M/s. Banner International, Surat V. The ACIT.,Circle-2, Surat

ITA 1829/AHD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57034 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 10-01-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 28-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUNIL KEDIA
• Keywords: Opportunity of being heard; Period of limitation; Retrospective amendment; Reasonable cause; Time period of passing order; Condonation of delay; Capital expenditure
• Section: 143(3); 80HHC

Judgement Text

, , . .. . . .. . , , , , ! !! ! . .. .'# !'# '# !'# '# !'# '# !'# , $ $ $ $ % % % % IN THE INCOME TAX APPELLATE TRIBUNAL : C BENCH : AHMEDABAD BEFORE HONBLE SHRI D.K.TYAGI, J.M. & HONBLE SHRI A.MOHAN ALANKAMONY, A.M.) ! !! ! . ITA NO.1829/AHD./2010 : # &' - 2001-2002 ! !! ! . ITA NO.1830/AHD./2010 : # &' - 2003-2004 ! !! ! . ITA NO.1831/AHD./2010 : # &' - 2004-2005 M/S.BANNER INTERNATIONAL, SURAT VS- A.C .I.T, CIRCLE-2, SURAT (PAN : AACFB 5280D) ( () /APPELLANT) ( *() /RESPONDENT ) () + , / APPELLANT BY : SHRI SUNIL KEDIA, A.R. *() + , / RESPONDENT BY : SHRI VINOD TANWANI, SR.D.R. -#. + /$ / DATE OF HEARING : 10/01/2012 0'& + /$ / DATE OF PRONOUNCEMENT : 13/01/2012 1 1 1 1 / ORDER PER SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER : THE ASSESSEE HAS PREFERRED THESE THREE APPEALS AGG RIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APP EALS)-II, SURAT IN APPEAL NOS.CAS/II/159/09-10, CAS/II/187/09-10 CAS/ II/188/09-10 ALL DATED 30.03.2010 FOR THE ASSESSMENT YEARS 2001-2002 , 2003-2004 AND 2004-2005 RESPECTIVELY PASSED UNDER SECTION 250 R.W .S. 143(3) OF THE I.T. ACT, 1961. SINCE ALL THE APPEALS PERTAIN TO TH E SAME ASSESSEE ON IDENTICAL FACTS AND ARGUED BY THE SAME COUNSEL, THE Y ARE DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NOS. 1829 TO 1831-AHD-10 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING COMMON GRO UNDS IN ALL THE THREE APPEALS. FOR THE SAKE OF BREVITY, GROUNDS TAK EN IN ONE APPEAL ARE REPRODUCED HEREINBELOW: 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN REFUSING TO CONDONE THE DELAY IN FILING THE FIRST APPEAL BEFORE HIM WITHIN THE*TIME LIMIT STIPULATED UNDER S. 249(2) AND THERE BY IN DISMISSING THE APPEAL IN LIMINE AT THRESHOLD WITHOUT GOING INT O THE MERITS OF THE CASE. 1.1 HE FAILED TO APPRECIATE THE 'SUFFICIENT CAUSE' DEMONSTRA TED TO HIM FOR CONDONATION DELAY IN FILING IN APPEAL UNDER S. 249(3) IN CORRECT PERSPECTIVE AS NOTED IN KVAERNER BOVING CONSTRUCTION LTD VS. DY. GIT 54 TTJ 429(DEL. BENCH) (1995). 1.2 HE FURTHER FAILED TO APPRECIATE THAT IN THE LI GHT OF CBDT CIRCULAR NO. 2/2006 DATED 17.01.2006, HE WAS ADVISED FOR NOT INDULGING IN PROTRACTED LITIGATION AND THEREFORE HE WAS PREVENTE D FROM SUFFICIENT CAUSE FOR NOT FILING APPEAL WITHIN LIMITATION PERIO D. 1.3 HE FAILED TO APPRECIATE IN VIEW OF CBDT CIRCUL AR, THE ASSESSEE REMAINED UNDER GOOD FAITH AND BONAFIDE IMPRESSION O F THE GIVEN LEGAL POSITION AND DID NOT PROCEED TO INDULGE IN CO ST PROHIBITIVE PROTRACTED LITIGATIONS BY AVAILING THE REMEDY BEFOR E THE CHAIN APPELLATE AUTHORITIES STARTING WITH LEARNED CIT(A). 1.4 HE OUGHT TO HAVE APPRECIATED THAT ASSESSEE NEED NOT BE DENIED REMEDY BY WAY OF APPEAL ON MERE TECHNICALITI ES IN VIEW OF THE LANDMARK SUPREME COURT JUDGMENT REPORTED IN 167 ITR 471(1987)(SC) AND THE DISCRETION VESTED TO HIM UNDE R S. 249(3) OUGHT TO BEEN EXERCISED IN MOST JUDICIOUS MANNER TO PROMOTE SUBSTANTIAL JUSTICE. 1.5 THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED TH AT THE ASSESSEE HAS SWUNG INTO ACTION BY FILING APPEAL BEF ORE HIM ON HAVING LEARNT THE TRUE LEGAL POSITION PURSUANT TO S PECIAL BENCH DECISION OF HON'BLE ITAT IN THE CASE OF TOPMAN EXPOR TS IN ITA NO. 5769 / MUM./ 2006 GIVING RELIEF TO EXPORTERS UNDER 80HHC IN RESPECT OF SALE OF DEPB CERTIFICATES AND THEREFORE NO MATAFIDE IS IMPUTABLE TO ASSESSEE FOR LATE FILING APPEAL. ITA NOS. 1829 TO 1831-AHD-10 3 2. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN SUSTAINING THE DISALLOWANCE OF RELIEF AVAILABLE UNDER S. 80HHC IN RESPECT OF SALE PROCEEDS OF DEPB CERTIFICATES WITHOUT DISPOSING THE CASE ON MERITS IN THE LIGHT OF BINDING SPECIAL BENCH JUDGMENT IN T HE CASE OF TOPMAN EXPORTS. 3. THE ASSESSEE HAS RAISED IDENTICAL TWO GROUNDS IN ALL THESE THREE APPEALS WITH RESPECT TO CONDONATION OF DELAY IN FIL ING THE APPEAL BEFORE THE LD. CIT(A). THE ASSESSEE IS A FIRM ENGAGED IN T HE BUSINESS OF EXPORT OF ART SILK FABRICS, FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEARS 2001-02, 2003-04 AND 2004-05 ON 29.10.2001, 29.11.2 003 AND 28.12.2004 RESPECTIVELY. SUBSEQUENTLY, ASSESSMENT O RDERS WERE PASSED UNDER SECTION 143(3) OF THE ACT R.W.S. 147 OF THE A CT FOR ALL THESE THREE YEARS ON 14.12.2007, 07.02.2006 AND 25.11.2006 RES PECTIVELY. AGAINST THE RESPECTIVE ASSESSMENT ORDERS, THE ASSESSEE FILE D APPEALS ON 28.05.2010 FOR THE ASSESSMENT YEARS 2001-02, 2003-0 4 AND 2004-05, ALONG WITH REQUEST FOR CONDONATION OF DELEY. THERE WAS A DELAY OF 1 YEAR 10 MONTHS AND 16 DAYS FOR THE ASSESSMENT YEAR 2001- 02, 3 YEARS 8 MONTHS AND 15 DAYS FOR THE ASSESSMENT YEAR 2003-04 AND 2 YEARS 11 MONTHS AND 13 DAYS FOR THE ASSESSMENT YEAR 2004-05. THE ASSESSEE HAD SUBMITTED BEFORE THE LD. CIT(APPEALS) THAT THE REASON FOR DELAY IN FILING THE RETURN WAS BECAUSE OF THE WRONG ADVISE GIVEN BY THE ASSESSEES COUNSELS THAT NOT TO PURSUE THE ADDITION S/ DISALLOWANCES BEFORE THE ITAT AND THEREFORE THE ASSESSEE HAD PROC EEDED TO PAY THE DEMAND AS PER CBDTS CIRCULAR NO.2/2006 DATED 17.01 .2006. HOWEVER, IN VIEW OF THE DECISION OF THE SPECIAL BENCH OF THE ITAT IN THE CASE OF M/S. TOPMAN EXPORTS AND OTHERS IN ITA NO.5769/MUM/2 006, THE ASSESSEE REALIZED THAT IT HAD A FOOL PROOF CASE IN ITS FAVOUR FOR SEEKING DEDUCTION UNDER SECTION 80HHC. ITA NOS. 1829 TO 1831-AHD-10 4 4. BECAUSE OF THE AFORESAID REASONS THE ASSESSEE HA S NOW PREFERRED THE APPEALS. THE ASSESSEE HAD PETITIONED BEFORE THE LD. CIT(A) FOR CONDONATION OF DELAY. HOWEVER, THE LD. CIT(A) RELIE D ON THE DECISIONS OF THE FOLLOWING CASES AND DENIED CONDONATION OF DELAY . I) ANDAL SWEET STALL & TIFFIN DINING HALL VS- S TATE OF TAMILNADU (1981) 48 STC 551 II) NIHALKARAN VS- CWT (1988) 73 CTR MP 63 III) M.S. NULSON INDIA LTD. VS- CIT (1996) 219 IT R 736 IV) COLLECTOR LAND ACQUISITION VS- MST. KATIJI & O RS. (1987) 62 CTR 23 V) VEDABAI ALIAS VAIJAYANATABAI B PATIL VS- SHANT ARAM B PATIL & ORS (2002) 173 CTR 300(SC) VI) CIT-VS- RAM MOHAN KABRA (2002) 178 CTR (P&H) 27 4 VII) ITO-VS- S.G. JHAVERI & CO. (2004) 89 TTJ 895 VIII) RAMLA & ORS. VS- REWA COALFIELDS LTD. AIR 19 62 SC 361 IX) AJIT SINGH THAKUR SINGH & ANR VS- STATE OF GU JARAT (1981) 1 SCC 495 X) V.V.KUDVA & ANR VS- ESIC AIR 1972 MYSORE 204 THE LD. CIT(A) MADE THE FOLLOWING OBSERVATIONS FOR REFUSING CONDONATION OF DELAY:- 4.7 AS MAY BE SEEN FROM THE ABOVE, THE FACTS OF T HE ASSESSEE'S CASE ARE IDENTICAL TO THE FACTS OF THE CASE OF VENK ATESA PAPER & BOARDS LTD (SUPRA) AND THEREFORE, THE RATIO OF THAT CASE IS SQUARELY APPLICABLE TO THE CASE OF THE ASSESSEE. AS IN THAT CASE, THE ASSESSE ALSO TOOK CONSCIOUS AND DELIBERATE DECISION NOT TO FILE APPEAL AGAINST THE ASSESSMENT ORDER AND, AS IN THE CASE OF ANDAL SWEET STALL & TIFFIN DINING HALL (SUPRA), HAS SOUGH T TO TAKE ADVANTAGE OF THE DECISION OF THE SPECIAL BENCH IN T HE CASE OF M/S TOPMAN EXPORTS WHICH, AS THE HON'BLE MADRAS HIGH CO URT HAD HELD, CANNOT BE DONE. THUS, THE ASSESSEE HAS FAILED TO SHOW THAT THERE WAS SUFFICIENT CAUSE FOR THE DELAY IN FILING THE APPEAL. THE DELAY WAS CAUSED BECAUSE OF THE DELIBERATE AND CONS CIOUS DECISION TAKEN BY THE ASSESSEE NOT TO FILE THE APPE AL. THEREFORE, THERE WAS NOTHING WHICH WAS BEYOND THE CONTROL OF T HE ASSESSEE WHICH PREVENTED IT FROM FILING THE APPEAL WITHIN TH E PERIOD OF LIMITATION. AN APPELLATE AUTHORITY CANNOT SIMPLY CO NDONE THE DELAY BECAUSE THE ASSESSEE'S CASE IS COVERED BY A SUBSEQU ENT DECISION OF ANOTHER APPELLATE AUTHORITY AND HENCE, CALLS FOR SYMPATHY AND BENEVOLENCE TO BE METED OUT TO THE ASSESSEE SEEKING RELIEF. ITA NOS. 1829 TO 1831-AHD-10 5 4.8 GIVEN THE FACTS OF THE ASSESSEE'S CASE, AND PL ACING RELIANCE ON THE CASES OF VENKATESA PAPER & BOARDS LTD. (SUPR A) AND A.N.MAFATLAL HUF (SUPRA) IS HELD THAT THE ASSESSEE WAS NOT PREVENTED BY SUFFICIENT AND REASONABLE CAUSE AS ENVISAGED U/S 249(3), FROM NOT PRESENTING THE APPEAL WITHIN THE P ERIOD PRESCRIBED U/S 249(2) OF THE IT ACT. THEREFORE, THERE IS ABSOL UTELY NO CASE FOR CONDONING SUCH INORDINATE DELAY OF 1 YEAR, 10 MONTH S AND 16 DAYS IN FILING THE APPEAL AGAINST THE ASSESSMENT ORDER. THE PETITION OF THE MANAGING PARTNER OF THE ASSESSEE FIRM REQUESTIN G FOR THE CONDONATION OF THE DELAY IS THEREFORE, REJECTED. CO NSEQUENTLY, THE APPEAL IS NOT ADMITTED. 5. THE LD. A.R. FILED THE FOLLOWING AFFIDAVIT BEFOR E US. SEAL OF THE NOTARY AFFIDAVIT TO, THE HON'BLE CIT (A), SURAT. WE, BANNER INTERNATIONAL, HAVING OFFICE AT SHOP NO . 6007, WORLD TRADE CENTER, NR. UDANA DARWAJA, SURAT - 395 002 BEG TO STATE ON SOLEMN AFFIRMATION AS UNDER:- 1. WE SAY THAT ASSESSMENT ORDER DATED 14.12.2007 FO R A.Y. 2001- 02 U/S. 143(3) R.W.S 147 OF THE I. T. ACT, 1961, WA S RECEIVED BY US ON OR ABOUT 21.12.2007 ALONG WITH NOTICE OF DEMAND U/S 156 RAISING DEMAND OF RS. 60,49,021 (RUPEES SIXTY LAKHS FORTY NINE THOUSAND AND TWENTY ONE) MAKING DISALLOWANCE OF RS.1,38,47,642 U/S 80HHC ACT. 2. IN THIS CASE THE ASSESSEE IS ENGAGED IN THE EXPO RT OF ART SILK FABRICS AND WAS HAVING THE EXPORT TURNOVER EXCEEDIN G RS.10.00 CR DURING THE PREVIOUS YEAR AND ALSO RECEIVED DUTY ENTITLEMENT UNDER DEPB SCHEME UNDER FOREIGN TRADE (DEVELOPMENT & REGULATION) ACT, 1992. THE ENTIRE SALE PROCEED OF T HE DEPB WAS TAKEN AS PROFIT U/S. 28 (IIID) OF THE ACT AND 90% O F THE SAME WAS REDUCED FROM 'PROFIT & GAINS OF BUSINESS AND PROFES SION' AS REQUIRED BY EXPLANATION (BAA) OF SEC 80 HHC AND THE SAME PROCEED WAS FURTHER ADDED TO 'PROFIT & GAINS OF BUS INESS AND PROFESSION' AS PER PROVISO TO SUB-SECTION (3) OF SE C 80 HHC BUT IN ITA NOS. 1829 TO 1831-AHD-10 6 VIEW OF AMENDMENTS MADE IN TO SEC 80 HHC BY THE TAX ATION LAW (AMENDMENT ) ACT ,2005. THE FURTHER ADDITION AS PER SUB-SECTION (3) WAS RESTRICTED IN CASE OF EXPORTER HAVING EXPOR T TURNOVER EXCEEDING RS.10.00 CR BY INSERTING THE ANOTHER PROV ISO TO THAT SUB- SECTION, WHICH WAS HAVING RETROSPECTIVE EFFECT AND ACCORDINGLY THE CASE WAS REOPENED U/S. 147 AND REASSESSED U/S. 143 (3) R.W.S.147 DISALLOWING THE DEDUCTION CLAIMED U/S. 80 HHC TO TH E TUNE OF RS.1,38,47,642. 3. WE WERE LEGALLY ADVISED NOT TO PURSUE THE ADDITI ON/DISALLOWANCE BEFORE THE HONBLE APPELLATE AUTHORITIES. ACCORDING LY, DEMAND ARISING FROM SUCH ADDITION/DISALLOWANCES WERE BEING PAID IN COURSE OF TIME AS PER CBDT CIRCULAR NO.2/2006 DATED 17.01. 2006. 4. WE SAY THAT APPEAL COULD NOT BE FILED WITHIN 30 DAYS OWING TO ERRONEOUS IMPRESSION OF LAW ON TAXABILITY / EXEMPTI ON OF DEPB ENTITLEMENT U/S. 80 HHC 5. WE SAY THAT SPECIAL BENCH OF HON'BLE ITAT, MUMBAI IN THE CASE OF TOPMAN EXPORTS & OTHERS (ITA NO. 5769/MUM/2006) HAS VERY RECENTLY HOLD THAT THE FACE VALUE OF DEPB IS CHARGE ABLE TO TAX U/S. 28(IIIB) AT THE TIME OF ACCRUAL OF INCOME, THAT IS, WHEN THE APPLICATION FOR DEPB IS FILED WITH THE COMPETENT AU THORITY PURSUANT TO EXPORTS AND PROFIT ON SALE OF DEPB REPRESENTING THE EXCESS OF SALE PROCEEDS OF DEPB OVER ITS FACE VALUE IS LIABLE TO BE CONSIDERED U/S. 28(IIID) AT THE TIME OF ITS SALE. O N NOTICING THE AFORESAID UNREPORTED DECISION, WE HAVE PROMPTLY INS TRUCTED OUR LEGAL COUNSEL MR, SUNIL KEDIA, PARTNER OF M/S B.N. KEDIA & CO. TO PREFER APPEAL BEFORE YOUR HONOUR IN THE LIGHT OF AF ORESAID SPECIAL BENCH DECISION. 6. WE SAY THAT THE DELAY IS BONAFLDE AND UNINTENTIO NAL. WE SAY THAT THE ASSESSEE HAS A VERY STRONG PRIMA FACIE CAS E ON MERIT IN THE LIGHT OF THE LAW DECLARED BY THE HON'BLE SPECIAL BENCH, MURNBAI. THE ADDITIONS/ DISALLOWANCES MADE IS PRIMA FACIE OP POSED TO EXPRESS PROVISION OF LAW. THEREFORE, THE ASSESSEE D ID NOT STAND TO BENEFIT BY LODGING THE APPEAL LATE IN THIS CASE. RE FUSING TO CONDONE DELAY BY YOUR HONOUR WOULD RESULT IN THIS HIGHLY ME RITORIOUS MATTER THROWN OUT AT A VERY THRESHOLD AND CAUSE OF JUSTICE WOULD BE DEFEATED. THE SUBSTANTIAL AMOUNT OF DEMAND TO THE T UNE OF RS. 60,49,021- HAS BEEN IMPOSED AND DEMANDED FROM THE A SSESSEE BASED ON THE ASSESSMENT ORDER. IN FACT, THE DELAY I S GROSSLY ITA NOS. 1829 TO 1831-AHD-10 7 DETRIMENTAL TO SELF INTEREST. THE CAUSE OF SUBSTANT IAL JUSTICE MAY KINDLY BE PREFERRED BY CONDONING THE DELAY. 7. WE SAY THAT NO PREJUDICE WOULD BE CAUSED TO THE RESPONDENT IF THE DELAY IS CONDONED. 8. WE SAY THAT IF THE DELAY IS NOT CONDONED IT WOUL D CAUSE GRAVE HARM AND INJURY TO US. 9. WE SAY THAT THE ASSESSES SHOULD BE ALLOWED TO CO NTEST THE APPEAL ON MERITS AND SHOULD NOT BE SHUNNED AWAY ON TECHNICAL GROUNDS. WE SAY THAT LIBERAL VIEW BE KINDLY TAKEN W HILE CONSIDERING CONDONATION OF DELAY. 10. THE NOTICE OF DEMANCDWAS RECEIVED ON 21/12/2007 DUE DATE FOR FILING OF APPEAL WAS 20/01/2008 AND AS SUCH THE DELAY OF ABOUT ONE YEAR MONTHS 10 MONTHS AND ____DAYS HAVE OCCURRE D IN FILLING THE APPEAL BEFORE YOUR OFFICE. 11. WE HUMBLY PRAY THAT DELAY IN FILING THE PRESENT APPEAL BE KINDLY CONDONED. SOLEMNLY AFFIRMED AT SURAT FOR BANNER INERNATIONAL. SD/- (HEMANT BORANA) SEAL OF THE ATTESTED MG. PARTNER NOTARY SD/- APPELLANT NITA J. MEVADA DATE: ADVOCATE & NOTARY GOVT. OF INDIA. SURAT /GUJARAT) I KNOW THE SIGNATORY AND IDENTIFIED BY ME SD/- R.M.BAKRIWALA ADVOCATE, PALANPUR PATIYA, SURAT 5.1 THE LD. A.R. ARGUED THAT THE LD. CIT(A) HAD FAI LED TO OBSERVE THE RATIO IN THE CASE OF KVAERNER BOVING CONSTRUCTION L TD VS- DY. CIT 54 TTJ 429 (DEL. BENCH) (1995). THE ASSESSE E HAD NOT FILED THE APPEALS IN ORDER NOT TO INDULGE IN PROTRACTED LITIG ATION CONSIDERING THE CIRCULAR NO.2/2006 DATED 17.01.2006 AND THAT WAS A SUFFICIENT CAUSE FOR ITA NOS. 1829 TO 1831-AHD-10 8 NOT FILING THE APPEALS WITHIN THE LIMITATION PERIOD . HOWEVER, THE SUBSEQUENT FAVORABLE DECISION OF THE HON. ITAT REN DERED IN THE CASE OF TOPMAN EXPORTS ( SUPRA ) ON THE ISSUE OF SECTION 80HHC IN RESPECT OF DEPB CERTIFICATES, WHICH WAS IDENTICAL TO THE CASE THAT OF THE ASSESSEE, THE ASSESSEE SWUNG INTO ACTION TO FILE THE APPEALS. THE ASSESSEE WITH THE ABOVE SUBMISSION PRAYED THAT THE DELAY MAY BE C ONDONED AND THE ISSUE MAY BE REMITTED BACK TO THE LD. CIT(A) FOR AD JUDICATION, AS PER LAW AND MERIT. 6. THE LD. D.R. VEHEMENTLY OPPOSED TO THE SUBMISSIO NS OF THE LD. A.R. AND SUPPORTED THE ORDER OF THE LD. CIT(A). HE SUBMI TTED THAT THE LD. CIT(A), AFTER CAREFUL DILIGENCE AND AFTER RELYING O N VARIOUS DECISIONS OF THE HIGHER JUDICIARY, HAD CORRECTLY ARRIVED AT THE DECISION. THE LD. D.R. SUBMITTED THAT THE ORDER OF THE LD. CIT(A) MAY BE U PHELD. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED CAREFULLY THE MATERIALS ON RECORD. FROM THE FACTS OF THE CASE, IT IS APPARENT THAT THE ASSESSEE HAD INITIALLY DECIDED TO FOLLOW THE CIRCUL AR NO.2/2006 DATED 17.01.2006 IN ORDER TO AVOID PROTRACTED LITIGATION. HOWEVER, THE ASSESSEE FIRM REALIZED THAT IT HAD A GENUINE CASE TO BE HEL D IN ITS FAVOUR BY VIRTUE OF THE DECISION RENDERED BY THE SPECIAL BENCH OF TH E ITAT IN THE CASE OF TOPMAN EXPORTS & OTHERS ( SUPRA ). FURTHER, THE ASSESSEE HAS PLACED ON RECORD THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF KVAERNER BOVING CONSTRUCTION VS- DCIT DECIDED ON 2 9 TH SEPTEMBER, 1995 REPORTED IN (1996) 54 TTJ DEL 429 IN SUPPORT O F ITS STAND. THE FACTS IN THAT CASE IS THAT:- THE ASSESSEE, A FOREIGN COMPANY, AS PART OF A CONS ORTIUM ARRANGEMENT CONTRACTED WITH NATIONAL HYDRO-ELECTRIC POWER CORPORATION LTD. (NHPC), A GOVERNMENT OF INDIA ENTE RPRISE, TO SET UP A TURNKEY HYDRO-ELECTRIC POWER PROJECT AT URI, J &K. THE PROJECT WAS APPROVED BY THE DEPARTMENT OF ENERGY, MINISTRY OF POWER ITA NOS. 1829 TO 1831-AHD-10 9 UNDER S. 44BBB OF THE IT ACT. AS PART OF CONSORTIUM ARRANGEMENT THE ASSESSEE ENTERED INTO A CONTRACT WITH NHPC FOR ERECTION, TESTING AND COMMISSIONING OF MECHANICAL PLANT AND M ACHINERY FOR THE URI HYDRO ELECTRIC PROJECT. UNDER THE AGREEMENT WITH NHPC, THE ASSESSEE IS TO RECEIVE PAYMENTS FOR STORAGE, ER ECTION TESTING AND COMMISSIONING OF MECHANICAL PLANT AND MACHINERY AND ALSO PAYMENTS FOR MARINE FREIGHT AND INSURANCE IN RESPEC T OF SHIPMENT OF CAPITAL EQUIPMENT AND OTHER GOODS. UNDER THE AGR EEMENT, THE ENTIRE TAX OF THE CONTRACT WAS TO BE BORNE BY THE N HPC. THE ASSESSEE WAS LIABLE FOR ANY TAX DUE ON SELF-ASSESSM ENT PURSUANT TO APPLICATION OF R. 115 OF THE IT RULES. THE ASSES SEE PAID AN AMOUNT OF RS. 1,62,773 TOWARDS THE TAX ON SELF-ASSE SSMENT AS A RESULT OF APPLICATION OF R. 115. ON THE BASIS OF TH E DECISION IN THE CASE OF CHOWGULE & CO. VS. CIT (1992) 195 ITR 810 ( BOM) HOLDING THAT R. 115(C) OF THE IT RULES WAS ULTRA VIRES AND BEYOND THE SCOPE OF THE PROVISIONS OF THE IT ACT, THE ASSESSEE SOUGH T REFUND OF THE TAX PAID ON SELF-ASSESSMENT BY FILING A BELATED APP EAL, AS ON THE DATE OF THE SAID DECISION ITSELF, LIMITATION FOR FI LING THE FIRST APPEAL RAN OUT. THE CIT(A), THEREFORE, DISMISSED THE APPEA L AS TIME- BARRED. HENCE, THE INSTANT SECOND APPEAL BY THE ASS ESSEE BEFORE US. 7.1 IN THE CASE CITED ABOVE, IT WAS HELD BY THE HON BLE HIGH COURT AT UNDER: WE ARE OF THE CONSIDERED OPINION THAT ONLY DUE TO THE BONA FIDE REASONS, THE ASSESSEE, A FOREIGN COMPANY COULD NOT FILE THE APPEAL IN TIME WHICH IS FURTHER DISCUSSED HEREINAFTER BELO W AND THAT, THEREFORE, THE ASSESSEE SHOULD NOT BE DENIED OF BEI NG HEARD ON ITS MERITS AND REJECTED BY MERELY ON GROUNDS OF TECHNIC ALITIES. IN THE CASE OF VENKATA RAMANA CHUDUVA (SUPRA) DECIDED BY T HE HONBLE ANDHRA PRADESH HIGH COURT, HOWEVER, HOLDS THAT WHER E THE DECISION OF THE HIGH COURT IN NOOKA AGAIAH 39 STC 5 21 WAS NOT RENDERED, MUCH LESS REPORTED BY THE DATE OF RECEIPT OF THE ASSESSMENT ORDERS BY THE ASSESSEES AND BOTH THE JUD GMENTS OF THE HIGH COURT AND THE SUPREME COURT WERE RENDERED LONG AFTER THE PERIOD OF LIMITATION FOR FILING THE APPEALS IN THEIR CASE EXPIRED AND THE ASSESSEES FILED APPEALS AFTER THE DECISION OF THE SUPREME COURT WITH A PETITION TO CONDONE THE DELAY, IT COUL D NOT BE SAID THAT THE ASSESSEES HAD ESTABLISHED SUFFICIENT CAUSE FOR CONDONING THE DELAY IN FILING THE APPEALS AND NOTHING PREVENTED T HEM IF THEY CHOSE TO DISPUTE THEIR LIABILITY FROM FILING AN APP EAL WITHIN 30 DAYS AFTER RECEIVING THE ORDERS OF ASSESSMENT. AT THE SA ME TIME, IT MAY ITA NOS. 1829 TO 1831-AHD-10 10 ALSO BE SEEN THAT IN THE CASE OF SOTHIA MINING & MF G. CORPN. LTD. (SUPRA), THE HONBLE CALCUTTA HIGH COURT HAS HELD TH AT WHERE THE QUESTION WHETHER CERTAIN EXPENDITURE WAS REVENUE OR CAPITAL WAS IN DISPUTE AND THE ASSESSEE ACCEPTED THE DECISION OF T HE ASSESSING OFFICER FOR THE TIME BEING AND THEREAFTER THERE WAS A JUDGMENT OF THE SUPREME COURT ON THE CONTROVERSY RAISED AND BEC AUSE OF THAT JUDGMENT, THE ASSESSEE FOUND THAT IT HAD A GOOD REA SON TO PREFER AN APPEAL, THE AAC WAS COMPETENT TO CONDONE THE DEL AY IN FILING THE APPEAL. UNDER THE CIRCUMSTANCES OF THESE TWO CO NFLICTING DECISIONS, WE HAVE TO GIVE DUE WEIGHTAGE TO THE LAT ER DECISION OF THE HONBLE CALCUTTA HIGH COURT AS IT GOES IN FAVOR OF THE ASSESSEE IN ACCORDANCE WITH THE PRINCIPLES OF TAX JURISPRUDE NCE WELL PROPOUNDED BY THE HONBLE SUPREME COURT IN THE WELL KNOWN CASE OF CIT VS. VEGETABLE PRODUCTS (1973) 88 ITR 192 (SC ). IN THE INSTANT CASE BEFORE US, AS HAS ALREADY BEEN SAID, T HE ORDER OF ASSESSMENT WAS PASSED ON 30TH SEPT., 1991, HAVING B EEN RECEIVED ON 22ND OCT., 1991, FOR WHICH THE DUE DATE OF APPEAL BEFORE THE CIT(A) WAS 21ST NOV., 1991, ADMITTEDLY. WHILE SO, THE DECISION OF THE HONBLE BOMBAY HIGH COURT NOW RELIED UPON BY THE ASSESSEE WAS NOT AVAILABLE, AS HAS ALREADY BEEN SAI D EITHER AT THE TIME OF PASSING THE ORDER OF ASSESSMENT OR DURING T HE TIME OF THE PERIOD OF LIMITATION TO FILE THE FIRST APPEAL HAVIN G THAT BEEN DELIVERED ON 3RD/4TH MARCH, 1992. THUS, THIS JUDGMENT WHICH W AS DELIVERED NEARLY 3-1/2 MONTHS AFTER THE EXPIRY OF THE LIMITAT ION PERIOD FOR FILING THE FIRST APPEAL IS HEAVILY RELIED UPON AND FOR CAU SING THE INSTITUTION OF THE FIRST APPEAL BEFORE THE CIT(A) WITH A PRAYER TO CONDONE THE DELAY AS THE ASSESSEE WAS UNDER THE BONA FIDE BELIE F THAT THE POSITION OF LAW PRIOR TO THE DECISION OF THE HONBLE BOMBAY HIGH COURT WAS CORRECT AND THAT, THEREFORE, IT CONSTITUT ES A GOOD AND SUFFICIENT CAUSE WHICH PREVENTED THE ASSESSEE FROM FILING THE APPEAL. WHILE WE CAREFULLY DELIBERATE UPON THE STAN D OF THE ASSESSEE WHICH WAS INCORPORATED IN THE PETITION FOR CONDENSATION OF DELAY BEFORE THE CIT(A) WHO REJECTED IT AND WHIC H HAS COME UP BEFORE US FOR OUR SCRUTISR IN THE SECOND APPEAL, TH E DECISION OF THE HONBLE GUJARAT HIGH COURT ALSO IN THE CASE OF KARAM CHAND PREM CHAND PVT. LTD. CITED SUPRA RELIED UPON BY THE ASSE SSEE HEAVILY COMES TO ITS RESCUE IN OUR CONSIDERED OPINION. IN T HAT CASE, THE ASSESSEE DID NOT CLAIM DEDUCTION IN ASSESSMENT ON T HE BASIS OF LAW AS PROPOUNDED BY THE HIGH COURT, BUT THE LATER DECISION OF THE SUPREME COURT PERMITTED THE DEDUCTION AND THEREFORE REVISION PETITION TO THE CIT WAS FILED BASED ON LAW AS LATER EXPOUNDED BY THE SUPREME COURT EVEN THOUGH THAT PETITION WAS TIM E-BARRED. THE QUESTIONS AROSE AS TO WHETHER THERE WAS SUFFICIENT CAUSE TO EXCUSE ITA NOS. 1829 TO 1831-AHD-10 11 SUCH DELAY AND WHETHER THE CIT WAS RIGHT IN REFUSIN G TO EXCUSE SUCH DELAY, SUCH REFUSAL TO EXERCISE THE DISCRETION WAS ALSO JUDICIOUS IN A WRIT PETITION BEFORE THE HONBLE GUJA RAT HIGH COURT. THE GUJARAT HIGH COURT ULTIMATELY MAINTAINED THE WR IT PETITION BY HOLDING THAT THE PETITION FOR RECTIFICATION OF ASSE SSMENT WAS SUSTAINABLE AND THAT, THEREFORE, THE REVISION PETIT ION WAS NOT BARRED BY TIME AS THE DELAY IN PREFERRING THE APPLICATION BEFORE THE CIT WAS RIGHTLY CONDONED AND THAT THE CIT WAS DIRECTED TO PROCEED FURTHER IN THE MATTER AND TO DISPOSE OF THE CASE ON ITS MERITS ACCORDING TO LAW, BESIDES THE HONBLE HIGH COURT OBS ERVING THAT EVER SINCE THE DECISION OF THE BOMBAY HIGH COURT (R EFERRED TO IN THAT CASE) WHICH WAS FOLLOWED BY THREE OR FOUR OTHE R HIGH COURTS, THE ACCEPTED VIEW WAS THAT THE EXPENDITURE IN QUEST ION WAS CAPITAL EXPENDITURE AND THIS VIEW WAS TAKEN AS SETTLED LAW AND, THEREFORE, THE PETITIONER HAD NO CAUSE TO INVOKE THE REVISION JURISDICTION OF THE CIT AND THAT SUCH SITUATION CHANGED ON ACCOUNT OF S UBSEQUENT DECISION OF THE SUPREME COURT WHICH DECISION ALONE GIVES CAUSE TO THE PETITIONER TO MOVE THE CIT IN REVISION AND ULTI MATELY HOLDING THAT THE CIT WAS PALPABLY WRONG IN HOLDING THAT THE CHANGE OF LEGAL SITUATION BROUGHT ABOUT BY THE DECISION OF SUPREME COURT WAS HARDLY A VALID GROUND. 7. THEREFORE, IN THE LIGHT OF THE AFORESAID DECISIO N IN THE INSTANT CASE TOO, THE APPARENT ILLEGALITY DECLARED BY THE H ONBLE BOMBAY HIGH COURT IN THE CASE OF CHOWGULE & CO. (SUPRA) ON R. 115 AS ULTRA VIRES, SEEMS TO HAVE CREPT INTO THE ASSESSMENT AND BECAME QUITE PATENT ONLY BECAUSE OF THE DECISION OF THE HONBLE B OMBAY HIGH COURT. IT WAS, THEREFORE, ONLY AFTER THIS DECISION OF THE HONBLE BOMBAY HIGH COURT THAT THE ASSESSEE HAD REASON TO M OVE THE APPEALS TO THE CIT(A) WITH A VIEW TO OBTAIN RELIEF IN ACCORDANCE WITH THE RATIO DECIDENDI RENDERED BY THE HONBLE BOMBAY H IGH COURT. THE FACT THAT THE PETITIONER DID NOT KEEP THE QUEST ION ALIVE BY PREFERRING APPEAL IN TIME, WAS ON ACCOUNT OF THE SI TUATION THAT BEFORE THE HONBLE BOMBAY HIGH COURT TOOK A DIFFEREN T VIEW IN THE CASE OF CHOWGULE 8. CO., THE LEGAL POSITION WAS PRA CTICALLY SETTLED IN REGARD TO R. 115. IF THE ASSESSEE DID NOT KEEP T HE QUESTION ALIVE BY FILING AN APPEAL IN TIME, IT WAS OBVIOUSLY BECAU SE THE REAL LEGAL POSITION APPEARED TO BE SETTLED NOT ONLY TO THE ASS ESSING OFFICER BUT ALSO TO THE ASSESSEE AND THAT, THEREFORE, THERE WAS NO POINT IN PURSUING THE QUESTION ANY FURTHER. HENCE, FOR THE P URPOSE OF DECIDING AS TO WHETHER THE ASSESSEE HAD SUFFICIENT CAUSE FOR NOT PREFERRING THE APPEAL WITHIN TIME, THE FACT THAT IT DID NOT KEEP THE QUESTION ALIVE BY PREFERRING APPEAL BEFORE THE EXPI RY OF THE ITA NOS. 1829 TO 1831-AHD-10 12 LIMITATION PERIOD, WHICH WAS LIKELY TO PROVE INFRUC TUOUS DID NOT MAKE ANY DIFFERENCE. THEREFORE, IN OUR CAREFULLY CONSIDE RED OPINION, AFTER HEARING THE PARTIES AT LENGTH BESIDES IN OUR CAREFU L DELIBERATION OVER THE ISSUE IN QUESTION, THE DELAY CAUSED BY 3-1 /2 MONTHS APPROXIMATELY FROM THE LAST DATE OF FILING THE APPE AL, I.E., 21ST NOV., 1991, UP TO THE DATE OF JUDGMENT OF THE HONBLE BOMB AY HIGH COURT WHICH IS 4TH MARCH, 1992, IS A BONA FIDE ONE CONSTI TUTING SUFFICIENT CAUSE PREVENTING THE ASSESSEE IN FILING THE APPEAL BEFORE CIT(A). NOW, COMING TO THE PERIOD OF DELAY CAUSED SUBSEQUEN T TO THE DATE OF DELIVERY OF THE AFORESAID JUDGMENT OF 4TH MARCH, 1992, UNTIL THE DATE OF FILING THE FIRST APPEAL BEFORE THE CIT(A) O N 24TH NOV., 1992, IT WAS SUBMITTED BEFORE US THAT THE AFORESAID DECIS ION OF THE HONBLE BOMBAY HIGH COURT WAS REPORTED IN THE LAW JOURNAL O N 24TH AUG., 1992, WHICH WAS BROUGHT TO THE NOTICE OF THE ASSESS EE THEREAFTER. IF IT WOULD HAVE BEEN REPORTED IN THE JOURNAL ON 24TH AUG., 1992, NORMALLY ABOUT A WEEK OR TWO MAY BE TAKEN FOR REACH ING THE HANDS OF EVEN A REGULAR LAW JOURNAL SUBSCRIBER. IN FACT, IT HAS BEEN HELD BY THE DECISION IN THE CASE OF S. RATNAM PILLAY VS. IT O (1987) 20 ITD 578 (COCH) THAT IN VIEW OF THE DECISION IN THE CASE OF ASIA TOBACCO CO. LTD. VS, UNION OF INDIA (1985) 155 ITR 568 (MAD ), THE NOTIFICATION DT. 29TH MARCH, 1987, IN THAT CASE WAS EFFECTIVE FOR THE ASSESSEE AS WELL AS THE DEPARTMENT OR FOR THAT MATT ER OF THE PUBLIC IN GENERAL FROM 3RD APRIL, 1979, ONLY WHEN IT WAS P UBLISHED IN THE GAZETTE AND WHICH FELL WITHIN THE ACCOUNTING YEAR 1 979-80 RELEVANT TO THE ASST. YR. 1980-81 AND THAT, THEREFORE, THE C IT WAS NOT JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO TAX THAT AMOUNT IN THE ASST. YR. 1979-80 BASED ON THE DATE OF THE NOTIFICA TION. HENCE, IN ACCORDANCE WITH THE RATIO DECIDENDI OF THE COCHIN B ENCH ALSO, THE PERIOD BETWEEN THE DATE OF DELIVERY OF THE BOMBAY H IGH COURT JUDGMENT, NAMELY, 3RD/4TH MARCH, 1992, AND THE DATE OF PUBLICATION OF THE JUDGMENT IN THE JOURNAL NAMELY, 24TH AUG., 1 992, OR SAY THE RELEASE OF THAT REPORTED JOURNAL WAS BY THE END OF AUGUST, 1992 IS ALSO DEEMED TO BE EXCUSABLE. AFTER HAVING GOT THE K NOWLEDGE OF THIS DECISION THEREAFTER, THE ASSESSEE TOOK STEPS F OR CONSULTATION AND PREPARATION OF THE APPEAL AFTER WHICH THE RELEV ANT PAPERS WERE SENT TO THE UNITED KINGDOM FOR THE SIGNATURE OF THE ASSESSEE, A FOREIGN COMPANY AND FROM WHERE THE PAPERS HAVE TO B E RETURNED BACK BY TAKING APPROPRIATE TIME IN THIS REGARD AND AFTER ALL THESE, THE APPEAL COULD BE FILED BY THE ASSESSEE BEFORE TH E CIT(A) ONLY ON 23RD NOV., 1992, AS URGED BY THE ASSESSEE AND WH ICH WERE ALL NOT DISPUTED BY THE REVENUE BEFORE US. UNDER THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT T HE TIME TAKEN APPROXIMATELY FOR CONSULTATION, PREPARATION OF THE CASE AND SENDING ITA NOS. 1829 TO 1831-AHD-10 13 THE PAPERS TO THE UNITED KINGDOM FOR THE SIGNATURE OF THE ASSESSEE AND GETTING IT RETURNED AND FILING IT, APPEARS TO B E NOT UNREASONABLE BUT CONSTITUTE A BONA FIDE ONE WHICH, THEREFORE, CO ULD BE TAKEN AS SUFFICIENT CAUSE THAT HAS PREVENTED THE ASSESSEE FR OM FILING THE APPEAL EARLY. THUS, ON ALL THESE GROUNDS, WE ARE OF THE CLEAR OPINION THAT SUBSTANTIAL JUSTICE WOULD BE RENDERED BY CONDONING THE DELAY CAUSED IN THE APPEAL FILED BEFORE THE FIRST A PPELLATE AUTHORITY. THUS, WE ACCEPT THE FIRST GROUND OF APPEAL OF THE A SSESSEE BEFORE US. 8. INSOFAR AS THE SECOND GROUND OF APPEAL IS CONCER NED WHICH HAS NOT AT ALL BEEN DEALT WITH BY THE ORDER IMPUGNED BY VIRTUE OF HAVING DISMISSED THE APPEAL IN LIMING AS TIME-BARRED, WE S ET IT ASIDE TO THE FILE OF THE CIT(A) HIMSELF TO DECIDE IT IN ACCORDAN CE WITH FAW AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE D ULY CONSIDERING MERITS OF THE CASE AND THE STAND OF THE ASSESSEE WI TH ANY RELEVANT SUPPORTING MATERIAL AND THE CASE LAW THAT MAY BE RE LIED UPON IN THIS REGARD. 7.2 CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE BEFORE US AND THE CASE LAWS RELIED ON BY THE ASSESSEE, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEES ARGUMENTS HAVE MERITS. THE MERE FACT THAT THE ASSESSEE COOPERATED WITH THE REVENUE BASED ON T HE CIRCULAR ISSUED BY THE CBDT SHOULD NOT PUT THE ASSESSEE ON IN A WEA KER FOOTING. THE SUBSEQUENT DECISION BY THE SPECIAL BENCH OF THE TRI BUNAL HAS ENLIGHTENED THE ASSESSEE TO KNOCK THE DOORS BEFORE THE APPELLATE AUTHORITY FOR JUSTICE. IN THESE CIRCUMSTANCES, THE REQUEST OF THE ASSESSEE FOR THE DELAY OF CONDONATION FOR ALL THE ASSESSMENT YEARS SEEMS TO BE REASONABLE AND JUSTIFIABLE. THEREFORE, IN THE INTER EST OF JUSTICE, WE HEREBY CONDONE THE DELAY IN FILING THE APPEALS BEFORE THE LD. CIT(A) BY THE ASSESSEE AND REMIT BACK THE ISSUES BEFORE THE LD. C IT(A) TO DECIDE THE CASE AS PER LAW AND MERIT. FURTHER THE ASSESSEE IS AT LIBERTY TO RAISE ANY ITA NOS. 1829 TO 1831-AHD-10 14 LEGAL GROUND(S) IT DEEMS FIT BEFORE THE APPELLATE A UTHORITY AND SEEK JUSTICE. 8. IN THE RESULT, ALL THE THREE APPEALS OF THE AS SESSEE ARE ALLOWED. 2 1 + 0'& 3#!' 13 / 01 /201 2 ' 4 + . 5 SD/- SD/- (D.K.TYAGI) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT M EMBER DATED :13/01/2012 1 1 1 1 + ++ + */6 */6 */6 */6 76&/' 76&/' 76&/' 76&/' - 1. () 2. *() 3. !! / -8 4. -8 - - 5. 69 */# , , 5 6. :2 1 , ; / !< , 5 TALUKDAR/ SR. P.S .