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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
PER Bench: These five appeals by the same assessee are arising out of orders passed by different CIT(A)s, Mumbai on different dates, all for the assessment year 1988-89 under various sections.
First, we will deal with the assessee’s appeal in ITA No.317/Mum/2006. This appeal is arising out of the order of the CIT (A) - X, Mumbai passed in appeal No.CIT (A)-X/Wd.20/IT/16/2001-01 dated 31-01-2001. Assessment was framed by the ACIT, Circle- 20(1), Mumbai for assessment year 1988-89 vide his order dated 08-03-2000 passed u/s 144 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).
At the outset, it is noticed that this appeal is delayed as the assessee filed the appeal on 31-01-2006 as against receipt of the impugned order on 09-12-2005. Thereby, delay occurred for four days. But, now before us, the Revenue contended that the impugned order passed by the CIT(A) is dated 31-01-2001 and this was dispatched on 26-02-2001 (it is inferred from the stamp put on the order by the office of CIT). The
2 ITA No.315, 316, 317, 318 & 319/Mum/2006
Revenue contended that there is huge delay of 4/5 years but could not support his
argument by any evidence. The assessee has filed an Affidavit stating the factual aspects
as under:-
“1. The business of the appellant was more or less discontinued since 27.08.1987, i.e. the date on which the search action U/s 132 of the Act was carried out at the appellant’s premises when all the records were seized by I. T. Department as well as D. R. I. and FERA departments. 2. Since then, I being the partner of the firm and responsible for the Income Tax and other related matters of the firm, was suffering from 100% blockage of artery (Triple Vessel Disease) and accordingly, I underwent “Off Pump Coronary Artery Bypass Surgery” two times at Asian Heart Institute, Mumbai. Even thereafter, I am advised complete bed rest at home. The Xerox copies of the Doctors’ certificate and other medical reports are enclosed for your ready reference. 3. Our office at 14, Majestic Shopping Centre, Mumbai was under the attachment since 1989. Due to this, since 1989 no notices/papers/orders were received by us. Thereafter, certain papers may have been received at my residence, but due to critical heart problems, those papers were neither preserved nor attended to. 4. Accordingly, on hearing from the Income Tax Department about the arrears of taxes outstanding against us, we vide our letter dated 21.11.2005 requested the officer Incharge to give us copies of all orders i.e. orders of the Assessing Officers and the orders of the C. I. T. (A) against the said order of the assessing Officer. Pursuant to this, copies of orders were received on 9.12.2005 by us. 5. However, the copies of Grounds of Appeal and the Statements of facts are not received from the Income Tax Department. 6. In view of the abovementioned facts, we request you to kindly consider the limit of 60 days for filing of appeal from 9.12.2005, i.e. the day on which the copies of orders are received from the Tax Authorities on humanitarian grounds and treat this appeal as filed in time & condone the delay and the appeals filed by the appellant be admitted for the decision of the Hon’ble I.T.A.T. to give justice to the appellant”. 4. The assessee partner, in person appeared before us and argued that the assessee
has received the impugned order only on 09-12-2005 and that also on lot of persuasions
and after receiving demand notices as well as penalty notices under various sections.
According to the partner of the assessee firm Shri Bharat J. Mehta, service of the
appellate order is only 09-12-2005 and no contrary evidence is available on record that
the appellate order was earlier served on the assessee.
3 ITA No.315, 316, 317, 318 & 319/Mum/2006
We have heard both the sides on this issue and gone through the facts and
circumstances of the case. We have also heard the learned Sr. DR, who could not
controvert the factual aspects narrated by the partner of the assessee firm, Shri Bharat J.
Mehta in his Affidavit. Even, the learned SR. DR could not bring on record any contrary
evidence that the appellate order was served on the assessee prior to 09-12-2005. In such
a situation, we deem it fit to condone the delay of only 4/5 days and admit the appeal.
Accordingly the appeal is admitted.
At the outset, the partner of the assessee first of all drew our attention to framing
of assessment u/s 144 of the Act. For this, the assessee has raised the following four
grounds:-
“1. The Hon’ble Commissioner of Income Tax (Appeals-X (“the C.I.T. (A)” erred in confirming the order U/s 144 of the Act. 2. He failed to appreciate and ought to have held that the order made U/s 144 of the Act was made without giving adequate opportunity to the appellant and hence needs to be set aside. 3. He further erred in not appreciating that the required details could not be furnished due to non availability of the same and the bad health of one of the partner of the appellant who was looking after the matter. 4. The appellant prays that the order U/s 144 be set aside as ab – initio or otherwise void and illegal to be made de-novo”.
The assessee partner first of all took us through the assessment order and stated
that the AO proceeded to make order u/s 144 of the Act, but to answer this the assessee
partner stated that a search action was carried out on the assessee u/s 132 of the Act on
26-08-1987 in the premises of M/s. Everest Gems. During the course of search at the
premises of M/s. Everest Gems a consignment of 9004.59 carats of rough diamond was
found along with the Jhangad of M/s. Silver Stars i.e. the assessee. M/s. Everest Gems
claimed that this rough diamond had come to their office from M/s. Silver Stars on
approval basis. The entire books of account, bills & vouchers and other details were
seized by the Income Tax Department. Nothing was provided to the assessee to explain
4 ITA No.315, 316, 317, 318 & 319/Mum/2006
his case. It was explained by the assessee partner that the assessee firm could not filed
return of income for assessment year 1988-89 since the books of account are already
seized by the Department as well as DRI and FERA. Regarding DRI and FERA, the
assessee filed Panchanama. This fact is admitted by the AO in his assessment order in
Para 6 which reads as under:-
“6. In response to the notice u/s. 142(1) Shri Bharat J. Mehta, “partner of the assessee firm attended and stated that the details necessary for the assessment of the asstt. Year 88-89 cannot be filed singe the books of account are already seized by the I. T. Department as well as D.R.I. and FERA. Regarding DRI/FERA the assessee has filed panchanama but has not enclosed the annexures referred thereto. The assessee could have taken extracts/inspection of the books of account/documents from wherever it is lying and could have furnished necessary details alongwith return of income but the assessee has opted for not doing so and as such the assessee has not co-operated in the assessment proceedings. The assessee was asked to produce books of account pertaining to its Surat branch. Even these books were also not produced for verification. The assessee was given inspection of the books of accounts and documents with this Department on two occasions.
When these were confronted to the learned Sr. DR, he fairly agreed that now the
Revenue is ready to provide these documents to the assessee provided he is ready to co-
operate with the Department. On this assurance, the assessee agreed for co-operation
with the Department and also agreed for taking copies of all the documents and for filing
of return of income and also for co-operation in the assessment proceedings as and when
called.
In the entirety of the facts and circumstances of the case, we are of the view that
nothing has been examined either by the AO or by CIT (A) and the documents were not
provided to the assessee before framing assessment u/s 144 of the Act. In our considered
opinion, the assessee should be given fair change to represent his case. In terms of the
above, we remit the issues back to the file of the AO, cancelling this assessment and
setting aside the orders of the authorities below. Needless to say the AO will re-frame
the assessment de-novo based on the seized materials after allowing photo copies of the
same to the assessee and also after allowing reasonable opportunity of being heard and
5 ITA No.315, 316, 317, 318 & 319/Mum/2006 to rebut the same. In terms of the above, the appeal of the assessee is allowed for statistical purposes.
In respect to assessee’s appeal in ITA315/Mum/2006 for assessment year 1988- 89 relating to levy of penalty u/s 271 (1) (c) of the Act, ITA No.316/Mum/2006 for assessment year 1988-89 in respect of penalty u/s 271 (1) (a) of the Act, ITA No.318/Mum/2006 for assessment year 1988-89 for penalty u/s 271 (1) (b) of the Act and ITA No.319/Mum/2006 for assessment year 1988-89 for penalty u/s 271D of the Act, we are of the view that once the quantum assessment is set aside to the file of the AO and remanded the matter back for fresh adjudication, these penalties will not survive and hence deleted. However, the AO is free to initiate penalty proceedings as per law under any of the above provisions, in case, during the set aside assessment proceedings, he comes to a conclusion that penalty under particular provision is leviable. These penalties are deleted and the appeals of the assessee are allowed. 11. In the result, the appeal in ITA No. 317/mum/2006 of the assessee is allowed for statistical purposes and other appeals in ITA No. 315, 316, 318 & 319/mum/2006 of assessee are allowed. Order pronounced in the open court on 15/06/2016.
Sd/- Sd/- (RAMIT KOCHAR) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated 15 /6/2016 Lakshmikanta Deka/Sr.PS
6 ITA No.315, 316, 317, 318 & 319/Mum/2006
Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. The CIT (A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// BY ORDER,
Assistant Registrar ITAT, MUMBAI
Initial Date Dictation pad attached with the Draft Order Yes
Draft dictated on 13-06-16 Sr.PS 2. Draft placed before author 14-06-16 Sr.PS 3. Draft proposed & placed before the second JM member 4. Draft discussed/approved by Second Member. AM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. File sent to the Bench Clerk Sr.PS 8. Date on which file goes to the AR 9. Date on which file goes to the Head Clerk. 10. Date of dispatch of Order.