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TMI Blog2017 (7) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... n law. - Decided in favour of assessee. - I.T.A. No.644 & 718/Mum/2015 - - - Dated:- 31-1-2017 - SHRI B.R. BASKARAN (ACCOUNTANT MEMBER), AND SHRI AMIT SHUKLA (JUDICIAL MEMBER) For The Appellant : Shri Viajy Mehta For The Respondent : Shri Alok Johri ORDER PER BENCH:- Both the appeals filed by the assessee relate to AY 2003-04. The appeal numbered as ITA 644/M/2015 relates to the quantum assessment proceedings and the other appeal relate to penalty proceedings. The assessee is challenging the orders passed by Ld CIT(A)-17, Mumbai in both the proceedings. 2. We shall first take up the appeal filed by the assessee challenging the order passed by Ld CIT(A) in quantum assessment proceedings. The assessee is challenging the decision of Ld CIT(A) in refusing to condone the delay of 141 days in filing appeal before him and also in confirming the addition made by the AO. 3. The Ld A.R submitted that the impugned assessment was reopened by the AO after expiry of four years from the end of the assessment year. He submitted that the original assessment was completed u/s 143(3) of the Act. He submitted that assessee s representative did not appear before the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) (Delay of 10 years) (c) Phoenix Mills Ltd Vs. ACIT (ITA No.6240/M/2007 dated 23-03- 2010)(Mum ITAT) which is upheld by Hon ble Bombay High Court, vide its order dated 09-12-2011 passed in ITA No.5596 of 2010. (Delay of 1358 days). The Ld A.R submitted that there was a delay of 141 days in filing appeal before Ld CIT(A) and the assessee was having sufficient cause for filing appeal belatedly before Ld CIT(A). Further, none of the facts submitted by the assessee for the delay was found to be wrong by the First appellate authority. Accordingly he submitted the Ld CIT(A) should have condoned the delay before proceeding to dispose of other grounds on merits. 7. The Ld D.R, on the contrary, strongly supported the decision of Ld CIT(A) in refusing to condone the delay. He submitted that the assessee did not appear before the AO and hence he was constrained to pass the assessment order to the best of his judgement. He further submitted that the reasons given by the assessee are self serving and are not supported by any document. He further submitted that Hon ble Supreme Court, in the case of Esha Bhattacharjee Vs. Managing Committee of Raghunathpur Nafar Academy and others (Civi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme Court has noted, in paragraph 12 of the order passed in the case of Esha Battacharjee (supra), the following observations made in the case of Balwant Singh (dead) V. Jagdish Singh and others :- 25. We may state that even if the term sufficient cause has to receive liberal construction, it must squarely fall with the concept of reasonable time and proper conduct of the party concerned. The purpose of introducing liberal construction normally is to introduce the concept of reasonableness as it is understood in its general connotation. 26. The law of limitation is a substantive law and has definite consequences on the right and obligation of a party to arise. These principles should be adhered to and applied appropriately depending upon the facts and circumstances of a given case. Once a valuable right has accrued in favour of one party as a result of the failure of the other party to explain the delay by showing sufficient cause and its own conduct, it will be unreasonable to take away that right on the mere asking of the applicant, particularly when the delay is directly a result of negligence, default or inaction of that party. Justice must be done to both p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f management. Only when the management received the notice for penalty proceedings, it came to know about the assessment order and then they searched for the assessment order and took steps to file the appeal through another Chartered Accountant. It is the case of the assessee that the authorized representative, who was originally authorized to appear before the AO, has failed to appear in the assessment proceedings and the same has resulted in passing of ex-parte order u/s 144 of the Act. It is also pertinent to note that the impugned assessment proceeding is a reopened assessment proceeding. 12. On a careful consideration of the reasons cited by the assessee, we are of the view that the same cannot be considered to be a concocted story or the explanation can be taken as unreasonable one. The fact that the main operations of the assessee are carried out at Vadodara and the fact that the assessment order has been served to the Head office located at Mumbai are not disputed. It is stated that the clerical staff who received the order has forwarded the same to the then Executive Director and it is stated that the said Executive Director has submitted resignation letter at that poi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould also apply to the instant case. 14. We shall now take up the issue of validity of reopening of assessment. The original assessment for the year under consideration was completed by the AO u/s 143(3) of the Act on 24.03.2006. Subsequently the AO has reopened the assessment by issuing notice u/s 148 of the Act on 19-03-2010. Admittedly the assessment has been reopened after expiry of four years from the end of the assessment year, i.e., AY 2003-04. The assessing officer has reopened the assessment on the reasoning that the assessee has claimed a loss of ₹ 2871.56 lakhs, being decrease in the value of stock, i.e., the opening and closing stock of products named Filter and Cane harvester remained the same and the assessee has claimed the loss by valuing them at a lower rate. 15. The contention of the assessee is that the assessee has fully disclosed the facts relating to valuation in the original assessment proceedings. Placing reliance on the first proviso to sec. 147 of the Act, the Ld A.R submitted that the assessing officer is entitled to reopen the assessment after expiry of four years from the end of the assessment year only if there is failure on the part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nued to treat the goods as Semi finished goods and the value has also been reduced from Semi finished goods only. 18. The assessee has further stated that the revised Accounting standard -2 became mandatory from AY 2003-04 and hence it had to revise its valuation policy of semi-finished goods, i.e., from the policy of valuing it at cost to the policy of valuing it at cost or market value whichever is less . We notice that the assessee has reported its original valuation policy in the Annual report relating to AY 2002-03 and the revised policy in the Annual report relating to AY 2003-04. The assessee has reduced the valuation of semi-finished goods by passing an accounting entry, i.e., by crediting the Stock and debiting the loss as material consumption . We further notice that the assessee has also offered explanation with regard to the above said claim by filing letter in response to the queries raised by the AO, meaning thereby, the assessing officer has asked specific queries in this matter and the assessee has also furnished its reply. We notice that the assessing officer did not disallow the claim in the original assessment proceedings. 19. We notice that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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