Shri Samatbhai Malabhai Parmar, Jamnagar V. The ITO, Ward-3(1), Jamnagar

ITA 142/RJT/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1132 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 10-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUHAS MISTRY
• Keywords: Wrong claim
• Section: 271(1)(c); 274

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & MS. MADHUMITA ROY, JUDICIAL MEMBER ITA NO. 142/RJT/2018 (ASSESSMENT YEAR : 2013-14) SHRI SAMATBHAI MALABHAI PARMAR, PROP. OF JAI MOMAI TRANSPORT, AT SINGACH, TAL. LALPUR, DIST. JAMNAGAR VS. ITO WARD-3(1), JAMNAGAR [PAN NO. AMTPP7987N] (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI CHETAN AGARWAL, CA RESPONDENT BY : SHRI SUHAS MISTRY, SR. D.R. DATE OF HEARING 2 8 .02 .20 20 DATE OF PRONOUNCEMENT 02.06.2020 O R D E R PER BENCH: THE INSTANT APPEAL FILED BY THE ASSESSEE IS DIRECTE D AGAINST THE ORDER DATED 23.03.2018 PASSED BY THE COMMISSIONER O F INCOME TAX (APPEALS), JAMNAGAR ARISING OUT OF THE ORDER DATED 23.09.2016 PASSED BY THE ITO, WARD 3(1), JAMNAGAR UNDER SECT ION 274 R.W.S. 271(1)(C) OF THE INCOME TAX ACT, 1961(HEREINAFTER R EFERRED AS TO THE ACT) FOR THE ASSESSMENT YEAR (A.Y.) 2013-14. 2. AT THE TIME OF HEARING OF THE INSTANT APPEAL LD. COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE ASSESSMENT - 2 - ITA NO.142/RJT/2018 SHRI SAMATBHAI MALABHAI PARMAR VS. ITO ASST.YEAR 2013-14 ORDER WAS PASSED MAKING ADDITION PURELY ON ESTIMATE BASIS WITHOUT ANY BASE; NEITHER POSITIVE FACTS NOR FINDING HAS BE EN FOUND SO AS TO MAKE SUCH ADDITION. IN THAT VIEW OF THE MATTER IT WAS ARGUED BY THE LD. AR THAT PENALTY UNDER SECTION 271(1)(C) TO THE TUNE OF RS. 1,48,503/- AS LEVIED BY THE AO FOR FILING INACCURAT E PARTICULARS OF INCOME BY WAY OF MAKING WRONG CLAIM OF EXPENDITURE CANNOT BE SAID TO BE JUSTIFIED. ON THE OTHER HAND, THE LD. D R RELIED UPON THE ORDER PASSED BY THE AUTHORITIES BELOW. 4. WE HAVE HEARD THE RESPECTIVE PARTIES, WE HAVE AL SO PERUSED THE RELEVANT MATERIALS AVAILABLE ON RECORD. IT IS A SETTLED PRINCIPLE OF LAW THAT WHERE ADDITI ON TO ASSESSEES INCOME IS MADE ON ESTIMATE BASIS PENALTY UNDER SECT ION 271(1)(C) CANNOT BE IMPOSED. THE DIFFERENT JUDICIAL FORM HAS ALREADY DECIDED IN FAVOUR OF THE ASSESSEE ON THE IDENTICAL ISSUE, O F SUCH IS PASSED IN THE CASE OF NARESH CHAND AGARWAL VS. COMMISSIONER O F INCOME TAX BY THE HONBLE ALLAHABAD HIGH COURT. WE HAVE FURTH ER GONE THROUGH THE WRITTEN SUBMISSION MADE BEFORE THE AUTH ORITIES BELOW BY THE APPELLANT. IT IS ON RECORD THAT THE ADDITIO N WAS MADE ON ESTIMATION OF NET PROFIT @ 1.5% BY THE LD. AO AND H ENCE WE FIND THERE IS NO MERIT IN LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR THE PROPOSITION ALREADY DEALT WITH BY US IN THE FOREGOING PARAGRAPH. THUS, IN THE ABSENCE OF ANY MERIT IN TH E ORDER PASSED - 3 - ITA NO.142/RJT/2018 SHRI SAMATBHAI MALABHAI PARMAR VS. ITO ASST.YEAR 2013-14 BY THE AUTHORITIES BELOW WE QUASH THE SAME. THE AD DITION IS THEREFORE, DELETED. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 6. BEFORE PARTING WE WOULD LIKE TO MAKE CERTAIN OBS ERVATION RELATING TO THE ISSUE CROPPED UP UNDER PRESENT SCEN ARIO OF COVID-19 PANDEMIC AS TO WHETHER WHEN THE HEARING OF THE MATT ER WAS CONCLUDED ON 28.02.2020 THE ORDER CAN BE PRONOUNCED TODAY I.E. ON 28.05.2020. THE ISSUE HAS ALREADY BEEN DISCUSSED B Y THE CO- ORDINATE BENCH IN THE CASE OF DCIT VS. JSW LTD. (IT A NOS. 6264 & 6103/MUM/2018) PRONOUNCED ON 14.05.2020 IN THE LIGH T OF WHICH IT IS WELL WITHIN THE TIME LIMIT PERMITTED UNDER RU LE 34(5) OF THE APPELLATE TRIBUNAL RULES, 1963 IN VIEW OF THE FOLLO WING OBSERVATIONS MADE THEREIN: 7. HOWEVER, BEFORE WE PART WITH THE MATTER, WE MUS T DEAL WITH ONE PROCEDURAL ISSUE AS WELL. WHILE HEARING OF THE SE APPEALS WAS CONCLUDED ON 8TH JANUARY 2020, THIS ORDER THEREON I S BEING PRONOUNCED TODAY ON THE DAY OF 14TH MAY, 2020, MUCH AFTER THE EXPIRY OF 90 DAYS FROM THE DATE OF CONCLUSION OF HE ARING. WE ARE ALSO ALIVE TO THE FACT THAT RULE 34(5) OF THE INCOM E TAX APPELLATE TRIBUNAL RULES 1963, WHICH DEALS WITH PRONOUNCEMENT OF ORDERS, PROVIDES AS FOLLOWS: (5) THE PRONOUNCEMENT MAY BE IN ANY OF THE FOLLOWIN G MANNERS : - 4 - ITA NO.142/RJT/2018 SHRI SAMATBHAI MALABHAI PARMAR VS. ITO ASST.YEAR 2013-14 (A) THE BENCH MAY PRONOUNCE THE ORDER IM MEDIATELY UPON THE CONCLUSION OF THE HEARING. (B) IN CASE WHERE THE ORDER IS NOT PRONO UNCED IMMEDIATELY ON THE CONCLUSION OF THE HEARING, THE BENCH SHALL GIVE A D ATE FOR PRONOUNCEMENT. (C) IN A CASE WHERE NO DATE OF PRONOUNCE MENT IS GIVEN BY THE BENCH, EVERY ENDEAVOUR SHALL BE MADE BY THE BENCH TO PRONOUNCE T HE ORDER WITHIN 60 DAYS FROM THE DATE ON WHICH THE HEARING OF THE CASE WAS CONCLUDED BUT, WHERE IT IS NOT PRACTICABLE SO TO DO ON THE GROUND OF EXCEPTIONAL A ND EXTRAORDINARY CIRCUMSTANCES OF THE CASE, THE BENCH SHALL FIX A FUTURE DAY FOR P RONOUNCEMENT OF THE ORDER, AND SUCH DATE SHALL NOT ORDINARILY (EMPHASIS SUPPLIED B Y US NOW) BE A DAY BEYOND A FURTHER PERIOD OF 30 DAYS AND DUE NOTICE OF THE DAY SO FIXED SHALL BE GIVEN ON THE NOTICE BOARD. 8. QUITE CLEARLY, ORDINARILY THE ORDER ON AN APPE AL SHOULD BE PRONOUNCED BY THE BENCH WITHIN NO MORE THAN 90 DAYS FROM THE DATE OF CONCLUDING THE HEARING. IT IS, HOWEVER, IMP ORTANT TO NOTE THAT THE EXPRESSION ORDINARILY HAS BEEN USED IN T HE SAID RULE ITSELF. THIS RULE WAS INSERTED AS A RESULT OF DIRECTIONS OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SHIVSAGAR VEG RESTAURANT VS ACIT [(2009) 317 ITR 433 (BOM)] WHEREIN THEIR L ORDSHIPS HAD, INTER ALIA, DIRECTED THAT WE, THEREFORE, DIRECT TH E PRESIDENT OF THE APPELLATE TRIBUNAL TO FRAME AND LAY DOWN THE GUIDEL INES IN THE SIMILAR LINES AS ARE LAID DOWN BY THE APEX COURT IN THE CASE OF ANIL RAI (SUPRA) AND TO ISSUE APPROPRIATE ADMINISTRATIVE DIRECTIONS TO ALL THE BENCHES OF THE TRIBUNAL IN THAT BEHALF. WE HOP E AND TRUST THAT SUITABLE GUIDELINES SHALL BE FRAMED AND ISSUED BY T HE PRESIDENT OF - 5 - ITA NO.142/RJT/2018 SHRI SAMATBHAI MALABHAI PARMAR VS. ITO ASST.YEAR 2013-14 THE APPELLATE TRIBUNAL WITHIN SHORTEST REASONABLE T IME AND FOLLOWED STRICTLY BY ALL THE BENCHES OF THE TRIBUNAL. IN THE MEANWHILE(EMPHASIS, BY UNDERLINING, SUPPLIED BY US NOW), ALL THE REVISIONAL AND APPELLATE AUTHORITIES UNDER THE INCO ME-TAX ACT ARE DIRECTED TO DECIDE MATTERS HEARD BY THEM WITHIN A P ERIOD OF THREE MONTHS FROM THE DATE CASE IS CLOSED FOR JUDGMENT. IN THE RULED SO FRAMED, AS A RESULT OF THESE DIRECTIONS, THE EXPRES SION ORDINARILY HAS BEEN INSERTED IN THE REQUIREMENT TO PRONOUNCE T HE ORDER WITHIN A PERIOD OF 90 DAYS. THE QUESTION THEN ARISES WHETH ER THE PASSING OF THIS ORDER, BEYOND NINETY DAYS, WAS NECESSITATED BY ANY EXTRAORDINARY CIRCUMSTANCES. 9. LET US IN THIS LIGHT REVERT TO THE PREVAILING SI TUATION IN THE COUNTRY. ON 24TH MARCH, 2020, HONBLE PRIME MINIST ER OF INDIA TOOK THE BOLD STEP OF IMPOSING A NATIONWIDE LOCKDOW N, FOR 21 DAYS, TO PREVENT SPREAD OF COVID 19 EPIDEMIC, AND THIS LO CKDOWN WAS EXTENDED FROM TIME TO TIME. AS A MATTER OF FACT, EV EN BEFORE THIS FORMAL NATIONWIDE LOCKDOWN, THE FUNCTIONING OF THE INCOME TAX APPELLATE TRIBUNAL AT MUMBAI WAS SEVERELY RESTRICTE D ON ACCOUNT OF LOCKDOWN BY THE MAHARASHTRA GOVERNMENT, AND ON ACCO UNT OF STRICT ENFORCEMENT OF HEALTH ADVISORIES WITH A VIEW OF CHE CKING SPREAD OF COVID 19. THE EPIDEMIC SITUATION IN MUMBAI BEING GR AVE, THERE WAS NOT MUCH OF A RELAXATION IN SUBSEQUENT LOCKDOWNS AL SO. IN ANY CASE, THERE WAS UNPRECEDENTED DISRUPTION OF JUDICIA L WOK ALL OVER THE COUNTRY. AS A MATTER OF FACT, IT HAS BEEN SUCH AN UNPRECEDENTED - 6 - ITA NO.142/RJT/2018 SHRI SAMATBHAI MALABHAI PARMAR VS. ITO ASST.YEAR 2013-14 SITUATION, CAUSING DISRUPTION IN THE FUNCTIONING OF JUDICIAL MACHINERY, THAT HONBLE SUPREME COURT OF INDIA, IN AN UNPRECEDENTED ORDER IN THE HISTORY OF INDIA AND VID E ORDER DATED 6.5.2020 READ WITH ORDER DATED 23.3.2020, EXTENDED THE LIMITATION TO EXCLUDE NOT ONLY THIS LOCKDOWN PERIOD BUT ALSO A FEW MORE DAYS PRIOR TO, AND AFTER, THE LOCKDOWN BY OBSERVING THAT IN CASE THE LIMITATION HAS EXPIRED AFTER 15.03.2020 THEN THE PE RIOD FROM 15.03.2020 TILL THE DATE ON WHICH THE LOCKDOWN IS L IFTED IN THE JURISDICTIONAL AREA WHERE THE DISPUTE LIES OR WHERE THE CAUSE OF ACTION ARISES SHALL BE EXTENDED FOR A PERIOD OF 15D AYS AFTER THE LIFTING OF LOCKDOWN. HONBLE BOMBAY HIGH COURT, IN AN ORDER DATED 15TH APRIL 2020, HAS, BESIDES EXTENDING THE VALIDIT Y OF ALL INTERIM ORDERS, HAS ALSO OBSERVED THAT, IT IS ALSO CLARIFI ED THAT WHILE CALCULATING TIME FOR DISPOSAL OF MATTERS MADE TIME- BOUND BY THIS COURT, THE PERIOD FOR WHICH THE ORDER DATED 26TH MA RCH 2020 CONTINUES TO OPERATE SHALL BE ADDED AND TIME SHALL STAND EXTENDED ACCORDINGLY, AND ALSO OBSERVED THAT ARRANGEMENT C ONTINUED BY AN ORDER DATED 26TH MARCH 2020 TILL 30TH APRIL 2020 SH ALL CONTINUE FURTHER TILL 15TH JUNE 2020. IT HAS BEEN AN UNPRE CEDENTED SITUATION NOT ONLY IN INDIA BUT ALL OVER THE WORLD. GOVERNMENT OF INDIA HAS, VIDE NOTIFICATION DATED 19TH FEBRUARY 20 20, TAKEN THE STAND THAT, THE CORONA VIRUS SHOULD BE CONSIDERED A CASE OF NATURAL CALAMITY AND FMC (I.E. FORCE MAJEURE CLAUSE) MAY BE INVOKED, WHEREVER CONSIDERED APPROPRIATE, FOLLOWING THE DUE PROCEDURE. THE TERM FORCE MAJEURE HAS BEEN DEFINED IN BLACK S LAW - 7 - ITA NO.142/RJT/2018 SHRI SAMATBHAI MALABHAI PARMAR VS. ITO ASST.YEAR 2013-14 DICTIONARY, AS AN EVENT OR EFFECT THAT CAN BE NEIT HER ANTICIPATED NOR CONTROLLED WHEN SUCH IS THE POSITION, AND IT IS OF FICIALLY SO NOTIFIED BY THE GOVERNMENT OF INDIA AND THE COVID-19 EPIDEMI C HAS BEEN NOTIFIED AS A DISASTER UNDER THE NATIONAL DISASTER MANAGEMENT ACT, 2005, AND ALSO IN THE LIGHT OF THE DISCUSSIONS ABOV E, THE PERIOD DURING WHICH LOCKDOWN WAS IN FORCE CAN BE ANYTHING BUT AN ORDINARY PERIOD. 10. IN THE LIGHT OF THE ABOVE DISCUSSIONS, WE ARE OF THE CONSIDERED VIEW THAT RATHER THAN TAKING A PEDANTIC VIEW OF THE RULE REQUIRING PRONOUNCEMENT OF ORDERS WITHIN 90 DAYS, D ISREGARDING THE IMPORTANT FACT THAT THE ENTIRE COUNTRY WAS IN LOCKD OWN, WE SHOULD COMPUTE THE PERIOD OF 90 DAYS BY EXCLUDING AT LEAST THE PERIOD DURING WHICH THE LOCKDOWN WAS IN FORCE. WE MUST FAC TOR GROUND REALITIES IN MIND WHILE INTERPRETING THE TIME LIMIT FOR THE PRONOUNCEMENT OF THE ORDER. LAW IS NOT BROODING OMN IPOTENCE IN THE SKY. IT IS A PRAGMATIC TOOL OF THE SOCIAL ORDER . THE TENETS OF LAW BEING ENACTED ON THE BASIS OF PRAGMATISM, AND THAT IS HOW THE LAW IS REQUIRED TO INTERPRETED. THE INTERPRETATION SO A SSIGNED BY US IS NOT ONLY IN CONSONANCE WITH THE LETTER AND SPIRIT O F RULE 34(5) BUT IS ALSO A PRAGMATIC APPROACH AT A TIME WHEN A DISASTER , NOTIFIED UNDER THE DISASTER MANAGEMENT ACT 2005, IS CAUSING UNPREC EDENTED DISRUPTION IN THE FUNCTIONING OF OUR JUSTICE DELIVE RY SYSTEM. UNDOUBTEDLY, IN THE CASE OF OTTERS CLUB VS DIT [(2 017) 392 ITR 244 (BOM)], HONBLE BOMBAY HIGH COURT DID NOT APPRO VE AN ORDER - 8 - ITA NO.142/RJT/2018 SHRI SAMATBHAI MALABHAI PARMAR VS. ITO ASST.YEAR 2013-14 BEING PASSED BY THE TRIBUNAL BEYOND A PERIOD OF 90 DAYS, BUT THEN IN THE PRESENT SITUATION HONBLE BOMBAY HIGH COURT ITSELF HAS, VIDE JUDGMENT DATED 15TH APRIL 2020, HELD THAT DIRECTED WHILE CALCULATING THE TIME FOR DISPOSAL OF MATTERS MADE T IME-BOUND BY THIS COURT, THE PERIOD FOR WHICH THE ORDER DATED 26 TH MARCH 2020 CONTINUES TO OPERATE SHALL BE ADDED AND TIME SHALL STAND EXTENDED ACCORDINGLY. THE EXTRAORDINARY STEPS TAKEN SUO MOT U BY HONBLE JURISDICTIONAL HIGH COURT AND HONBLE SUPREME COURT ALSO INDICATE THAT THIS PERIOD OF LOCKDOWN CANNOT BE TREATED AS A N ORDINARY PERIOD DURING WHICH THE NORMAL TIME LIMITS ARE TO R EMAIN IN FORCE. IN OUR CONSIDERED VIEW, EVEN WITHOUT THE WORDS ORD INARILY, IN THE LIGHT OF THE ABOVE ANALYSIS OF THE LEGAL POSITION, THE PERIOD DURING WHICH LOCKOUT WAS IN FORCE IS TO EXCLUDED FOR THE P URPOSE OF TIME LIMITS SET OUT IN RULE 34(5) OF THE APPELLATE TRIBU NAL RULES, 1963. VIEWED THUS, THE EXCEPTION, TO 90-DAY TIME-LIMIT FO R PRONOUNCEMENT OF ORDERS, INHERENT IN RULE 34(5)(C), WITH RESPECT TO THE PRONOUNCEMENT OF ORDERS WITHIN NINETY DAYS, CLEARLY COMES INTO PLAY IN THE PRESENT CASE. OF COURSE, THERE IS NO, A ND THERE CANNOT BE ANY, BAR ON THE DISCRETION OF THE BENCHES TO REFIX THE MATTERS FOR CLARIFICATIONS BECAUSE OF CONSIDERABLE TIME LAG BET WEEN THE POINT OF TIME WHEN THE HEARING IS CONCLUDED AND THE POINT OF TIME WHEN THE ORDER THEREON IS BEING FINALIZED, BUT THEN, IN OUR CONSIDERED VIEW, NO SUCH EXERCISE WAS REQUIRED TO BE CARRIED OUT ON THE FACTS OF THIS CASE. - 9 - ITA NO.142/RJT/2018 SHRI SAMATBHAI MALABHAI PARMAR VS. ITO ASST.YEAR 2013-14 7. ON THE BASIS OF THE OBSERVATION MADE IN THE AFOR ESAID JUDGMENT WE EXCLUDE THE PERIOD OF LOCKDOWN WHILE CO MPUTING THE LIMITATION PROVIDED UNDER RULE 34(5) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULE 1963. ORDER IS, THUS, PRONOUNCED IN THE OPEN COURT. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 02/06/2020 SD/- SD/- (WASEEM AHMED) (MS. MADHUM ITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 02/06/2020 TANMAY, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , ! /DR,ITAT, RAJKOT 6. '# $% / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , ! / ITAT, RAJKOT 1. DATE OF DICTATION 21.04.2020 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 21.04.2020 3. OTHER MEMBER. 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 26.05.2020 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 02.06.2020 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER