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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI RAMIT KOCHAR
Instant appeals by the assessee are directed against the consolidated order dated 1st October 2013, passed by the learned Commissioner (Appeals)–37, Mumbai, for the assessment year 2000–
3 Shri Rajesh J. Jain 01, 2001–02, 2003–04, 2004–05 and 2006–07. The common grievance of the assessee in the aforesaid appeals is with regard to dismissal of application filed for restoration of appeal before the learned Commissioner (Appeals).
Brief facts are, the assessee is an individual engaged in the jewellery business through its proprietorship concern M/s. Saraswati Jewellers. A search and seizure action was conducted in case of the assessee as well as other family members on 27th December 2005 as a consequence of search and seizure operation notice under section 153A was issued calling upon the assessee to file his return of income for assessment year 2000–01 to 2005–06. In response to notices issued under section 153A, assessee filed his return of income for these assessment years showing his income as was declared in the original return. Assessments in the case of the assessee for the assessment years 2000–01 to 2006–07 were completed by the Assessing Officer under section 143(3) r/w section 153A by determining the income at much higher figure than what was declared by the assessee. The details of income declared and income assessed for different assessment years are as under:–
Income Tax Tax A.Y. Appeal no. Returned (`) Demanded Demanded (`) CIT(A)–II/IT–24/ACCC–10/08–09 1,21,750 23,24,410 16,67,569 2000–01 CIT(A)–II/IT–24/ACCC–10/08–09 85,134 15,97,070 11,26,613 2001–02
4 Shri Rajesh J. Jain CIT(A)–II/IT–24/ACCC–10/08–09 7,88,590 25,14,780 14,12,495 2002–03 CIT(A)–II/IT–24/ACCC–10/08–09 1,66,420 18,40,760 10,06,273 2003–04 CIT(A)–II/IT–24/ACCC–10/08–09 2,38,960 27,25,910 14,55,209 2004–05 CIT(A)–II/IT–24/ACCC–10/08–09 5,00,566 68,70,770 35,65,233 2005–06 CIT(A)–II/IT–24/ACCC–10/08–09 26,857 32,98,839 32,98,839 2006–07
Against the assessment orders passed by the Assessing Officer as aforesaid, assessee preferred appeals before the learned Commissioner (Appeals). As it appears, due to some compelling reasons and also under misconception that self–assessment tax was not paid on the income declared, which will render the appeals non– maintainable before the learned Commissioner (Appeals), the assessee through its authorised representative filed a letter on 7th July 2008, seeking withdrawal of the appeal. The learned Commissioner (Appeals) after considering the aforesaid letter of the assessee, passed an order on 9th July 2008, allowing the assessee to withdraw the appeals and accordingly, appeals were dismissed. Subsequently, the assessee being conscious of the fact that for the impugned assessment years, the assessee had deposited the self–assessment tax prior to filing of appeal, moved an application before the Commission of Income–tax (Appeals) on 16th November 2012, seeking restoration of the appeals. Further, explaining the reasons for withdrawal of the appeals at the first instance, it was submitted by the assessee that he was facing serious financial difficulties at the relevant period and under the advise of his Chartered Accountant, that non–payment of self–assessment tax
5 Shri Rajesh J. Jain would render the appeals non–maintainable, under misconception, he had withdrawn all the appeals for all the assessment years, though, actually only in the assessment years 2002–03 and 2005–06, assessee had not paid the self–assessment tax before filing of appeal. It was also submitted in the said application that due to financial difficulties for which the assessee was not able to even engage a Counsel, he was left with no option but to withdraw the appeals. He also stated, the financial strength of the assessee deteriorated to such an extent that he has to depend upon close relatives for maintaining daily household needs. However, since he had paid the self–assessment tax for the impugned assessment years and appeals are maintainable before the learned Commissioner (Appeals), it was pleaded by the assessee before the learned Commissioner (Appeals) to restore the appeals.
The learned Commissioner (Appeals), however, did not entertain the claim of the assessee for two reasons; firstly, according to him, the petition for restoration of the appeal filed by the assessee on 26th November 2012, is beyond four years from the date of order passed by the first appellate authority while dismissing the appeals of the assessee; and second reason shown by the learned Commissioner (Appeals) was, the appeals of the assessee were dismissed and not permitted to be withdrawn. Thus, on the basis of the aforesaid
6 Shri Rajesh J. Jain reasoning, he did not entertain the application for restoration of appeals by the assessee.
The learned Authorised Representative submitted before us that as per section 154(7), the limitation of four years would start from the end of the financial year in which the order sought to be recalled / rectified was passed. He submitted, in the present case, the order dismissing the appeal was passed by the learned Commissioner (Appeals) on 9th July 2008. Therefore, the limitation of four years should begin from the end of the financial year 2008–09 i.e., 31st March 2009. As the assessee has filed the application for restoration on 26th November 2012, it is within the period of four years as per section 154(7). Therefore, the inference drawn by the learned Commissioner (Appeals), application of the assessee is beyond four years is under a misconception of statutory provisions. As far as the second allegation of the learned Commissioner (Appeals) that the appeals were dismissed and not permitted to be withdrawn, the learned Authorised Representative submitted, the learned Commissioner (Appeals) in fact has permitted to withdraw the appeals and for substantiating such facts, he drew our attention to the order dated 9th July 2008, passed by the learned Commissioner (Appeals) placed in the paper book. Thus, it was submitted by the learned Authorised Representative, the appeals may be restored back to the 7 Shri Rajesh J. Jain file of the learned Commissioner (Appeals) with a direction to decide them on merit.
Learned Departmental Representative on the other hand supported the reasoning of the learned Commissioner (Appeals).
We have considered the submissions of the parties and perused the material available on record. On going through the facts on record, it is found that the assessee under a misconception that the appeals are not maintainable under section 249(4) of the Act, for non– payment of self–assessment tax filed a letter seeking withdrawal of the appeals for the impugned assessment years. This fact is evident from the contents of the letter extracted by the learned Commissioner (Appeals) in his order dated 9th July 2008, while dismissing the appeals of the assessee. It may also be a fact as stated by the assessee in his application for restoration dated 16th November 2012, that the severe financial difficulties faced by the assessee which even prevented him to engage a Counsel could have compelled him to withdraw the appeals. Be that as it may, it is a fact on record that the assessee on 16th November 2012, filed a petition before the first appellate authority praying for restoration of appeals for the impugned assessment year. The learned Commissioner (Appeals) has dismissed the petition filed by the assessee for two reasons; firstly, the petition is beyond four years from the date of the order passed by the learned
8 Shri Rajesh J. Jain Commissioner (Appeals) dismissing the appeal and secondly, the learned Commissioner (Appeals) had dismissed the appeals and not permitted the assessee to withdraw them. However, on a perusal of the fact emerging from record as well as examination of relevant statutory provisions, we find both the reasons on which the learned Commissioner (Appeals) dismissed the petition of the assessee to be totally misconceived. As far as the limitation aspect is concerned, on a perusal of section 154(7), it is observed that the limitation of four years prescribed under the said provision will apply after expiry of four years from the end of the financial year in which the order sought to be amended was passed. Undisputedly, in the present case, the order of the learned Commissioner (Appeals) sought to be restored by the assessee was passed on 9th July 2008. Therefore, it falls within the financial year 2008–09. In terms of section 154(7), the limitation of four years will begin from 1st April 2009. Admittedly, the assessee has filed the application for restoration of appeals on 26th November 2012. That being the case, the application filed by the assessee is within four years from the end of financial year in which the order sought to be amended was passed by the learned Commissioner (Appeals). As far as the allegation of the learned Commissioner (Appeals) that assessee’s appeals were dismissed and not permitted to be withdrawn is concerned, a perusal of the facts on record the said finding of the learned Commissioner (Appeals) is also found to be incorrect. On a 9 Shri Rajesh J. Jain reference to the order passed by the learned Commissioner (Appeals) dated 9th July 2008, a copy of which has been submitted in the paper book, it is noticed that the learned Commissioner (Appeals) in Para– (iii) of his order has given a specific finding that the appeals of the assessee cannot be admitted under section 249(4) as the assessee had not paid the tax on the admitted income returned by him. It is further evident that he allowed the appeals to be withdrawn. Firstly, the observation of the learned Commissioner (Appeals) that appeals are not maintainable in terms of section 249(4) as far as the impugned assessment years are concerned, is an incorrect statement of fact may be due to the application for withdrawal filed by the assessee before him. As demonstrated by the learned Authorised Representative before us, as far as the impugned assessment years are concerned, the assessee had paid the tax due on the income admitted in the return of income before filing of the appeals before the learned Commissioner (Appeals). Therefore, to that extent, there is mistake apparent on the face of record which deserves to be rectified under section 154 of the Act. Further, it is also evident that the learned Commissioner (Appeals) has allowed the assessee to withdraw the appeals. That being the case, in our view, the first appellate authority was not justified in dismissing the assessee’s petition for restoration of appeals. In this context, it needs to be observed that judicial opinion expressed by the Hon'ble Supreme Court as well as different High
10 Shri Rajesh J. Jain Courts, is always in favour of deciding the appeals filed by a litigant on merit rather than dismissing the appeals at the threshold on technicalities. The Courts are unanimous in their view that an endeavour should always be made in deciding the issues on merit. In the present case, it is evident on record that dismissal of assessee’s appeal is under the misconception of fact that tax on the income admitted as per return of income has not been paid by the assessee which is not a correct fact. Therefore, in our view, there is a mistake apparent on record in the order of the learned Commissioner (Appeals) while dismissing the appeals of the assessee, which comes within the purview of section 154 of the Act. In view of the aforesaid, we are inclined to set aside the impugned order of the learned Commissioner (Appeals) and restore the appeals of the assessee to the file of the learned Commissioner (Appeals) with a direction to decide the issues on merit after providing adequate opportunity of hearing to the assessee.
In the result, assessee’s appeals for A.Y. 2000–01, 2001–02, 2003–04, 2004–05 and 2006–07 are allowed for statistical purposes. Order pronounced in the open Court on 26th May 2016