S. Ram Tours & Travels pvt.Ltd, Bhubaneswar v. ACIT, Bhubaneswar

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK ( ) BEFORE . . HONBLE SHRI K.K.GUPTA ACCOUNTANT MEMBER. /AND . . . S HRI K.S.S.PRASAD RAO JUDICIAL MEMBER / I.T.A.NO S.173 AND 174 /CTK/ 2009 / ASSESSMENT YEAR 2005 - 06 SRI RAM TOURS & TRAVELS (P) LTD. N - 5/274 IRC VILLAGE NAYAPALLI BHUBANESWAR. PAN : AAGCS 6845 N - - - VERSUS - ACIT CIR CLE 2(1) BHUBANESWAR. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI P.K.MISHRA AR / FOR THE RESPONDENT: / SHRI S.C.MOHANTY DR / ORDER . . . SHRI K.S.S.PRASAD RAO JUDICIAL MEMBER . THESE TWO APPEALS ARE BY THE ASSESSEE AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME - TAX (APPEALS) DT.19.2.2009 FOR THE ASSESSMENT YEAR 2005 - 06 IN THE CASE OF THE ASSESSEE DISMISSING THE APPEALS FILED BY THE ASSESSEE AGAINST THE ASSESSMENT ORDER PASSED U/S.144 OF THE INCOME - TAX ACT 19961 AND PENALTY ORDER PASSED U/S.271(1)(C) OF THE SAID ACT REFUSING TO CONDONE THE DELAY IN FILING THE TWO APPEALS BEFORE THE LEARNED CIT(A) HOLDING THAT THE ASSESSEE IS NOT ABL E TO SUBSTANTIATE THE REASONS FOR DELAY IN FILING THOSE APPEALS. 2. BOTH PARTIES WERE HEARD REGARDING THE ISSUES RAISED BY THE ASSESSEE IN THESE TWO APPEALS AS WELL AS THE REASONS FOR THE DELAY IN FILING APPEALS BEFORE THE LEARNED CIT(A). 3. DURING THE COU RSE OF HEARING THE LEARNED AR OF THE ASSESSEE HAS VEHEMENTLY ARGUED CONTENDING INTER ALIA THAT THERE IS DISPUTE BETWEEN THE MANAGING DIRECTOR AND OTHER DIRECTORS AND THE MANAGING DIRECTOR FELL SICK. SINCE THE MANAGING DIRECTOR WAS LOOKING AFTER THE TAXATI ON MATTERS OF THE I.T.A.NOS.173 AND 174/CTK/ 2009 2 COMPANY AND IN VIEW OF HIS SICKNESS WAS NOT ABLE TO ANSWER THE QUESTIONS RAISED BY THE AO IN THE ASSESSMENT PROCEEDINGS WHICH RESULTED IN PASSING THE ASSESSMENT ORDER BY INVOKING THE PROVISIONS U/S.144 OF THE I.T.ACT. AFTERWARDS THE LEARN ED ASSESSING OFFICER STARTED PENALTY PROCEEDINGS U/S.271(1)(C) AND THESE PROCEEDINGS WERE ALSO NOT PROPERLY CANVASSED BEFORE THE ASSESSING OFFICER IN VIEW OF THE SICKNESS OF THE MANAGING DIRECTOR OF THE ASSESSEE - COMPANY. WHEN THE SAID MANAGING DIRECTOR WAS C URED HALF OF HIS NEUROLOGICAL PROBLEM IMMEDIATELY CONTACTED HIS TAX CONSULTANT WHO ADVISED HIM TO FILE THE APPEALS WITH A DELAY CONDONATION PETITION BEFORE THE CIT(A). THE LEARNED CIT(A) HAS DISMISSED THE APPEALS FILED BY THE ASSESSEE ON THE GROUND THAT TH E ASSESSEE IS NOT ABLE TO SUBSTANTIATE THE REASONS FOR CONDONATION OF DELAY SPECIFICALLY POINTING OUT THAT THE ASSESSEE WAS DISCHARGED FROM THE HOSPITAL ON 12.2.2008 WHICH IS LONG BEFORE THE LAPSE OF APPEAL TIME ALLOWED FOR PREFERRING APPEAL BEFORE THE CI T(A). HE FURTHER SUBMITTED THAT TWO ASPECTS THAT WERE CONSIDERED BY THE ASSESSING OFFICER WERE BEING THE DISALLOWANCE OF EXPENSES ON AUTO FINANCE SERVICE AND DISALLOWANCE OF DEPRECIATION. THE ASSESSMENT ORDER IS APPARENTLY PASSED BY INVOKING THE PROVISIONS OF SECTION 144 OF THE I.T.ACT FOR NON - APPEARANCE OF ANYBODY ON BEHALF OF THE ASSESSEE. AS WAS ALREADY SUBMITTED AS THERE ARE DISPUTES BETWEEN THE ASSESSEES DIRECTOR IN - CHARGE OF TAXAT ION MATTERS AND OTHER DIRECTORS NO O THER PERSON PROSECUTED THE MATTER BEFORE THE ASSESSING OFFICER. ALL THESE ASPECTS RESULTED IN PASSING OF THE ASSESSMENT ORDER U/S.144 OF THE I.T. ACT AND PENALTY ORDER U/S.271(1 )(C) OF THE I.T.ACT. SOON AFTER RECOVERY FROM ILLNESS EVEN TO THE EXTENT ONLY THE DIRECTOR WHO IS IN CHARGE OF TAXATION MATTER S H AS IMMEDIATELY CONTACTED THE TAX ADVISOR AND FILED THE APPEALS BEFORE THE CIT(A) WITH DELAY CONDONATION PETITION. THEREFORE UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) OUGHT TO I.T.A.NOS.173 AND 174/CTK/ 2009 3 HAVE CONDONE D THE DELAY INSTEAD OF DISMISSING THEM FOR THE SIMPLE REASON THAT THE REASONS FOR DELAY ARE NOT SUBSTANTIATED BEFORE HIM. APART FROM THAT IN THE IMPUGNED ORDERS THERE IS NO CONSIDERATION OF THE DELAY IN FILING THE APPEAL AGAINST THE PENALTY ORD ER U/S.271(1)(C) AS IT IS HAVING DELAY OF ONLY ONE DAY. EVEN THIS ASPECT WAS NOT ADVERTED BY THE LEARNED CIT(A) IN THE IMPUGNED ORDER. HE SIMPLY PASSED THE ORDER IN APPEALS OBSERVING THAT THE ASSESSEE DID NOT SUBSTANTIATE THE REASONS FOR DELAY CONDONATION. HENCE THE LEARNED AR OF THE ASSESSEE HAS SOUGHT FOR RELIEF OF CONDONATION OF DELAY OCCURRED IN FILING THE APPEALS BEFORE THE LEARNED CIT(A) AND ADJUDICATE THE ISSUES IN PARTICULAR ON MERITS. 4. CONTRARY TO THIS THE LEARNED DR HAS OPPOSED THE PRAYER OF T HE ASSESSEE FOR CONDONATION OF DELAY STATING THAT THE ASSESSEE COULD NOT SUBSTANTIATE THE REASONS SHOWN BY IT FOR CONDONATION OF DELAY IN FILING THE APPEALS BEFORE THE LEARNED CIT(A) THE IMPUGNED ORDERS PASSED BY THE LEARNED CIT(A) I S VERY MUCH RIGHT AND SUBMISSIONS OF THE ASSESSEE DESERVES TO BE REJECTED OUTRIGHT. THE CALLOUSNESS OF THE ASSESSEE AS EVIDENT FROM THE ASSESSMENT ORDER AND PENALTY ORDER ITSELF AS NONE APPEARED BEFORE THE ASSESSING OFFICER IN THOSE TWO PROCEEDINGS. THER EFORE THE ASSESSING OFFICER IS WELL WITHIN HIS POWERS IN INVOKING THE PROVISIONS OF SECTION 144 OF THE I.T.ACT IN PASSING THE ASSESSMENT ORDER. AS THE ASSESSEE FOUND TO HAVE NOT RESPONDED TO THE SHOW CAUSE NOTICE ISSUED U/S.271(1)(C) THE ASSESSING OFFICE R IS WELL WITHIN HIS POWERS INITIATING PROCEEDINGS AGAINST THE ASSESSEE AND IN PASSING THE PENALTY ORDER IN QUESTION AS THERE IS NO SUFFICIENT AND COGENT MATERIAL WAS PLACED BEFORE THE ASSESSING OFFICER BY THE ASSESSEE AGAINST THE SHOW - CAUSE NOTICE FOR LE VY OF PENALTY. IN THE FACTS AND CIRCUMSTANCES OF THE CASE MORE PARTICULARLY WHEN THE ASSESSEE ITSELF CLAIMS THAT THE PERSON CONCERNED WHO IS IN - CHARGE OF TAXATION MATTERS WAS I.T.A.NOS.173 AND 174/CTK/ 2009 4 DISCHARGED FROM THE HOSPITAL WELL BEFORE THE EXPIRATION OF THE APPEAL TIME ITSE LF DISCLOSES THE LAPSES ON THE PART OF THE ASSESSEE IN TAKING APT STEPS AT THE RELEVANT TIME AND FOR ITS LAPSES THE ASSESSEE HAS RIGHTLY REAPED THE CONSEQUENCE BY THE ORDERS OF THE ASSESSING OFFICER AS WELL AS THE CIT(A). EVEN BEFORE THE TRIBUNAL ALSO THER E IS NO FURTHER MATERIAL MADE OUT BY THE ASSESSEE SUBSTANTIATING THE REASONS FOR CONDONATION OF THE DELAY BEFORE THE CIT(A). IN THAT VIEW OF THE MATTER ON THE FACTS AND IN LAW THE PRAYER OF THE ASSESSEE TO CONDONE THE DELAY IN FILING THE APPEALS BEFORE T HE CIT(A) IS DEVOID OF MERITS AND HENCE RIGHTLY REJECTED BY THE CIT(A) . AS THERE IS NO INFIRMITY IN THE ORDERS PASSED BY THE LEARNED CIT(A) THE PRAYER OF THE ASSESSEE BEFORE THE TRIBUNAL ALSO DESERVES TO BE REJECTED. 5. ON CAREFUL ANALYSIS OF THE FACTS MADE AVAILABLE ON RECORD IN THE LIGHT OF T HE RIVAL SUBMISSIONS OF BOTH THE PARTIES IT IS NOTICED THAT THE DEPARTMENT IS NOT SAYING ANYTHING ABOUT THE GENUINENESS OF THE ILLNESS SUFFERED BY THE CONCERNED PERSON WHO WAS IN - CHARGE OF TAXATION MATTERS OF THE ASSESSEE. NOR IT WAS THE CASE OF THE DEPARTMENT THAT THERE ARE AMPLE ELIGIBLE QUALIFIED PERSONS WITH THE ASSESSEE TO PURSUE THE TAXATION MATTERS BEFORE THE CIT(A) IN THE ABSENCE OF THE PERSON IN - CHARGE OF TAXATION MATTERS. THE ONLY REASON SHOWN BY THE LEA RNED CIT(A) FOR REJECTING THE CONDONATION OF DELAY IS THAT THE PERSON WHO WAS ILL HAS NOT SIGNED IN THE CERTIFICATE AND SUCH SIGNATURE WAS NOT ATTESTED BY THE DOCTOR IN THE CERTIFICATE ISSUED BY THE DR. IT IS WELL KNOWN PRINCIPLE IN LAW THAT DUE TO TECHNICA L INFIRMITIES SUBSTANTIAL JUSTICE CANNOT BE DENIED TO THE DESERVING PERSON. KEEPING IN VIEW OF THIS BROADER PRINCIPLE IN MIND WE ARE OF THE CONSIDERED VIEW THAT THIS IS A FIT CASE WHERE THE LEARNED CIT(A) OUGHT TO HAVE CONDONED THE DELAY PLEADED BY THE AS SESSEE AND PASSED THE ORDERS ON THE BASIC ISSUES ON MERITS RAISED BEFORE HIM. WE THEREFORE FIND THAT THERE IS MERIT IN THE CONTENTION OF THE ASSESSEE FOR I.T.A.NOS.173 AND 174/CTK/ 2009 5 CONDONATION OF DELAY OCCURRED IN FILING THE APPEALS BEFORE THE LEARNED CIT(A). ACCORDINGLY THE ORDE R OF THE LEARNED CIT(A) HAVING BEEN PASSED ONLY ON THIS ASPECT BUT NOT ADVERTING TO THE MERITS OF THE ISSUES IS HEREBY SET ASIDE BY ALLOWING THE APPEALS OF THE ASSESSEE. SINCE THE ASSESSMENT ORDER WAS ALSO PASSED U/S.144 OF THE I.T.ACT WHICH CLEARLY SHOW S THAT THE ASSESSEE WAS NOT ABLE TO PARTICIPATE IN THE ASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER WITH NECESSARY MATERIAL TO THE SATISFACTION OF THE ASSESSING OFFICER WE ARE OF THE CONSIDERED VIEW THAT THESE TWO MATTERS ARE REQUIRED TO BE EXAMINE D BY THE ASSESSING OFFICER AFRESH BY GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE AND PASS NECESSARY CONSEQUENTIAL ORDER AS PER LAW. SINCE THE ASSESSMENT ORDER ITSELF IS SET ASIDE THE CONSEQUENTIAL PENALTY ORDER IS ALSO HEREBY SET ASIDE. THEREF ORE THE ASSESSING OFFICER IS AT LIBERTY TO TAKE RECOURSE TO PENALTY PROCEEDINGS PROVIDED IF HE FINDS ANY MATERIAL WHILE RE - DOING THE ASSESSMENT FOR INITIATING PENALTY PROCEEDINGS. HOWEVER THE ASSESSEE IS HEREBY DIRECTED TO COOPERATE WITH THE ASSESSING OF FICER FOR EARLY DISPOSAL OF THE MATTER BY HIM BY PRODUCING BEFORE HIM ALL THE NECESSARY MATERIALS REQUIRED BY HIM. 6. IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 19 TH JANUARY 2011 S D/ - S D/ - ( . . ) (K.K.GUPTA) ACCOUNTANT MEMBER. ( . . . ) (K.S.S.PRASAD RAO) JUDICIAL MEMBER. ( ) DATE: 15 TH FEBRUARY 2011 ( ) ( H.K.PADHEE ) SENIOR.PRIVATE SECRETARY. I.T.A.NOS.173 AND 174/CTK/ 2009 6 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : SRI RAM TOURS & TRAVELS ( P) LTD. N - 5/274 IRC VILLAGE NAYAPALLI BHUBANESWAR. 2 / THE RESPONDENT: ACIT CIRCLE 2(1) BHUBANESWAR 3 . / THE CIT 4 . ( )/ THE CIT(A) 5 . / DR CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY / BY ORDER [ ] SENIOR PRIVATE SECRETARY