Income Tax Appellate Tribunal - Ahmedabad
Shri Gaurav S. Verma,, Ahmedabad vs The Acit(Osd), Circle-9,, Ahmedabad on 27 September, 2018
आयकर अपील
य अ धकरण, अहमदाबाद यायपीठ 'C' अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL
"C" BENCH, AHMEDABAD
BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER
AND
SHRI AMARJIT SINGH, ACCOUNTANT MEMBER
अपील सं./ITA No.3641 and 3642/Ahd/2015
नधा रण वष /Asstt. Year: 2008-2009 and 2009-10
Shri Tarun S. Varma (Ind.) Vs. ACIT (OSD)
307-308, Sarthik Square Cir.9, Ahmedabad.
Opp: New U.S.Pizza
S.G. Highway, Ahmedabad.
PAN : AAIPV 6427 C
अपील सं./ ITA No.3643/Ahd/2015
नधा रण वष /Asstt. Year: 2008-2009
Shri Gaurva S. Varma Vs. ACIT (OSD)
307-308, Sarthik Square Cir.9, Ahmedabad.
S.G. Highway, Ahmedabad.
PAN : ADEPV 3361 L
अपीलाथ / (Appellant) यथ / (Respondent)
Assessee by : Shri S.N. Soparkar, AR
Revenue by : Shri Lalit P. Jain, Sr.DR
सन
ु वाई क तार ख/ Date of Hearing : 27/09/2018
घोषणा क तार ख / Date of Pronouncement: 27/09/2018
आदे श/O RDER
PER RAJPAL YADAV, JUDICIAL MEMBER:
In the present appeals, the assessees are impugning separate orders of the ld.CIT(A)-13, Ahmedabad dated 31.3.2015 in their respective appeals passed for the assessment years 2008-09 and 2009-10.
ITA No.3641 and 3642 /Ahd/2015 and Anr.
22. Registry has pointed out that all these appeals are time barred by 203 days. In order to explain the delay, both assesses have filed their affidavits which are verbatim same. Therefore, for the facility of reference we take note of affidavit filed by Shri Tarun S. Varma, which reads as under:
"I, Tarun S Varma L/H Santramdas K Varma, adult at present operating from 307-308, Sarthik Square, Opp. New U S Pizza, S.G. Highway, Ahmedabad 380 054 state on solemn affirmation as under:
That the order u/s 143 (3) r w s 263 for A.Y. 2008-09 passed by CIT (A) dismissing the appeal of the appellant was received on 10/04/2015. Mr. Sanjiv Shah, Accountant was entrusted with the task to file appeal before Hon'ble ITAT that required to be filed within 60 days of receipt of appellate order. However, the accountant kept the order in his drawer without taking any action & eventually resigned from the job in the month of December 2015. On clearing his drawer it came to the notice about non filing of appeal before Hon'ble ITAT & hence it was immediately forwarded to the office of Shri Saurabh Soparkar, Senior Advocate and appeal was filed on 29/12/2015 after delay of 203 days.
Therefore I hereby request your honour to take this reason into consideration and to condone the delay in filing of the captioned appeal due to negligence of the Accountant and to grant me an opportunity of being heard on merits.
That what has been stated above is the fact and true to my knowledge."
3. Thus, the stand of the assessees is that their accountant received orders of the CIT(A) and kept the orders in his drawer without taking any action and informing the assessees. The ld.counsel for the assessee submitted that the accountant is working with company in their ITA No.3641 and 3642 /Ahd/2015 and Anr.
3individual cases, they have not employed accountant, but he was assisting the assessees in income-tax assessments. In support of this plea, he filed copy of register showing payment of salary to Shri Sanjiv Shah. However on the last date of hearing i.e. on 4.9.2018, we have adjourned hearing and appraised the ld.counsel for the assessee to show us attendance register. Shri Soparkar has filed fresh affidavit of Shri Tarun Santramdas Varma as well as monthly attendance register of Swagat Infrastructure P.Ltd. Attendance by the employees were marked through bio-metric machine and print out of attendance register has been placed before us. This register shows that accountant Shri Sanjiv Shah did not attend office from the month of December, 2015. Similarly, salary has not been paid to him. On the strength of these details, the ld.counsel for the assessee contended that delay in filing all these appeals happened on account of non-communication of orders of the ld.CIT(A) by the accountant to the assessee. He prayed that delay in filing the appeals be condoned and appeals be decided on merit.
4. On the other hand, the ld.DR contended that the assessees did not appear before the ld.CIT(A). They have tendency not to cooperate with the department and not prosecute their income tax proceedings according to the law. No sympathy should be shown to such type of assessees. He prayed that all the appeals be dismissed on account of delay in filing the appeals.
5. We have duly considered rival contentions and gone through the record carefully. Sub-section 5 of Section 253 of the Act contemplates that the Tribunal may admit an appeal or permit filing of memorandum ITA No.3641 and 3642 /Ahd/2015 and Anr.
4of cross-objections after expiry of relevant period, if it is satisfied that there was a sufficient cause for not presenting it within that period. This expression "sufficient cause" employed in the section has also been used identically in sub-section 3 of section 249 of Income Tax Act, which provides powers to the ld.Commissioner to condone the delay in filing the appeal before the Commissioner. Similarly, it has been used in section 5 of Indian Limitation Act, 1963. Whenever interpretation and construction of this expression has fallen for consideration before Hon'ble High Court as well as before the Hon'ble Supreme Court, then, Hon'ble Court were unanimous in their conclusion that this expression is to be used liberally. We may make reference to the following observations of the Hon'ble Supreme court from the decision in the case of Collector Land Acquisition Vs. Mst. Katiji & Others, 1987 AIR 1353:
"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. "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.
4. 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.
ITA No.3641 and 3642 /Ahd/2015 and Anr.5
5. 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.
6. 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."
6. Similarly, we would like to make reference to authoritative pronouncement of Hon'ble Supreme Court in the case of N.Balakrishnan Vs. M. Krishnamurthy (supra). It reads as under:
"Rule of limitation are not meant to destroy the right 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. Law of limitation fixes a life-span for such legal remedy for the redress of the legal injury so suffered. Time is precious and the wasted time would never revisit. During efflux of time newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So a life span must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. Law of limitation is thus founded on public policy. It is enshrined in the maxim Interest reipublicae up sit finis litium (it is for the general welfare that a period be putt to litigation). Rules of limitation are not meant to destroy the right 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 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 construction so as to advance substantial justice vide Shakuntala ITA No.3641 and 3642 /Ahd/2015 and Anr.
6Devi lain Vs. Kuntal Kumari [AIR 1969 SC 575] and State of West Bengal Vs. The Administrator, Howrah Municipality [AIR 1972 SC 749]. 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 delay the Could should not forget the opposite party altogether. It must be borne in mind that he is a looser and he too would have incurred quiet a large litigation expenses. It would be a salutary guideline that when courts condone the delay due to laches on the part of the applicant the court shall compensate the opposite party for his loss."
We do not deem it necessary to re-cite or recapitulate the proposition laid down in other decisions. It is suffice to say that the Hon'ble Courts are unanimous in their approach to propound that whenever the reasons assigned by an applicant for explaining the condonation of delay, then such reasons are to be construed with a justice oriented approach.
7. In the light of the above, let us examine the facts of the present case. Shri Gaurav Santramdas Varma is director in Swagat Infrastructure P.Ltd., Partner in Swagat Developers etc. Similarly, Shri Tarun S. Varma is also a director in Swagat Infrastructure P.Ltd. Thus, an employee in Swagat Infrastructure can be expected to receive orders passed in their individual cases. The case of the appellants is that accountant of Swagat Infrastructure, Shri Sanjiv Shah has received orders of ld.CIT(A) and kept in his drawer. He did not communicate this order to the assessee and left the job. Later on in consequence of ITA No.3641 and 3642 /Ahd/2015 and Anr.
7notice, it came to knowledge about the orders and immediately filed appeals. To our mind, if both the assessees have adopted any strategy to delay their appeals, they would not get anything. In other words, by adopting a strategy to delay filing of the appeal is concerned, that would only harm assessees. Thus, they would not get any benefit by adopting a delay tactic while fighting litigation with the department. It might have been happened on account of a bonafide human error. Hon'ble Supreme Court in the case of M.Krishnamurthy (supra) has observed that length of delay is immaterial. It is the plausibility of explanation for condoning the delay. Considering the above aspects, we are satisfied that the assessees have been prevented by sufficient reasons for not filing appeals in time, therefore, we condone the delay in filing appeals and proceed to decide the appeals on merit.
8. Assesses have raised number of grounds in their appeals. But one of the preliminary grounds raised by them is that ld.CIT(A) has erred in dismissing the appeals of the assessee without providing sufficient opportunity of hearing. First of all we note that facts on all vital points are common. Therefore, for the facility of reference, we take up the facts from ITA No.3642/Ahd/2015 in the case of Tarun S. Varma.
9. As observed earlier, both the assessee are directors in Swagat Infrastructure P.Ltd. and partners in Swagat Developers and Mrunal Builders and TS Corporation. It is pertinent to note that assessees' assessments under section 143(3) of the Act were framed in the case of Tarun S. Varma on 22.12.2010 in the Asstt.Years 2008-09 and 2009-10 determining taxable income of Rs.30,63,390/- and Rs.3750,280/- i.e. ITA No.3641 and 3642 /Ahd/2015 and Anr.
8returned income in both years. In the case of Shri Gaurav S. Varma assessment under section 143(3) was finalized on 22.12.2010 determining taxable income at Rs.24,99,440/- i.e. returned income. The ld.Commissioner took cognizance under section 263 of the Income Tax Act and set aside these assessment orders. In pursuance of 263-order, the AO has passed fresh assessment order on 21.1.2014 in the case of both assessees in all these years. In the fresh assessment order, he determined taxable income of the assessee as under:
Shri Tarun S. Verma, Asstt: Year 2008-09
10. Subject to the above remarks and data made available, the total income of the assessee is computed as under :-
Income from salary as per computation of total income Rs. 2,40,000/-
Income from house property as per computation of total Rs. 19,589/- income Income from other sources as per computation of total Rs. 14,939/-
income
Gross Total Income Rs. 1,06,38,040/-
Less : Deduction under Chapter VIA Rs. 1,10,500/-
Assessed Total Income Rs. 1,05,27,540/-
Shri Gaurav S. Verma, Asstt: Year 2008-09
"10. Subject to the above remarks and data made available, the total income of the assessee is computed as under:-
Income from salary as per computation of total income Rs. 1,20,000/-
ITA No.3641 and 3642 /Ahd/2015 and Anr.9
Income from business or profession
i) As per computation of total income - Rs. 35,000/-
Add :-
Income from business as worked - Rs. 99,23,866/-
Rs. 99,58,866/-
Out in para - 9 above Income from other sources as per computation of total Rs. 22,833/-
income
Gross total income Rs. 1,01,01,699/-
Less : Deduction under Chapter VIA Rs. 1,00,000/-
Assessed Total income Rounded off Rs. 1,00,01,699/-
Rs. 1,00,01,700/-
10. Dissatisfied with the above orders, the assessees carried the matter in appeal before the ld.CIT(A). The ld.CIT(A) issued notice of hearing on a number of occasions and ultimately dismissed the appeals of the assessees ex parte. The AO has issued notice on 13.12.2013 in the case of Tarun S. Varma inviting his explanation as to why fresh assessment order should not be made on following issues:
"i) To compute your income by treating the profit or sale of land as income from business instead of short term or long term capital gains
ii) To examine the genuineness of cash advance shown from two Co-op housing societies as advance against land, on all aspects as per provisions of section 68 and the applicability of section 269SS
iii) To examine the genuineness of the expenses incurred on improvement / development of land by conducting through inquiry and its source thereof.
iv) To examine the genuineness of the Cooperative societies and its relation with the assessee with respect to the transaction of land and receipt of cash."
ITA No.3641 and 3642 /Ahd/2015 and Anr.
1011. Thus, the basic issue involved in these appeals relates to whether profit on sale of land is to be assessed from business income or short term capital gain. This is the major issue. While impugning the orders of the ld.CIT(A), the ld.counsel for the assessee submitted that the ld.CIT(A) has not recorded any independent finding, rather concurred with the AO and dismissed the appeals of the assessees in a way on account of non-prosecution. On the other hand, the ld.DR submitted that the ld.CIT(A) has taken cognizance of the assessment orders, and thereafter he concurred with the AO because the assessees have not filed any fresh evidence or any fresh explanation. Thus, finding recorded by the AO was not rebutted. Therefore, he has no choice except to concur with the AO.
12. We have duly considered rival contentions and gone through the record carefully. At this stage, we deem it appropriate to take note of the finding recorded by the ld.CIT(A) in the case of Tarun S. Varma for the Asstt.Year 2009-10. Identical finding has been recorded in other two years. The finding recorded as under:
5. DECISION:
The issue of non compliance by assessees at appellate stage has been considered and decided by the Hon'ble Supreme Court and Various High Courts as discussed below:
1. The decision of the Hon'ble High Court of Mumbai in the case of M/s Chemipol v/s. Union of India [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. For ITA No.3641 and 3642 /Ahd/2015 and Anr.11
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 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 no court or tribunal is supposed to continue a proceeding before it when the party who has moved it has not appeared nor cared to remain present. The dismissal, therefore, is an inherent power which every tribunal possesses."
2. 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 matter pending before it or to pursue the matter on behalf of the complainant who had instituted the proceedings. That is not the function of the court or, for that matter of a judicial or quasi judicial body. In the absence of the complainant, therefore, the court will be will without 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 being shown for the non appearance of the complainant."
3. 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 facts of the case is of the view that the appellant is not interested in prosecuting the appeal, it can in exercise its inherent power to dismiss the appeal for non-
ITA No.3641 and 3642 /Ahd/2015 and Anr.
12prosecution. In the case of CIT Vs. B. N. Bhattacharya reported at 118 ITR 461, it was held that appeal does not mean merely filing of appeal but effectively pursuing it.
4. The Hon'ble ITAT Delhi (ITR No.2006/Del/2011 dt.19.12.2001) in the case of Whirlpool f of India Ltd. v. DOT had dismissed appeal for non attendance at hearings, inferring that f assessee was not interested in prosecuting of appeal.
5. In the case of Chadho Finlease Ltd. V. ACIT (ITA No.3013/Del/2011 date of order 20.12.2011) the Hobble ITAT Delhi had dismissed the appeal for non-attendance at hearings.
6. In a recently delivered decision in the case of CIT v. Gold Leaf Capital Corporation Ltd. on 02.09.2011 (ITA No.798 of2009)f 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. When the assessee is non- cooperative, it can naturally be safely concluded that the assessee did not want to adduce evidence as it would expose falsity and non genuineness.
In view of the facts and legal position discussed above, it is presumed that appellant is not interested in pursuing the appeal and not having any documents, explanation and evidence in support of grounds of appeal raised and thus has not discharged the onus to prove the genuineness of the transactions / addition made by the AO. Therefore the grounds of appeal of the appellant are discussed hereunder are confirmed.
1. The first ground of appeal is general in nature and needs no adjudication.
2. The second ground of appeal relates to addition of Rs.95,94,949/- as Income from business, as against gain arising on sale of land offered by the appellant as Capital Gains is ITA No.3641 and 3642 /Ahd/2015 and Anr.
13dismissed in view of the detailed discussion by the AO and no submission filed by the appellant to rebut this addition made.
3. The third ground of appeal relates to disallowance of appellant's claim of cost on improvement of land for Rs. 61,63,144/- is dismissed in view of the detailed discussion by the AO and no submission filed by the appellant to rebut this addition made.
4. The fourth ground relates to rejection of Appellant claim in respect of sale transactions claimed by the Appellant against Long Term Capital Gain by AO which is dismissed in view of the detailed discussion by the AO and no submission filed by the appellant to rebut this addition made.
5. The next ground regarding initiation of penalty proceedings under Section 271(1)(c) of the I T Act is dismissed as no appeal lies against mere initiation of penalty proceedings.
6. The last ground relates to charging of interest u/s. 234A, 234B and 234C is dismissed being consequential in nature."
13. Order of the ld.CIT(A) though is running into 21 pages, but from page no.3 upto 18, he has just reproduced the assessment order. Thereafter, he has recorded finding extracted (supra). A perusal of this finding would indicate that the ld.CIT(A) has not justified his action as to why he should concur with the AO. It is pertinent to observe that sub- section (6) of section 250 contemplates procedures require to be followed by the ld.CIT(A) while deciding the appeal. This section provide that the ld.CIT(A) would state points in dispute, and thereafter record reasons in support of his conclusion. The assessee has filed paper book running into 63 pages in the case of Gaurav S. Varma and 68 pages in the case of Tarun S. Varma. He placed on record copy of statement recorded on 9.10.2013 and other details. All these documents were filed ITA No.3641 and 3642 /Ahd/2015 and Anr.
14by the AO. Thus, perusal of the order of the ld.CIT(A) would indicate that neither the ld.CIT(A) carved out any points of disputes nor recorded reasons for the decision. After looking into the record, he simply concurred with the AO. The ld.CIT(A) ought to have applied his independent mind on the facts collected by the AO and the explanation given by the assessee before the AO. The ld.CIT(A) failed to adhere to the procedure contemplated in section 250(6) of the Act, therefore, orders of ld.CIT(A) are not sustainable. We deem it appropriate to state here for the argument's sake that even if it is assumed that there is a contributory negligence at the end of the assessee by not appearing before the ld.CIT(A), then also, punishment in the shape of tax liability on additions extracted (supra) is disproportionate to the negligence. Therefore, without going into the merits of different issues, we deem it appropriate to set aside these issues to the file of the ld.CIT(A) for fresh hearing. Appeals of the assessees are allowed for statistical purpose and all the issues are remitted to the file of ld.CIT(A) for fresh adjudication. The assessees are directed to cooperate with ld.CIT(A) in the appellate proceedings.
14. In the result, all appeals of the assessees are allowed for statistical purposes.
Order pronounced in the Court on 27th September, 2018 at Ahmedabad.
Sd/- Sd/- (AMARJIT SINGH) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 27/09/2018