Arvindbhai Mohanbhai Patel (HUF), Surat V. The Income Tax Officer, Ward-9(1), Surat

ITA 1636/AHD/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5774 (ITAT-AHMEDABAD)
• Duration Of Justice: 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 08-03-2017
• Assessment Year: 2003-2004
• Appeal Filed On: 17-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIVA SEWAK
• Assessee Lawyers: HARSH BHUTIA
• Keywords: Gift; Depreciation; Condonation of delay; Revenue expenditure; Reassessment proceedings
• Section: 133A; 147; 148

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL CAMP AT SURAT BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER / (APPELLANT) / (RESPONDENT) SR.NO. ITA NO. APPELLANT RESPONDENT 1. 1635/AHD/2016 A.Y.2003-2004 ARVINDBHAI MOHANBHAI PATEL 5/C & D ALLOKIK APARTMENT SUMUL DAIRY ROAD SURAT 395 004. PAN: AAUPP 7568 B ITO, WARD-9(1) SURAT. 2. 1636/AHD/2016 A.Y.2003-2004 ARVINDBHAI PATEL KARTA (HUF) 5/C & D ALLOKIK APARTMENT SUMUL DAIRY ROAD SURAT 395 004. -DO- 3. 1637/AHD/2016 A.Y.2001-02 KIRIT MOHANBHAI PATEL (HUF) 5/C & D ALLOKIK APARTMENT SUMUL DAIRY ROAD SURAT 395 004. PAN : AADHP 5895 D ITO, WARD-9(2) SURAT. 4. 1638/AHD/2016 A.Y.2003-04 KIRIT MOHANBHAI PATEL (HUF) 5/C & D ALLOKIK APARTMENT SUMUL DAIRY ROAD SURAT 395 004. PAN : AADHP 5895 D -DO- 5. 1655/AHD/2016 A.Y.2003-2004 MOHANBHAI D. PATEL (HUF) 5/C & D ALLOKIK APARTMENT SUMUL DAIRY ROAD SURAT 395 004. PAN : AACHM 3425 P ITO, WARD-9(3) SURAT ITA NO.1655/AHD/2014 & 4 OTHERS 2 ASSESSEE BY : SHRI HARSH BHUTIA REVENUE BY : SHRI SHIVA SEWAK, SR.DR ! / DATE OF HEARING : 10/03/2017 '#$ ! / DATE OF PRONOUNCEMENT: 01 /06/2017 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: PRESENT APPEALS ARE DIRECTED AT THE INSTANCE OF THE ASSESSEES AGAINST SEPARATE ORDERS OF THE LD.CIT(A) PASSED ON THE APPEALS OF THE APPELLANTS IN RESPECT OF RESPECTIVE ASSESSMENT YEAR S. ALL THESE APPEALS ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE O F CONVENIENCE. 2. REGISTRY HAS POINTED OUT THAT THESE APPEALS ARE TIME BARRED BETWEEN 847 DAYS TO 1020 DAYS. APPEAL OF SHRI MOHA NBHAI D. PATEL (HUF) IS TIME BARRED BY 847 DAYS, WHEREAS REST OF T HE APPEALS ARE TIME BARRED BY 1011 DAYS TO 1113 DAYS. ALL THE APPELLAN TS HAVE FILED APPLICATION FOR CONDONATION OF DELAY. ON ALL VITAL POINTS, FACTS ARE COMMON, THEREFORE, FOR THE FACILITY OF REFERENCE WE TAKE UP THE FACTS FROM THE APPEAL OF SHRI MOHANBHAI D. PATEL (HUF). 3. BRIEF FACTS OF THE CASE ARE THAT A SURVEY UNDER SECTION 133A OF THE INCOME TAX ACT, 1961 WAS CONDUCTED IN THE CASE OF S HRI PANKAJ DANAWALA (CA) BY THE DDIT(INV)-II, SURAT. DURING T HE COURSE OF SURVEY, IT WAS FOUND THAT SHRI PANKAJ DANAWALA WAS CREATING BOGUS CAPITAL IN THE CASE OF HIS VARIOUS CLIENTS. HE USE D TO INCREASE OPENING CAPITAL BALANCE FRAUDULENTLY WITHOUT TAKING INTO AC COUNT CLOSING BALANCE OF THE IMMEDIATELY PRECEDING YEAR, WHICH OUGHT TO H AVE BEEN OPENING BALANCE OF THE CONCERNED YEAR. HE WOULD SHOW FICTI TIOUS GIFTS/INCOME THROUGH WILL, AGRICULTURE INCOME AND FICTITIOUS INT EREST ON LOAN ETC. IN THE SURVEY, IT WAS FOUND THAT SHRI MOHANBHAI DHANJI BHAI PATEL, GROUP MANAGING DIRECTOR WAS ONE OF THE MAJOR BENEFICIARIE S OF BOGUS CAPITAL CREATED BY SHRI PANKAJ DANAWALA. DURING THE COURSE OF SURVEY, ITA NO.1655/AHD/2014 & 4 OTHERS 3 STATEMENT OF SHRI KIRIT M. PATEL, SON OF SHRI MOHAN BHAI DHANJIBHAI PATEL WAS RECORDED AND HE WAS CONFRONTED WITH EVIDENCES F OUND REGARDING CREATION OF BOGUS CAPITAL BY SHRI PANKAJ DANAWALA F OR THE BENEFIT OF SHRI MOHANBHAI DHANJIBHAI PATEL GROUP. IT IS PERTINENT TO POINT OUT THAT THE ASSESSEE SHRI MOHANBHAI DHANJIBHAI PATEL (HUF) HAD GIVEN ADVANCE OF RS.8,000/- TO M.D. TEXTILE LTD., AND RS.6 LAKHS IN THE LOAN ACCOUNT. THUS, A TOTAL RS.6,08,000/- WAS GIVEN FRESH IN THIS YEAR. THIS ADVANCE WAS SHOWN IN THE BALANCE SHEET AS ON 31.3.2003. ON ACCOUNT OF THIS SURVEY OPERATION, INFORMATION CAME TO THE AO, HE RE OPENED ASSESSMENT BY RECORDING REASONS AND NOTICE UNDER SECTION 148 W AS ISSUED ON 28.3.2008. THE ASSESSEE WAS ASKED TO EXPLAIN THE S OURCE OF SUCH ADVANCES. IT FAILED TO GIVE ANY EXPLANATION. ACCO RDINGLY, AN ADDITION OF RS.6,08,000/- WAS MADE TO THE TOTAL INCOME OF THE A SSESSEE VIDE ASSESSMENT ORDER DATED 31.12.2008. 4. SIMILARLY, THE FACTS IN THE CASE OF SHRI ARVINDB HAI M. PATEL ARE THAT DURING THE COURSE OF SURVEY ON THE PREMISES OF SHRI PANKAJ DANAWALA EVIDENCES EXHIBITING CREATION OF BOGUS CAPITAL WAS FOUND. A PERUSAL OF BALANCE SHEET OF SHRI ARVINDBHAI M. PATEL, HUF IT R EVEALED THAT THIS ASSESSEE HAS SHOWN LOAN/ADVANCES OF INVESTMENT IN T HE NAME OF M.D. INTERNATIONAL AMOUNTING TO RS.24,15,654/-. WHEN TH E AO CALLED FOR INFORMATION ABOUT SOURCE AND NATURE OF THIS ADVANCE , THEN NOTHING WAS SUBMITTED, AND ACCORDINGLY, AN ADDITION WAS MADE. SINCE WE ARE NOT CALLED UPON TO ADJUDICATE THESE ISSUES ON MERIT, TH EREFORE, WE DO NOT DEEM IT NECESSARY TO TAKE NOTE OF THE FACTS IN OTHE R CASES. REFERENCE TO THE ABOVE FACTS IS IN ORDER TO APPRECIATE WHETHER T HERE IS A PLAUSIBLE EXPLANATION AT THE END OF THE ASSESSEES TO EXPLAIN THE DELAY IN FILING OF THE APPEAL BEFORE THE TRIBUNAL ORDER OR NOT. THESE ASSESSMENT ORDERS WERE CHALLENGED BEFORE THE LD.CIT(A). THE LD.FIRST APPELLATE AUTHORITY HAS DISMISSED THE APPEALS ON THE GROUND THAT THESE APPEALS ARE NOT MAINTAINABLE BECAUSE THE ASSESSEES HAVE APPROACHED SETTLEMENT COMMISSION AND THE PROCEEDINGS WERE STATED TO BE PE NDING AT DIFFERENT ITA NO.1655/AHD/2014 & 4 OTHERS 4 LEVELS. THUS, FOR WANT OF JURISDICTION, THE LD.CIT (A) HAS DISMISSED ALL THE APPEALS. 5. WITH THIS BACKGROUND, LET US NOTE OF THE PLEADIN GS MADE IN THE APPLICATION FOR CONDONATION OF DELAY. AS OBSERVED EARLIER, WE TAKE THE FACTS FOR REFERRAL PURPOSE ONLY FROM THE CASE OF SH RI MOHANBHAI DHANJIBHAI PATEL HUF. WE TAKE NOTE OF THIS APPLICA TION FOR CONDONATION OF DELAY, WHICH READS AS UNDER: 1. IN THE ABOVE MENTIONED CASE, THE COMMISSIONER O F INCOME TAX (APPEALS)-V INCOME TAX OFFICER, SURAT PASSED AN ORDER ON 23-12- 2013. THE DUE DATE OF FILING THIS APPEAL BEFORE THE HON'BLE ITAT WAS TWO MONTHS FROM THE DATE OF RECEIPT OF CIT(A)'S ORD ER, I.E. 21-02-2014. THE APPEAL BEFORE YOUR HONOURS IS HOWEVER BEING FIL ED NOW, FOR WHICH THERE IS DELAY OF 847 DAYS. 2. THERE ARE GENUINE REASONS FOR THE DELAY WHICH AR E BEING NARRATED BEFORE YOUR HONOURS FOR YOUR SYMPATHETIC CONSIDERAT ION AND FOR THE CONDONATION OF THE DELAY, SO THAT THE APPEAL MAY KI NDLY BE ADMITTED AND THE JUSTICE DUE TO THE APPELLANT IS RENDERED. T HE CHRONOLOGY OF THE EVENTS IN THE GIVEN CASE IS STATED BELOW. 3. SUBSEQUENT TO SURVEY ACTION CARRIED OUT ON 11-03 -2006, ALL TWENTY MEMBERS OF THE GROUP FILED SETTLEMENT PETITION FOR VARIOUS ASSESSMENT YEARS RANGING FROM 09-03-2006 TO 05-04-2 007. ALL THE TWENTY CASES WERE COVERED BY SINGLE SURVEY. ALL THE SE CASES ARE CONNECTED AND HAVE COMMON ISSUES. ALL THE MEMBERS B ELONGING TO GROUP WERE WHOLLY CONTROLLED AND MANAGED BY SHRI M. D. PATEL. A COMMON CASH FLOW HAS BEEN PREPARED IN CASE OF SETTL EMENT PETITION OF SHRI M.D. PATEL WHEREIN TRANSACTIONS OF ALL THE TWE NTY GROUP MEMBERS HAVE BEEN INCORPORATED. THE NET INCOME OF THE SAID CASH FLOW HAS BEEN OFFERED AS ADDITIONAL INCOME OF SHRI M. D. PAT EL IN HIS SETTLEMENT PETITION. 4. 29-03-2006: THE APPELLANT FILED ITS SETTLEMENT PETITION FOR AY 1999- 00 TO 2005-06 BEFORE THE HON'BLE INCOME TAX SETTLEM ENT COMMISSION, MUMBAI. HOWEVER NOTICE U/S. 148 AND 143 (2) OF THE ACT WAS RECEIVED ONLY IN CASE OF AY 2000-01 AND 2004-05 RESPECTIVELY AT THE TIME OF FILING THE PETITION. 5. 20-02-2008: THE SETTLEMENT COMMISSION PASSED ORDER FOR ADMISSION AND ABATEMENT OF ALL 20 PETITIONS U/S. 24 5HA OF THE ACT BY ONE COMMON ORDER. ACCORDING TO THE SAID ORDER, SETT LEMENT ITA NO.1655/AHD/2014 & 4 OTHERS 5 APPLICATION OF THE APPELLANT FOR ASSESSMENT YEAR 20 00-01 AND 2004-05 WAS PROCEEDED WITH, WHILE FOR AY 1999-2000, 2001-02 TO 2003-04 AND 2005-06 WERE ABATED ON GROUNDS OF NON PENDENCY OF P ROCEEDING. 6. 28-03-2008: NOTICES U/S. 148 OF THE ACT WAS ISSUED FOR AY 2003- 04. 7. 31-03-2008: ALL THE ADMITTED PETITIONS OF THE GROUP WERE ABATED ON 31-03-2008 DUE TO THE AMENDMENT BROUGHT IN BY FINAN CE ACT 2007 IN SECTION 245D(4) OF THE ACT WHEREIN IF THE SETTLEMEN T PROCEEDINGS WERE NOT CONCLUDED BY 31-03-2008, SUCH PROCEEDINGS WOULD BE ABATED. ACCORDINGLY, THE PETITION OF APPELLANT FOR AY 2000- 01 AND 2004-05 WERE ALSO ABATED. 28-04-2008: ALL THE 20 MEMBER OF OUR GROUP, THEREAFTER FILED WR IT PETITIONS IN THE HON'BLE BOMBAY HIGH COURT CHALLENG ING THE ABATEMENT ORDERS PASSED U/S. 245HA OF THE ACT BY SETTLEMENT C OMMISSION AS WELL AS CHALLENGING THE CONSTITUTIONAL VALIDITY OF SECTI ONS 245D(2A), 245(20), 245D(4A) AND 245HA OF THE IT. ACT, 1961, AS AMENDED /INSERTED BY FINANCE ACT, 2007, W.E.F. 01-06-2007 WHICH WAS ADMI TTED ON 30-04- 2008. THE APPELLANT FILED WRIT PETITION FOR AY 2000 -01 AND 2004-05 BEFORE HON'BLE BOMBAY HIGH COURT. 9. 31-12-2008: THE ASSESSMENT PROCEEDINGS WERE CONCLUDED BY THE ASSESSING OFFICER U/S. 147 OF THE ACT FOR AY 2003-0 4. 10. 07-08-2009: BASED ON JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN CASE OF STAR TELEVISION NEWS LIMITED VS. UOI & OTHERS (2009 ) 317 ITR 66 (BOM), WHEREIN IT WAS HELD BY HON'BLE BOMBAY HIGH COURT TH AT IF THE DELAY IN DISPOSAL BEFORE 31-03-2008 IS NOT ATTR IBUTABLE TO THE APPLICANT, THEN SETTLEMENT COMMISSION WAS DIRECTED TO HEAR THOSE PETITIONS, 9 CASES OF THE GROUP INCLUDING THE APPEL LANT'S CASE WERE DISPOSED BY THE HON'BLE HIGH COURT VIDE THEIR ORDER S DATED 07-08-2009 AND WERE RESTORED BACK TO THE ITSC FOR FINAL HEARIN G U/S. 245D(4)OFTHEACT. 11. 23-12-2013: THE ORDER WAS PASSED BY CIT(A) - V FOR AY 2003-04, DISMISSED THE APPEAL FOR WANT OF JURISDICTION. THE APPEAL WAS DISMISSED IN LIMINE BY THE LEARNED CIT(A). A LEGAL OPINION WA S SOUGHT FROM THE REPRESENTATIVE, ADVOCATE HEMANT JADIA WHO WAS HANDL ING THE CASE IN SETTLEMENT COMMISSION AS WELL AS IN HON'BLE BOMBAY HIGH COURT WITH REGARDS TO WHETHER APPEAL BEFORE HON'BLE IT AT IS T O BE FILED AGAINST THE ORDER OF CIT(A). MR. HEMANT JADIA HAD OPINED THAT S INCE THE MATTER IS PENDING BEFORE HON'BLE BOMBAY HIGH COURT AND THEREA FTER WILL POSITIVELY BE HEARD BY HON'BLE SETTLEMENT COMMISSION, THERE IS NO NEED TO FILE ANY FURTHER APPEAL TO HON'BLE IT AT. HE WAS ALSO OF THE OPINION THAT IN CASE OF ANY ABATED YEARS OR IN ANY YEAR WHICH WILL NOT BE RESTORED BY ITA NO.1655/AHD/2014 & 4 OTHERS 6 HON'BLE BOMBAY HIGH COURT, THE HON'BLE SETTLEMENT C OMMISSION WOULD TAKE UP THOSE YEARS EXERCISING THEIR POWER U/ .S 245E OF THE ACT. SINCE ALL THE YEARS AND MEMBER OF THE GROUP ARE CON NECTED, HE OPINED THAT IN ALL LIKELIHOOD ALL MATTERS WOULD BE HEARD TOGETHER BY THE SETTLEMENT COMMISSION. 12. 03-06-2016: DURING THE COURSE OF HEARING BEFORE HON'BLE SETTLEMENT COMMISSION, THE ISSUE OF REVIVING THE AB ATED YEARS WAS DISCUSSED IN LENGTH IN THE GIVEN CASES FIXED. BOTH THE PARTIES ARGUED OVER THE ISSUE. THE MEMBERS HOWEVER, DECLINED TO EX ERCISE THEIR INHERENT POWER AVAILABLE U/S. 245E OF THE ACT TO RE VIVE THE ABATED YEARS. 13. 07-06-2016: BASED ON CURRENT CIRCUMSTANCES AND HEARING HELD ON 03-06-2016, M/S. BHUTA SHAH & CO LLP, THE REPRES ENTATIVE ADVISED THAT APPEAL SHOULD BE FILED FOR ALL ABATED YEARS AS HON'BLE MEMBERS OF SETTLEMENT COMMISSION HAD DECLINED TO RE VIVE ALL ABATED YEARS. WE ARE ENCLOSING HEREWITH COPY OF THE SAID L ETTER. 14. FROM THE ABOVE CHRONOLOGY, THE HON'BLE MEMBERS WOULD OBSERVE THAT PROPER STEPS WERE TAKEN BY US TO AGITATE THE O RDER PASSED BY THE ASSESSING OFFICER. HOWEVER, TO THE MISFORTUNE OF TH E APPELLANT, APPEAL AS MANDATED BY THE STATUTE WAS NOT FILED BEFORE THI S HON'BLE TRIBUNAL IN VIEW OF THE CIRCUMSTANCES EXPLAINED HEREINABOVE. CONSIDERING THE COMPLEXITY OF THE SUBJECT-MATTER, IT IS HUMBLY PRAY ED THAT THE DELAY CAUSED IN LODGING THE CAPTIONED APPEAL MAY KINDLY B E CONDONED. 15.IN THIS CONNECTION, THE APPELLANT PLACES RELIANC E UPON THE FOLLOWING DECISIONS WITH THE RELEVANT FINDINGS THEREFROM: COLLECTOR. LAND ACQUISITION V. MST. KATIJI & ORS. [ 167 ITR 471 (SOI: 'THE LEGISLATURE HAS CONFERRED POWER TO CONDONE DEL AY BY ENACTING SECTION 5 OF THE LIMITATION ACT, 1963, IN ORDER TO ENABLE THE COURTS TO SUBSTANTIAL JUSTICE TO PARTIES BY DISPOSING OF MATT ERS ON MERITS. THE EXPRESSION 'SUFFICIENT CAUSE' IN SECTION 5 IS ADEQU ATELY ELASTIC TO ENABLE THE COURTS 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. A JUSTIFIABLY LIBERAL APPROA CH HAS TO BE ADOPTED ON PRINCIPLE. 'EVERY DAY'S DELAY MUST BE EXPLAINED' DOES NOT IMPL Y A PEDANTIC APPROACH. THE DOCTRINE MUST BE APPLIED IN A RATIONA L, COMMON SENSE AND PRAGMATIC MANNER. WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATIO N ARE PITTED AGAINST EACH OTHER, THE CAUSE OF SUBSTANTIAL JUSTICE DESERV ES TO BE PREFERRED, FOR ITA NO.1655/AHD/2014 & 4 OTHERS 7 THE OTHER SIDE CANNOT CLAIM TO HAVE A VESTED RIGHT IN INJUSTICE BEING DONE BE *CAUSE OF A NON-DELIBERATE DELAY.' (II) N. BALAKRISHNAN V. M. RAMAMURTHY [(1998) 7 SCC 1231: '12. A COURT KNOWS THAT REFUSAL TO CONDONE DELAY WO ULD RESULT IN FORECLOSING A SUITOR FORM PUTTING FORTH HIS CAUSE. THERE IS NO PRESUMPTION THAT DELAY IN APPROACHING THE COURT IS ALWAYS DELIB ERATE. THIS COURT HAS HELD THAT THE WORDS 'SUFFICIENT CAUSE' UNDER SECTIO N 5 OF THE LIMITATION ACT SHOULD RECEIVE A LIBERAL CONSTRUCTION SO AS TO ADVANCE SUBSTANTIAL JUSTICE VIDE SHANKUTALA DEVI JAIN V. KUNTAL KUMARI (AIR 1969 SC 575) AND STATE OF W.B. V. ADMINISTRATOR, HOWRAH MUNICIPA LITY (AIR 1972 SC 949)'. (III) SONERAO SADASHIVRAO PATIL & ANR. V. GODAWA RIBAI F1999 (2) MH. LJ. 2731: ' THE PRIMARY FUNCTION OF A COURT TO IS TO ADJUDICA TE THE DISPUTES BETWEEN THE CONTESTING PARTIES AND TO ADVANCE SUBSTANTIAL J USTICE. THE RULES OF LIMITATION ARE NOT MADE TO HARM THE VALUABLE RIGHTS OF THE PARTIES. THE DISCRETION IS GIVEN TO THE COURT TO CONDONE DELAY A ND ADMIT THE APPEAL IN ORDER THAT JUDICIAL POWER AND DISCRETION IN THAT BE HALF SHOULD BE EXERCISED TO ADVANCE SUBSTANTIAL JUSTICE ................................................... ............................. THE REQUIREMENT OF EXPLANATION OF EVERY DAY'S DELAY DOES NOT MEAN THAT A PEDANTIC APPROACH SHOULD BE TAKEN. THE COURTS ARE REQUIRED TO TAKE PRAGMATIC APPROACH WHILE INTERPRETING THE CONCEPT O F SUFFICIENT CAUSE. TOO MUCH RIGOUR OF THE LAW IS NOT JUSTICE BUT THE D ENIAL OF IT. IT IS TO BE BORNE IN MIND THE MAXIM 'SUMMUM JUS, SUMMA INJURIA' . EXTREME LAW IS EXTREME INJURY. IN THE MATTER OF CONDONATION OF DEL AY, THE DURATION OF DELAY IS INSIGNIFICANT. THE COURT HAS TO TAKE INTO ACCOUNT WHETHER THERE IS ACCEPTABLE EXPLANATION OR PARDONABLE EXPLA NATION. ' (IV) VENKATADRI TRADERS LTD, V. CIT F248 ITR 681 (MAD)]: 'THE DISCRETION SO VESTED IS REQUIRED TO BE EXERCIS ED IN A MANNER WHICH WOULD PROTECT AND PROMOTE THE JUST INTEREST O F THE ASSESSEE. THE POSITION OF THE ASSESSEE VIS-A-VIS THE REVENUE IS NOT STRICTLY ADVERSARIAL, ALTHOUGH MORE OFTEN THAN NOT, THAT IS THE MANNER IN WHICH THE TWO PARTIES PERCEIVE THEIR ROLE. THE REVENUE IS NOT TO BE REGARDED AS INTERESTED IN SCORING POINTS AGAINST THE ASSESSE E, BUT ONLY IN THE JUST ENFORCEMENT OF THE PROVISIONS OF THE ACT. THE DISCRETION OF THE AUTHORITY, THEREFORE, ON THE FACTS OF THIS CASE, WA S REQUIRED TO BE EXERCISED BY BEARING THE AFOREMENTIONED CONSIDERATI ONS IN MIND. ' ITA NO.1655/AHD/2014 & 4 OTHERS 8 (V) SAURASHTRA CEMENT AND CHEMICAL INDUSTRIES L TD, V. CIT [115 ITR 27 IN AY 1965-66, THE ASSESSEE HAD PAID A SUM OF X 3,00,600/- TO GUJARAT STATE ELECTRICITY BOARD FOR LAYING ELECTRIC POWER LINE TO ITS FACTORY, WHICH WAS CAPITALIZED AND DEPRECIATION THE REON WAS CLAIMED @ 10%. THIS CLAIM WAS ALLOWED BY THE ITO IN THE ORD ER PASSED FOR THAT YEAR. SIMILAR CLAIM FOR THE SUBSEQUENT YEAR, H OWEVER, WAS DISALLOWED BY THE ITO ON THE GROUND THAT THE ASSESS EE WAS NOT THE OWNER OF THE POWER LINE AND SUCH FINDING WAS SUSTAI NED IN FIRST APPEAL. DURING THE COURSE OF THE HEARING BEFORE THE ITAT, T HE ASSESSEE REALIZED THE DIFFICULTY IN GETTING DEPRECIATION AND , ACCORDINGLY, REQUESTED THE TRIBUNAL TO ALLOW IT TO WITHDRAW THE APPEAL WHICH WAS GRANTED. SUBSEQUENT TO RECEIPT OF THE ORDER OF THE TRIBUNAL ON 07.12.1972, THE ASSESSEE FILED A REVISION APPLICATI ON ON 26.12.1972 PRAYING THAT IT SHOULD BE ALLOWED TO TREAT THE AMOU NT OF X 3,00,600/- AS REVENUE EXPENDITURE FOR A.Y. 1965-66 ALONG WITH AN APPLICATION FOR CONDONATION OF DELAY. THAT WAS, HOWEVER, REJECTED F OR DELAY. IN THE WRIT PETITION FILED, THE HON'BLE HIGH COURT HELD AS UNDER: 'IN THE INSTANT CASE, THE COMMISSIONER RECOGNIZED T HAT IT WOULD HAVE BEEN A SUFFICIENT CAUSE IF THE PETITIONER-COMPANY H AD APPROACHED THE COMMISSIONER IMMEDIATELY AFTER THE ORDER OF THE INC OME-TAX OFFICER WITH REFERENCE TO ASSESSMENT YEAR 1966-67, BUT DECL INED TO CONDONE THE DELAY JUST BECAUSE THE PETITIONER-COMPANY TOOK THE MATTER IN APPEAL FIRST BEFORE THE APPELLATE ASSISTANT COMMISS IONER AND THEREAFTER BEFORE THE APPELLATE TRIBUNAL. THAT APPR OACH COULD NOT BE SAID TO BE IN EXERCISE OF SOUND JUDICIAL DISCRETION AND THE DECISION BECOMES ILLOGICAL ONCE THE TWO CONCLUSIONS REACHED BY HIM ARE EXAMINED CLOSELY. MERELY BECAUSE THE MATTER WAS TAK EN IN APPEAL, IT DOES NOT CHANGE THE COMPLEXION AND IT WOULD BE IMPO SSIBLE TO COME TO THE CONCLUSION THAT BECAUSE OF THAT THERE WAS NO SUFFICIENT CAUSE. UNDER THE CIRCUMSTANCES, IT MUST BE HELD THAT THE D ISCRETION VESTED IN HIM WAS NOT EXERCISED IN A JUDICIAL MANNER AND THE RESULT WAS THAT A SUBSTANTIAL INJURY WAS 'CAUSED TO THE PETITIONER-CO MPANY SO FAR AS THE CONSIDERATION OF THE QUESTION REGARDING THE REVENUE ' EXPENDITURE OF RS.3,00,600 WAS CONCERNED.' 6. THE LD.COUNSEL FOR THE ASSESSEE TOOK US THROUGH THE APPLICATION AS WELL AS OPINION OF SHRI HEMANT JADIA DATED 7.6.2016 . COPY OF THE LETTER WRITTEN BY SHRI HEMANT JADIA TO KIRIT M. PATEL HAS BEEN PLACED ON RECORD. HE ALSO TOOK US THROUGH WRIT PETITION FILED BY THE RESPECTIVE ASSESSEES BEFORE THE HONBLE BOMBAY HIGH COURT AND ALSO INTERIM ORDER ITA NO.1655/AHD/2014 & 4 OTHERS 9 PASSED BY THE HONBLE HIGH COURT. APART FROM DECIS IONS REFERRED IN THE APPLICATION FOR CONDONATION OF DELAY, HE MADE REFER ENCE TO A LARGE NUMBER OF TRIBUNALS ORDERS WHICH ARE PLACED IN THE PAPER BOOK. ON THE STRENGTH OF THESE PLEADINGS, HE CONTENDED THAT THER E WAS NO DELIBERATE ATTEMPT AT THE END OF THE ASSESSEE FOR NOT FILING T HE APPEAL WITHIN TIME LIMIT. ACCORDING TO THE LD.COUNSEL FOR THE ASSESSE E, THEY WERE NOT PROPERLY ADVISED BY THEIR TAX CONSULTANT, AND ON AC COUNT OF THAT THE APPEALS BECOME TIME BARRED. 7. ON THE OTHER HAND, THE LD.DR CONTENDED THAT THER E IS NO EXPLANATION AT THE END OF THE ASSESSEES. HE POINTE D OUT THAT LETTER FROM SHRI HEMANT JADIA IS DATED 7.6.2016 WHEREAS THE APP EALS OUGHT TO HAVE BEEN FILED IN 2013. THEY HAVE NOT TAKEN ANY STEPS BEFORE THE HONBLE SETTLEMENT COMMISSION AFTER THE ORDER OF THE HONBL E HIGH COURT TILL THE APPLICATION UNDER SECTION 245E OF THE INCOME TAX AC T WAS CONSIDERED AGAINST ABATEMENT ORDER WAS FILED ON 14.3.2015. WH EREAS, THE LD.CIT(A) HAS DECIDED THE APPEAL FOR WANT OF JURISD ICTION ON 23.12.2013. THERE IS NO EXPLANATION FOR THIS DELAY. HONBLE SE TTLEMENT COMMISSION HAS ALSO REJECTED THEIR APPLICATION UNDER SECTION 2 45E ON 3.6.2016 THEREAFTER, THEY HAVE FILED APPLICATION ON 17.6.201 6. ACCORDING TO THE LD.DR, THERE IS NO PLAUSIBLE EXPLANATION AT THE END OF THE ASSESSEE. 8. WE HAVE CONSIDERED RIVAL CONTENTIONS AND GONE TH ROUGH THE RECORD CAREFULLY. SUB-SECTION 5 OF SECTION 253 CON TEMPLATES THAT THE TRIBUNAL MAY ADMIT AN APPEAL OR PERMIT FILING OF ME MORANDUM OF CROSS- OBJECTIONS AFTER EXPIRY OF RELEVANT PERIOD, IF IT I S SATISFIED THAT THERE WAS A SUFFICIENT CAUSE FOR NOT PRESENTING IT WITHIN THA T PERIOD. THIS EXPRESSION SUFFICIENT CAUSE EMPLOYED IN THE SECTI ON HAS ALSO BEEN USED IDENTICALLY IN SUB-SECTION 3 OF SECTION 249 OF INCOME TAX ACT, WHICH PROVIDES POWERS TO THE LD.COMMISSIONER TO CON DONE THE DELAY IN FILING THE APPEAL BEFORE THE COMMISSIONER. SIMILA RLY, IT HAS BEEN USED IN SECTION 5 OF INDIAN LIMITATION ACT, 1963. WHENE VER INTERPRETATION ITA NO.1655/AHD/2014 & 4 OTHERS 10 AND CONSTRUCTION OF THIS EXPRESSION HAS FALLEN FOR CONSIDERATION BEFORE HONBLE HIGH COURT AS WELL AS BEFORE THE HONBLE SU PREME COURT, THEN, HONBLE COURT WERE UNANIMOUS IN THEIR CONCLUSION TH AT THIS EXPRESSION IS TO BE USED LIBERALLY. WE MAY MAKE REFERENCE TO THE FOLLOWING OBSERVATIONS OF THE HONBLE SUPREME COURT FROM THE DECISION IN THE CASE OF COLLECTOR LAND ACQUISITION VS. MST. KATIJI & OTH ERS, 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 BEING DEFEA TED. AS AGAINST THIS WHEN DELAY IS CONDONED THE HIGHEST THAT CAN HAPPEN IS THAT A CAUS E 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 S ECOND'S DELAY? THE DOCTRINE MUST BE APPLIED IN A RATIONAL COMMON SENSE PRAGMATI C MANNER. 4. WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERA TIONS ARE PITTED AGAINST EACH OTHER, CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO 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 MALA FIDES. A LITIGANT DOES NOT STAND TO BENEFIT BY RESORTING TO DELAY. IN FACT HE RUNS A SE RIOUS RISK. 6. IT MUST BE GRASPED THAT JUDICIARY IS RESPECTED N OT ON ACCOUNT OF ITS POWER TO LEGALIZE INJUSTICE ON TECHNICAL GROUNDS BUT BECAUSE IT IS CAPABLE OF REMOVING INJUSTICE AND IS EXPECTED TO DO SO. 9. SIMILARLY, WE WOULD LIKE TO MAKE REFERENCE TO AU THORITATIVE PRONOUNCEMENT OF HONBLE 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 REMEDY IS TO REPAIR THE DAMAGE CAUSED BY REASON OF LEGAL INJURY. LAW OF LIMITATION FIXES A LIFE-SPAN F OR SUCH LEGAL REMEDY FOR THE REDRESS OF THE LEGAL INJURY SO SUFFERED. TIME IS PR ECIOUS AND THE WASTED TIME WOULD NEVER REVISIT. DURING EFFLUX OF TIME NEWER CAUSES W OULD SPROUT UP NECESSITATING NEWER PERSONS TO SEEK LEGAL REMEDY BY APPROACHING T HE COURTS. SO A LIFE SPAN MUST BE FIXED FOR EACH REMEDY. UNENDING PERIOD FOR LAUNC HING THE REMEDY MAY LEAD TO UNENDING UNCERTAINTY AND CONSEQUENTIAL ANARCHY. LAW OF LIMITATION IS THUS FOUNDED ITA NO.1655/AHD/2014 & 4 OTHERS 11 ON PUBLIC POLICY. IT IS ENSHRINED IN THE MAXIM INTE REST REIPUBLICAE UP SIT FINIS LITIUM (IT IS FOR THE GENERAL WELFARE THAT A PERIOD BE PUT T 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 TACTICS BUT SEEK THEIR RE MEDY PROMPTLY. THE IDEA IS THAT EVERY LEGAL REMEDY MUST BE KEPT ALIVE FOR A LEGISLA TIVELY FIXED PERIOD OF TIME. A COURT KNOWS THAT REFUSAL TO CONDONE DELAY WOULD R ESULT FORECLOSING A SUITOR FROM PUTTING FORTH HIS CAUSE. THERE IS NO PR ESUMPTION THAT DELAY IN APPROACHING THE COURT IS ALWAYS DELIBERATE. THIS COURT HAS HELD THAT THE WORDS 'SUFFICIENT CAUSE' UNDER SECTION 5 OF THE LIMITATION 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. T HAT ALONE IS NOT ENOUGH TO TURN DOWN HIS PLEA AND TO SHUT THE DOOR A GAINST HIM. IF THE EXPLANATION DOES NOT SMACK OF MALA FIDES OR IT IS N OT PUT FORTH AS PART OF A DILATORY STRATEGY THE COURT MUST SHOW UTMOST CONS IDERATION TO THE SUITOR. BUT WHEN THERE IS REASONABLE GROUND TO THIN K THAT THE DELAY WAS OCCASIONED BY THE PARTY DELIBERATELY TO GAIN TIME T HEN THE COURT SHOULD LEAN AGAINST ACCEPTANCE OF THE EXPLANATION. WHILE C ONDONING DELAY THE COULD SHOULD NOT FORGET THE OPPOSITE PARTY ALTOGETH ER. IT MUST BE BORNE IN MIND THAT HE IS A LOOSER AND HE TOO WOULD HAVE I NCURRED QUIET A LARGE LITIGATION EXPENSES. IT WOULD BE A SALUTARY GUIDELI NE THAT WHEN COURTS CONDONE THE DELAY DUE TO LACHES ON THE PART OF THE APPLICANT THE COURT SHALL COMPENSATE THE OPPOSITE PARTY FOR HIS LOSS. 10. WE DO NOT DEEM IT NECESSARY TO RE-CITE OR RECAP ITULATE THE PROPOSITION LAID DOWN IN OTHER DECISIONS. IT IS SU FFICE TO SAY THAT THE HONBLE COURTS ARE UNANIMOUS IN THEIR APPROACH TO P ROPOUND THAT WHENEVER THE REASONS ASSIGNED BY AN APPLICANT FOR E XPLAINING THE CONDONATION OF DELAY, THEN SUCH REASONS ARE TO BE C ONSTRUED WITH A JUSTICE ORIENTED APPROACH. IN THE LIGHT OF THE AB OVE, LET US CONSIDER EXPLANATION OF THE ASSESSEE. A PERUSAL OF THE APPL ICATION FOR ITA NO.1655/AHD/2014 & 4 OTHERS 12 CONDONATION OF DELAY WOULD INDICATE THAT ON 29.3.20 06 SETTLEMENT PETITIONS WERE FILED BEFORE THE INCOME TAX SETTLEME NT COMMISSION IN THE ASSTT.YEAR 1999-2000 TO 2005-06. ON 22.2.008, SETTLEMENT COMMISSION HAS DISMISSED APPLICATIONS EXCEPT FOR TH E ASSTT.YEAR 2000- 01 AND 2004-05 IN THE CASE OF MOHANBHAI D. PATEL. SIMILARLY IN OTHER CASES, APPLICATIONS WERE ADMITTED EITHER FOR ONE YE AR OR TWO YEARS VIZ. IN THE CASE OF ARVIND PATEL APPLICATION FOR THE ASS TT.YEAR 2004-05 WAS ADMITTED FOR CONSIDERATION AND APPLICATION FOR ASST T.YEAR 1999-2000 TO 2003-04 AND 2005-2006 WERE ABATED ON THE GROUNDS OF NON-PENDENCY OF THE PROCEEDINGS. THEREAFTER, AMENDMENTS WERE BR OUGHT IN FINANCE ACT, 2007 IN SECTION 245D(4) OF THE INCOME TAX ACT WHEREIN IT WAS PROVIDED THAT IF SETTLEMENT PROCEEDINGS WERE NOT CO NCLUDED ON 31.3.2008, THEN SUCH PROCEEDINGS WOULD ABATE. ACCO RDINGLY, THE PETITIONS OF THE ASSESSEES FOR THE YEARS ADMITTED B Y THE SETTLEMENT COMMISSION FOR CONSIDERATION HAVE ALSO BEEN DISMISS ED. APPELLANTS HAVE CHALLENGED THE ORDER OF SETTLEMENT COMMISSION DATED 31.3.2008 VIDE WHICH THEIR PETITIONS HAVE BEEN ABATED BY OPER ATION OF PROVISIONS OF INCOME TAX ACT BEFORE THE HONBLE HIGH COURT. U LTIMATELY, HONBLE COURT ALLOWED THEIR PETITIONS AND REMITTED THAT MAT TER BACK TO THE FILE OF SETTLEMENT COMMISSION FOR ADJUDICATION. QUESTION B EFORE US IS HOW THE ASSESSEES HAVE HARBOURED A BELIEF THAT THEY SHOULD NOT FILE APPEALS BEFORE THE TRIBUNAL. ACCORDING TO THEM, THEY WERE EXPECTING THAT THEIR CASES WILL BE TAKEN UP BY THE SETTLEMENT COMMISSION IN ALL ASSESSMENT YEARS. ACCORDING TO THE ASSESSEE, THEY HAVE HARBOU RED THIS BELIEF ON THE ADVICE OF THEIR COUNSEL SHRI HEMANT JADIA, WHOS E OPINION IS AVAILABLE ON THE PAPER BOOK. 11. WE HAVE CONSIDERED THIS OPINION. THE LD.COUNSE L FOR THE ASSESSEE ALSO TOOK US THROUGH LETTER OF PR. COMMISSIONER OF INCOME TAX, SURAT DATED 26.5.2016 WRITTEN TO THE CIT(DR), SETTLEMENT COMMISSION. THIS LETTER WAS REBUTTAL TO REPLY TO RULE 9 REPORT MADE IN THE M.D. GROUP OF CASES. WHILE GIVING REPLY TO THE CASES OF SHREYA T RADERS, ONE OF THE ITA NO.1655/AHD/2014 & 4 OTHERS 13 CONCERNS OF GROUP, EVEN THE DEPARTMENT HAS SUPPORTE D THE APPLICATION OF THE ASSESSEE MOVED UNDER SECTION 245E OF THE INC OME TAX ACT FOR TAKING UP PETITION RELEVANT TO THE ASSTT.YEAR 2004- 05 FOR CONSIDERATION. IT IS PERTINENT TO OBSERVE THAT WHEN THE SETTLEMENT COMMISSION HAS DISMISSED THE APPLICATION OF THE APPELLANTS ON 20.2 .008, MAIN REASON WAS THAT NO PROCEEDINGS WERE PENDING BEFORE THE INC OME TAX AUTHORITIES. AFTER THIS ORDER, PROCEEDINGS HAVE BE EN INITIATED UNDER SECTION 147 OF THE ACT. IN OTHER WORDS, THE ASSESS MENTS HAVE BEEN REOPENED ON 31.12.2008, BUT BEFORE ANY ASSESSMENT C OULD BE PASSED PETITIONS FOR OTHER YEARS ADMITTED BY THE SETTLEMEN T COMMISSION WERE ALSO ABATED ON 31.3.2008 BECAUSE OF THE AMENDMENT M ADE IN THE INCOME TAX ACT BY WAY OF FINANCE ACT, 2007. THUS, A VERY VEXED SITUATION DEVELOPED. ON ONE HAND, THE ASSESSEE HAS FILED WRIT PETITION BEFORE THE HONBLE HIGH COURT CHALLENGING ORDER OF THE SETTLEMENT COMMISSION DATED 31.3.2008 VIDE WHICH, THEIR APPLIC ATIONS ADMITTED FOR CONSIDERATION FOR SOME OF THE YEARS, WERE TREATED A S ABATED BY OPERATION OF LAW. ON THE OTHER HAND, THE AO HAS I NITIATED REASSESSMENT PROCEEDINGS IN SOME OF THE YEARS GIVIN G A BELIEF TO THE ASSESSEE THAT NOW THE PROCEEDINGS ARE PENDING IN OT HER YEARS. THEY CAN ALSO BE TAKEN INTO SETTLEMENT COMMISSION. THE IMPORTANT FACT WHICH WEIGH WITH US FOR ACCEPTING BONAFIDE OF THE ASSESSEE IS THAT EVEN IN 2013, THE LD.CIT(A) HAS HABOURED A BELIEF THAT P ROCEEDINGS ARE PENDING BEFORE THE SETTLEMENT COMMISSION, AND THERE FORE, THE LD.CIT(A) HAS NO JURISDICTION TO ENTERTAIN THE ISSU E AGITATED BY THE ASSESSEE ON MERIT. THIS FINDINGS OF THE LD.CIT(A) SUPPORTS BONA FIDE OF THE ASSESSEE IN BELIEVING THAT THEIR APPLICATIONS U NDER SECTION 245E WOULD BE ENTERTAINED BY THE SETTLEMENT COMMISSION A ND THERE IS NO NEED TO CHALLENGE THE ORDER OF THE CIT(A). IT IS A LSO IMPORTANT TO NOTE THAT THERE IS NO ADJUDICATION ON MERIT ON THE ISSUE S INVOLVED IN THESE APPEALS BY THE LD.CIT(A). THE APPEALS WERE DISMISS ED FOR THE REASON THAT THEY ARE NOT MAINTAINABLE. CONSIDERING THIS A SPECT AND IN THE ITA NO.1655/AHD/2014 & 4 OTHERS 14 INTEREST OF JUSTICE, WE DEEM IT APPROPRIATE TO COND ONE THE DELAY IN FILING THE APPEAL. WE PROCEED TO DECIDE THE APPEAL ON MER IT. 12. THE LD.CIT(A) HAS NOT ADJUDICATED THE ISSUES ON MERITS RATHER, DISMISSED THE APPEALS ON ACCOUNT OF THEIR NON-MAINT AINABILITY. WE DEEM IT APPROPRIATE TO SET ASIDE ORDERS OF THE LD.C IT(A) ON THESE APPEALS AND RESTORE ALL THESE APPEALS TO THE FILE O F THE LD.CIT(A) FOR RE- ADJUDICATION. 13. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEES ARE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 1 ST JUNE, 2017 AT AHMEDABAD. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER