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Income Tax Appellate Tribunal, F Bench, Mumbai
Before: Shri Jason P. Boaz & Shri Sandeep Gosain
These appeals by the assessee are directed against the orders of the CIT(A)-36, Mumbai dated 24.04.2012 for assessment years 2007-08 and 2008- 09.
Order on the petition for condonation of delay in filing the appeals for assessment years 2007-08 and 2008-09. 2.1 In this case, admittedly the impugned orders of the CIT(A)-36, Mumbai dated 24.04.2012 for assessment years 2007-08 and 2008-09 were received by the assessee on 27.05.2012. As per the provisions of section 253 of the Income Tax Act, 1961 (in short 'the Act') the assessee ought to have filed the appeals for assessment years 2007-08 and 2008-09 within 60 days from the date of receipt of the impugned orders. In the case on hand, however, it is seen that the appeals for assessment years 2006- 07 and 2007-08 were filed on 07.01.2013 thereby leading to a delay of 170 days. Along with the appeals for assessment years 2007-08 and 2008-09, the assessee has filed an application for condonation of delay dated 2 & 209/Mum/2013 M/s. Finance Technologies (India) Ltd. 04.01.2013 and an affidavit dated 03.01.2013 sworn to by the Managing Director of the assessee-company. 2.2 In the affidavit of the Managing Director of the assessee-company, the reasons given for the delay of 170 days in filing these appeals before the ITAT are as under: - “2. I have authorized M/s. Mukesh P. Shah & Co. firm of chartered accountants for handling the tax matters of the company comprising compiling and filing of returns coupled with representation before the tax authorities concerning scrutiny assessment as also the subsequent appellate proceedings under the Income Tax Act, 1961 [Act].
The firm of chartered accountants was of opinion that as the appeal to CIT (A) had become infructous due to selling aside of original assessment order passed u/s. 263 hence no further appeal was required till the revised order u/s. 153A r.w.s. 143(3) r.w.s. 263 is received by the appellant.
However, there were several grounds of disallowances made in the original order u/s. 143(3) r.w.s. 153A which were not covered in the set a side order u/s.
But due to treating the appeal as infructous by the CIT(A)-36 the appellant was denied the benefit of natural justice to fight on the grounds of disallowances which does not relate to the issues covered in the selling aside order u./s. 263.
Recently when we approached our counsel, Mr. Chetan Karia to represent our appeal against order u/s. 263 and all the facts were informed to him. He advised us that an appeal ought to have been filed against CIT(A) order.
Hence we are preferring an appeal against the order of CIT(A)- 36, dated 24.04.2012 which was received by us on 27.05.2012. Under the circumstances explained herein above, I request your Honour to kindly grant condonation for delay in filing the appeal.” 2.3 The learned A.R. for the assessee was heard in the matter and strongly supported the factual averments put forth by the assessee in its affidavit (supra) and submitted that the assessee was certainly prevented by sufficient cause from filing the appeals for assessment year 2007-08 and 2008-09 in time due to the peculiar facts and circumstances of the case. It is further contended that the non-condonation of the delay of 170 days in filing these appeals would put the assessee to great hardship and irreparable damage and injury, whereas no injury would be caused to the 3 & 209/Mum/2013 M/s. Finance Technologies (India) Ltd. Revenue if the delay is condoned and the appeal be heard on merits. In support of the assessee’s case for condonation of delay, the learned A.R. for the assessee placed reliance on the following judicial decisions: - i. Collector, Land Acquisition vs. MST Katiji & Others (167 ITR 471) (SC) ii. Radhakrishna Rai vs. Allahabad Bank & Others (2009) 9SCC 733) iii. CIT vs. ISRO Satellite Centre (ITA No. 532/2008 dated 28.10.2011 The learned A.R. for the assessee submitted that the assessee has a fair case on merits of the issues raised in appeal and prayed for condonation of the delay of 170 days. 2.4 Per contra, the learned D.R. opposed the assessee’s plea for condonation of delay in filing the appeals for assessment year 2007-08 and 2008-09. 2.5.1 We have heard the rival contentions and perused and carefully considered the material on record. The Hon'ble Apex Court in the case of Collector, Land Acquisition vs. MST Katiji & Others (supra), while laying down the principles to be followed for condonation of delay has observed that substantial justice should prevail over technical considerations, and the doctrine must be applied in a natural, commonsense and pragmatic manner. Considering the aforesaid principles laid down by the Hon'ble Courts and taking into account the fact and circumstances and the reasons put forth by the assessee in its affidavit (supra), we are of the opinion that this is a fit case for condonation of delay of 170 days in filing the appeals for assessment years 2007-08 and 2008-09 as the assessee was prevented by reasonable cause from filing the appeals in time. We are also of the opinion that if the aforesaid delay is condoned and the issues be adjudicated on merits then there would be no loss to Revenue as legitimate taxes payable in accordance with law alone will be collected. In this view of the matter, we condone the delay of 170 days in filing the appeals for assessment years 2007-08 and 2008-09 and admit the appeals for adjudication. It is accordingly ordered.
4 & 209/Mum/2013 M/s. Finance Technologies (India) Ltd.
3. In these appeals for assessment years 2007-08 and 2008-09, the assessee has raised the following grounds: - 3.1.1 Assessment Year 2007-08 1) The Learned Commissioner of Income Tax (Appeal) erred in treating the appeal as infructuous on the basis of order passed by the Commissioner of Income Tax-IV u/s 263 of the Act. 2) The Learned Commissioner of Income Tax (Appeal)-36, erred in not allowing claim of the appellant for deduction of interest on Zero Coupon Convertible Bonds of Rs.9,63,05,800/-. 3) The Learned Commissioner of Income Tax (Appeal)-36, erred in not allowing claim of the appellant for deduction of Issue expenses of Zero Coupon Convertible Bonds of Rs.15,75,36,929/-. 4) The Learned Commissioner of Income Tax (Appeal)-36, erred in confirming disallowances of Rs.88,51,124/- u/s 14A r.w. R. 8D. 5) The Appellant craves leave to add, alter, amend or delete any of the above grounds of appeal.” 3.1.2 Assessment Year 2008-09 1) The Learned Commissioner of Income Tax (Appeal) erred in treating the appeal as infructuous on the basis of order passed by the Commissioner of Income Tax-IV u/s 263 of the Act. 2) The Learned Commissioner of Income Tax (Appeal)-36, erred in not allowing claim of the appellant for deduction of interest on Zero Coupon Convertible Bonds of Rs.31,9681,320/-. 3) The Learned Commissioner of Income Tax (Appeal)-36, erred in confirming disallowances of Rs.6,46,45,514/- u/s 14A r.w. R. 8D. 4) The Appellant craves leave to add, alter, amend or delete any of the above grounds of appeal.” 3.2.1 According to the learned A.R. for the assessee, the facts of the matter are that there was a search action under section 132 of the Act in the assessee’s case on 19.06.2007 and consequent thereto the assessments for assessment years 2007-08 and 2008-09 were completed under section 153A r.w.s. 143(3) of the Act vide separate orders dated 09.04.2009. 3.2.2 For A.Y. 2007-08: the assessee originally filed its return of income under section 139(1) of the Act on 30.10.2007 declaring income of `21,92,10,943/-. Consequent to search under section 132 of the Act, the assessee filed a return of income in response to notice under section 153A of the Act on 10.12.2007 declaring income of `21,92,10,943/- and 5 & 209/Mum/2013 M/s. Finance Technologies (India) Ltd. subsequently a revised return was filed on 30.01.2009 declaring income of `20,37,42,526/-. The assessment was completed under section 153A r.w.s. 143(3) of the Act vide order dated 09.04.2009, wherein the income of the assessee was determined at `46,94,22,687/-, in view of the following disallowances: - `9,63,05,800/- (i) Disallowance of interest claimed on Zero Coupon Convertible Bonds (ii) Disallowance of expenses claimed on issue `15,75,36,929/- expenses of Zero Coupon Convertible Bonds (iii) Disallowance under section 14A r.w. Rule 8D `88,54,124/- 3.2.3 For A.Y. 2008-09: the assessee originally filed its return of income under section 139(1) of the Act on 27.08.2008 declaring income of `11,27,60,85,114/-. Consequently, in response to notice under section 153A of the Act, the assessee filed its return on 30.01.2009 declaring income of `11,26,44,49,262/-. The assessment was completed under section 143(3) r.w.s. 153A of the Act vide order dated 09.04.2009 wherein the income of the assessee was determined at `11,72,74,38,446/- in view of the following disallowances: - (i) Disallowance of interest claimed on Zero Coupon `31,96,81,320/- Convertible Bonds (ii) Disallowance under section 14A r.w. Rule 8D `6,46,45,514/- 3.3 Aggrieved by the orders of assessment for assessment years 2007-08 and 2008-09 dated 09.04.2009, the assessee preferred appeals before the CIT(A)-36, Mumbai. The learned A.R. for the assessee submits that consequent to the passing of these orders of assessment, and the pendency of the assessee’s appeals before the learned CIT(A), the CIT, Central IV, Mumbai, on an examination of the relevant records of assessment, initiated revisionary proceedings under section 263 of the Act for both assessment years 2007-08 and 2008-09. In the order under section 263 of the Act dated 29.03.2012, the learned CIT was of the view that the aforesaid orders of assessment were erroneous and prejudicial to the interests of Revenue since the Assessing Officer (AO) had, inter alia, accepted the assessee’s claim of foreign exchange gain of `6,04,89,329/- for A.Y. 2007-08 and of `24,38,50,908/- for A.Y. 2008-09 as being exempt 6 & 209/Mum/2013 M/s. Finance Technologies (India) Ltd. from tax being on capital account without examination and proper application of mind and also in not following the ratio laid down by the Hon'ble Apex Court in the case of M/s. Woodward Governor India P. Ltd. and M/s. Honda Siel Power Products Ltd. The learned CIT observed that while making the disallowance under section 14A r.w. Rule 8D, the AO had not considered the provisions of Rule 8D(ii). In that view of the matter, the learned CIT, vide order under section 263 of the Act dated 29.03.2012, set aside the orders of assessment for assessment years 2007-08 and 2008-09 and directed the AO to pass fresh assessment orders considering all relevant factual and legal matters after affording the assessee adequate opportunity of being heard. 3.4 The learned A.R. for the assessee drew the attention of the Bench to the orders of assessment for assessment years 2007-08 and 2008-09 under section 143(3) r.w.s. 263 of the Act vide orders dated 22.03.2013 (placed at pages 16-35 of the assessee’s paper book) passed by the AO subsequent to the orders of the learned CIT under section 263 of the Act dated 29.03.2012 in order to show that the AO has determined the income of the assessee at `49,94,22,687/- for A.Y. 2007-08 and at `11,72,74,38,446/- for A.Y. 2008-09; as originally assessed vide original assessment orders dated 09.04.2009 and to emphasise the fact that no fresh additions have been made to the originally assessed income, pursuant to the CIT’s order under section 263 of the Act. 3.5 The learned A.R. for the assessee submits that in the interregnum period between the order under section 263 dated 29.03.2012 and the orders of assessment for assessment years 2007-08 and 2008-09 pursuant thereto, the learned CIT(A) vide the impugned order dated 24.04.2012 dismissed the assessee’s appeal against the original orders of assessment dated 04.09.2009 for these years, on the ground that, since the CIT, Central-IV, Mumbai had vide the orders under section 263 of the Act dated 29.03.2012, set aside the orders of assessment for assessment years 2007- 08 and 2008-09 these appeals were infructuous. According to the learned A.R. for the assessee in the above factual circumstances in the case on 7 & 209/Mum/2013 M/s. Finance Technologies (India) Ltd. hand, it is clearly evident that the grounds raised
on merits, on various issues, by the assessee in its appeals for assessment years 2007-08 and 2008-09 against the disallowances made in the original orders of assessment before the learned CIT(A) have not been addressed. It is therefore prayed that in the interests of equity and justice the Bench in the present appeals should set aside the matters to the file of the learned CIT(A) to be decided on merits of the issue, since in the impugned orders, the learned CIT(A) had not adjudicated on merits, but dismissed the appeals on technicalities.
4. Per contra, the learned D.R. supported the impugned orders of the learned CIT(A). 5.1 We have heard the rival contentions of both the parties and perused and carefully considered the material on record. The facts of the case as emanate from the records and the factual averments of the learned A.R. for the assessee at paras 3.2.1 to 3.5 have been duly considered. As contended by the learned A.R., the assessee’s assessments for assessment years 2007-08 and 2008-09 were concluded by separate orders dated 04.09.2009 wherein the additions as laid out at (i) to (iii) at paras 3.2.2 for A.Y. 2007-08 and as laid out at (i) and (ii) at para 3.2.3 of this order (supra) were made. It is also a matter of record that it is in respect of these very issues (supra) that grounds of appeals were raised by the assessee on appeal before the learned CIT(A). 5.2 We find that in the interregnum, the CIT, Central-IV, Mumbai had passed revisionary orders under section 263 of the Act vide order dated 29.03.2012 wherein the assessments for assessment years 2007-08 and 2008-09 were set aside on certain other issues to be examined by the AO. The learned CIT(A) in the impugned orders passed thereafter on 24.02.2012 dismissed the assessee’s appeals for assessment years 2007- 08 and 2008-09, not on merits but on technical grounds that they are rendered infructuous due to the CIT, Central-IV, Mumbai setting aside the original orders of assessment dated 04.09.2009 under section 263 of the Act.
8 & 209/Mum/2013 M/s. Finance Technologies (India) Ltd. 5.3 Subsequently, vide orders of assessment passed under section 143(3) r.w.s. 263 for assessment years 2007-08 and 2008-09 on 22.03.2013, the AO finding no merit in the issues on which the CIT, Central-IV, Mumbai set aside the assessments for these years to his file, assessed the assessee’s income for these years at the same figure as originally assessed in the orders under section 143(3) r.w.s. 153A of the Act dated 04.09.2009; which incidentally includes the disallowances against which the assessee had preferred appeals before the learned CIT(A) and also before us. It is a matter of record that the learned CIT(A) had not adjudicated ‘on merits’ the grounds raised by the assessee but rather dismissed the assessee’s appeals for assessment years 2007-08 and 2008- 09 on technical grounds. In these piquant circumstances, we are of the considered opinion that the cause of substantial justice can be furthered only if the assessee’s grievances as raised before the learned CIT(A) in the form of grounds of appeals in ITA Nos. 90 & 91/10-11 for assessment years 2007-08 and 2008-09 be considered on merits by the learned CIT(A) who has not done so; as is evident from his decision in the impugned appeals. We, therefore, in the interest of justice and equity, set aside the impugned orders of the learned CIT(A) dated 24.04.2012 for assessment years 2007-08 and 2008-09 and restore to his file the grounds of appeals raised by the assessee, on merits before the learned CIT(A) in the impugned appeals, with directions to dispose off the same on merits after affording the assessee adequate opportunity of being heard and to file details/ submissions required. It is accordingly ordered.