that from these two copies , the signature of assessee appears to be the same with the signature furnished in the statement of receipt and expenditure for the year ended 31.3.2010 and 31.3.2011 and other documents. The assessee vide his reply dated 21.12.2012 stated that there is no business carried on by him and hence the question of commission and advertisement, sundry debtors , creditors and other business items does not arise. The ld AO in order to verify the genuineness and authenticity of the submissions, issued summons u/s 131 of the Act on 26.2.2013 to the assessee. A statement on oath was recorded from the assessee on 20.3.2013 wherein it was mentioned by the assessee that he had not filed any income tax return as his income is below the basic exemption limit. The ld AO observed that no evidences were produced to prove the genuineness of this statement. The ld AO further observed that the assessee had not taken sufficient steps to establish that the return does not belong to him. He observed that the assessee did not lodge any complaint to the respective authority against cybercrime. Accordingly, the ld AO disbelieved the version of the assessee that he had not filed any returns and proceeded to frame the assessment by making the following additions :-
a) Addition towards Proprietor’s Capital based on the capital amount shown in the balance sheet of the assessee – Rs. 2,26,86,028/- b) Addition towards Sundry Creditors – Rs. 1,50,29,071/- c) Disallowance of Commission expenditure – Rs. 23,26,409/-
The assessee stated before the ld CITA that he had never filed any income tax returns in the past and this fact has been acknowledged by the ld AO in his order itself while making addition towards proprietor’s capital account in the sum of Rs. 2,26,86,028/- . The ITR 4 contains the following details of the assessee :-
6 ITA No.1396/Kol/2016 Gobindo Chatterjee, AY 2010-11 1. Name, PAN , address and date of birth 2. Name & PAN of Tax Audit Sri Manmohan Jhawar
The assessee reiterated the submissions made before the ld AO and emphasized on the fact that the facts stated by the assessee were even recorded on oath by way of statement in response to summons issued u/s 131 of the Act which has got more evidentiary value. The ld CITA observed that the ld AO had contacted the CPC, Bangalore to check the details filed by the assessee because as per the procedure after making an e-return, the assessee is required to send a signed copy of the acknowledgement form in ITR-V to CPC , Bangalore before the e-return gets validated and accepted by the system. In the case of the assessee , the paper in ITR-V had been sent by the assessee by post to CPC, Bangalore after putting his signature. The ld AO called for the copies of the ITR-V and noted that the signatures of the assessee are the same on the ITR-V as are usually done by the assessee. Accordingly, the ld AO found substantial evidence to hold that the assessee had acknowledged the e-return being filed and that the assessee had also subsequently verified under his own signature. The ld CITA observed that the assessee being a qualified advocate for the past thirty years cannot plead ignorance of judicial processes and consequences. With regard to the reliance placed by the assessee on the provisions of section 136 of the Act, the ld CITA observed that firstly section 136 of the Act has a limited application and mandates that the proceedings before an income tax authority are deemed to be judicial proceeding within the meaning of section 193 & 228 and for the purpose of section 196 of the Indian Penal Code, 1860. The section also deems the authority to be a civil court for the purpose of section 195 of Cr.P.C. , 1973. Section 193 & 196 of the Indian Penal Code provide for punishment for intentionally giving false evidence in a judicial proceeding or for fabricating false evidence for the purpose of being used in such judicial proceeding and for using or attempting to use as true or genuine any evidence, which an accused knows to be false or fabricated. Section 195 of Cr.P.C., 1973 provides for taking cognizance of violation of provisions of section 193, 196 & 228 of IPC only on a written compliant of a court. The section 136 of the IT Act is basically intended to secure prosecution proceedings for offences under the relevant provisions of the IPC as may be launched on the complaint of an Indian tax authority. On a compliant from an income tax authority, a court can take cognizance of the offence of making false statement
7 ITA No.1396/Kol/2016 Gobindo Chatterjee, AY 2010-11 in any proceedings before him. Thus the provisions of section 136 of the IT Act are not for the benefit of the assessee but to secure their prosecution, if necessary. Accordingly the ld CITA observed that the reference of the assessee to this section is misplaced.
5.1. Secondly, the assessee cannot claim violation of principles of natural justice. The assessee suo moto accepts that he intended to secure a loan from financial institution. This could be possible only if the assessee had been a regular tax payer having a healthy balance sheet. Thus the assessee is aware and complicit in the matter of filing the e-return but the assessee has consciously avoided naming the financial institution or the persons who were supposedly going to assure him that loan for starting a large training academy. The ld AO concluded that the assessee on his own part had not done anything to shift the onus which lies only on him.
5.2. Thirdly, the income tax return for Asst Year 2010-11 was filed on 25.5.2011 and the return was picked up for scrutiny on 17.8.2012 and the assessment order was passed on 22.3.2013. Till this entire period, the assessee refrained from disclosing any intention on his part to prove that the e-return was not filed by him. The ld CITA observed, that the assessee, a LLB and a law teacher with decades of experience, filed a Police Diary only on 19.12.2013 mentioning one Abijit Banerjee as a consultant who may have misused his PAN & voter card. This Police Diary is silent on the signed verification of ITR – V and does not give the complete postal address of the so called consultant.
5.3. Lastly, the assessee was directed to file a written submission when he attended the appellate proceedings personally on 30.10.2014. The assessee filed a written submission reiterating the above facts and stated that he had approached the Maniktola Police Station asking to lodge an FIR but could not , as the police authorities refused to lodge the report and instead just lodged a General Diary (G.D. No. 1854 dated 19.12.2013). Subsequently, to acquire relief from such injustice, the assessee further approached the Cyber Crime Department from wherein the investigation report is pending. In this submission the assessee also mentioned the name of one Sujit Pal of E/1/23. Bonhoogli Tenament Estate, Kolkata – 700108 to whom Mr Abijit Banerjee had handed over the documents of the assessee for e-filing of return. The assessee further stated in the written submission that
8 ITA No.1396/Kol/2016 Gobindo Chatterjee, AY 2010-11 he had informed to Police authorities and Cyber Crime department about Mr Sujit Pal but all his efforts are invain.
5.4. The ld CITA observed that the assessee had not even gone to the court to get the FIR registered against the two persons i.e Mr Abijit Banerjee and Mr Sujit Pal. He observed that the assessee is also silent on the role of the tax auditor M/s M Jhawar & Co whose name is mentioned in the IT return. The ld CITA observed that the taxes due on the returned income has been paid by the assessee which is quite evident from the e-return. He observed that the assessee had not even filed any affidavit stating his contentions. Accordingly, he confirmed the additions made by the ld AO. Aggrieved, the assessee is in appeal before us on the following grounds :- “1. For that on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the action of the AO in assessing the total income of the assessee at Rs.4,14,06,990/- without considering the fact that the assessee had not filed the Income Tax Return for the AY 2010-2011. 2.For that on the facts and in the circumstances of the case, the ld. CIT(A) ought to have deleted the additions made by the AO under the following heads – (a) Proprietor’s Capital Rs. 2,26,86,028/- (b) sundry Creditors Rs. 1,50,29,071/- (c) Commission Expenditure Rs. 23,26,409/-”
We have heard the rival submissions and perused the materials available on record including the paper book of the assessee. We find that the ld AR placed the profit and loss account for the year ended 31st March 2010 enclosed in Page 12 of the Paper Book which was filed during the course of assessment proceedings. He stated that the signature of the assessee in the said profit and loss account and that reflected in the ITR-V acknowledgement did not match at all. Accordingly he argued that the ld AO erred in stating that the signature in ITR-V matched with that of the assessee in other documents. The ld AR argued that in case if the ld AO had any doubt about the veracity of the signature, he could have very well verified by referring the same to a Handwriting Expert using his government machinery. He further placed on record the letter addressed by the tax auditor M/s M Jhawar & Co to the ld AO completely denying the fact that he had conducted the tax audit of the assessee and also stated that the assessee is not his client at all. He argued that hence the finding of the ld CITA that the assessee did not raise any objection about the tax auditor in his appellate order is devoid of any merits. The ld AR
9 ITA No.1396/Kol/2016 Gobindo Chatterjee, AY 2010-11 also placed on record the compliant lodged by the assessee to Maniktola Police Station on 19.12.2013 against Mr Abijit Banerjee and also denying the fact that he had not filed any income tax returns for Asst Years 2010-11 and 2011-12 or furnished balance sheet and profit and loss account before the income tax department. It was further pleaded that his total income is below the basic exemption limit. This is enclosed in page 35 of the Paper Book. The ld AR also placed on record vide page 36 of the Paper Book the compliant lodged by the assessee before the Cyber Crime Department on 19.12.2013 explaining the facts against Mr Abijit Banerjee. In response to the said compliant before the Police authorities, the assessee was called for enquiry vide correspondence dated 12.1.2014 enclosed in Page 37 of the Paper Book. The assessee appeared before the Police Authorities and explained his case and the matter is pending at that stage without any progress. He pleaded that the assessee is that much powerful to use the influence to impress upon the police authorities and Cyber crime department to expedite the investigation to find out the truth. He also stated that in between the assessee was given to understand that Mr Abijit Banerjee had passed away . He also placed on record the recent compliant lodged by the assessee on 14.2.2017 to Deputy Commissioner of Police Kolkata against the other person Mr Sujit Pal (an accomplice of Mr Abijit Banerjee) to find out the truth and the said compliant was delivered to the said authority by speed post on 1.3.2017. In the said compliant, the assessee had also specifically pleaded that the returns for Asst Years 2010-11 and 2011-12 were uploaded electronically on 25.5.2011 through the IP Address 117,194,195,69 which is not the IP address of the assessee. In response to this, the ld DR vehemently relied on the orders of the lower authorities. We find that in the instant case, the assessee had lodged certain complaints as stated supra before the Maniktola Police Station, Cyber Crime Department and before Deputy Commissioner of Police, Eastern Subbern Division, Kolkata. The relevant documents are placed on record explaining the grievances of the assessee. We find that the action against the said complaints are in progress. We also find that the signature in the ITR-V Acknowledgement of return requires to be cross verified with the other documents of the assessee for which purpose the same is required to be referred to a Handwriting Expert to understand the truth. In these facts and circumstances of the case, we deem it fit and
10 ITA No.1396/Kol/2016 Gobindo Chatterjee, AY 2010-11 appropriate , to set aside this assessment to the file of the ld AO for de novo adjudication, with the following directions :- a) The ld AO should send the signature of the assessee in ITR – V acknowledgement to a Handwriting Expert and obtain the report thereon ; b) The ld AO should co-ordinate with the police authorities and cyber crime department with regard to the complaints lodged by the assessee as stated supra and understand the status of the case from time to time and prevail upon them for speedy disposal of the complaints using the government machinery ; c) The assessee should also co-operate with the enquiries, if any, conducted the police authorities and cyber crime department for expeditious disposal of the complaints lodged by him and also parallely co-operate with the assessment proceedings before the income tax authorities.
We feel that the aforesaid directions would meet the ends of justice in the facts and circumstances of the case. Accordingly, the grounds raised by the assessee are allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order is pronounced in the open court on 10.03.2017 Sd/- Sd/- (S. S. Viswanethra Ravi) (M. Balaganesh) Judicial Member Accountant Member
Dated : 10th March, 2017
Jd.(Sr.P.S.) Copy of the order forwarded to:
APPELLANT – Shri Gobindo Chatterjee, AE-535, Salt Lake, Kolkata- 1. 700 064. 2 Respondent – ITO, Ward-50(3), Kolkata 3. The CIT(A), Kolkata 4. CIT, Kolkata. 5. DR, Kolkata Benches, Kolkata
/True Copy, By order,
Asstt. Registrar.