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Income Tax Appellate Tribunal, JAIPUR BENCHES,”B” JAIPUR
आयकरअपीलीय अधिकरण] जयपुरन्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Mk0 ,l- lhrky{eh]U;kf;dlnL; ,oaJhjkBksMdeys'kt;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;djvihy la-@ITA No. 653/JP/2023 fu/kZkj.ko"kZ@AssessmentYear : 2017-18 cuke M/s. M.M. Brothers The DCIT E-666 Ekta Complex, Nakul Path, Vs. Circle-6 Lal Kothi Scheme, Jaipur 302 015 Jaipur LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: AARFM 8094 K vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assessee by : Shri P.C. Parwal, CA jktLo dh vksj ls@Revenue by: Shri Anup Singh, Addl. CIT lquokbZ dh rkjh[k@Date of Hearing : 28/11/2023 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 12/12/2023 vkns'k@ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal by the assesse is directed against the order of ld. CIT(A) dated 04-09-2023, National Faceless Appeal Centre, Delhi [ hereinafter referred to as (NFAC)] for the A.Y. 2017-18 wherein the assessee has raised the following grounds of appeal. ‘’1. The ld. CIT(A) has erred on facts and in law in dismissing the appeal holding that assessee has not pursued the appeal despite being granted several opportunities without considering the online reply filed on 24-06- 2023 in response to notice dated 09-06-2023.
2 M/S. M.M. BROTHERS, JAIPUR VS DCIT, CIRCLE 6, JAIPUR 2. The ld. CIT(A) has erred on facts and in law in upholding the addition of Rs.71,70,438/- made by ld. CIT(A), NFAC appeal u/s 143(1)(a)/154 without considering the facts that the amount so claimed is on account liquidated damages paid which is not fine or penalty but on account of delay in performance of contract allowable u/s 37(1) of the Act.
2.1 Brief facts of the case are that the assessee filed his return of income on 31-10-0217 declaring total income of Rs.1,89,07,656/-. However, the CPC while processing the return u/s 143(1) of the Act (a) disallowed an expenditure of Rs.71,70,429/- u/s 37 and Rs.22,578/-on account of ESI/PF not deposited before due date. Subsequently, the assessee filed rectification u/s 154 of the Act and the same was decided by the CPC vide order dated 15-06-2019 and thus the request of the assessee was rejected. 2.2 Aggrieved by the order of the AO, the assessee carried the matter before the ld. CIT(A) who dismissed the appeal of the assessee being not pursuance of the case by the assessee in spite of providing various opportunities by the ld. CIT(A) whose relevant para 4 to 8 are as under:- ‘’4. During the course of appeal proceedings, the following notices/letters for hearing were issued to the appellant, but till date the appellant has neither filed any response nor filed any submissions in support of grounds of appeal. The details of the notices issued are as under:-
3 M/S. M.M. BROTHERS, JAIPUR VS DCIT, CIRCLE 6, JAIPUR S.No. Date of notice sent Compliance Remarks Date 1. 14-01-2021 18-01-2021 No response from the appellant 2. 11-02-2021 Requested for adjournment 3. 22-08-2022 02-09-2022 No response from the appellant 4. 02-09-2022 Requested for adjournment 5. 03-11-2022 - Issued enablement of communication window. No response from the appellant 6. 09-06-2023 26-06-2023 No response from the appellant 4.1 As can be seen from the above table the appellant was given ample opportunities by way of notices issued as narrated above. However, the appellant/AR has refrained from attending the appellate proceedings and has not furnished any submission. 4.2 There is a well known dictum of law "VIGILANTIBUS, NO DORMENTIBUS, JURA SUBVENIUNT" which means law will help only those who are vigilant Law will not assist those who are careless of his/her right. In order to claim one's right. s/he must be watchful of his/her right. Only those persons, who are watchful and careful of using his/her rights, are entitled to the benefits of law, Law confers rights on persons who are vigilant of their rights. 4,3Hon'ble Madhya Pradesh High Court in the case of Estate of Late TukojiraoHolkar vs. CWT (223 ITR 480) has held as under: "if the party, at whose instance the reference is made, fails to appear at the hearing, or fails in taking steps for preparation of the paper books so as to enable hearing of the reference, the court is not bound to answer the reference."
4 M/S. M.M. BROTHERS, JAIPUR VS DCIT, CIRCLE 6, JAIPUR 4.4 Similarly, Hon'ble Punjab & Haryana High Court in the case of New Diwan Oil Mills vs. CIT (2008) 296 ITR 495) returned the reference unanswered, since the appellant remained absent and there was no assistance from the appellant. 4.5 In the case of CIT vs. B.N. Bhattacharya reported at 118 ITR 461, it was held by the Hon'ble Supreme Court that ‘’…appeal does not mean merely filing of appeal but effectively pursuing 4.6 The decision of the Hon'ble High Court of Mumbai in the case of M/s. Chemipol v/s. Union of India, Law Ministry, Aayakar Bhawan, Mumbai and The Commissioner of Central Excise, Mumbai (Central Excise Appeal No 62 of 2009) clearly states, that every court judicial body or authority, which has a duty to decide a matter between two parties, inherently possesses the power to dismiss the case in default. 4.7 For the sake of reference, the relevant extract of the judicial pronouncement rendered by the Hon'ble High Court of Mumbai quoting decision of Hon'ble Supreme Court in the case of Nandramdas Dwarkadas AIR 1958 MP 260, is reproduced below: "Now the Act does not give any power of dismissal. But it is axiomatic that nocourt or tribunal is supposed to continue a proceeding before it when the partywho has moved it has not appeared nor cared to remain present. Thedismissal, therefore, is an inherent power which every tribunal possesses." 4.8 The principle that every court that is to decide on a matter of dispute inherently possesses the power to dismiss the case for default, has been upheld by the Hon'ble Supreme Court in case of Dr. P. Nalla Thampy Vs. Shankar (1984 (Supp) SCC 63 and the case of New India Assurance vs. Srinivasan (2000) 3 SCC 242. In the latter case, the Apex Court has held as under:- "That every court or judicial body or authority, which has a duty to decide a list between two parties, inherently possesses the power to dismiss a case in default Where a case is called up for hearing and the party is not present, the court or the Judicial or quasi-judicial body is under no obligation to keep the 5 M/S. M.M. BROTHERS, JAIPUR VS DCIT, CIRCLE 6, JAIPUR matter pending before it or to pursue the matter on behalf of the complainant, therefore, the court will be wellwithin its jurisdiction to dismiss the complaint for non-prosecution. So also, it would have the inherent power and jurisdiction to restore the complaint on good cause b shown for the non-appearance of the complainant." 4.9 The Hon'ble Bombay High Court has also laid down the proposition that where the appellant in spite of notice is persistently absent and the Tribunal on fac of the case is of the view that the appellant is not interested in prosecuting th appeal, it can in exercise its inherent power to dismiss the appeal for no prosecution. 4.10 The Hon'ble ITAT Delhi (ITR No.2006/Del/2011 dtd. 19.12.2001) in the case of Whirlpool of India Ltd v. DCIT had dismissed appeal for non- attendance at hearings, inferring that assessee was not interested in prosecuting of appeal. Thereafter in another decision in the case of Chadha Finlease Ltd. V. ACIT (ITA No.3013/Del/2011 date of order 20.12.2011) the Hon'ble ITAT had dismissed the appeal for non-attendance at hearings. 4.11 In a decision in the case of CIT v. Gold Leaf Capital Corporation Ltd. On 02.09.2011 (ITA no.798 of 2009), the Hon'ble High Court of Delhi had held that a negligent assessee should not be given many opportunities just because that quantum of amount involved is high. Necessary course of action is to draw adverse inference; otherwise, it would amount to give premium to the assessee for his negligence.
The facts of the case as noted above are that the appellant has not pursued the appeal despite being granted several opportunities as elaborated supra. No details, documents or submissions have been provided to come to any conclusion other than those arrived at by the assessing officer in the order. The notices have been duly served upon the assessee via e-mail. Regrettably no response whatsoever was forthcoming on the appointed date. Thus, nothing has been placed on record to substantiate as to why the rectification order passed by the AO should not be upheld.
In view of the above, the undersigned is left with no option but to decide the case on the basis of material on record. Bare perusal of the facts shows that the appellant has not pursued the appeal despite being granted several opportunities aselaborated supra. In the absence of any evidence whatsoever, 6 ITA NO.653/JP/2023 M/S. M.M. BROTHERS, JAIPUR VS DCIT, CIRCLE 6, JAIPUR whether documentary or otherwise, I am constrained to agree with the approach adopted by the AO in rejecting the rectification application. No interference with the order of the AO is called for. The grounds of appeal
are therefore dismissed.
7. Thus, in view of the facts and circumstances of the case, the order passed u/s 154 of the Act dated 15.06.2019 by the CPC Bangalore is upheld. 8.In the result, the appeal of the appellant is dismissed.’’ 2.3 During the course of hearing, the ld.AR of the assessee submitted that the order of the lower authorities be quashed with the direction to allow deduction of Rs.71,70,438/- claimed by the assessee on account to liquidated damages for which theld. AR of the assessee submitted the following written submission ‘’1. At the outset it is submitted that before Ld. CIT(A), NFAC assessee filed submission on 26.06.2023 along with documentary evidences stating that amount of Rs.71,70,438/- is deducted by the awarder of contract for delay in completion of work (PB 7) as per the terms of contract (PB 8-14). It is not a statutory penalty but only liquidated damage paid on account of delay in completion of work allowable u/s 37 of the Act.
2. It may also be noted that similar adjustment was made by AO(CPC) in AY 2018- 19 against which also assessee filed appeal on 24.02.2020 before Ld. CIT(A), NFAC. This appeal was decided by Ld. CIT(A), NFAC vide order dt. 06.10.2023 where similar disallowance of Rs.13,28,153/- disallowed by AO(CPC) was allowed (PB 16-26). Hence instead of setting aside the issue, it is prayed that appeal of assessee be decided by the Hon’ble ITAT on merit.
From the statement placed at PB 7, it can be noted that major deduction for delay in completion of work was made by MP Poorv Kshetra Vidyut Vitran Company Ltd. (in short MPPKVVCL). From the contract awarded by MPPKVVCL it can be noted that payment of liquidated damages is a part of contract. Out of total amount of Rs.71,70,438/-, one major amount is Rs.47,84,389/-, the calculation of which is at PB 13. Thus the liquidated damages so paid is not against any infringement of law but is incurred by the assessee in course of carrying out its contract. Such liquidated damages is allowable deduction u/s 37 as held by Gujarat High Court in case of PCIT Vs. Mazda Ltd. 250 Taxman 510 (PB 27-30) and Full Bench of P&H High Court in case of Jamuna Auto Industries Vs. CIT 292 ITR 92 (PB 31-36). In view of above, AO be directed to allow deduction of Rs.71,70,438/- claimed by the assessee on account of liquidated damages.
On the other hand, the ld.DR supported the order of the ld.CIT(A). 2.4 2.5 We have heard both the parties and perused the materials available on record. In this case, the AO disallowed an expenditure of Rs.71,70,429/- u/s 37 and Rs.22,578/- on account of ESI/PF not deposited before due date. Subsequently the assessee filed rectification u/s 154 before the AO who after taking into consideration the matter of the case rejected the rectification application of the assessee. In first appeal, the ld. CIT(A) had provided various opportunities to the assessee as mentioned hereinabove but the assessee had not pursued his case. In this view of the matter, the ld. CIT(A) confirmed the action of the AO relating to addition made by the AO as well as rectification application u/s 154 of the Act. As argued by the ld.AR of the assessee that the issue is covered in favour of the assessee in previous year and that if argued by the assessee is heard before the ld. CIT(A). Therefore, the Bench feels that it is a peculiar case wherein the addition was made by the AO who subsequently rejected the rectification application us/154 of the Act of the assessee and further in first appeal, the ld. CIT(A) dismissed the appeal of the assessee in limine by passing an ex-parte order. Thus, it would be in the interest of equity and justice that one more chance should be given to the assessee to contest the case before the ld. CIT(A) on the merit of the issue as raised hereinabove. The assessee is directed to the submit all the documents 8 M/S. M.M. BROTHERS, JAIPUR VS DCIT, CIRCLE 6, JAIPUR pertaining to the issue in question and dispel the doubt before the ld CIT(A) who will provide adequate opportunity of being heard to the assessee. 3.1 Before parting, we may make it clear that our decision to restore the matter back to the file of the ld. CIT(A)shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by the ld. CIT(A)independently in accordance with law.