BRAHMAPUTRA CRACKER AND POLYMER LIMITED,LEPETKATA, DIBRUGARH V. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, DIBRUGARH, DIBRUGARH

ITA 139/GTY/2024

AI Insights

The case involves Brahmaputra Cracker and Polymer Limited (the appellant) contesting the decision of the Commissioner of Income Tax (Appeals), which disallowed the condonation of delay in filing an appeal against the assessment order for the assessment year 2016-17. The primary contention was the non-condonation of delay despite sufficient cause, including the illness and death of the advocate responsible for filing the appeal. The Tribunal found merit in the appellant's arguments, particularly noting the procedural lapses and the impact of the COVID-19 pandemic on the timely filing of the appeal. The Tribunal directed the CIT(A) to reconsider the appeal on its merits, emphasizing the need to adhere to principles of natural justice and the substantive provisions of the Income Tax Act.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 474515 (ITAT-GUWAHATI)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 12-11-2024
• Assessment Year: 2016-2017
• Appeal Filed On: 18-06-2024
• Other Referred Cases: Collector of Land Acquisition vs Mst. Kati Ji AIR 1987 SC 1353, Assistant Commissioner (CT) LTU, Kakinada & Ors. v. M/s Glaxo Smith Kline Consumer Health Care Limited 2020[36] G.S.T.L. 305
• Laws Referred To: Income Tax Act, 1961, Limitation Act, 1963
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KAUSIK RAY
• Assessee Lawyers: MAHABIR BAGARIA
• Keywords: Condonation of delay; Capital receipt; Principle of natural justice
• Section: 143(3); 43; 37(1)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL GUWAHATI BENCH, GUWAHATI (Through Virtual hearing at Kolkata) BEFORE SHRI MANOMOHAN DAS, JUDICIAL MEMBER AND SHRI RAKESH MISHRA, ACCOUNTANT MEMBER ITA No. 139/GTY/2024 Assessment Year: 2016-17 Brahmaputra Cracker and polymer limited, M/s BCPL, Project Site Office, A.T. Road, Lepetkatta Dibrugarh 786007, Assam, Dibrugarh, Assam 768006 Vs Asst. Commissioner of Income Tax, Circle-2, Dibrugarh, Pushkara House, NH-37, Natun Goan, P.O. Mohanaghat, Dibrugarh-786008, Assam (Appellant) (Respondent) PAN: AADCB2356E Present for: Appellant by : Shri Mahabir Bagaria, FCA Respondent by : Shri Kausik Ray, JCIT Date of Hearing : 12.11.2024 Date of Pronouncement : 27.11.2024 O R D E R PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the Ld. Commissioner of Income-tax (Appeals), ADDL/JCIT (A)-2, Chandigarh [hereinafter referred to as “the Ld. CIT (A)”] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2016-17 dated 29/03/2024, which has been passed against the assessment order u/s 143(3) of the Act, dated 22/12/2018. 2. The grounds of appeal raised by the assessee are reproduced as under: “1. On the facts and in the circumstances of the case and in law, the order of the Ld. ADDL/JCIT (A)-2 CHANDIGARH, CIT(A), NFAC, erroneously disallowed the condonation of delay, despite there being sufficient causes with the assessee for not filing the appeal in time as per section 249(2) of the Income Tax Act, 1961, which obstructed his action to file the appeal within the time limit. The cause for delay was beyond the control of the assessee rather than malafide, deliberate intention, negligence or inaction, preventing the timely filing of the appeal within the 30-day limit. Page | 2 ITA No.139/GTY/2024 Brahmaputra Cracker and Polymer limited; A.Y. 2016-17 2. On the facts and in the circumstances of the case and in law, the order of the Ld. ADDL/JCIT (A)-2 CHANDIGARH CIT(A), NFAC, erroneously disallowed the condonation of delay, disregarding the cogent and proper evidence enclosed as Annexure-3 evidencing the death of the its advocate who was entrusted for filing the appeal and entirely denying the principle of natural justice to the Appellant. 3. On the facts and in the circumstances of the case and in law, the order of the Ld. ADDL/JCIT (A)-2 CHANDIGARH CIT(A), NFAC, erroneously disallowed the condonation in filing the appeal without granting opportunity of being heard as requested vide written submission dated 24.03.2024 and thereby acted entirely against the principle of natural justice to the Appellant. 4. On the facts and in the circumstances of the case and in law, the order of the Ld. ADDL/JCIT (A)-2 CHANDIGARH CIT(A), NFAC, erroneously disallowed the condonation of delay, overlooking that the Income Tax Act, 1961, is a self-contained enactment and section 249(3) provides for condonation of delay at the discretion of the CIT(A), with sufficient cause for delay as envisaged in section 5 of the Limitation Act, 1963. 5. On the facts and in the circumstances of the case and in law, the order of the Ld. ADDL/JCIT (A)-2 CHANDIGARH CIT(A), NFAC, erroneously disallowed the condonation of delay, not appreciating that the term “sufficient cause” should be interpreted pragmatically in a justice-oriented approach rather than a technical detection of sufficient cause for explaining every day’s delay, as illustrated in the case of Collector of Land Acquisition vs Mst. Kati Ji AIR 1987 SC 1353. A pedantic approach should be avoided while dealing with an explanation of the delay, applying the doctrine in a rational and pragmatic manner. It is worth to mention here that the Honourable Apex Court suo moto excluded the period from 15.03.2020 till 28.02.2022. 6. On the facts and in the circumstances of the case and in law, the order of the Ld. ADDL/JCIT (A)-2 CHANDIGARH CIT(A), NFAC, erroneously disallowed the condonation of delay applying Apex Court Judgement in Assistant Commissioner (CT) LTU, Kakinada & Ors. v. M/s Glaxo Smith Kline Consumer Health Care Limited 2020[36] G.S.T.L. 305 where there is specific provision for codonation of delay up to one month only. 7. On the facts and in the circumstances of the case and in law, the order of the Ld. ADDL/JCIT (A)-2 CHANDIGARH CIT(A), NFAC, erroneously disallowed the condonation of delay, failing to consider the merits of important Grounds of Appeal filed with the CIT(A), NFAC, which are now being pleaded before the Hon’ble ITAT, GUWAHATI BENCH. 8. That the AO has erred on facts and in law in not appreciating that the business of the Appellant did not commence during the relevant assessment year, and accordingly, AO fell in to serious error in holding interest income of INR 3,88,15,027/- received out of Borrowed Funds temporarily placed in fixed deposits. prior to commissioning was income and not capital receipt. 9. The interest from short term deposits are inextricably linked with setting up of capital structure of assesses company for building up of Capital Page | 3 ITA No.139/GTY/2024 Brahmaputra Cracker and Polymer limited; A.Y. 2016-17 Assets. It must therefore be viewed as capital receipts going to reduce cost of construction. 10. That the AO has erred on facts and in law in not appreciating that the business of the Appellant did not commence during the relevant assessment year prior to 02.01.2016, and accordingly, AO fell in to serious error in holding interest income received amounting to INR 3,88,15,027/- prior to commissioning out of temporarily placed in fixed deposits was income and not capital receipt. 11. The interest from short term deposits are inextricably linked with setting up of capital structure of assesses company for building up of Capital Assets. It must therefore be viewed as capital receipts going to reduce cost of construction. 12. That the A.O has interpreted the judicial pronouncement in different ways ignoring the vital facts and holding the income as taxable as income from other sources. 13. Section 4 of the Income Tax Act says the chargeability is depending upon the substance of the transaction which is to be assessed by applying the taxing status under income tax Act. The authorities under the act are under obligation to act while ensuring that only due legitimate taxes are collected considering the concept of real income for taxability under the Income Tax Act, Judicial pronouncement of Supreme Court /High Court including Tribunal. Further, in appellants own case for A.Y. 2011- 12 to 2015-16, the hounarable ITAT, Guwahati, Bench vide order dated 22.10.2020 affirmed Appellant’s which is further affirmed by the Jurisdictional Gauhati High Court while disposing off the departmental appeals No ITA/15/2022, ITA/13/2022 and ITA/16/2022 against ITAT order dated 22.10.2020 14. That the AO has erred on facts and in law in not appreciating that the business of the Appellant did not commence during the relevant assessment year upto 01.01.2016, and accordingly, AO fell in to serious error in disallowing INR 3,69,21,000/-( Rs. 3,38,00,000/- up to FY 2014-15 and Rs.31,21,000/- for FY 2015- 16) voluntarily incurred under the head Corporate Social Responsibility claimed during FY 2015-16. 15. The impugned expenses of INR 3,69,21,000/-deductible u/s 37(1) and not covered by explanation 2 because these are not covered under the provision of Section 135 of the Companies Act, 2013 since the company was under construction stage and as such not obligated to incur CSR expenditure.”. 3. Rival contentions were heard and submission made have been examined. The main ground of appeal is regarding not condoning the delay in filing the appeal by the ld. CIT (A). It was argued by the ld. AR that the ld. CIT (A) did not condone the delay despite there being sufficient cause for the delay and the ld. AO Page | 4 ITA No.139/GTY/2024 Brahmaputra Cracker and Polymer limited; A.Y. 2016-17 had passed the order increasing the loss claimed on account of income from other sources received during the period of construction, which was claimed as a capital receipt and was added vide order u/s 143(3) dated 22.12.2018 and the order was received on 25.12.2018. As regards the delay, it was submitted that the assessment order was given to the advocate, who was ill and had expressed his inability to file the appeal in time. The advocate could not hand over the paper to the assessee and expired. Subsequently, the assessee’s wife approached the junior of the advocate during Covid period and received the file on 19.08.2020 and thereafter the appeal was filed on 25.11.2020, which is evident from the ld. CIT (A)’s order on page 43 to 45. The ld. AR also submitted that there was a delay of 681 days. The assessment order was received on 25.12.2018, and therefore, the due date for filing the appeal was 25.01.2019, but the same was filed on 23.11.2020, but the appeal was not admitted on account of delay, even though the submission of the assessee is discussed in the appeal order. It was also submitted that the case laws relied upon by the ld. CIT (A) were not applicable as under the Income- tax Act, 1961 (the Act), there is no such section which denies the condonation of delay if there is sufficient cause and the same is governed by the Limitation Act. The requisite documents were given to the ld. CIT (A) as well. The ld. AR submitted that the issue of interest and CSR expenses are in favour of the assessee on the basis of judicial pronouncements which enclosed at pages 381 to 429 of the second Paper Book. The ld. DR supported the order of the ld. CIT (A). 4. We have heard the ld. AR on the facts as mentioned above. The delay in filing the appeal was on account of delay at the end of the ld. advocate of the assessee, who subsequently expired as per Page | 5 ITA No.139/GTY/2024 Brahmaputra Cracker and Polymer limited; A.Y. 2016-17 the submission made by the ld. AR. Hence, there was sufficient cause and justification for the delay which ought to have been condoned by the ld. CIT (A). Hence, we hereby condone the delay in filing the appeal before the ld. CIT (A) and direct him to admit the appeal. The order of the ld. CIT (A) is remitted back to the file of the ld. CIT (A) as various grounds of appeal raised before him have not been decided on merits. The assessee shall furnish the requisite documents, evidence/ submission before the ld. CIT (A), who shall decide and adjudicate the grounds on the basis of evidences filed & in accordance with law. 5. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced as per Rule 34(4) of the Income Tax (Appellate The Tribunal) Rules, 1963 on 27th November, 2024. Sd/- Sd/- (MANOMOHAN DAS) (RAKESH MISHRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Kolkata, Dated 27.11.2024 *SS, Sr.Ps आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अिीिार्थी / The Appellant 2. प्रत्यर्थी / The Respondent 3. संबंतिि आयकर आयुक्त / Concerned Pr. CIT 4. आयकर आयुक्त ( अिीि ) / The CIT(A)- 5. तिभागीय प्रतितिति , अतिकरण अिीिीय आयकर , गुिाहाटी/DR,ITAT, Guwahati 6. गार्ड फाईि / Guard file. आदेशािुसार/ BY ORDER, TRUE COPY Sr. PS/ Assistant Registrar आयकर अिीिीय अतिकरण ITAT, Guwahati "