Banyan & Berry Alloys Limited, Ahmedabad V. The Dy.Commissioner of Income Tax (OSD), Range-1, Ahmedabad

ITA 2352/AHD/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 8990 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 14-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K DEV
• Assessee Lawyers: ROHAN POPAT
• Keywords: Recovery proceedings; Period of limitation; Condonation of delay

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER I.T.A. NOS. 2352 TO 2357/AHD/2016 ( ASSESSMENT YEARS : 2007-08 TO 2009-10 & 2011-12) BANYAN & BERRY ALLOYS LIMITED 1006, SAMUDRA ANNEXE, OFF. C.G.ROAD, NAVRANGPURA, AHMEDABAD - 380009 / VS. THE DEPUTY COMMISSIONER OF INCOME-TAX (OSD)/ THE ASSISTANT COMMISSIONER OF INCOME-TAX (OSD) RANGE-1, AHMEDABAD / / PAN/GIR NO. : AABCB7470R ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI ROHAN POPAT, A.R. / RESPONDENT BY : SHRI S. K. DEV, SR.D.R. DATE OF HEARING 12/10/2018 !'# / DATE OF PRONOUNCEMENT 17/10/2018 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE PRESENT BUNCH OF SIX APPEALS CAPTIONED ABOVE CO NCERNS DIFFERENT ASSESSMENT YEARS OF THE SAME ASSESSEE, GI VING RISE TO ONE COMMON QUESTION AS TO WHETHER THE CIT(A) WAS JUSTIF IED IN REFUSING TO CONDONE THE DELAY IN FILING APPEAL BEFORE IT AND CO NSEQUENTLY, DISMISSING THE APPEALS OF THE ASSESSEE IN LIMINE . ITA NOS. 2352 TO 2357/AHD/16 [BANYAN & BERRY ALLOYS LTD.] A.YS. 2007-08 TO 2011-12 - 2 - 2. THE PARTICULARS OF VARIOUS APPEALS ARE TABULATED HEREUNDER: SR. NO. ITA NO. A.Y. ORDER PASSED UNDER SECTION DATE OF ORDER DATE OF FILING APPEAL BEFORE CIT(A) DATE OF RECEIPT OF ORIGINAL/ CERTIFIED COPY OF THE ORDER PERIOD OF DELAY, AS QUANTIFIE D AT PARA 3.1 OF EACH OF THE ORDERS OF THE CIT(A) 1 2352/A/16 2007-08 271(1)(C) 21/06/2010 23/04/2015 07/04/2015 4 YEARS, 10 MONTHS 2 2353/A/16 2008-09 271(1)(C) 27/06/2011 23/04/2015 07/04/2015 3 YEARS, 10 MONTHS 3 2354/A/16 2009-10 271(1)(C) 29/06/2012 23/04/2015 07/04/2015 2 YEARS, 10 MONTHS 4 2355/A/16 2009-10 144 30/12/2011 23/04/2015 07/04/2015 3 YEARS, 4 MONTHS 5 2356/A/16 2011-12 271(1)(C) 23/07/2014 23/04/2015 07/04/2015 8 MONTHS 6 2357/A/16 2011-12 144 21/01/2014 23/04/2015 07/04/2015 1 YEAR, 2 MONTHS 3. A PERUSAL OF THE RESPECTIVE ORDERS OF THE CIT(A) SHOWS THAT THE CIT(A) DECLINED TO ENTERTAIN THE APPEAL OF THE ASSE SSEE FOR ADJUDICATION ON MERITS OWING TO DELAY IN FILING FIR ST APPEAL BY NUMBER OF DAYS TABULATED ABOVE. THE CIT(A) REFUSED TO CON DONE THE DELAY AND THUS, DECLINED TO PROCEED ON MERITS. 4. WHEN THE MATTER WAS CALLED FOR HEARING AGAINST T HE ORDER OF THE CIT(A), THE LEARNED AR FOR THE ASSESSEE APPEARED AL ONGWITH DIRECTOR OF THE ASSESSEE. IT WAS POINTED OUT THAT THE DELAY IS SUPPORTED BY AN APPLICATION FOR CONDONATION OF DELAY IN FILING APPE AL. THE LEARNED AR FOR THE ASSESSEE REFERRED TO THE FACTS AS NOTED IN THE ORDER OF THE FIRST APPELLATE AUTHORITY AND SUBMITTED THAT THE ASSESSEE IS A CLOSELY HELD COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING AN D DEALING IN VARIOUS STEEL PRODUCTS AND HAD AVAILED CERTAIN FINA NCIAL ASSISTANCE FROM CERTAIN NATIONALIZED BANKS (PUNJAB NATIONAL BA NK, DENA BANK & UCO BANK) WORKING IN CONSORTIUM WITH PUNJAB NATIONA L BANK BEING THE LEAD BANK. THE LEARNED AR SUBMITTED THAT DUE T O ACUTE FINANCIAL CRISIS AND MARKET SITUATION, THE ASSESSEE SUFFERED LOSSES AND LIQUIDITY ITA NOS. 2352 TO 2357/AHD/16 [BANYAN & BERRY ALLOYS LTD.] A.YS. 2007-08 TO 2011-12 - 3 - CRUNCH AND THEREBY DEFAULTED IN MAKING CONTRACTUAL REPAYMENTS OF LOANS OF THE ABOVE REFERRED BANKS. THIS EVENTUALLY FORCED THE ASSESSEE TO PRACTICALLY CLOSE DOWN ALL ITS BUSINESS ACTIVITI ES. AS A RESULT OF SUCH CRISIS, EVEN THE POSSESSION OVER THE SPECIFIED ASSETS AND PROPERTIES WERE TAKEN OVER BY THE BANK UNDER THE SE CURITIZATION AND RE- CONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002 AND THE RULES FRAMED THEREUNDER. THE LIT IGATION ARISING OUT OF THIS CONTINUES TO BE PENDING EVEN AT PRESENT. T HE LEARNED AR SUBMITTED THAT ALL THESE FACTS WERE PLACED BEFORE T HE APPELLATE AUTHORITY AND HAS BEEN RECORDED IN ITS ORDER. IT I S OWING TO SUCH GRAVE FINANCIAL CRISIS AND CLOSURE OF BUSINESS ACTIVITIES , THE ASSESSEE WAS IN TOTAL DISARRAY AND MIDST OF CHAOS AND COULD NOT ATT END TO ITS TAX AND OTHER MATTERS. IT WAS SUBMITTED THAT THE DIRECTORS WERE NOT IN FACT EVEN AWARE OF THE NOTICES, ORDERS OR ANY OTHER COMM UNICATION THAT MAY HAVE BEEN SERVED BY VARIOUS AUTHORITIES OF THE INCO ME TAX DEPARTMENT. AS A COROLLARY, THE ASSESSEE WAS NEITH ER IN A POSITION TO ATTEND THE PROCEEDINGS OR TO COMPLY WITH LEGAL REQU IREMENT IN THIS REGARD OR TO DEFEND ITS POSITION. THE LEARNED AR T HEREAFTER SUBMITTED THAT THE ASSESSEE CAME TO KNOW ABOUT THE TAX DEMAND S IN RESPECT OF AYS 2006-07 TO 2009-10 WHEN ONE OF ITS DIRECTORS WA S SERVED UPON WITH THE SUMMONS BY THE TAX RECOVERY OFFICER (TRO). IT IS IN PURSUANCE OF THE RECOVERY PROCEEDINGS BEFORE THE TR O, THE ASSESSEE LEARNT THAT THE DEPARTMENT HAS PASSED ORDERS IN QUA NTUM AND IN PENALTY IN RESPECT OF SEVERAL ASSESSMENT YEARS. IT WAS ALS O LEARNT THAT MOST OF THESE ORDERS HAVE BEEN PASSED EX PARTE. CONSEQUENT UPON THIS, THE ASSESSEE APPROACHED THE AO AND APPLIED FOR GETTING CERTIFIED COPIES OF EACH OF SUCH ORDERS ALONGWITH RESPECTIVE NOTICES OF DEMAND. PURSUANT TO THE REQUESTS SO MOVED, THE ASSESSEE OBTAINED THE CERTIFIED COPY OF THE ASSESSMENT ORDER ON 7 TH APRIL, 2015 FOR ALL THESE ASSESSMENT YEARS IN APPEAL. AFTER HAVING RECEIVED THE COPY OF THE O RDER AND NOTICE OF ITA NOS. 2352 TO 2357/AHD/16 [BANYAN & BERRY ALLOYS LTD.] A.YS. 2007-08 TO 2011-12 - 4 - DEMAND ON 07.04.2015, THE ASSESSEE FILED APPEAL BEF ORE THE CIT(A) ON 23.04.2015. 5. THE LEARNED AR SUBMITTED THAT IN THE BACKDROP OF WHAT HAS BEEN STATED ABOVE, THE ASSESSEE FILED THE APPEAL WITHIN A PERIOD OF 30 DAYS FROM THE DATE OF ACTUAL, PHYSICAL RECEIPT OF THE CO PY OF THE ORDER ACCOMPANYING NOTICE OF THE DEMAND. IT IS IN THIS B ACKGROUND, THE ASSESSEE SUBMITTED BEFORE THE CIT(A) THAT APPEAL HA S BEEN FILED IN TIME OR ALTERNATIVELY THE DELAY OF INTERVENING PERI OD BE CONDONED AS PRAYED. THE CIT(A) HOWEVER DID NOT FIND MERIT IN T HE PLEA OF THE ASSESSEE AND REFUSED TO ADMIT THE APPEAL FOR DISPOS AL ON MERITS ON THE GROUND THAT DELAY OCCURRED IN FILING THE APPEAL DOE S NOT DESERVE TO BE CONDONED. THE LEARNED AR THUS SUBMITTED THAT ASSES SEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST THE AFORESAID ACTION OF THE CIT(A) AND PRAYED THAT HAVING REGARD TO THE ONGOING FINANCIAL MESS AND BUSINESS CLOSURE AND ALSO IN VIEW OF THE FACT THAT THE RESPE CTIVE ORDERS PASSED BY THE AO WERE RECEIVED PHYSICALLY ON 07.04.2015, T HE PERIOD OF LIMITATION SHOULD BE RECKONED FROM THE LATTER DATE AND CONSEQUENTLY, THE APPEAL SHOULD BE TREATED AS FILED IN TIME OR IN ALTERNATIVE THE INTERVENING DELAY SHOULD BE CONDONED FOR SUBSTANTIA L CAUSE OF JUSTICE. 6. THE LEARNED DR, ON THE OTHER HAND, REFERRED TO A ND RELIED UPON THE ORDER OF THE CIT(A). 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE ORDER OF THE CIT(A). THE SOLITARY GRIEVANCE OF THE ASSESSEE IN THE INSTANT CASE IS TOWARDS DENIAL OF THE CIT(A) TO ADM IT THE APPEAL FOR ADJUDICATION ON MERITS BY REFUSING TO CONDONE THE D ELAY IN FILING APPEAL BEFORE THE CIT(A). SECTION 249(2) OF THE AC T CONTEMPLATES THAT APPEAL SHALL BE PRESENTED WITHIN 30 DAYS FROM THE D ATE OF SERVICE OF THE NOTICE OF DEMAND RELATING TO ASSESSMENT OR PENA LTY. SECTION 249(3) OF THE ACT HOWEVER CONFERS DISCRETION TO THE CIT(A) TO ADMIT ITA NOS. 2352 TO 2357/AHD/16 [BANYAN & BERRY ALLOYS LTD.] A.YS. 2007-08 TO 2011-12 - 5 - AN APPEAL AFTER THE EXPIRATION OF THE SAID PERIOD O F 30 DAYS IF HE SATISFIED THAT THE ASSESSEE HAD SUFFICIENT CAUSE FO R NOT PRESENTING IT WITHIN THAT PERIOD. THEREFORE, THE CIT(A) IS VESTE D WITH DISCRETION TO ADMIT THE APPEAL BELATEDLY FOR DETERMINATION OF ISS UES ON MERITS IN APPROPRIATE CIRCUMSTANCES. IN THIS BACKGROUND, WE NOTICE FROM THE TABULATED STATEMENT (SUPRA) THAT A LAPSE HAS BEEN C OMMITTED BY ASSESSEE IN FILING THE APPEAL IN TERMS OF SECTION 2 49(2) OF THE ACT WHEN THE PERIOD OF DELAY IS RECKONED WITH REFERENCE TO THE DATE OF ASSESSMENT ORDER/PENALTY ORDER. HOWEVER, THE ASSES SEE HAS PROVIDED JUSTIFICATION FOR SUCH DELAY. THE ASSESSEE HAS TAK EN CONSISTENT POSITION THAT ITS BUSINESS VENTURE HAS CLOSED DOWN AND THE POSSESSION OF THE PREMISES HAVE BEEN TAKEN BY THE LENDER BANK ON 14.07.2010. THE POWER SUPPLY WAS ALSO DISCONNECTED MUCH EARLIER . THE ASSESSEE HAS UNDERLINED HIS PRECARIOUS FINANCIAL POSITION GI VING RISE TO SUCH ALLEGED LAPSE. IT IS THE CASE OF THE ASSESSEE THAT RESPECTIVE ORDERS OF ASSESSMENT AND PENALTY PRESENTLY APPEALED AGAINST W ERE NOT MADE PRIVY TO THE ASSESSEE. THE ASSESSEE HAS OBTAINED T HE CERTIFIED COPY OF THE RESPECTIVE ORDERS FROM THE AO BELATEDLY ON 07.0 4.2015 AND WHEN THIS DATE OF RECEIPT/SERVICE OF ORDER IS TAKEN INTO ACCOUNT, THERE IS NO DELAY IN FILING THE APPEAL. 8. FROM THE CONSPECTUS OF THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ASSESSEE HAS DEMONSTRATED THE CIRCUMSTANCE S RESULTING IN DELAY IN FILING THE VARIOUS APPEALS IN QUESTION. N EEDLESS TO SAY, THERE CAN BE NO STRAIGHT JACKET FORMULA TO COME TO CONCLU SION AS TO WHETHER THE SUFFICIENT AND GOOD GROUNDS HAVE BEEN MADE OUT OR NOT WHILE SEEKING CONDONATION OF DELAY. WE DO NOT SEE ANY MA LAFIDE WRITTEN LARGE ON THE CONDUCT OF THE ASSESSEE FOR ALLEGED DE LAY. IT IS TRITE THAT AN ATTEMPT SHOULD ALSO BE MADE TO ALLOW THE MATTER TO BE CONTESTED ON MERITS RATHER THAN TO THROW IT ON SUCH TECHNICALITI ES. APART FROM THE ABOVE, THE ASSESSEE DOES NOT STAND TO GAIN IN ANY M ANNER WHATSOEVER ITA NOS. 2352 TO 2357/AHD/16 [BANYAN & BERRY ALLOYS LTD.] A.YS. 2007-08 TO 2011-12 - 6 - BY NOT FILING APPEAL WITHIN THE PERIOD OF LIMITATIO N. IN FACT, IT IS THE CASE OF THE ASSESSEE THAT THE APPEALS HAVE BEEN FIL ED IN TIME WHEN SEEN WITH REFERENCE TO THE DATE OF RECEIPT OF COPY OF OR DER FROM THE AO ON 07.04.2015. KEEPING IN VIEW THE FINANCIAL CRISIS CU LMINATING IN ATTACHMENT OF PROPERTIES BY THE LENDER AND CLOSING DOWN OF THE BUSINESS ON OR ABOUT THE DATE OF PENALTY ORDER IN I TA NO.2152/AHD/2016, ONE CANNOT SAY THAT THE ASSESSEE HAD BEEN CALLOUS AND NEGLIGENT IN PROSECUTING THE MATTER. AT THIS P OINT, REFERENCE IS MADE TO THE DECISION OF THE HONBLE SUPREME COURT I N IMPROVEMENT TRUST VS. UJAGAR SINGH, (2010) 6 SCC 786 (SC) AND B OMBAY MERCANTILE CO-OP. BANK VS. CBDT (2010) 45 DTR 377 ( BOM) FOR THE PROPOSITION THAT IN THE MATTER OF CONDONATION OF DE LAY, A HIGHLY PEDANTIC APPROACH SHOULD BE ESCHEWED AND A JUSTICE ORIENTED APPROACH SHOULD BE ADOPTED AND A PARTY SHOULD NOT BE MADE TO SUFFER ON ACCOUNT OF TECHNICALITIES. THE TEST OF SUFFICIENT CAUSE IS PURELY AN INDIVIDUALISTIC TEST. IT IS NOT AN OBJECTIVE OF TE ST AS OBSERVED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF VITHHAL DH ONDIBA CHAWAN VS. MADHAV RAO (BOM) CIVIL APPLICATION NO.9464 OF 2 008 JUDGMENT DATED 06.082009. WHILE CONSIDERING THE BONAFIDES O F THE DELAY, AN ADJUDICATION AUTHORITY IS EXPECTED TO BEAR IN MIND THE PRINCIPLES LAID DOWN BY HONBLE SUPREME COURT IN THE LOCUS CLASSICUS CASE OF COLLECTOR OF LAND ACQUISITION VS. MST. KATIJI & ORS . 167 ITR 471 (SC). THE HONBLE SUPREME COURT LAID DOWN THE GUIDING PRI NCIPLES FOR ADOPTING A LIBERAL APPROACH IN THE MATTER OF CONDON ATION OF DELAY. THE PRINCIPLES LAID DOWN BY THE HONBLE COURT ARE R EPRODUCED HEREUNDER: 1. ORDINARILY, A LITIGANT DOES NOT STAND TO BENEFI T 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 ITA NOS. 2352 TO 2357/AHD/16 [BANYAN & BERRY ALLOYS LTD.] A.YS. 2007-08 TO 2011-12 - 7 - BEING DEFEATED. AS AGAINST THIS, WHEN DELAY IS COND ONED, THE HIGHEST THAT CAN HAPPEN IS THAT A CAUSE WOULD BE DE CIDED ON MERITS AFTER HEARING THE PARTIES. 1. ' ANY APPEAL OR ANY APPLICATION, OTHER THAN AN A PPLICATION UNDER ANY OF THE PROVISIONS OF ORDER XXI OF THE COD E OF CIVIL PROCEDURE, 1908, MAY BE ADMITTED AFTER THE PRESCRIB ED PERIOD IF THE APPELLANT OR THE APPLICANT SATISFIES THE COU RT THAT HE HAD SUFFICIENT CAUSE FOR NOT PREFERRING THE APPEAL OR M AKING THE APPLICATION WITHIN SUCH PERIOD.' 3. 'EVERY DAY'S DELAY MUST BE EXPLAINED DOES NOT M EAN THAT PEDANTIC APPROACH SHOULD BE MADE. WHY NOT EVERY HOU R'S DELAY, EVERY SECOND'S DELAY? THE DOCTRINE MUST BE A PPLIED IN A RATIONAL, COMMON SENSE AND PRAGMATIC MANNER. 4. WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERA TIONS ARE PITTED AGAINST EACH OTHER, THE CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRED, FOR THE OTHER SIDE CANNOT CLAIM TO HAVE VESTED RIGHT IN INJUSTICE BEING DONE BECAUSE O F 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 SERIOUS RISK. 6. IT MUST BE GRASPED THAT THE JUDICIARY IS RESPECT ED NOT ON ACCOUNT OF ITS POWER TO LEGALIZE INJUSTICE ON TECHN ICAL GROUNDS BUT BECAUSE IT IS CAPABLE OF REMOVING INJUSTICE AND IS EXPECTED TO DO SO. 9. THE PRINCIPLES ENUNCIATED BY THE HONBLE COURTS SAY IT ALL. 10. IN THE LIGHT OF FACTS AND CIRCUMSTANCES NARRATE D HEREINABOVE, WE ARE OF THE VIEW THAT THE ASSESSEE HAS SUFFICIENTLY DISCHARGED ITS BURDEN ITA NOS. 2352 TO 2357/AHD/16 [BANYAN & BERRY ALLOYS LTD.] A.YS. 2007-08 TO 2011-12 - 8 - OF PROOF FOR DELAY. CONSEQUENTLY, WE DIRECT THE CI T(A) TO CONDONE THE DELAY OCCURRED IN FILING THE APPEAL BEFORE IT AND A DMIT THE APPEAL FOR ADJUDICATION ON MERITS IN ACCORDANCE WITH LAW. ACC ORDINGLY, ALL THE APPEALS CAPTIONED ABOVE ARE RESTORED TO THE FILE OF THE CIT(A) FOR DE NOVO ADJUDICATION ON MERITS IN ACCORDANCE WITH LAW AFTE R GIVING FAIR OPPORTUNITY TO THE ASSESSEE. 11. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE CAPTIONED ABOVE ARE ALLOWED FOR STATISTICAL PURPOSES. SD/- SD/- (RAJPAL YADAV) (PRADIP K UMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 17/10/2018 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- & / REVENUE 2 / ASSESSEE ( ) *+ , / CONCERNED CIT 4 ,- / CIT (A) / 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7 289 : / GUARD FILE. BY ORDER / 4 / 5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 17/10/201 8