Maharashtra State Co.op. Credit Soc. Deposit Guarantee Corp. Ltd., Pune V. Income-tax Officer,

ITA 118/PUN/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88934 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-02-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 16-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Keywords: Bonafide belief; Condonation of delay
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIAL MEMBER ITA NOS.118 TO 120/PN/2014 ASSESSMENT YEARS: 2006-07 TO 2008-09 MAHARASHTRA STATE CO-OPERATIVE CREDIT SOCIETY DEPOSIT GUARANTEE CORPORATION LTD., SURAKSHA BHAVAN, PLOT NO.9, INDUSTRIAL ESTATE, GULTEKDI, PUNE 411037 . APPELLANT PAN: AABTM4090M VS. THE INCOME TAX OFFICER, WARD 11(1), PUNE . RESPONDENT APPELLANT BY : KISHORE PHADKE RESPONDENT BY : B.C.MALAKAR DATE OF HEARING : 04-02-2015 DATE OF PRONOUNCEMENT : 13-02-2015 ORDER PER SUSHMA CHOWLA, JM: THIS BUNCH OF THREE APPEALS FILED BY THE ASSESSEE ARE A GAINST SEPARATE ORDERS OF CIT(A)-I, PUNE, EVEN DATED 31.10.2013, RELATING TO ASSESSMENT YEARS 2006-07 TO 2008-09 AGAINST ORDERS P ASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961. 2. ALL THE APPEALS RELATING TO THE SAME ASSESSEE ON SIMILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS C ONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE ASSESSEE HAS RAISED PRELIMINARY ISSUE AGAINST THE D ISMISSAL OF APPEAL BY THE CIT(A) IN NOT CONDONING THE DELAY IN FURNIS HING THE APPEAL LATE BEFORE CIT(A). ITA NOS.118 TO 120/PN/2014 MAH STATE COOP CREDIT SOCIETY 2 4. THE BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE W AS A COOPERATIVE SOCIETY FORMED FOR THE PURPOSE OF GUARANTEEIN G TO DEPOSITS OF MEMBER CREDIT CO-OPERATIVE SOCIETIES. THE ASSESSEE SO CIETY WAS FORMED BY THE STATE GOVERNMENT OF MAHARASHTRA ON 21.07 .2003. MORE THAN 400 PATSANSTHAS I.E. COOPERATIVE CREDIT SOCIETIES WE RE THE MEMBERS OF THE ASSESSEE AND INITIAL CONTRIBUTIONS WERE COLLE CTED FROM THE VARIOUS MEMBERS ALONG WITH SUPPORT CONTRIBUTION FROM THE STATE GOVERNMENT FEDERATION WORKING IN THE FIELD OF CO-OPERATIVE SOCIETIES. THE MAJOR ACTIVITY OF THE ASSESSEE WAS TO PROVIDE CREDIT GUARANTEE TO THE SMALL DEPOSITORS OF THE VARIOUS COOPERATIVE CREDIT SOCIETIES. FOR THE SAME, THE ASSESSEE WAS REQUIRED TO GET THE APPROVAL FRO M INSURANCE REGULATORY AUTHORITY OF INDIA (IRDA) AND OTHER AUTHORITIES, WHICH WAS NOT RECEIVED BY THE ASSESSEE UPTO 31.03.2006. IN VIEW T HEREOF, THE COLLECTED CONTRIBUTIONS WERE INVESTED INTO GOVERNMENT BON DS / MUTUAL FUNDS AND FIXED DEPOSITS WITH OTHER COOPERATIVE SOCIETIES. THE ASSESSEE WAS TREATING THE SAID ACTIVITY OF PROVIDING CREDIT GUARANTEES AS BUSINESS OF BANKING. THE ASSESSING OFFICER REJECTING THE PLEA OF THE DEDUCTION UNDER SECTION 80P OF THE ACT TREATED THE REV ENUE FROM SALE OF UNITS AS A SEPARATE TAXABLE FUND AND WORKED OUT THE NET TAXABLE INCOME AT RS.95,77,140/- IN ASSESSMENT YEAR 2006-07. H OWEVER, THE ASSESSING OFFICER DID NOT SET OFF THE LOSS ON GOVERNMENT SE CURITIES AMOUNTING TO RS.214,17,311/- AGAINST THE GAIN FROM SALE OF UNITS. THE ASSESSMENT IN THE CASE WAS COMPLETED AND THE ASSE SSMENT ORDER WAS RECEIVED BY THE ASSESSEE ON 31.12.2008 RELATING TO A SSESSMENT YEAR 2006-07. THE ASSESSEE DID NOT FILE ANY APPEAL AGAIN ST THE ORDER OF ASSESSING OFFICER IN TIME AS HE WAS MADE TO UNDERSTAND THAT THERE WAS NO MERIT IN HIS CLAIM OF DEDUCTION UNDER SECTION 80P OF THE ACT. DURING THE PENALTY MATTER BEING TAKEN UP, THE ASSESSEE WAS MADE TO UNDERSTAND THAT THE QUANTUM WORKED OUT IN THE HANDS OF THE ASSESSEE ITA NOS.118 TO 120/PN/2014 MAH STATE COOP CREDIT SOCIETY 3 HAD SOME SERIOUS ERRORS IN ASSESSMENT YEAR 2006-07. P URSUANT THERETO, THE ASSESSEE FURNISHED THE APPEAL BEFORE THE CI T(A) AGAINST QUANTUM ORDER PASSED BY THE ASSESSING OFFICER. THE APP EAL FOR ASSESSMENT YEAR 2006-07 WAS FILED AFTER A DELAY OF 1178 D AYS. THE APPEAL RELATING TO ASSESSMENT YEAR 2007-08 WAS FILED AFTER A DELAY OF 821 DAYS AND THE APPEAL FOR ASSESSMENT YEAR 2008-09 W AS FILED AFTER A DELAY OF 726 DAYS. THE ASSESSEE MOVED A PETITION FOR CON DONATION OF DELAY IN FILING THE APPEAL BEFORE THE CIT(A). HOWEVER, THE SA ID PETITION FOR CONDONATION OF DELAY IN FILING THE APPEAL WAS REJECTED BY THE CIT(A), OBSERVING THAT THE CLAIMS OF THE ASSESSEE WERE DE VOID OF MERITS. ACCORDING TO THE CIT(A), THE ACT OF THE ASSESSEE SHOWS COMPLETE NEGLIGENCE AND IN-ACTION AND THE DELAY OF 1178 DAYS COULD HAVE BEEN AVOIDED BY EXERCISE OF DUE CARE AND ATTENTION TO THE MA TTERS. THE CIT(A) REJECTING THE APPLICATION FILED BY THE ASSESSEE OBSE RVED THAT THE REASONS ATTRIBUTED BY THE ASSESSEE FOR THE DELAY OF 117 8 DAYS IN FILING THE APPEAL I.E. MISTAKEN BELIEF THAT THE DEDUCTION UNDER SEC TION 80P OF THE ACT WAS NOT AVAILABLE TO THE ASSESSEE, WERE NOT SUFFIC IENT AND GOOD REASONS. CONSEQUENTLY, THE APPEAL WAS DISMISSED IN LIMINE . IT IS FURTHER OBSERVED BY THE CIT(A) THAT THE GROUND OF APPEA L NO.1 RELATES TO DISALLOWANCE OF DEDUCTION CLAIMED UNDER SECTION 80P OF TH E ACT AND SINCE THE APPEAL WAS NOT ADMITTED ON THE GROUND OF LIMITAT ION, THE SAID GROUND WAS NOT CONSIDERED NECESSARY FOR ADJUDICATION. 5. THE ASSESSEE IS IN APPEAL AGAINST THE SAID ORDER OF CIT(A). 6. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE POINTED OUT THAT THE ASSESSEE HAD COLLECTED MONEY FROM SMALL SIZE , MEDIUM SIZE CREDIT SOCIETIES AND ALSO APPLIED FOR APPROVAL FROM IRDA AUTHORITIES. HOWEVER, THE SAID APPROVAL DID NOT COME TO T HE ASSESSEE, EVENTUALLY, THE ASSESSEE SOCIETY WAS NOT PERMITTED TO E XTEND CREDIT ITA NOS.118 TO 120/PN/2014 MAH STATE COOP CREDIT SOCIETY 4 GUARANTEES AS AN ASSURANCE TO THE DIFFERENT COOPERATIVE CREDIT SOCIETIES. THUS, THE DECISION WAS TAKEN TO ABANDON THE P ROJECT. HOWEVER, SINCE LARGE PARTS OF FUNDS WERE LOCKED UP WITH SU VARNA SAHAKARI BANK LTD. WHICH REMAINED IN LIQUIDATION BETWEEN TH E YEARS 2006 TO 2009, THE ASSESSEE WAS NOT WOUND UP. HOWEVE R, BECAUSE OF THE DECISION OF ABANDONING THE ACTIVITY, THE STAFF WAS CURTA ILED AND EXPENSES WERE MINIMIZED. IN VIEW THEREOF, THERE WAS DEFAULT IN COMPLIANCE TO VARIOUS ACTS AND DEEDS WHICH HAD TO BE CA RRIED ON BY THE ASSESSEE. IT WAS ALSO POINTED OUT BY THE LEARNED A UTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE ASSESSEE SOC IETY WAS AMALGAMATED INTO MAHARASHTRA STATE COOPERATIVE SOCIETIES FEDERATION THEREAFTER. ANOTHER PLEA RAISED BY THE LEARNED AUTHORI ZED REPRESENTATIVE FOR THE ASSESSEE WAS THAT BECAUSE OF TH E ACTION OF ASSESSING OFFICER IN ADOPTING GAINS ARISING FROM SALE OF SECURIT IES AS INCOME OF THE ASSESSEE AND NOT CONSIDERING THE LOSS ARIS ING THEREFROM, THE REAL INCOME HAS NOT BEEN ASSESSED IN THE HANDS OF THE ASSESSEE. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVE NUE POINTED OUT THAT THE ASSESSEE HAD BY AN ERROR CLAIMED DEDUCTION U NDER SECTION 80P OF THE ACT. IT WAS FURTHER POINTED OUT BY T HE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE THAT THE A CCOUNTS OF THE ASSESSEE WERE AUDITED AND HE WAS BEING ADVISED BY A SE NIOR CHARTERED ACCOUNTANT AND HENCE, THERE WAS NO MERIT IN THE PLEA OF THE ASSESSE E. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE PRELIMINARY ISSUE ARISING IN THE PRESENT APPEAL IS THE N ON- CONDONATION OF DELAY IN FILING THE APPEAL BY THE CIT(A). ADMITT EDLY, THE ASSESSMENT ORDER WAS RECEIVED BY THE ASSESSEE IN TIME. HOWEVER, THE APPEALS AGAINST THE SAID ASSESSMENT ORDERS WERE FILED BEFO RE THE CIT(A) AFTER A DELAY OF 1178 DAYS IN ASSESSMENT YEAR 2006-07. THE PLEA OF ITA NOS.118 TO 120/PN/2014 MAH STATE COOP CREDIT SOCIETY 5 THE ASSESSEE BEFORE US THAT INITIALLY, IT WAS ADVISED BY THE ADVISORS THAT THERE WAS NO MERIT IN FILING ANY APPEAL AS IT WAS NOT ENTIT LED TO THE CLAIM OF DEDUCTION UNDER SECTION 80P OF THE ACT. HOWEVER , DURING THE PENDENCY OF PENALTY PROCEEDINGS AGAINST THE QUANTUM ADD ITION, THE ASSESSEE WAS GUIDED BY THE COUNSEL THAT CERTAIN SERIOUS DEFECTS HAVE OCCURRED IN THE ASSESSMENT ORDER I.E. BESIDES THE DENYING DEDUCTION UNDER SECTION 80P OF THE ACT, THE ASSESSING OFFICER HAS ALS O NOT CORRECTLY COMPUTED THE INCOME IN THE RESPECTIVE YEARS. THE GAINS ARISING FROM SALE OF SECURITIES THOUGH WERE TAXED IN THE R ESPECTIVE YEARS, BUT THE LOSSES ARISING FROM THE SALE OF SECURITIES FRO M YEAR TO YEAR WERE NOT SET OFF AGAINST THE GAINS ARISING FROM THE SALE OF SECURITIES. IN VIEW THEREOF, THERE WAS OVER ASSESSMENT O F THE INCOME IN THE HANDS OF THE ASSESSEE IN THE RESPECTIVE YEARS. IN ASSESSMENT YEAR 2006-07, THE INCOME ASSESSED WAS RS.95,77,140/- AND THE LOSS ARISIN G ON SALE OF GOVERNMENT SECURITIES AMOUNTING TO RS.2,14,17,3 11/- AGAINST THE SAID PROFITS WAS NOT SET OFF. THE ASSESSEE H AS FURNISHED THE AFFIDAVIT OF CHAIRMAN OF MAHARASHTRA RAJYA SAHAKARI PAT SANSTHA FEDERATION LTD. ON RECORD, WHICH READS AS UNDER:- AFFIDAVIT I, OMPRAKASH DADAPPA KOYATE, AGE - ABOUT 62 YEARS, RESI DENT OF KOPARGAON, DISTRICT AHMADNAGAR, HAS TO SOLEMNLY STATE AND AFFIRM AS UNDER. 1. PRESENTLY, I AM CHAIRMAN OF MAHARASHTRA RAJYA SAHA KARI PATSANSTHA FEDERATION LIMITED (HEREINAFTER REFERRED AS MSPFL) . 2.THE MSPFL IS HAVING IT'S REGISTERED OFFICE AT SURA KSHA BHAWAN, PLOT NO. 9, INDUSTRIAL ESTATE, MUKUND NAGAR, PUNE-411037. 3. THE ERSTWHILE MAHARASHTRA STATE CO-OPERATIVE CREDIT SOCIETIES DEPOSIT GUARANTEE CORPORATION LIMITED (HEREINAFTER REF ERRED TO AS MSGCL) IS MERGED IN THE PRESENT ENTITY, I.E. MSPFL. 4.EARLIER, I WAS CHAIRMAN OF MSGCL ALSO. 6.IN MAHARASHTRA, MANY SMALL-SIZE / MEDIUM-SIZE CO-OPERA TIVE CREDIT SOCIETIES OPERATE. THESE ARE CALLED AS PATSANST HA. THESE CREDIT SOCIETIES ARE NOT UNDER TOTAL CONTROL / OVERSEEING O F RBI. ITA NOS.118 TO 120/PN/2014 MAH STATE COOP CREDIT SOCIETY 6 5.MSGCL WAS AN INSTITUTION SET-UP WITH THE LEAD FROM THE MAHARASHTRA STATE GOVERNMENT FOR THE BENEFIT OF IND IVIDUAL DEPOSITORS. THE REASON OF FORMATION OF MSGCL WAS THE LOSSES OF INDIVIDUAL DEPOSITORS HAVING FIXED / SAVING DEPOSITS I NVESTED IN VARIOUS CO-OPERATIVE SOCIETIES. MANY SMALL DEPOSITORS SUFFERED AFTER THE COLLAPSE OF BHUDARGAD CO-OPERATIVE CREDIT SO CIETY LIMITED. IN THE SAID EVENT, LIFE-TIME SAVINGS OF MANY SMA LL DEPOSITORS WERE LOST. 6.AFTER FORMATION OF MSGCL, VARIOUS CREDIT SOCIETIES IN MAHARASHTRA BECAME MEMBERS OF MSGCL. CAPITAL WAS COLLECT ED FROM VARIOUS MEMBER CREDIT SOCIETIES OF MSGCL. 7.AS THE PRIME INTENT OF MSGCL WAS TO PROVIDE RISK CO VER / INSURANCE TO INDIVIDUAL DEPOSITORS, MSGCL WAS REQUIRED TO REGISTER WITH IRDA, I.E. INSURANCE REGULATORY AND DEVELO PMENT AUTHORITY, INDIA. AS PER THE IRDA NORMS, REINSURANCE IS NECESSARY FOR ANY INSURANCE ACTIVITY. AS SUCH, CORRESPONDENCE WA S INITIALED WITH IRDA IN THIS REGARD. 8. IN THE MEANTIME, FUNDS COLLECTED FROM MEMBERS OF THE MSGCL WERE INVESTED IN VARIOUS GOVERNMENT SECURITIES / MU TUAL FUNDS / CO-OPERATIVE BANKS, ETC. INTEREST & DIVIDEND WAS EARNE D FROM THESE INVESTMENTS, APART FROM PROFIT ON SALE OF THESE INVESTMENTS FROM TIME TO TIME. AT TIMES, LOSSES WERE ALSO SUFFERED IN SALE OF THESE INVESTMENTS. 9.MSGCL WAS AWAITING CLEARANCE FOR REINSURANCE FROM TH E IRDA AUTHORITIES. HOWEVER, THIS APPROVAL DID NOT COME THROUG H. EVENTUALLY, MSGCL LEARNT THAT IT WAS NOT PERMITTED TO EX TEND CREDIT GUARANTEES AS AN INSURER CONSIDERING THE COO PERATIVE FORM OF MSGCL. 10. AS SUCH, IT WAS DECIDED THAT THE ACTIVITY OF MSGCL BE ABANDONED. BUT THEN, LARGE PART OF THE FUNDS OF MSGCL WAS LOCKED UP WITH THE SUVARNA SAHAKARI BANK LIMITED, WHICH REMAINED IN LIQUIDATION BETWEEN YEAR 2006 TILL YEAR 2009. 11. AFTER AVAILING ALL DUE STATE GOVERNMENT APPROVALS, MSGCL WAS MERGED INTO MSFSL. THE MERGER BECAME EFFECTIVE WHEN THE ORDER OF REGISTRAR OF CO-OPERATIVE SOCIETIES WAS PAS SED ON 15/4/2011. 12. IN THE IN-BETWEEN PERIOD, INCOME-TAX RETURNS WERE FILED FOR RESPECTIVE YEARS, WHEREIN, DEDUCTION U/S 80-P WAS CLAIMED AS PER THE ADVICE OF THE THEN COUNSELS OF MSGCL. 13. SCRUTINIES WERE TAKEN UP BY THE I-T AUTHORITIES FOR VARIOUS YEARS. AS PER THE I-T OFFICIALS, THE DEDUCTION U/S 80-P W AS NOT TO BE AVAILABLE TO MSGCL DUE TO TECHNICAL REASONS. AS SUC H, TAX DEMANDS WERE RAISED IN THE CASE OF MSGCL. 14. MSGCL NEVER REALIZED THAT THOUGH DEDUCTION U/S 80-P IS NOT AVAILABLE, THERE EXISTED OTHER ISSUES OF ADDITIONS, WH ICH OUGHT TO HAVE BEEN CHALLENGED BEFORE THE I-T APPELLATE AUTHORITIE S AS REGARDS THEIR CORRECTNESS. THE ISSUES RELATE TO NON-G RANT OF SET-OFF OF LOSSES FROM SALE OF GOVERNMENT SECURITIES AS AN ADJ USTMENT AGAINST THE PROFITS FROM SALE OF GOVERNMENT SECURITIE S, ETC. IT WAS ITA NOS.118 TO 120/PN/2014 MAH STATE COOP CREDIT SOCIETY 7 REALIZED LATER ON THAT THESE ISSUES OUGHT TO HAVE B EEN AGITATED IN DUE TIME BY FILING APPEALS BEFORE THE LEARNED CIT(A), PUNE. 15.ON THE ADVICE OF THE NEW COUNSELS, MSGCL (NOW MERGED INTO MSPFL) FILED APPEALS BEFORE THE LEARNED CIT(A), PUNE. AP PEALS FOR A.Y. 2006-07, A.Y. 2007-08 & A.Y. 2008-09 WERE FILED ON 23/4/12 & 1/2/13. 16. HOWEVER, DELAY CREPT INTO THE PROCESS OF FILING OF THE APPEALS BEFORE THE LEARNED CIT(A), PUNE. 17. THE DELAY IN FILING OF APPEALS WAS UN-INTENTIONAL. A LL STAFF OF MSGCL HAS ALREADY RESIGNED SINCE THERE WAS NO HOPE O F CONTINUITY OF THE MSGCL. THE ISSUES OF MERGER OF MSGC L INTO MSPFL WERE ONGOING. WORK OF SEEKING GOVERNMENT APPRO VALS WAS ONGOING. PROPER ADVICE ON THE CORRECTNESS OF TAX ASSE SSMENTS WAS NOT RECEIVED BY MSGCL IN THAT TIME. IN THIS ENTIRE PR OCESS, DELAY CREPT INTO THE PROCESS OF FILING OF APPEALS. 18. AFTER PROPER GUIDANCE FROM THE CONSULTANT, APPEALS WERE FILED WITH PRAYER FOR CONDONATION OF DELAY. THE SAID PRAYE R WAS FOR CONDONING DELAY OF - ABOUT 1,178 DAYS FOR A.Y. 2006-07 - ABOUT 821 DAYS FOR A.Y. 2007-08 & - ABOUT 726 DAYS FOR A.Y. 2008-09. 19. IT IS REITERATED, THE DELAY WAS PURELY UN-INTENTI ONAL. MSGCL WAS ALWAYS TAX COMPLIANT AS REGARDS FILING OF RETURNS , MAKING TDS COMPLIANCES, PAYING TAX DUES RAISED FROM TIME TO TIME AND SO ON. FOR MAHARASHTRA STATE CO-OP CREDIT SOC. DEPOSIT GUARAN TEE CORP. LTD. (AMALGAMATED INTO RAJYA SAHAKARI PATSANSTHA FEDE RATION LIMITED) OMPRAKASH DADAPPA KOYTE CHAIRMAN PLACE: KOPARGAON DISTRICT : AHMADNAGAR 9. THE ASSESSEE HAS IN THE APPEAL FILED AGAINST THE ORDER OF CIT(A) RAISED PRELIMINARY ISSUE AGAINST THE DISMISSAL OF APPEAL IN LIMINE. THE CIT(A) HAD DISMISSED THE CONDONATION PETITION MOVED BY THE ASSESSEE HOLDING THAT THERE WAS NO MERIT IN THE CLAIM OF THE ASSESS EE VIS--VIS DEDUCTION CLAIMED UNDER SECTION 80P OF THE ACT. THE CIT(A ) HAS FURTHER NOTED THAT THE ASSESSEE BY WAY OF GROUND OF AP PEAL NO.1 HAD RAISED THE ISSUE OF DEDUCTION UNDER SECTION 80P OF THE AC T. HOWEVER, WE FIND THAT THE CIT(A) BY MISTAKE HAS MADE THE SAID OBSE RVATION. THE ITA NOS.118 TO 120/PN/2014 MAH STATE COOP CREDIT SOCIETY 8 PERUSAL OF THE GROUND OF APPEAL FILED WITH THE FORM NO.35 RE FLECTS THAT ONE ISSUE RAISED BY THE ASSESSEE I.E. WHILE TAXING THE INT EREST ON GOVERNMENT SECURITIES AS AN INDEPENDENT TAXABLE INCOME A T RS.95,77,140/-, THE LEARNED AO ERRED IN NOT SETTING OFF THE LOSS ON SALE GOVERNMENT SECURITIES AMOUNTING TO RS.214,17,311/- AGAINST THE PROFIT ON SALE OF UNITS OF MUTUAL FUNDS AS STATED EARLIER. T HE ASSESSEE HAD NOT RAISED ANY ISSUE WITH REGARD TO DENIAL OF DEDUCTI ON UNDER SECTION 80P OF THE ACT. THE ORDER OF CIT(A) ON SUCH SUR MISES WAS THUS, INCORRECT. 10. THE SECOND ASPECT OF THE ISSUE IS WHETHER THE ASSE SSEE IS ENTITLED TO THE CONDONATION OF DELAY IN FILING THE APPEAL LATE BEFORE CIT(A). THE HONBLE SUPREME COURT IN COLLECTOR, LAND ACQU ISITION VS. MST. KATIJI & ORS. (1987) 167 ITR 471 (SC) HAD LAID DOWN TH E PROPOSITION THAT WHILE CONSIDERING THE APPLICATION FOR CONDON ATION OF DELAY, SUFFICIENT CAUSE PLEADED BY THE PARTY SHOULD BE CONS IDERED. THE HONBLE SUPREME COURT FURTHER HELD THAT SUFFICIENT CAUSE FO R THE PURPOSE OF CONDONATION OF DELAY SHOULD BE INTERPRETED WITH A VIEW TO DO EVEN-HANDED JUSTICE ON MERITS IN PREFERENCE TO APPRO ACH WHICH SCUTTLES A DECISION ON MERITS. THE HONBLE SUPREME COURT FURTHER HE LD AS UNDER:- THE LEGISLATURE HAS CONFERRED THE POWER TO CONDONE DELAY BY ENACTING S.5 OF THE LIMITATION ACT OF 1963 IN ORDER TO ENABLE THE COURTS TO DO SUBSTANTIAL JUSTICE TO PARTIES BY DISPOS ING OF MATTER ON MERITS. THE EXPRESSION SUFFICIENT CAUSE EMPLOY ED BY THE LEGISLATURE IS ADEQUATELY ELASTIC TO ENABLE THE COURT S TO APPLY THE LAW IN A MEANINGFUL MANNER WHICH SUBSERVES THE ENDS OF JUSTICE- THAT BEING THE LIFE-PURPOSE OF THE EXISTENCE OF THE INSTITUTION OF COURTS. THE DOCTRINE OF EQUALITY BEFORE LAW DEMANDS THAT ALL LITIGANTS, INCLUDING THE STATE AS A LITIGANT, ARE ACCOR DED THE SAME TREATMENT AND THE LAW IS ADMINISTERED IN AN EVEN-HAN DED MANNER. THERE IS NO WARRANT FOR ACCORDING A STEP-MOT HERLY TREATMENT WHEN THE 'STATE' IS THE APPLICANT PRAYING FOR CONDONATION OF DELAY. IN FACT, EXPERIENCE SHOWS THAT ON ACCOUNT OF AN IMPERSONAL MACHINERY (NO ONE IN CHARGE OF THE MA TTER IS DIRECTLY HIT OR HURT BY THE JUDGMENT SOUGHT TO BE SU BJECTED TO APPEAL) AND THE INHERENT BUREAUCRATIC METHODOLOGY IMB UED WITH THE NOTE-MAKING, FILE- PUSHING, AND PASSING-ON-THE-BUC K ETHOS, ITA NOS.118 TO 120/PN/2014 MAH STATE COOP CREDIT SOCIETY 9 DELAY ON ITS PART IS LESS DIFFICULT TO UNDERSTAND THOU GH MORE DIFFICULT TO APPROVE. IN ANY EVENT, THE STATE WHICH RE PRESENTS THE COLLECTIVE CAUSE OF THE COMMUNITY DOES NOT DESERVE A L ITIGANT NON GRATA STATUS. THE COURTS, THEREFORE, HAVE TO BE INFOR MED OF THE SPIRIT AND PHILOSOPHY OF THE PROVISION IN THE COURSE OF THE INTERPRETATION OF THE EXPRESSION 'SUFFICIENT CAUSE' . SO ALSO THE SAME APPROACH HAS TO BE EVIDENCED IN ITS APPLICATION TO MATTERS AT HAND WITH THE END IN VIEW TO DO EVEN-HANDED JUSTICE ON MERITS IN PREFERENCE TO THE APPROACH WHICH SCUTTLES A DECISION ON MERITS. 11. THE ASSESSEE BEFORE US HAS PLEADED FOR THE CONDONA TION OF DELAY IN FILING THE APPEALS LATE BEFORE THE CIT(A), ESPECIALLY IN THE CIRCUMSTANCES WHERE THE ASSESSEE WAS INITIALLY UNDER THE BONAFIDE BELIEF THAT IT WAS NOT ENTITLED TO THE DEDUCTION UNDER SEC TION 80P OF THE ACT AND HENCE, THE APPEALS WERE NOT FILED IN TIME. HOWEVER , THE ISSUE NOW RAISED IS THE CORRECT COMPUTATION OF INCOME IN THE HA NDS OF THE ASSESSEE I.E. WHERE ON THE ONE HAND, THE ASSESSING OFFICER HAD TAXED GAINS ARISING ON SALE OF SECURITIES IN THE HANDS OF THE ASSE SSEE, SIMILAR LOSS ARISING ON THE SALE OF SECURITIES MERITS TO BE CONSIDER ED TO THE SET OFF AGAINST THE SAID GAINS ON SALE OF SECURITIES. THE SECON D ASPECT POINTED OUT BY THE ASSESSEE WAS THE STATUS OF THE ASS ESSEE SOCIETY WHEREIN THOUGH IT WAS FORMULATED BY THE STATE GOVERNMEN T TO CARRY ON THE SPECIFIC PURPOSE, BUT SAME COULD NOT BE CARRIED ON AS NECESSARY APPROVALS WERE NOT GRANTED TO THE ASSESSEE. THEREAFTE R, THERE WAS A DECISION TO WIND UP THE AFFAIRS BUT SAME COULD NOT BE WOUN D UP BECAUSE OF HOLDING UP OF MONEY WITH COOPERATIVE SOCIETIES W HICH IN TURN, WERE IN LIQUIDATION. IN THE ENTIRETY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THERE WAS A REAS ONABLE CAUSE FOR THE DELAY IN FILING THE APPEALS IN TIME BEFORE THE CIT(A) AN D SINCE THE ASSESSEE SOCIETY WAS OPERATING UNDER THE SUPERVISIO N OF STATE GOVERNMENT, WE ARE OF THE VIEW THAT THE SAID DELAY IN FILING THE SAID APPEAL LATE BY 1178 DAYS IN ASSESSMENT YEAR 2006-07, BE FORE THE CIT(A), MERITS TO BE CONDONED. ACCORDINGLY, WE CONDONE THE SAME. ITA NOS.118 TO 120/PN/2014 MAH STATE COOP CREDIT SOCIETY 10 12. THE FACTS AND CIRCUMSTANCES IN ASSESSMENT YEARS 20 07-08 AND 2008-09 ARE IDENTICAL TO THE FACTS AND CIRCUMSTANCES IN A SSESSMENT YEAR 2006-07 AND ACCORDINGLY, WE CONDONE THE DELAY IN FILIN G THE APPEALS LATE BY 821 DAYS IN ASSESSMENT YEAR 2007-08 A ND 726 DAYS IN ASSESSMENT YEAR 2008-09. ALL THE APPEALS ARE RESTORED BACK TO THE FILE OF CIT(A) TO DECIDE THE ISSUE ON THE MERITS, AFTER AFFORDING R EASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE PRELIMINARY IS SUE RAISED BY THE ASSESSEE IS THUS, ALLOWED AND THE ISSUES ON MERIT S ARE NOT BEING DECIDED BY US IN VIEW OF OUR SETTING ASIDE THE SAME TO THE FILE OF CIT(A). 13. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE ALLO WED AS INDICATED ABOVE. ORDER PRONOUNCED ON THIS THE 13 TH DAY OF FEBRUARY, 2015. SD/- SD/- (G.S. PANNU) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 13 TH FEBRUARY, 2015. GCVSR COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-I, PUNE; 4) THE CIT-I, PUNE; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE