Itta/44/2020 Of M/S Annapurna Business Solutions v. The Deputy Commissioner Of Income Tax

IN THE HIGH COURT FOR THE STATE OF TELANGANAAT HYDERABAD WEDNESDAY,THE TWENTIETH DAY OF JANUARYTWO THOUSAND AND TWENTY ONE PRESENT THE HONOURABLE SRI JUSTICE [M.S.RAMACHANDRA RAO]AND THE HONOURABLE SRI [JUSTICE T.VINOD KUMAR] INCOME TAX TRIBUNAL [AL NO: ][44OF ][2020] (lnconre"fax Tribunal Appeal Uncler [Section ][260-A ][of ][the Incotne ][Tax ][Act, ][l96l ][against]the order of the [lncorne ][Tax ][Appellate ][Tribunal. llyderabatl ][Bench' ] [', ][Hyderabacl in]ITANo.g1iHydl20l6lorAssessrtentYear,20ll.12c.lated25-10-20t9pt.elemeclagainst the Ol'cler [of ][the ][Deputy ][Commissioner ][of ][Incotne ][Tax' ][Central ][Circle ][-3]Hvderabacl clated 3l-12-2015 [in ] [No' ][ ]['] Between: 6-3-866/A, [Maheshwarl][//s Annapurna [Business Solutions, ][Suit ][No ][40l' ]^[MCH [No]...APPELLANTiuiriii i't'lrfriv," [{ ][plunu, ][Besumpet, Hvderabad - ][500 ][01 ][6']AND The Deoutv commissioner [of lncome Tax, central ]-c^ilc!-e [- ][2(1 ][)' ][Aayakar Bhavan']il"po"i" [i'B ][siriirr. ][erir,""rbagh, ][Hvderabad ][- 500 ][004'] .,,RESPONDENT Counsel for the [Appellant: ] [A' ][V' ][A' ] Counsel for [the ][ResPondent: ][-] The Court [made ][the ][following: ] To 'THE HONOURABLE SI{T.JUSTICE [M'S'RAMACHANDRA ] AND 1'HE }IONOURABLE [JUSTICE T. ] I.T.T.A.No.44[of2020] JUDGMENT:[(Per ][Hon'ble ][Sri ][Justice ][M.S. ][Ramachandra Rao)] Heard leamed [counsel ][for ][appellant ][and ][Sri ][B'Narasimha]Sarma. learned [Special Senior Counsel ][for ][Central ][Taxes] It is stated by [counsel on ][either ][side that ][the ][issue ][raised ][in ][this]appeal is covered [by ][the ][judgment ][dt' ][l ][3-08-2020 ][in ][I'T'T'A ][No'20 ][of]:020 Therefbre fbr [rcasons ][alike, ][this ][appeal ][is ][also allorved; ][the]order [dt.25-10-2019 ][passed ][by ][the ][tncome ][Tax ][Appellatc]impugned Tribunal, Hyderabad [Bench ]['B' ][in ][I.T A'No'97 ][llHyd2016 is ][set ][aside;]and the matter [is ][remitted ][back ][to ][the ][said ][Tribunal ][for ][fresh]consideration in [terms ][of ][the ][judgment ][passed ][by ][this ][Court ][in]I.T.T.A.No.2O of [2020. ][No ][costs.] As a sequel, [miscellaneous ][petitions pending, ][if ][any, ][shall ][stand] closcd. Sd/.B.S.CHIRANJEEVIJorNr T2ijrRARSECTION ,TRUE l. The [Income ][Tax Appellate ][Tribunal' ][Hyderabad Bench ][' ] Hvtlerabad' ,r-:--r^ 1,r, "A.,rr.,,rr., iil;B$i,;y [Commissioner ][of ][lncome ][Tax',Central ][Circle-2(1)' ][Avakar]Bhawan' Opp: [L.B'staaiu*, ][notnttrbagh' ][Hyderabad-500004]. ;;i;';ii; [6fiin. ][v. ][n ][srnA ][xnirtxEvn' ][Advocate ][[oPUCl]4. Two [C.D.CoPies] HIGH COURTMSRJ & TVKJ DATED:2010112021 JUDGMENTITTA.No.44 ot 2020 '(01FEB2421q,o^y/\gvg'.:)PUlot ITTA AI,I-OWED AND I\4ATTEII IIEMITTED TO TRIBUNAL HONOURABLE SRI JUSTICE M.S.RAMACHANDRA RAOAND HONOURABLE SRT JUSTICE T.AMARNATH GOUD I.T.T.A. No.20 of2020 JUDGMENT: (Per Hon'ble Sri Justice M.S. Ramachandra Rao) This appeal is filed under Section 260A of the Income Tax Act,l96l (for short 'the Act') challenging the order dt.25-10-2019 inI.T.A.No.98/Hydl20l6 passed by the Income Tax Appellate Tribunal,Hyclerabad Branch 'A', Hyder.abad (for short 'the Tribunal,). 2. The appellant is an individual assessee under the Act. 3. A search and seizure rvas conducted in the case of the appellanton l6-09-2010, and a norice under Section 143(2) of the Act wasissued to the appellant for the Assessment Year 2011-12, as the dateof search fell within the said Assessment Year. 4. The assessee filed its retum of Income on 01-03-2010,declaring the total income of Rs.67,86,340/-. 5. During the course of scrutiny proceedings, theassessee/assessee's authorized representative appeared fiom time totime and a detailed reply was also filed on 05-01-2013 2. The appellant is an individual assessee under the Act. 3. A search and seizure rvas conducted in the case of the appellanton l6-09-2010, and a norice under Section 143(2) of the Act wasissued to the appellant for the Assessment Year 2011-12, as the dateof search fell within the said Assessment Year. 4. The assessee filed its retum of Income on 01-03-2010,declaring the total income of Rs.67,86,340/-. 5. During the course of scrutiny proceedings, theassessee/assessee's authorized representative appeared fiom time totime and a detailed reply was also filed on 05-01-2013 6. The Deputy Commissionet' of lncome'fax, Central Circle-3,Ilyderabad, the then Assessing Ofllcer, vide his order dt.30-03-2013,completed the assessnrent. The income returned r.vas the inconreassessed. No separate additions were made. 7 . Later, the Principal [Commissioner ][of ][Income ][Tax ][(Central)']issued [a ][show ][cause ][notice ][proposing ][to ][revise ][the]Hyderabad assessment in [terms ][of ][Section ] [63 ][of ][the ][Act'] 8. The Revisional [Authority, ][vide his ][show ][cause ][notice, ][proposed]to make an addition [of ][Rs.1,04,66,134/-, ][being the ][total ][value ][of ][gold]andsilverjewellery,foundduringthecourseofsearcl.tandseizureproceedings, as unexplained [investment ][in ][the hands ][of ][the ][Assessee']-fhe Revisional Authority opined that the assessee could not produceany docurnentary [evidence ][during the ][time ][of ][the ][original ][assessment]and that he was not [filing ][returns under ][the ][Wealth Tax ][Act, ][1957'] 9. In response to the said [notice, ][the ][assessee ][filed ][a ][detailed ][reply]on 12-01-2015. In [its reply, the ][assessee ][submitted that ][retums ][under]the Wealth Tax Act, [1957 wete ][filed ][in ][his ][individual ][capacity, ][and]also in the name of [T.Jagan ][Mohan Rao ][(HUF), ][T.Annapurna,]T.Nanda kishore & T.Saritha [(i.e. ][his ] [& ][family ][members) ][for ][the]Assessment Year 2011-12. [Further, personal ][affidavits ][ol ][his family]members were also enclosed to [the reply. ][Apan ][from ][that, ][detailed]statements of the [purchases made ][by his ][family ][members, ][both ][within]and outside India, were furnished. 10. It is contended by the appellant [that ][brushing aside ][the]submissions of the assessee, [the ][Revisional ][Authority ][cornpleted ][the]revision and passed an order under Section [263 ][ofthe ][Act on ][10-03-]2015 setting aside the well considered [order ][of ][the ][Assessing ][Officer']The Revisional Authority directed [the ][Assessing ][Officer to ][redo ][the] assessment [atter ]["making ][detailed enquiries and ][investigation"' ][He]was of the opinion [that the ][Assessing ][Olhcer ][ought ][to ][have ][nlade]'further enquiries', [before ][accepting ][the ][statements ][made ][by ][the]assessee at [the ][time ][of ][assessment' ][The Revisional ][Authority ][did ][not]consider [the ][separate ][retums ][under the ][Wealth Tax ][Act' ][1957 ][and ][the]affidavits [and other material ][filed ][by ][the ][family ][members ][of ][the]assessee. I l. The Assessing [Officer, ][vide ][his order ][dt'31-12-2015' ][completed]the assessment [once again, ][under ][Section ][143(3) ][r/w ][263 ][of ][the ][Act, ][in]tune with [the order ][of ][the ][Revisional ][Authority'] 12. Questioning [the ][order ][of the ][Revisional ][Authority]dt.l0-03-2015, [an ][appeal ][was ][filed ][before ][the ][Tribunal ][by ][the]assessee/appellant [on ][29-01 ][-201 ][6'] 13. The [assessee ][contends that ][he approached ][his counsel ][only ][after]the receipt [ofthe ][consequential order ][passed ][by ][the Assessing ][Officer]on 31-12-2015; [that he ][was ][under ][abonafid'e ][but ][erroneous ][view ][that]an appeal to [be ][filed ][challenging ][only ][the consequential order ][and ][not]to the Revisional [Order; ][and ][that ][only ][after ][he approached ][his counsel']it was realized [that ][an appeal ][ought ][to ][have ][been ][filed ][challenging ][the]Revision Authority's [order ][dt' ][l0-3-201 ][5 ][also'] 12. Questioning [the ][order ][of the ][Revisional ][Authority]dt.l0-03-2015, [an ][appeal ][was ][filed ][before ][the ][Tribunal ][by ][the]assessee/appellant [on ][29-01 ][-201 ][6'] 13. The [assessee ][contends that ][he approached ][his counsel ][only ][after]the receipt [ofthe ][consequential order ][passed ][by ][the Assessing ][Officer]on 31-12-2015; [that he ][was ][under ][abonafid'e ][but ][erroneous ][view ][that]an appeal to [be ][filed ][challenging ][only ][the consequential order ][and ][not]to the Revisional [Order; ][and ][that ][only ][after ][he approached ][his counsel']it was realized [that ][an appeal ][ought ][to ][have ][been ][filed ][challenging ][the]Revision Authority's [order ][dt' ][l0-3-201 ][5 ][also'] |4.SotheITTAwasfiledwithadelayofl54daysbeforetheTribunal on [29-01-2016, ][along ][with ][a ][petition to ][condone the ][delay ][in]the [same ][under ][sec.5 ][of ][the ][Limitation ][Act' ][1963']tiling 15. The Tribunal,- by [the ][impugned ][order ][dt.25-10-2019 ][in]I.T.A.No.98/Hydl2016 dismissed [the ][appeal ][on ][the ][ground ][that]assessee failed to establish [that ][it ][was prevented ][by ][a ][sufficient ][cause]lbr not liling the appeal in time. 16. Chaltenging the same, the instant [appeal ][is ][filed.] 17. Learned counsel for appellant contended that [the ][Tribunal ][erred]in not condoning the delay of 154 days in filing the appealI.T.A.No.98/Hydl20l6 before the Tribunal; that the assessee wasunder the bona fide impression that the appeal is required to be filedchallenging only the consequential order dt.31-12-2015 and notagainst the Revisional Order dt.10-03-2015; and only after theassessee approached the counsel, the appellant was advised that it wasnecessary to challenge the Revisional Authority order also, and thusthe delay of 154 days in flrling the appeal occurred. 18. Learned counsel for appellant also contended that the Tribunalered in holding that the explanation offered by the assessee lbr thedelay in filing the appeal was not bonafide. 19. Sri B.Narasimha Sarma, learned Senior Special Counsel tbrCentral Taxes appearing for respondents, however, supported theorder passed by the Tribunal, and contended that the Tribunal wasjustified in rejecting the application for condonation ofdelay. 20. We have noted the contentions of both sides. 21. The reasoning assigned by the assessee lor not preferring theappeal within the period of limitation to the Tribunal was that he rvasunder the mistaken impression that only the consequential orderpassed by the Assessing Officer on 3l-12-2015 was required to bechallenged and not the order dt.l0-03-2015 of the RevisionalAuthority, and that only after he consulted the Advocate, he realizedthe mistake and then challenged the order of the Revisional Authority. 22. The Tribunal took the view that the appellant ought to haveexplained why after receiving the order from the Revisional Authorityhe did not approach the Advocate, and held that he cannot say thatonly after he received the order of the Assessing Officer on 31-12-2015, he approached the Advocate. 23. In our opinion, this view is not reasonable for the reason thatthe assessee is an individual and may not be well versed in law. It isnot as if the appellant acted deliberately in not approaching theAdvocate after he received the order of the Revisional authority. 24. The Revisional Authority had remitted the matter back to theAssessing Officer to redo the exercise of assessment and the appellantcould very well be under the impression that the consequential orderof the Assessing Officer only required to be challenged and not theorder of the Revisional Authority. 25. The assessee is entitled to [question ]the order [passed ]by [the]Revisional Authority also on the [ground ]that [powers ]of [Revision] 23. In our opinion, this view is not reasonable for the reason thatthe assessee is an individual and may not be well versed in law. It isnot as if the appellant acted deliberately in not approaching theAdvocate after he received the order of the Revisional authority. 24. The Revisional Authority had remitted the matter back to theAssessing Officer to redo the exercise of assessment and the appellantcould very well be under the impression that the consequential orderof the Assessing Officer only required to be challenged and not theorder of the Revisional Authority. 25. The assessee is entitled to [question ]the order [passed ]by [the]Revisional Authority also on the [ground ]that [powers ]of [Revision] under section 263 [of ][the ][Act ][ought not ][to ][have ][been ][invoked ][in ][tl.re]facts and circumstances [of ][the ][case ][and ][contend before the Tribunal]that the order ofthe [Assessing ][Officer ][cannot ][be ][said to be ][prejudicial]to the interest of the [revenue even ][if ][it ][is erroneous ][particularly ][where]two views are possible. [The ][f'ribunal ][ought ][to ][have atleast imposed]some costs on the appellant [in ][the event ][it ][was ][of ][the opinion that ][the]said period of delay was not [properly ][explained ][in ][view ][of ][the]possible prejudice caused to the appellant if the appeal were to bedismissed . 26. The Supreme Court in N.Balakrishnan Vs. M.Krishnamurthyr has held that the primary function of a Court is toadjudicate the dispute between the parlies and to advance substantialj ustice; and that rules of limitation are not meant to destroy the rightof parties, but they are meant to see that pafties do not resoft todilatory tactics, but seek their remedy promptly. It held that there is no presumption that delay in approachingthe Court is always deliberate, and the words "sufficient cause,,under Section 5 of the Limitation Act should receive a liberalconstruction so as to advance substantial justice. It held that in every case of delay there can be some lapse onthe part of the litigant concemed, but that alone is not enough to turndown his plea and to shut the door against him; and if the explanationdoes not smack of mala fides or it is not put forth as part of a dilatory' ircss1 [r scc ]tz: strategy, the Court must show ufmost consideration to the suitor. Italso observed that iithe delayis deriberate, then the court shourd noraccept the explanation. It held that while condoning rhe delay, theCourl should compensate the opposite party with costs. 27. Applying the principles laid down in the above case to theinstant case, we are of the opinion that, in the facts and circumstancesof the case, the explanation for the delay offered by the appellantcannot be said to smack of malafides or that it was put fbrth as a partof a dilatory strategy, and therefore, the Tribunal ought to havecondoned the delay of said period of 154 days in filing the I.T.A. andtaken up the matter on merits. 28. Accordingly, the appeal is allowed; the order dt.25_10_2}lgpassed by the Tribunal in I.T.A.No.9S lHydl20l6 for the assessmenryear 201 l- l2 is set aside; the application for condonarion of delay infiling the said appeal stands allowed; and the said appeal is restor.ecl totrle ofthe Tribunal; and the Tribunal shall hear and decide the appealon merits in accordance with law. No costs. 29. Consequently, miscellaneous petitions, pending if any, shallstand closed. M-S. RAMACHANDRA RAO, J Date: 13-08-2020Vsv T.AMARNATH GOUD, J