Abzony Safety Glass Ltd v. Commissioner Of Income Tax, Chandigarh

ITA No. 270 of 2010 IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ITA No. 270 of 2010 Date of Decision: 7.9.2010 Abzony Safety Glass Ltd. Versus Commissioner of Income Tax, Chandigarh. ...Appellant ...Respondent CORAM:HON’BLE MR. JUSTICE ADARSH KUMAR GOELHON’BLE MR. JUSTICE AJAY KUMAR MITTAL Present:Mr. D.K. Goyal, Advocate for Mr. Pankaj Jain, Advocate for the appellant.Mr. Pankaj Jain, Advocate for the appellant. AJAY KUMAR MITTAL, J. This appeal under Section 260A of the Income-tax Act,1961 (for short “the Act’”) has been filed by the assessee against theorder dated 29.5.2009, passed by the Income Tax Appellate Tribunal,Chandigarh Bench “A” Chandigarh, (in short “the Tribunal”) in ITA No.333/CHANDI/2009, in respect of assessment year 2003-2004. The assessee has claimed that following substantialquestions of law arise in this appeal:- “i)Whether on the true and correct interpretation of theprovisions of section 249, 250 of the Act the decisionof CIT (A) on merits can be interpreted as a“satisfaction for an admission of an appeal” filedbeyond the period prescribed?provisions of section 249, 250 of the Act the decisionof CIT (A) on merits can be interpreted as a“satisfaction for an admission of an appeal” filedbeyond the period prescribed? ii)Whether Tribunal in right in law by not assigning anyreasoning to the pleadings raised in pursuance to thegrounds of appeal? iii)Whether the assessment framed u/s 144 r.w.s. 153Ais valid and legal when the required information toform 'reason to believe' u/s 132 of the Act is lacking?iv)Whether on the true and correct interpretations of theprovisions of section 254 of the Act Tribunal has thepowers for interpreting adversely the order u/s 250 ofthe Act? v)Whether on the facts and circumstances of the caseTribunal order is sustainable since makingcontradictory decisions in the hands of differentpersons qua the same material for delay henceperverse in nature? vi)Whether on the facts and circumstances of the caseassessment order is sustainable since additions onaccount of unexplained bank deposits are basedupon surmises and conjecture since very wellexplainable? In order to mention on record a little backdrop how thisappeal came to be filed it is necessary to notice that on 13.2.2004 asearch under Section 132 was carried out at the residential premises ofthe directors of the appellant, namely, Arun Ummat and SangfeetaUmmat. While conducting a survey under Section 133A of the Act atthe business premises of the assessee certain books of accounts and other records concerning the business were seized. As per appellant’scase, a term loan in the sum of Rs. 665 lacs had been sanctioned in itsfavour, by the Haryana State Industrial Development Corporation Ltd.(HSIDC) out of which a sum of Rs. 421 lacs was paid and the remainingwas cancelled as there was some dispute between the two sides overthe terms for the release of the loan against the sanctioned terms andconditions. During the course of assessment proceedings, it wasintimated that Arun Ummat i.e. the Director of the appellant-companywas not in a medically fit condition to attend the proceedings. Theassessment was completed under Section 144 read with Section 153Aof the Act at an amount of Rs. 24,99,000/- on protective basis, videorder dated 6.3.2006 (Annexure P-2). The said addition was made onaccount of unexplained bank deposits. The reason for framingassessment under Section 144 of the Act is discerned from thefollowing observations recorded in the assessment order:- “Notice u/s 153A of the I.T. Act, 1961 was issued on19.8.2005 which was duly served upon the assesseeon 20.8.2005 requiring the assessee to file return forthe assessment year 2003-04 within a period of 30days from the date of receipt of the notice u/s 153A.The assessee, however, did not file the return withinthe time allowed in the said notice. As no return wasfiled, notice u/s 142(1) was issued on 3.11.2005along with a detailed questionnaire. The case wasfixed for 23.11.2005, Sh. Arun Ummat, ManagingDirector of the assessee company appeared and requested for adjournment. The case was adjournedto 5.12.2005. On 5.12.2005, neither any return wasfiled nor anybody appeared. Another opportunity of being heard was afforded toassessee through a notice u/s 142(1) of the I.T. Act,1961 dated 6.12.2005 along with a detailed letterspecifying the broad lines on which assessment wasproposed to be framed. The case was fixed for27.12.2005. On 27.12.2005, neither the assesseenor any written reply was filed. A further opportunity of being heard was provided tothe assessee fixing the hearing on 16.1.2006. Asthis notice too remained uncoupled with, freshopportunities were given fixing the hearing on31.1.2006 and 3.3.2006 which too evoked noresponse. The above sequence of events clearly show that theassessee has no intention of complying with thenotices issued to it for filing return of income and getthe assessment proceedings finalized. Therefore, inview of circumstance explained above and in theabsence of any specific reply to the points raised inthe questionnaire, I am left with no other alternativebut to frame the assessment u/s 144 read withsection 153A to the best of my judgment on thematerial and information available on record.” This order was challenged by the assessee by filing appealbefore the Commissioner of Income-tax (Appeals) {in short “CIT(A)”}.Since the appeal was filed after 923 days of the expiry of period oflimitation, an application for condonation of delay was also filed. TheCIT(A) dismissed the application for condonation of delay anddismissed the appeal on merits as well, vide order dated 2.2.2009(Annexure P-5). The appellant preferred second appeal before the Tribunal.The Tribunal also dismissed the appeal of the assessee-appellant, videorder dated 29.5.2009, Annexure A-7. We have heard learned counsel for the appellant and havealso perused the record. There was a colossal delay of 923 days, or in other words,of two years and about ten months in preferring appeal before the CIT(A) by the assessee. The grounds for delay were examined and did notfind favour with CIT(A) which came to the conclusion that no sufficientcause was made out for condonation of delay. Hence, the delay was notcondoned. The CIT (A), however, proceeded to consider the merits ofthe appeal as well and accordingly dismissed the same holding it to bedevoid of any force by observing as under:- “I have considered the issue in hand. I have deleted theaddition of Rs. 24,99,000/- in the case of Sh. Arun Ummat,Director in the A.Y. 03-04 vide my appellate order dated2.2.2009 in Appeal No. 102/08-09. In my opinion, theaddition should be made on substantive basis in the hands of the Company as the Company is an independentassessee. Whatever deposits have been found in the bankaccount of assessee Company, the same are to beexplained by the company. Even though the assessee issingle handedly managing the affairs, yet the shares of theCompany are held by other share holders also. Therefore,Company becomes independent entity. Thus, this groundof the assessee is dismissed.” When the matter came up for consideration before theTribunal, the order of CIT(A) was upheld. The Tribunal has upheld thatthere was no sufficient ground established before CIT (A) forcondonation of delay in filing the appeal. of the Company as the Company is an independentassessee. Whatever deposits have been found in the bankaccount of assessee Company, the same are to beexplained by the company. Even though the assessee issingle handedly managing the affairs, yet the shares of theCompany are held by other share holders also. Therefore,Company becomes independent entity. Thus, this groundof the assessee is dismissed.” When the matter came up for consideration before theTribunal, the order of CIT(A) was upheld. The Tribunal has upheld thatthere was no sufficient ground established before CIT (A) forcondonation of delay in filing the appeal. Before us also, the counsel for the assessee re-iterated thesubmissions that were raised before the authorities below. But nosatisfactory cause, not to speak of sufficient cause, has been shown bythe assessee that may persuade this Court to differ with the conclusionarrived at by the said authorities. The sole contention on the strength ofwhich the assessee wants this Court to condone the delay, is that theassessee had not been keeping well and hence, he could not pursueand attend the assessment proceedings and file the appeal within timebefore CIT (A). But this Court is not convinced with the assertion of theassessee, especially when the assessee had not been able to fortify theabove cause. The plea of the assessee has not been accepted to bebonafide. Further, the order of the Assessing Officer also clearly showsthat the assessee had not been cooperative in getting the assessmentfinalized and had not even filed the return. The assessee had not been ITA No. 270 of 2010 appearing and answering to the questionnaire issued by the AssessingOfficer. Thus, in the facts and circumstances, the prayer of theassessee for condonation of delay is without any merit. Moreover,sufficiency or insufficiency of the reason would not constitute anysubstantial question of law and decision of such a question woulddepend upon the facts and circumstances of each case. As regards the other questions claimed to be the questionsof law, enumerated in the grounds of appeal, the same do not arise inthis appeal from the order of the Tribunal. In view of the above, the appeal is dismissed. (AJAY KUMAR MITTAL) JUDGE September 7, 2010rkmalik/gbs (ADARSH KUMAR GOEL) JUDGE