M/S. FOURESS ENGG. (INDIA) LTD, MUMBAI v. THE ITO 5(1),

ITA 5691/MUM/2007 | 1999-2000
Pronouncement Date: 12-02-2010 | Result: Allowed

Appeal Details

RSA Number 569119914 RSA 2007
Assessee PAN AAACF0026F
Bench Mumbai
Appeal Number ITA 5691/MUM/2007
Duration Of Justice 2 year(s) 5 month(s) 11 day(s)
Appellant M/S. FOURESS ENGG. (INDIA) LTD, MUMBAI
Respondent THE ITO 5(1),
Appeal Type Income Tax Appeal
Pronouncement Date 12-02-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted K
Tribunal Order Date 12-02-2010
Date Of Final Hearing 03-02-2010
Next Hearing Date 03-02-2010
Assessment Year 1999-2000
Appeal Filed On 31-08-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI K BENCH MUMBAI BEFORE SHRI PRAMOD KUMAR (ACCOUNTANT MEMBER) AND SHRI V.D. RAO (JUDICIAL MEMBER) ITA NO.5691/MUM./2007 ASSESSMENT YEAR : 1999-2000 DATE OF HEARING 3.2.2010 FOURESS ENGINEERING (I) LTD. MAHALAXMI CHAMBERS BHULABHAI DESAI ROAD MUMBAI 400 026 PAN AAACF0026F .. APPELLANT VS INCOME TAX OFFICER 5(1) MUMBAI RESPONDENT APPELLANT BY : SHRI K. SHIVRAM RESPONDENT BY : SHRI DEEPAK SUTARIA O R D E R PER PRAMOD KUMAR A.M. BY WAY OF THIS APPEAL THE ASSESSEE HAS CALLED INTO QUESTION CORRECTNESS OF LD. COMMISSIONER (APPEALS)S ORDER D ATED 5 TH MARCH 2007 FOR ASSESSMENT YEAR 1999-2000 IN THE MATTER OF RECTIFI CATION U/S 154 OF THE INCOME TAX ACT 1961 (FOR SHORT THE ACT ). ITA NO.5691/MUM./2007 FOURESS ENGINNERING (I) LTD. [2] 2. THIS APPEAL IS DELAYED BY HUNDRED DAYS. THE ASSE SSEE HAS MOVED A CONDONATION PETITION POINTING OUT THAT THE DELAY WA S CAUSED DUE TO INADVERTENT MISTAKE ON THE PART OF ONE MRS. PRACHI TAWADE AN EMPLOYEE OF THE TAX CONSULTANT. IT IS SUBMITTED THAT THE APPELLATE ORDER WAS SENT BY THE ASSESSEE BY FAX TO THE CHARTERED ACCOUNTANT BUT MRS. TAWADE MISPLACED THE FACTS AND AS A RESULT OF WHICH FILING OF APPEAL WAS DELAYED. IT IS ALSO SUBMITTED THAT AS SO ON AS THE MISTAKE WAS REALIZED THE APPEAL WAS DULY FILED AND THAT THE DELAY WAS NEITHE R DELIBERATE NOR WITH ANY MALICIOUS INTENTION. IT IS SUBMITTED THAT IT IS A BONAFIDE MI STAKE IN THE CIRCUMSTANCES WAS BEYOND THE CONTROL OF THE APPELLANT. LEARNED COUNSEL FOR T HE ASSESSEE RELIED UPON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF N. BALA KRISHNAN VS M. KRISHNAMURTHY (1998) 7 SCC 123 STATE OF NAGALAND VS LIPOK AO (20 05) 183 ELT 337 (SC) COLLECTOR LAND ACQUISITION VS MST. KATIJI & ORS (1987) 167 IT R 471 (SC) AND THE DECISION OF THIS TRIBUNAL IN THE CASE OF ANGELA J. KAZI VS ITO (2006 ) 10 SOT 139 (MUM.). 3. LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHE R HAND VEHEMENTLY OPPOSED THE CONDONATION PETITION AND SUBMITTED THAT THE FIL ING OF THE APPEAL IS NOTHING MORE THAN AFTER THOUGHT. WE WERE THUS URGED TO REJECT THE C ONDONATION PETITION. 4. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED THE APPLICABLE LEGAL POSITION AS ALSO TH E FACTUAL MATRIX OF THE CASE. WE ARE OF THE CONSIDERED VIEW THAT THAT IN THE FACTS AND CIRC UMSTANCES OF THE CASE THE DELAY INDEED DESERVES TO BE CONDONED AS THE ASSESSEE HAS GIVEN A REASONABLE EXPLANATION FOR THE SAME WITH WHICH WE ARE SATISFIED. WE ACCOR DINGLY CONDONE THE DELAY AND PROCEED TO DECIDE THE APPEAL ON MERIT. ITA NO.5691/MUM./2007 FOURESS ENGINNERING (I) LTD. [3] 5. ON MERITS THE SHORT GRIEVANCE OF THE ASSESSEE I S THAT THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.29 64 715/- U/S 43B R /W 154 OF THE ACT BY WAY OF RECTIFICATION OF MISTAKE ALLEGED TO BE APPARENT ON RECORD. 6. THE RELEVANT MATERIAL FACTS ARE LIKE THIS. THE A SSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING INDUSTRIAL ENGINEERIN G GOODS AND IS ALSO ENGAGED IN TRADING OF SUCH INDUSTRIAL GOODS AS ALSO IN CIVIL C ONSTRUCTION. THE ASSESSEE HAD FILED RETURN OF INCOME ON 30 TH DECEMBER 1999 DECLARING TOTAL INCOME AT NIL WHICH WAS ASSESSED U/S 143 VIDE ORDER DATED 28 TH MARCH 2002 AT A TOTAL INCOME OF RS.1 96 64 200/-. IN THE COURSE OF ASSESSMENT SO FR AMED THE ASSESSING OFFICER HAD DISALLOWED RS.14 68 884/- IN RESPECT OF DELAYED PAY MENT OF PF AND ESIC CONTRIBUTIONS. THESE DISALLOWANCES WERE CARRIED IN APPEAL AND CONF IRMED BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL. 7. ON 5 TH JULY 2004 THE ASSESSING OFFICER FURTHER PASSED RE CTIFICATION ORDER U/S 154 STATING THAT THE DISALLOWANCE IN RESPECT OF DELAYED PAYMENTS OF PF/ESIC WAS NOT PROPERTY WORKED OUT IN THE ASSESSMENT ORDER AND THE SAME IS ACCORDINGLY RE-COMPUTED AS PER ANNEXURE TO THE SAID RECTIFICATION ORDER. IN THE ANNEXURE THE ASSESSING OFFICER TOOK NOTE OF THE CASES WHERE THE PAYMENTS WERE MADE AFTER THE DELAY IN RESPECT OF DIFFERENT PLANTS AND IN RESPECT OF EMPLOYERS CONTR IBUTION AND EMPLOYEES CONTRIBUTION FOR PF AND ESIC. THE AMOUNT SO COMPUTED WORKED OUT TO R S.44 33 379/- HAVING NOTED THAT THE AMOUNT WAS DISALLOWED BY THE ASSESSING OFFICER IN THE ORIGINAL PROCEEDINGS WAS ONLY RS.14 68 664/-. THE ASSESSING OFFICER PROCEEDE D TO DISALLOW THE BALANCE OF RS.29 64 715/-. AGGRIEVED BY THE RECTIFICATION ORDE R SO PASSED BY THE ASSESSING OFFICER ITA NO.5691/MUM./2007 FOURESS ENGINNERING (I) LTD. [4] THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE TH E LEARNED CIT(A). THE LEARNED CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY OB SERVING AS FOLLOWS:- 2.1 BEFORE ME IT IS CONTENDED THAT THE GROUNDS ON WHICH THE ASSESSING OFFICER HAS MADE FURTHER DISALLOWANCE ARE NOT IN AC CORDANCE WITH LAW. THE APPELLANT HAS RELIED UPON THE DECISIONS IN THE CASE OF ALLIED MOTORS PVT. LTD. AND KWALITY MILK FOODS LTD. 2.2 IN THE COURSE OF APPELLATE PROCEEDINGS ATTENTI ON OF THE LEARNED COUNSEL OF THE APPELLANT WAS BROUGHT TO THE FACT THAT THE A PPEAL HAS BEEN FILED LATE BY ALMOST 2 YEARS AND THAT THE ISSUE OF ALLOWABILITY U /S 43B HAS ALREADY BEEN ADJUDICATED UPON BY THE FIRST APPELLATE AUTHORITY. THE LD. COUNSEL HAS FILED DETAILED WRITTEN SUBMISSIONS GIVING THE REASONS FOR DELAY IN FILING OF THE APPEAL. IT HAS BEEN CONTENDED THAT THEY WERE UNDER THE BONAFID E BELIEF THAT THE ISSUE WAS ALREADY PENDING BEFORE ITAT AND THE DECISION OF HON BLE ITAT SHALL BE APPLICABLE TO THE FURTHER ADDITION MADE BY THE ASSESSING OFFIC ER BY INVOKING PROVISION OF SEC. 154. IT IS FURTHER CONTENDED THAT THEY HAVE BE EN ADVISED BY SENIOR COUNSEL THAT THIS IS AN ISSUE ON WHICH INDEPENDENT APPEAL I S NECESSARY. IT IS FOR THIS REASON THAT APPEAL HAS BEEN FILED LATE BY THEM. THE REASON GIVEN BY THE COUNSEL OF THE APPELLANT ARE PRIMA FACIE JUSTIFIED AND THE REFORE THE DELAY IS CONDONED. HOWEVER THE MATTER OF ALLOWABILITY OR OTHERWISE U/ S 43B CANNOT BE RE- ADJUDICATED. THE QUANTUM ENHANCEMENT UNDER THE ORDE R U/S 154 IS NOT BASED UPON ANY FRESH ISSUES WHICH CAN BE CONSIDERED AGAIN IN THE APPEAL. THE GROUND OF APPEAL ARE THEREFORE LIABLE TO REJECTION. THE AS SESSING OFFICER HAS ONLY CHANGED THE QUANTUM OF DISALLOWANCE. TO MY MIND THE POSITION OF LAW EMERGING FROM THE APPELLATE DECISION SHOULD BE APPLICABLE EV EN TO THE ADDITION MADE BY THE ASSESSING OFFICER IN THE ORDER U/S 154. THIS IS BECAUSE A PLAIN READING OF ORDER U/S 154 CLEARLY SUGGESTS THAT THE ASSESSING O FFICER IS ONLY CHANGING THE QUANTUM OF ADDITION AND IS DOING NOTING ELSE. THERE FORE I REFUSE TO RE-ADJUDICATE THE ISSUE AND DISMISS THE APPEAL. 8. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED THE APPLICABLE LEGAL POSITION AS ALSO TH E FACTUAL MATRIX OF THE CASE. THE SHORT QUESTION THAT WE REALLY NEED TO ADJUDICATE IN THIS APPEAL AT THE THRESHOLD IS WHETHER OR NOT THE DELAYED PAYMENT OF PF / ESIC CONTRIBUTION CAN BE SUBJECTED TO A DISALLOWANCE U/S 43B IN THE COURSE OF RECTIFICATION PROCEEDINGS. NO DOUBT A CO-ORDINATE BENCH OF THIS TRIBUNAL HAS CONFIRMED SUCH DISALLOWANCE ON MERITS IN THE CASE OF ASSESSEE VIDE ORDER DATED 23 RD SEPTEMBER 2009 BUT SO FAR AS THE EMPLOYEES CONTR IBUTION TO PF / ESIC IS CONCERNED THE HONBLE DELHI HIGH COURT IN THE UNRE PORTED JUDGMENT DATED 23 RD ITA NO.5691/MUM./2007 FOURESS ENGINNERING (I) LTD. [5] DECEMBER 2009 IN THE CASE OF CIT VS AIMIL LTD. AS PUBLISHED IN THE WEBSITE WWW.ITATONLINE.ORG HAS HELD THAT EVEN EMPLOYEES CONTRIBUTION TO PF/E SIC PAID BEFORE THE DUE DATE OF FILING RETURN OF INCOME CANNOT BE D ISALLOWED U/S 43B. IN OTHER WORDS THEREFORE IN THE ESTEEMED VIEW OF THE HON'BLE DELH I HIGH COURT EVEN IF EMPLOYEES CONTRIBUTION TO PF IS PAID BEYOND THE DUE DATE BUT BEFORE THE FILING OF THE INCOME TAX RETURN DISALLOWANCE U/S 43B CANNOT BE RESTORED. AS FAR AS THE EMPLOYERS CONTRIBUTION IS CONCERNED THE ISSUE IS COVERED IN FAVOUR OF THE AS SESSEE IN ASSESSEES OWN CASE BY THE TRIBUNALS ORDER CITED SUPRA FOR ASSESSMENT YEA R 2000-01. IN THIS VIEW OF THE MATTER IT CANNOT BE SAID THAT THE IMPUGNED DISALLOWANCE MA DE BY WAY OF RECTIFICATION ORDER U/S 154 IS NOT CAPABLE OF ANOTHER VIEW BEING TAKEN. IT IS ONLY ELEMENTARY THAT CONNOTATION OF MISTAKE APPARENT FROM RECORD U/S 154 ARE CONFINED T O ONLY SUCH MISTAKES WHICH ARE GLARING OBVIOUSLY AND ON WHICH NO TWO VIEWS ARE POS SIBLE. IT WAS SO HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF ITO VS WOLKART BROS. 78 ITR 50. IN VIEW OF THESE DISCUSSIONS IT IS CLEAR THAT AS TO WHETHER THE DIS ALLOWANCE U/S 43B CAN BE INVOKED IN RESPECT OF PAYMENTS MADE FOR PF / ESIC AFTER THE DU E DATE BUT BEFORE FILING INCOME TAX RETURN CANNOT BE SUBJECT MATTER OF RECTIFICATION U/ S 154. THE PLEA RAISED BY THE ASSESSEE IS THUS INDEED CORRECT AND MEETS OUR APPROVAL. IT W AS NOT A FIT CASE BY ANY STRETCH OF LOGIC FOR RESORTING TO THE IMPUGNED DISALLOWANCE B Y INVOKING SECTION 154. AS REGARDS LEARNED DEPARTMENTAL REPRESENTATIVES PLEA THAT THE ISSUE OF DISALLOWANCE HAS ALREADY REACHED FINALITY AND THE IMPUGNED RECTIFICATION ORD ER IS IN RESPECT OF QUANTUM ALONE AND THEREFORE WE CANNOT AT THIS STAGE ADJUDICATE ON THE CORRECTNESS OR OTHERWISE A DISALLOWANCE PER-SE WE ARE UNABLE TO SEE LEGALLY S USTAINABLE MERITS IN THIS PLEA. THE ASSESSING OFFICER HAS MADE DISALLOWANCE BY WAY OF R ECTIFICATION ORDER AND THAT DISALLOWANCE IS TO BE EXAMINED BY US ON THE TOUCHST ONE OF APPLICABILITY OF LEGAL POSITION. MERELY BECAUSE THE SIMILARLY DISALLOWANCE HAS REACH ED FINALITY IN PAST CANNOT WORK AS ITA NO.5691/MUM./2007 FOURESS ENGINNERING (I) LTD. [6] AN ESTOPPEL AGAINST LAW. WHAT WE HAVE TO SEE IS LEG AL POSITION PREVAILING AS AT THE TIME OF OUR ADJUDICATION AND IF THAT LEGAL POSITION DOES NOT SUPPORT THE DISALLOWANCE THE RECTIFICATION ORDER BY WAY OF WHICH DISALLOWANCE HA S BEEN MADE CANNOT BE APPROVED EITHER. IN VIEW OF THE ABOVE DISCUSSION AND AS WE A RE DECIDING THE ISSUE ON MERITS OF RECTIFICATION ORDER WE NEED NOT ADDRESS OURSELVES TO THE OTHER ARGUMENTS SO STRENUOUSLY ADVANCED BY THE LEARNED COUNSEL. WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND DELETE THE ADDITION OF RS.29 64 715/- MA DE U/S 43B R/W 154 OF THE ACT BY WAY OF RECTIFICATION OF MISTAKE. 9. IN THE RESULT ASSESSEES APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT TODAY ON 12 TH DAY OF FEBRUARY 2010. SD/- (V.D. RAO) JUDICIAL MEMBER SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER MUMBAI; 12 TH DAY OF FEBRUARY 2010 COPIES OF THE ORDER FORWARDED TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT MUMBAI (4) CIT(A) MUMBAI (5) DR I BENCH (6) GUARD FILE TRUE COPY BY ORDER ETC. ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PRADEEP J. CHOWDHURY MUMBAI BENCHES SR. PRIVATE SECRETARY ITA NO.5691/MUM./2007 FOURESS ENGINNERING (I) LTD. [7] DATE INITIAL 1. DRAFT DICTATED ON 8.2.2010 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 9.2.2010 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 9.2.2010 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 9.2.2010 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 9.2.2010 SR.PS/PS 6. DATE OF PRONOUNCEMENT 12.2.2010 SR.PS 7. FILE SENT TO THE BENCH CLERK 22.2.2010 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER