Ramsunar Roll Steel Ltd.,, Mumbai vs Assessee

सुनवाई क तार ख/ Date of Hea ring : 07/04/2015 घोषणा क तार ख /Date o f Prono unceme nt: 24/04/2015

आदेश /O R D E R

PER: S. S. GODARA, JUDICIAL MEMBER

These two assessee's appeals for A.Y.1995-96, arise from different orders of CIT(A)-VI & CIT(A)-I, Baroda dated 25.09.2002 ITA Nos.1798/Ahd/2011 & 659/Ahd/2013 Ramsunar Roll Steel Ltd.

For A.Ys.1995-96 -2-

and 31.12.2012 respectively, in 'quantum' and penalty proceedings u/s.143(3) and Section 271(1)(c) of the Income Tax Act, in short 'the Act'.

2. The assessee's grounds in ITA No.1798 plead as under:

"1. The Ld. CIT(A) erred on facts and in law in dismissing appeal without hearing the appellant in as much as without serving the notice to the Court Receiver appointed by the Bombay High Court who had complete custody of records and assets of the appellant inspite of specific written request on 26/03/1999.

2. The Ld. CIT(A) erred on facts and in law in confirming addition of Rs.1,28,34,181/- on account of alleged unaccounted production and sale of CTD bars.

3. The Ld. CIT (A) erred on facts and in law in confirming addition of Rs. 5,09,533/- on account of alleged unaccounted sales of scrap.

4. The Ld CIT (A) erred on facts and in law in confirming addition of Rs.7,14,141/- on account of alleged payment of bogus labour payments.

5. The Ld. CIT (A) erred on facts and in law in confirming addition of Rs. 30,000/- on account of alleged bogus payment made to Mr Mina.

6. The Ld. CIT (A) erred on facts and in law in confirming addition of Rs.3,14,000/- on account of alleged bogus purchase/ expense of oil.

7. The Ld. CIT (A) erred on facts and in law in confirming addition of Rs. 2,19,990/- towards alleged unaccounted purchase.

8. The Ld. CIT (A) erred on facts and in law in confirming addition of Rs.2,07,792/- by treating revenue expenses incurred by the appellant to be as capital expenses.

9. Without prejudice to the above, the Ld. CIT (A) erred on facts and in law in confirming various disallowances and additions without pointing out any defects in the accounts maintained by the appellant and audited by independent chartered accountant.

10. The Ld. CIT(A) erred on facts and in law in confirming disallowance of Bank Interest of Rs.1,62,47,604/- u/s.438."

Similarly, its grounds in latter case challenge the CIT(A) order refusing condonation of delay thereby affirming Section 271(1)(c) penalty of Rs.68,22,030/-.

ITA Nos.1798/Ahd/2011 & 659/Ahd/2013 Ramsunar Roll Steel Ltd.

For A.Ys.1995-96 -3-

4. The former case file reveals that the CIT(A) has passed an ex- parte order under challenge confirming all the disallowance/additions made in the course of a regular assessment framed on 18.03.1998. The assessee has preferred the instant appeal on 14.07.2011 after delay of 3154 days in filing. The Assessing Officer; after framing the aforesaid 'regular' assessment, had imposed Section 271(1)(c) penalty in an ex-parte penalty order dated 30.04.2003. The assessee filed its appeal on 15.06.2011. The CIT(A) has dismissed the same without condoning a huge delay of more than seven years. The assessee has filed these two appeals in this backdrop of facts.

5. In the course of hearing, the assessee files an affidavit explaining the reasons of non-appearance in the instant quantum as well as 'penalty' proceedings before the lower authorities. Its solemn affirmations therein as under:

"I, the undersigned, MR. SANJIV KHANNA, son of MR. SRIKISHAN KHANNA presently residing at 10, BHAGWAN MANSION, BEHIND METRO CINEMA, CINEMA ROAD, MUMBAI-400 020, declare on oath as under:

1) M/s. Ramsunar Rollsteel Ltd. is a listed Company having its Registered Office at Village Allindra, Taluka Kalol, Dist.

Panchmahal, Gujarat, and that I am a Director of the Company since 1993 till December, 1995, as Court Receiver took over the company.

2. The company was engaged in the manufacture of CTD BARS and that on establishment, the manufacturing operations were conducted and operated upto the year 1995.

3) For the purpose of business of the Company, a borrowing was made from Central Bank of India, MARINE LINES BRANCH, MUMBAI in an amount of Rs.95 Lacs in the year 1993.

ITA Nos.1798/Ahd/2011 & 659/Ahd/2013 Ramsunar Roll Steel Ltd.

For A.Ys.1995-96 -4-

4) Sometime in the year, 1994 due to recession in the entire steel industries, the operations of the company were severely affected due to which the financial position of the Company had suffered severely making it impossible to carry out its day to day activities and also repay the debts due to the Bankers.

5) The Company defaulted in the payments to the Bank forcing the Bankers to approach the Hon'ble High Court of Judicature in the year 1994. The Hon'ble High Court was pleased to appoint the Court Receiver in the month of December, 1995 and since then the office premises as well as manufacturing premises came to be in the possession of the Court Receiver.

6) The Ld. Court Receiver subsequently transferred the assets to the Debt Recovery Tribunal.

7) It is during this period that the assessment proceedings for the A.Y. 1995-96 was taken up and due to the fact that all the records being in the possession of Court Receiver, the Company could not represent its case before the Ld. Assessing Officer.

8) The Company even submitted before the Income Tax Authorities that all the notices for conducting the tax proceedings be addressed to the Liquidator so as to enable proper presentation and that all the records being in his possession, it was not possible to represent the case.

9) The financial position of the Company was so bad that it had no resources to avail the services of any Counsel for representing its case.

10) During this period, the assessment order for the year under consideration was passed u/s. 143(3) on 18/03/1998 which was contested in appeal and due to its bad financial position, no presentation could be done before the Ld. CIT(A). In these circumstances, the order of the Ld. A. O. was confirmed by the Ld. CIT(A).

11) In the absence of the receipt of the order of the Ld. CIT(A) to the Company, no further appeal could be made. The order of the Ld. CIT(A) even if received at the Company by the Liquidator, was never received by the Company or any of its Directors.

12) Due to constant litigation with the Bankers as also proceedings for recovery by various creditors, the financial position of the Directors had also deteriorated substantially. The Deponent, in fact, started working as ASSISTANT MANAGER with a private firm from the year 1997/1998 at a salary of Rs. 15,000/- per month.

13) The above factors led to disturbances at the end of the Deponent and all the time and attention was focused on day to day survival, balancing between the pressures of the new employment as well as the litigations related to the Company.

ITA Nos.1798/Ahd/2011 & 659/Ahd/2013 Ramsunar Roll Steel Ltd.

For A.Ys.1995-96 -5-

14) Sometime in the year 2011, I started receiving the notices under Sec. 279 proposing the prosecution and only thereafter I pursued with the Ld. Assessing Officer and upon obtaining the relevant records filed an appeal to the Ld. CIT(A) on 15.06.2011 against the levy of penalty u/s.271(1)(c).

15) The appeal to the Ld. CIT(A) was filed on 15/06/2011 only upon obtaining the copies of the necessary records from the Ld. A.O. in the year 2011.

16) In the appeal proceedings, it was made known that the penalty order was actually served on me on 03/06/2003 and that the submissions made before the Ld. CIT(A) with respect to the non- receipt of the penalty order in time was found to be false and according to the Ld. CIT(A), no explanation for filing such false statement is given.

17) The Deponent has perused the copy of the Acknowledgement of the order served on it on 30/05/2003 (as enclosed) and confirms that the same is received my aunty Mrs. Khanna with whom I and my family do not share cordial relations, and hence because of the strained relations, the order never reached me. The relations between my family and aunty got worst, and as a result, we have separated out and my aunty has shifted her residence due to the division/problems in the family, and today our families are not in talking terms with each other.

18) I reconfirm that during the impugned period, I used to be constantly away from my house and remained in tremendous mental pressure due to continuing litigation and bad financial position. The order of penalty u/s. 271(1)(c), even if received at my residence, was never handed over to me and, therefore, the deposition made before the Ld. CIT(A) with respect to the reasons for late filing of the appeal is not false and are bonafide.

19) I reiterate that the above facts are true to the best of my knowledge and belief."

We notice from the paper book filed that the hon'ble Bombay high court had appointed a court receiver. The Tax Recovery Officer also appears to have initiated recovery/attachment proceedings against the assessee. The Revenue fails to controvert the assessee's solemn affidavit and the factual position stated hereinabove. In these circumstances, we are of the opinion that the assessee has been able ITA Nos.1798/Ahd/2011 & 659/Ahd/2013 Ramsunar Roll Steel Ltd.

For A.Ys.1995-96 -6-

to tender a reasonable explanation in not appearing in these quantum and penalty proceedings. We treat the very averments as valid for condonation of delay in both cases as well. Therefore, we accept its grounds for statistical purposes and direct the CIT(A) to re-examine the grounds raised in both cases afresh as per law. The assessee would be at liberty to place on record all necessary evidence in support of its grounds. A period of almost two decades has lapsed since the end of impugned A.Y.1995-96. It would be appreciated if the learned CIT(A) decides these two cases expeditiously.

7. Assessee's both appeals are allowed for statistical purpose.

Order pronounced in the open court on this the 24 day of April, 2015.

Sd/- Sd/- (G. D. AGARWAL) (S.S. GODARA) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 24/04/2015 Prabhat Kr. Kesarwani, Sr. P.S.s आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आयु त / Concerned CIT

4. आयकर आयु त(अपील) / The CIT(A)-III, Ahmedabad

5. वभागीय त न ध, आयकर अपील य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad

6. गाड फाईल / Guard file.

आदेशानुस ार / BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad