Prism Industries Limited, Baroda V. The Asstt. Commissioner of Income Tax, Circle-4, Baroda

ITA 1235/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8455 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2003-2004
• Appeal Filed On: 10-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH SINGH
• Assessee Lawyers: M J SHAH
• Keywords: Reasonable cause; Condonation of delay
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA NOS. 1235 & 1236/AHD/2016 / ASSESSMENT YEAR : 2003-04 PRISM INDUSTRIES LIMITED, TB-5, VRUNDAVAN ESTATE, PASHABHAI PARK, RACE COURSE CIRCLE, BARODA PAN : AABCP 7162 Q VS ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-4, BARODA ASSESSEE BY : SHRI MJ SHAH, AR REVENUE BY : SHRI SAURABH SINGH, SR DR DATE OF HEARING : 15/03/2018 DATE OF PRONOUNCEMENT IN COURT : 10/04/2 018 / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE PRESENT TWO APPEALS ARE DIRECTED AT THE INSTANC E OF THE ASSESSEE AGAINST THE ORDERS OF THE LEARNED CIT(A)-2, VADODAR A DATED 10.02.2016 AND 19.02.2016 PASSED FOR ASSESSMENT YEAR 2003-04. ITA NO.1235/AHD/2016 EMERGES OUT OF PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT); WHEREAS ITA NO.1236/AHD/2016 AROSE AGAINST PENALTY IMPOSED UNDER SECTION 271(1)( C) OF THE ACT. 2. THE SOLITARY GRIEVANCE OF THE ASSESSEE IN BOTH T HESE APPEALS IS THAT THE LEARNED CIT(A) HAS ERRED IN NOT CONDONING THE DELAY IN FILING THE APPEALS BEFORE HIM AND DISMISSING THE APPEALS BEING TIME BA RRED. 3. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. IT EMERGES OUT FROM THE RECO RD THAT THE QUANTUM APPEAL OF THE ASSESSEE WAS TIME BARRED BEFORE THE F IRST APPELLATE AUTHORITY BY A PERIOD OF ONE YEAR AND THREE DAYS; WHEREAS THE PENALTY APPEAL WAS ITA NOS. 1235 & 1236/AHD/2016 PRISM INDUSTRIES LTD VS. ACIT AY : 2003-04 2 TIME BARRED BY A PERIOD OF SIX MONTHS AND SEVEN DAY S. IN ORDER TO EXPLAIN THE DELAY, THE ASSESSEE HAS FILED AN APPLICATION FO R CONDONATION OF DELAY UNDER SECTION 249(3) OF THE ACT. LEARNED CIT(A) HA S REPRODUCED THE EXPLANATION OF THE ASSESSEE IN THE QUANTUM APPEAL, WHICH READ AS UNDER:- IT IS MOST RESPECTFULLY SUBMITTED THAT IN OUR CASE THERE HAS BEEN A DELAY OF 1 YEAR AND 3 DAYS IN FILING OF APPEAL BEFORE YOUR HON OUR. THE DELAY WAS PRIMARILY ON ACCOUNT OF FACT THAT THE ASSESSMENT OR DER WAS DELIVERED TO AN OFFICER OF THE COMPANY WHO FORWARDED THE ORDER TO T HE ACCOUNTANT. THE ACCOUNTANT IMMEDIATELY THEREAFTER HAD LEFT THE SERV ICES OF THE COMPANY WITHOUT PRIOR INTIMATION. ALL THE PAPERS AND OTHER MATERIAL ON HIS TABLE WAS INITIALLY KEPT IN THE CUPBOARD TO BE LOOKED INTO LA TER. IT HOWEVER TOOK TIME FOR THE MANAGEMENT TO LOOK INTO THE SAME ON ACCOUNT OF VARIOUS REASONS AS MENTIONED BELOW. 1. DURING THAT TIME YOUR APPELLANT WAS PASSING THR OUGH EXTREMELY DIFFICULT FINANCIAL POSITION AND THE COMPANY HAD TURNED SICK. THE COMPANY HAD MADE APPLICATION TO BIFR FOR REGISTRATION AS SICK COMPAN Y AND SANCTION OF REHABILITATION PACKAGE TO RESTORE THE COMPANY BACK TO HEALTH. ON ACCOUNT OF THIS CASH FLOW WAS EXTREMELY POOR AND THE COMPANY W AS NOT IN A POSITION TO MEET EVEN SALARY OBLIGATIONS. ON ACCOUNT OF THIS MA NY STAFF MEMBERS LEFT THE SERVICES AND REMAINING STAFF WAS ALSO LOOKING FOR O THER AVENUES. ALL THE WORK THEREFORE HAD TO BE GOT DONE WITH THE HELP OF MINIM UM STAFF AVAILABLE. IN VIEW OF THIS CERTAIN IMPORTANT THINGS UNINTENTIONALLY RE MAINED UNATTENDED. 2. ON ACCOUNT OF CONSISTENT LOSS THE COMPANY WAS C LOSING DOWN ITS OFFICES IN OTHER CITIES AND IN PARTICULAR THE OFFICE AT MUMBAI . IN VIEW OF THIS THE RECORDS OF THE OFFICE WERE ALSO SHIFTED TO THE OFFICE AT KA LAMSAR, DIST: ANAND. THIS LED TO PILING OF HUGE RECORD LEADING TO DIFFICULTY IN L OCATING REQUIRED PAPERS. THIS LED TO MANY PAPERS REQUIRING URGENT ATTENTION BEING LEFT OUT TO BE ATTENDED. 3. ON ACCOUNT OF THIS FACTOR BEYOND THE CONTROL OF THE MANAGEMENT-THE MATTER AS REGARDS FILING OF APPEAL WAS LEFT OUT. TH E DELAY THEREFORE IN FILING OF APPEAL WAS NOT INTENTIONAL. IT WAS ON ACCOUNT OF TH ESE EXCEPTIONAL CIRCUMSTANCES THAT THE MATTERS REQUIRING ATTENTION WERE LEFT OUT. IT CAN BE APPRECIATED THAT THERE WAS NO CASUAL APPROACH AND T HAT THE MANAGEMENT WAS HELPLESS TO THE EXTENT AND WAS FORCED INTO THE CIRC UMSTANCES. IT IS THEREFORE RESPECTFULLY SUBMITTED THAT THE DELAY IN FILING OF THE APPEAL MAY PLEASE BE CONDONED AND APPEAL ACCEPTED. ITA NOS. 1235 & 1236/AHD/2016 PRISM INDUSTRIES LTD VS. ACIT AY : 2003-04 3 4. AFTER GOING THROUGH THE ABOVE EXPLANATION, LEARN ED CIT(A) WAS NOT SATISFIED WITH THE REASONABLE CAUSE GIVEN BY THE AS SESSEE AND DID NOT CONDONE THE DELAY. ACCORDINGLY, BOTH THE APPEALS O F THE ASSESSEE WERE DISMISSED BY THE LEARNED FIRST APPELLATE AUTHORITY. 5. BEFORE US, LEARNED COUNSEL FOR THE ASSESSEE REIT ERATED HIS CONTENTIONS AS WERE RAISED BEFORE THE FIRST APPELLATE AUTHORITY . ON THE OTHER HAND, LEARNED DEPARTMENTAL REPRESENTATIVE CONTENDED THAT THERE IS NO PLAUSIBLE REASON ASSIGNED BY THE ASSESSEE FOR NOT FILING THE APPEAL WITHIN THE TIME. 6. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. WE FIND THAT SUB-SECTION 5 OF SE CTION 253 CONTEMPLATES THAT THE TRIBUNAL MAY ADMIT AN APPEAL OR PERMIT FILING O F MEMORANDUM OF CROSS- OBJECTIONS AFTER EXPIRY OF RELEVANT PERIOD, IF IT I S SATISFIED THAT THERE WAS A SUFFICIENT CAUSE FOR NOT PRESENTING IT WITHIN THAT PERIOD. THIS EXPRESSION 'SUFFICIENT CAUSE' EMPLOYED IN THE SECTION HAS ALSO BEEN USED IDENTICALLY IN SUB-SECTION 3 OF SECTION 249 OF INCOME TAX ACT, WHI CH PROVIDES POWERS TO THE LD. COMMISSIONER TO CONDONE THE DELAY IN FILING THE APPEAL BEFORE THE COMMISSIONER. SIMILARLY, IT HAS BEEN USED IN SECTIO N 5 OF INDIAN LIMITATION ACT, 1963. WHENEVER INTERPRETATION AND CONSTRUCTION OF THIS EXPRESSION HAS FALLEN FOR CONSIDERATION BEFORE HON'BLE HIGH COURT AS WELL AS BEFORE THE HON'BLE SUPREME COURT, THEN, HON'BLE COURT WERE UNA NIMOUS IN THEIR CONCLUSION THAT THIS EXPRESSION IS TO BE USED LIBER ALLY. WE MAY MAKE REFERENCE TO THE FOLLOWING OBSERVATIONS OF THE HON' BLE SUPREME COURT FROM THE DECISION IN THE CASE OF COLLECTOR LAND ACQUISIT ION VS. MST. KATIJI & OTHERS, 1987 AIR 1353: '1. ORDINARILY A LITIGANT DOES NOT STAND TO BENEFIT BY LODGING AN APPEAL LATE. 2. REFUSING TO CONDONE DELAY CAN RESULT IN A MERITO RIOUS MATTER BEING THROWN OUT AT THE VERY THRESHOLD AND CAUSE OF JUSTICE BEIN G DEFEATED. AS AGAINST THIS ITA NOS. 1235 & 1236/AHD/2016 PRISM INDUSTRIES LTD VS. ACIT AY : 2003-04 4 WHEN DELAY IS CONDONED THE HIGHEST THAT CAN HAPPEN IS THAT A CAUSE WOULD BE DECIDED ON MERITS AFTER HEARING THE PARTIES. 3. 'EVERY DAY'S DELAY MUST BE EXPLAINED' DOES NOT M EAN THAT A PEDANTIC APPROACH SHOULD BE MADE. WHY NOT EVERY HOUR'S DELAY , EVERY SECOND'S DELAY? THE DOCTRINE MUST BE APPLIED IN A RATIONAL COMMON S ENSE PRAGMATIC MANNER. 4. WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERA TIONS ARE PITTED AGAINST EACH OTHER, CAUSE OF SUBSTANTIAL JUSTICE DESERVES T O BE PREFERRED FOR THE OTHER SIDE CANNOT CLAIM TO HAVE VESTED RIGHT IN INJUSTICE BEING DONE BECAUSE OF A NON-DELIBERATE DELAY. 5. THERE IS NO PRESUMPTION THAT DELAY IS OCCASIONED DELIBERATELY, OR ON ACCOUNT OF CULPABLE NEGLIGENCE, OR ON ACCOUNT OF MA LA FIDES. A LITIGANT DOES NOT STAND TO BENEFIT BY RESORTING TO DELAY. IN FACT HE RUNS A SERIOUS RISK. 6. IT MUST BE GRASPED THAT JUDICIARY IS RESPECTED N OT ON ACCOUNT OF ITS POWER TO LEGALIZE INJUSTICE ON TECHNICAL GROUNDS BUT BECA USE IT IS CAPABLE OF REMOVING INJUSTICE AND IS EXPECTED TO DO SO.' 7. SIMILARLY, WE WOULD LIKE TO MAKE REFERENCE TO AU THORITATIVE PRONOUNCEMENT OF HON'BLE SUPREME COURT IN THE CASE OF N.BALAKRISHNAN VS. M. KRISHNAMURTHY (SUPRA). IT READS AS UNDER: 'RULE OF LIMITATION ARE NOT MEANT TO DESTROY THE RI GHT OF PARTIES. THEY ARE MEANT TO SEE THAT PARTIES DO NOT RESORT TO DILATORY TACTICS, BUT SEEK THEIR REMEDY PROMPTLY. THE OBJECT OF PROVIDING A LEGAL RE MEDY IS TO REPAIR THE DAMAGE CAUSED BY REASON OF LEGAL INJURY. LAW OF LIM ITATION FIXES A LIFE-SPAN FOR SUCH LEGAL REMEDY FOR THE REDRESS OF THE LEGAL INJURY SO SUFFERED. TIME IS PRECIOUS AND THE WASTED TIME WOULD NEVER REVISIT. D URING EFFLUX OF TIME NEWER CAUSES WOULD SPROUT UP NECESSITATING NEWER PE RSONS TO SEEK LEGAL REMEDY BY APPROACHING THE COURTS. SO A LIFE SPAN MU ST BE FIXED FOR EACH REMEDY. UNENDING PERIOD FOR LAUNCHING THE REMEDY MA Y LEAD TO UNENDING UNCERTAINTY AND CONSEQUENTIAL ANARCHY. LAW OF LIMIT ATION IS THUS FOUNDED ON PUBLIC POLICY. IT IS ENSHRINED IN THE MAXIM INTERES T REIPUBLICAE UP SIT FINIS LITIUM (IT IS FOR THE GENERAL WELFARE THAT A PERIOD BE PUTT TO LITIGATION). RULES OF LIMITATION ARE NOT MEANT TO DESTROY THE RIGHT OF THE PARTIES. THEY ARE MEANT TO SEE THAT PARTIES DO NOT RESORT TO DILATORY TACTI CS BUT SEEK THEIR REMEDY PROMPTLY. THE IDEA IS THAT EVERY LEGAL REMEDY MUST BE KEPT ALIVE FOR A LEGISLATIVELY FIXED PERIOD OF TIME. ITA NOS. 1235 & 1236/AHD/2016 PRISM INDUSTRIES LTD VS. ACIT AY : 2003-04 5 A COURT KNOWS THAT REFUSAL TO CONDONE DELAY WOULD R ESULT FORECLOSING A SUITOR FROM PUTTING FORTH HIS CAUSE. THERE IS NO PRESUMPTI ON THAT DELAY IN APPROACHING THE COURT IS ALWAYS DELIBERATE. THIS CO URT HAS HELD THAT THE WORDS 'SUFFICIENT CAUSE' UNDER SECTION 5 OF THE LIM ITATION ACT SHOULD RECEIVE A LIBERAL CONSTRUCTION SO AS TO ADVANCE SUB STANTIAL JUSTICE VIDE SHAKUNTALA DEVI LAIN VS. KUNTAL KUMARI [AIR 1969 SC 575] AND STATE OF WEST BENGAL VS. THE ADMINISTRATOR, HOWRAH MUNICIPAL ITY [AIR 1972 SC 749]. IT MUST BE REMEMBERED THAT IN EVERY CASE OF D ELAY THERE CAN BE SOME LAPSE ON THE PART OF THE LITIGANT CONCERNED. THAT A LONE IS NOT ENOUGH TO TURN DOWN HIS PLEA AND TO SHUT THE DOOR AGAINST HIM. IF THE EXPLANATION DOES NOT SMACK OF MALA FIDES OR IT IS NOT PUT FORTH AS PART OF A DILATORY STRATEGY THE COURT MUST SHOW UTMOST CONSIDERATION TO THE SUITOR. BUT WHEN THERE IS REASONABLE GROUND TO THINK THAT THE DELAY WAS OCCAS IONED BY THE PARTY DELIBERATELY TO GAIN TIME THEN THE COURT SHOULD LEA N AGAINST ACCEPTANCE OF THE EXPLANATION. WHILE CONDONING DELAY THE COULD SHOULD NOT FORGET THE OPPOSITE PARTY ALTOGETHER. IT MUST BE BORNE IN MIND THAT HE IS A LOOSER AND HE TOO WOULD HAVE INCURRED QUIET A LARGE LITIGATION EXPENS ES. IT WOULD BE A SALUTARY GUIDELINE THAT WHEN COURTS CONDONE THE DELAY DUE TO LACHES ON THE PART OF THE APPLICANT THE COURT SHALL COMPENSATE THE OPPOSITE P ARTY FOR HIS LOSS.' 8. WE DO NOT DEEM IT NECESSARY TO RECITE OR RECAPIT ULATE THE PROPOSITION LAID DOWN IN OTHER DECISIONS. IT IS SUFFICE TO SAY THAT THE HON'BLE COURTS ARE UNANIMOUS IN THEIR APPROACH TO PROPOUND THAT WHENEV ER THE REASONS ASSIGNED BY AN APPLICANT FOR EXPLAINING THE CONDONA TION OF DELAY, THEN SUCH REASONS ARE TO BE CONSTRUED WITH A JUSTICE ORIENTED APPROACH. IF WE LOOK THE EXPLANATION OF THE ASSESSEE, IN THE LIGHT OF PROPOS ITION PROPOUNDED BY THE HON'BLE COURTS, THEN, IT WOULD REVEAL THAT THE ASSE SSEE COULD NOT AFFORD TO MAKE ITS APPEAL TIME-BARRED KNOWINGLY. THE DELAY IN FILING THE APPEAL HAPPENED ON ACCOUNT OF COMMUNICATION GAP BETWEEN TH E MANAGEMENT AS WELL AS PART-TIME ACCOUNTANT, WHO HAS COLLECTED COP Y OF THE ORDER FROM THE TAX CONSULTANT OFFICE AND SUBSEQUENTLY LEFT THE JOB . IN THE CASE OF N.BALAKRISHNAN VS. M.KRISHNAMURTHY (SUPRA), THE HON 'BLE COURT HAS ITA NO.2496/AHD/2013 OBSERVED THAT EVERY CASE OF DELAY, THERE MUST BE SOME NEGLIGENCE, BUT THAT NEGLIGENCE IS TO BE VIEWED WHE THER TO MAKE AN APPEAL TIME BARRED WAS ADOPTED BY WAY OF CONSCIOUS DECISIO N AS A DILATORY STRATEGY. IN THE PRESENT CASE, BY MAKING THE APPEAL TIME BARRED, THE ASSESSEE ITA NOS. 1235 & 1236/AHD/2016 PRISM INDUSTRIES LTD VS. ACIT AY : 2003-04 6 WOULD NOT ACHIEVE ANYTHING. IT IS ALSO TO BE SEEN T HAT A POSSIBLE HUMAN NEGLIGENCE WILL PUT THE ASSESSEE WITH TAX LIABILITY OF SUBSTANTIAL SUM ALONG WITH PENALTY. IN VIEW OF THE ABOVE, WE CONDONE T HE DELAY IN FILING THE APPEALS BEFORE THE LEARNED CIT(A) AND SET ASIDE THE IMPUGNED ORDERS. WE, THEREFORE, REMIT THESE PROCEEDINGS BEFORE LEARNED C IT(A) FOR ADJUDICATION ON MERITS. 9. IN THE RESULT, BOTH APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 10 TH APRIL, 2018 AT AHMEDABAD. SD/- SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD, DATED 10/04/2018 *BIJU T., SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION- 06.04.2018 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 06.04.2018 OTHER MEMBER 10.04.2018. 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S. - 10.04.2018 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 10.04.2018 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK10.0 4.2018 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER 8. DATE OF DESPATCH OF THE ORDER