Case Law Details
PMI Entertainment (India) Pvt. Ltd. Vs ACIT (ITAT Mumbai)
The recent ITAT Mumbai ruling in the case of PMI Entertainment (India) Pvt. Ltd. vs. ACIT has brought attention to the justifiability of filing a delayed appeal due to the unfortunate demise of the company’s director and Chartered Accountant (CA). The appeal, filed against the order of the Ld. Commissioner of Income-tax (Appeals)-4, Mumbai, for the assessment year 2013-14, raises significant grounds, including an ex-parte order and challenges to disallowances.
Detailed Analysis:
Ground No.1 – Ex-Parte Order:
The appellant contends that the Ld. CIT(A) erred in passing an ex-parte order without providing a reasonable opportunity for a hearing. The delay in filing the appeal, approximately 2100 days, is attributed to a change of address and the subsequent death of key personnel.
Ground No.2 – Condonation of Delay:
The appeal seeks condonation of the 2100-day delay, emphasizing the appellant’s lack of awareness regarding the ex-parte order due to changes in personnel and addresses. The affidavit details the timeline, including the death of the director and CA.
Ground No.3 – Disallowance of Tele Serial Rights Value:
Challenges are raised against the disallowance of the claim for the write-off of tele serial rights value, arguing that it follows the company’s accounting policy. The appellant asserts that the expenditure was not claimed or allowed in past assessment years.
Ground No.4 – Write Off of Advance Amount:
The appellant contests the addition made by the assessing officer for the write-off of an advance amount given for the production of the Tamil program “Akka Thangai” for a Tamil channel.
Condonation of Delay Granted by ITAT:
ITAT Mumbai, considering the circumstances, condones the delay in filing the appeal and admits it for adjudication. The death of the director and CA, along with address change complications, are deemed sufficient and bona fide reasons for the delay.
Restoration of Order:
On Ground No.1, the ITAT sets aside the order of the Ld. CIT(A) and restores the matter for a fresh decision, considering the appellant’s submissions.
Conclusion:
The ITAT Mumbai’s decision in the PMI Entertainment vs ACIT case highlights the importance of considering reasonable causes for filing delays in appeals. The unfortunate circumstances, including the death of key individuals and address-related issues, played a crucial role in the ITAT’s decision to condone the delay and restore the matter for a fresh decision. This case serves as a reminder of the complexities involved in legal proceedings and the need for a fair assessment of genuine challenges faced by appellants.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal has been filed by the assessee against order dated 20.06.2017 passed by the Ld. Commissioner of Income-tax (Appeals)-4, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2013-14, raising following grounds:
Ground No.1
“On the facts and circumstances of the case, the learned Commissioner of Income-tax (Appeals) -4, Mumbai erred in law in passing ex-parte (non-attendance) order without giving reasonable opportunity of being heard as your appellant has not received any notice of hearing due to change of address and the learned CIT (Appeals) passed the order without ascertaining that the notice of hearing has been served to your appellant.
Your appellant pray that non- restoration of appeal before CIT(Appeals) – IV, Mumbai will be against the principle of natural justice to your appellant.
Ground No. 2
On the facts and circumstances of the case, Your appellant plead that delay in filing of appeal by 2100 days approximately shall be condoned -parte order for the reason that your appellant was not aware of the ex passed as explained in the affidavit.
Your appellant hereby requests your honour to condone the delay in filing of this appeal considering the facts and circumstances causing such delay as mentioned in the Affidavit, duly signed by the director of your appellant, attached separately based on the principle of natural justice and the fairness of the law considering the extent by which the appellant may be affected.
GROUND NO 3
“On the facts and circumstances of the case, the learned Commissioner of Income-tax (Appeals)- 4, Mumbai, erred in law and in facts in sustaining the addition made by the assessing officer for disallowing the claim of write off of tele serial Rights Value’ in aggregate of Rs. 1,19,56,138 as per accounting policy followed by your appellant and without appreciating that this expenditure amount has not been claimed and allowed in the past assessment years”
GROUND No. 4
On the facts and circumstances of the case, the learned Commissioner of Income-tax (Appeals)- 4, Mumbai, erred in law and in facts in sustaining the addition made by the assessing officer for Rs. 126,332 being the write off of advance amount given to Mr. Prashant Jadhav for settlement of dues in connection with the production of “Tamil Programme ‘Akka Thangai’ for Tamil Channel”
2. At the outset, the Ld. Counsel for the assessee submitted that this appeal has been filed with a delay of 2100 days. The Ld. Counsel for the assessee referred to the affidavit filed by the Director of the assessee company. The contents of the affidavit are reproduced as under:
3. That aggrieved by the assessment order, the appeal was filed physically on 13th April 2016 with Commissioner of Income tax (Appeals) – 4 Mumbai. The E-filling of the appeal was then required and -filed electronically on hence the appeal was E04/06/2016 vide number acknowledgement187683201040616 and in the appeal memo form 35 filed electronically the accountant Mr Ashok Mishra’s email address ashokmishra43@gmail.com along with his telephone number 9821261990 was given as he was in charge of all the accounts and taxation related matters of the company in addition to the auditor and tax consultants CA Shri Shailesh Dave. Thus the Company had filed an – appeal with Commissioner of Income tax (Appeals) 4 Mumbai with the help of CA Shri Shailesh Dave.
4. THAT after the filing of appeal physically on 13th April 2016 but before electronically filing it on 04/06/2016 the director Shri Manish Patadia, who was running the business of the Company and affairs of the Company, expired on 4th May 2016.
5. THAT after the filing of appeal the Chartered Accountant Shri Shailesh Dave. Proprietor of firm M/s. S.B DAVE & CO. expired on 2nd March, 2017.
6. Thus after the death of director Shri Manish Patadia and also the death of Chartered Accountant Shri Shailesh Dave on 02/03/2017 in-charge of (copy of death certificate attached), Mr. Ashok Mishra was accounts, tax matters and all the communication with the income tax department. On 24th May 2017 Mr Ashok Mishra as an the accountant and authorised signatory submitted letter dated 24th May 2017 to the Income tax (Appeals) – 7 Commissioner of Mumbai and informed the notice of the change of address from OLD OFFICE ADDRESS of the company as mentioned in the appeal memo in form No.35 from Kartik Complex, Opp, Laxmi Industrial Estate, New Link Road, Andheri (W), Mumbai – 400053 to NEW OFFICE ADDRESS 55A Silver Astra, J. B. – Nagar, Andheri East, Mumbai 400059. It is not within my knowledge why the notice of change of address was submitted to Commissioner of – Income tax (Appeals) 7 Mumbai, instead of CIT (Appeals)-4, Mumbai. (copy attached).
7. That the change of address was wrongly submitted on 24th March, 2017 to CIT (Appeals)- 7 by Mr Ashok Mishra instead of submitting to CIT (Appeals)- 4, Mumbai with whom the Appeal was filed. On realising of address the error and to rectify the same another notice of change was submitted to CIT (Appeals)- 4, Mumbai, on 9th January, 2018 vide -filing letter dated 8th January, 2018 with attachment of e – acknowledgement of appeal to CIT (Appeals)4, Mumbai, notifying also the telephone number and email address of the director Mr Ajay Patadia (copy attached).
8. THAT for the assessment year 2009- 10 CA Bharat Kanabar filed appeal in Form no 35 against the assessment order on 24th April, 2023. After filing of appeal for assessment year 200910, on 25th April, 2023 it came to the notice of CA Bharat Kanabar from the Income Tax portal while log in to the appellant’s account that appeal for assessment year 2013-14 has been disposed off by CIT Appeals- 4 on 20th June, 2017 by passing ex-parte order and sustained addition of Rs. 1, 20,82,4 70. Thus the appeal that is disposed off on 20th June, 2017 came to the notice of the appellant on 25th April, 2023, i.e. approximately 2100 days after the order is passed.
9. THAT in the appellate order and grounds of decision received by the appellant on 25/04/2023 for order dated 20/06/2017 CIT (Appeals) has observed that: “After receipt of appeal memo in Form No.35, INS-51 was sent to the Assessing Officer on 07.06.2016 for response and CIT(A)-4/IT-45/ACIT‑ thereafter notice No.16(1)/201 6-17 dated 30.05.2017 fixing the hearing on 19.06.2017 was sent through RPAD at the address given by the Appellant. In compliance of notice, no one had attended the proceeding from Appellant’s side nor was any communication for adjournment. Therefore, it is found beyond doubt However, that the Appellant is not interested in prosecuting his appeal. appeal is decided on merits.” Thus hearing fixed on 19/06/2017 for – notice sent through RPAD, CIT (Appeals) 4 has formed the judgement on the very next day i.e. 20/06/2017 that due to non- attendance the thus Appellant is not interested in prosecuting his appeal and has passed the judgement against the assessee without giving proper and appellant. sufficient opportunity to the appellant.
10. It appears from the CIT (Appeals) -4 order that neither the appellant was informed of the hearing by phone call or through email as – appearing in form35 filed electronically. It also appears that CIT (Appeals) – 4 order was not emailed to the email address, as the order is silent and just speaks about the notice being sent to the office by RPAD and not by E- mail. The notice sent by the CIT (Appeals) – 4 was never received by the appellant as the address of the appellant had changed. Order if any sent to the appellant has also not been received by the appellant as the appellant is not aware about the address at which it -parte order was sent. Hence your appellant came to know of the ex recently on 25th of April 2023.
11. THAT it is not within the knowledge of the appellant that whether any communication or notice or order was sent to Mr Ashok Mishra whose email address is ashokmishra43@gmail.com was given by CA Shailesh Dave in the form 35 filed electronically and hence the appellant had no knowledge of any notice being sent or ex parte order being passed, if the same has been sent to Mr Ashok Mishra. The order is any case silent about it being sent on the e-mail address.
12. THAT on coming to the knowledge through the IT portal of the hurriedly passed ex- parte order and aggrieved by the order of CIT (Appeals), the Company decided to file an appeal before ITAT and plead – for delay in appeal filing before ITAT, as the exparte order was held against the Company by making huge disallowance of Rs. 1,20,82,4 70 without appreciating that this expenditure amount has not been claimed and allowed in the past assessment years, for the Ground that CIT (Appeals) was not justified in passing an ex-parte order.
13. That It is evident from the order under section 250 issued by the respected CIT (A) -4 Mumbai that the aforesaid disallowance which was contested for Rs. 1,20,82,4 70 has been wrongly confirmed and he – hurriedly passed exparte order dated 20/06/2017. It is evident from the ex-parte order of the CIT Appeals dated 20/06/2017 that the order was passed in haste without giving proper notice as also not following the principles of natural justice by making huge disallowance of Rs. 1,20,82,470.
14. THAT in view of the aforesaid reasons the filing of the appeal is delayed by approximately 2100 days from the passage of order but within 60 days of the receipt of the order. It is presumed that the order has been served at the wrong address but not through email to the appellant as the appellant do not have date of physically service of the order and the order passed electronically has come to the notice of the appellant on 25/04/2023.
15. THAT the appellant pray to this Hon’ble Bench of the Tribunal to condone the delay and admit the present appeal, ignoring the technicality and considering the substantial justice, as the delay is not caused by the negligence of the appellant.
16. THAT if the application of the appellant for condoning the delay is rejected, it would amount to legalise injustice on technical ground when the Tribunal is capable of removing injustice and to do justice. If the delay is not condoned, it would amount to legalising an illegal order which would result in unjust enrichment on the part of the State.”
3. We find that delay in filing the appeal has been caused due death of the Director of the assessee company as well as death of the Chartered Accountant who was dealing the matter of the assessee company. Further, the delay has also been due to appellate furnishing details of change of address to the wrong authority i.e. Commissioner of Income-tax (Appeals) by the accountant of the assessee company. In the circumstances, we are of the opinion that there is a sufficient and bona fide reason for filing the appeal with a delay of 2100 days. We are of the view that assessee has not benefiting in any manner by delaying the appeal.
In view of the aforesaid reason, we condone the delay in filing the appeal and admit the appeal for adjudication.
4. Before us, the Ld. Counsel for the assessee referred to Ground to No. 1 of the appeal and submitted that due reasons mentioned in the application for condonation of the appeal i.e. (i) due to death of the Director and Chartered Accountant dealing with the matter of the assessee company (ii) due to submission of the change of the address to wrong destination by the accountant , the assessee could not represent before the Ld. CIT(A) and therefore, he submitted that order of the Ld. CIT(A) may be restored back for deciding afresh.
5. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The assessee before us has submitted that due the death of the Director and also the death of the Chartered Accountant who was dealing with the company’s financial matters and also due to letter of change of address submitted to Commissioner (Appeals)-7, instead to the Commissioner (Appeals) -4 by the accountant, no representation could be made before the Ld. CIT(A). In our opinion, the assessee is prevented by sufficient reason in representing before the Ld. CIT(A). The Ld. CIT(A) has passed the impugned order without taking into consideration submission of the assessee. Before us, the Ld. Counsel for the assessee has given undertaking that he should comply all the notices issued by the Ld. CIT(A). In view of the above facts and circumstances, we feel it appropriate to set-aside the order of the Ld. CIT(A) and restore the matter back to him for deciding afresh after taking into consideration submission of the assessee. The ground No. 1 of the appeal of the assessee is accordingly allowed. The other ground on merit are rendered academic which are not required to adjudicate upon at this stage.
6. In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 03/11/2023.
