M/s. Rajiv Gandhi Rural Housing Corporation Limited, Bangalore V. Assistant Commissioner Of Income Tax, Circle - 5(1)(1), Bangalore

ITA 2389/BANG/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 1864 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 05-03-2021
• Assessment Year: 2014-2015
• Appeal Filed On: 20-11-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: H R SURESH
• Keywords: Audit objection; Reasonable cause; Condonation of delay; Set aside
• Section: 143(3); 250; 251; 13; 22

Judgement Text

ITA NOS.2388 & 2389/BANG/2019 M/S. RAJIV GANDHI RURAL HOUSING CORPORATION LTD., B ENGALURU IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: BANGALORE BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.2388/BANG/2019 ASSESSMENT YEAR: 2013-14 RAJIV GANDHI RURAL HOUSING CORPORATION LIMITED 9 TH FLOOR, CAUVERY BHAVAN, E&F BLOCK, K.G. ROAD BANGALORE PAN NO : AABCR5689N VS. DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-5(1)(1) BENGALURU APPELLANT RESPONDENT ITA NO.2389/BANG/2019 ASSESSMENT YEAR: 2014-15 RAJIV GANDHI RURAL HOUSING CORPORATION LIMITED 9 TH FLOOR, CAUVERY BHAVAN, E&F BLOCK, K.G. ROAD BANGALORE VS. ACIT CIRCLE-5(1)(1) BENGALURU APPELLANT RESPONDENT APPELLANT BY : SHRI H.R. SURESH, A.R. RESPONDENT BY : SHRI SUNIL KUMAR AGARWAL, D.R. DATE OF HEARING : 05.03.2021 DATE OF PRONOUNCEMENT : 09.03.2021 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIRECTE D AGAINST ORDERS OF THE CIT(A) FOR THE ASSESSMENT YEARS 2013- 14 & 2014-15. ITA NOS.2388 & 2389/BANG/2019 M/S. RAJIV GANDHI RURAL HOUSING CORPORATION LTD., B ENGALURU PAGE 2 OF 14 THE ISSUE IN THESE TWO APPEALS ARE COMMON AND ONLY CHANGE IS IN FIGURES. SINCE THE ISSUE IS COMMON, THESE APPEALS ARE CLUBBED TOGETHER AND HEARD FOR THE SAKE OF CONVENIENCE. TH E GROUNDS OF THE APPEALS IN BOTH THE APPEALS ARE AS FOLLOWS: THE ASSESSING AUTHORITY HAS ERRED IN DISALLOWING TH E EXPENDITURE OF RS.3,09,62,215 FOR THE A.Y. 20123-14 AND OF RS.3 ,15,00,000/- FOR THE A.Y. 2014-15 BEING THE FINANCIAL GUARANTEE COMM ISSION PAYABLE TO GOVT OF KARNATAKA FOR ISSUING GUARANTEE FOR VARI OUS LOANS AVAILED FROM KARNATAKA HOUSING DEVELOPMENT COOPERATION FOR THE APPELLANT'S HOUSING SCHEMES FOR THE BENEFIT OF ECON OMICALLY WEAKER SECTIONS OF SOCIETY (SC/ST CATEGORY) IN RURAL AREAS AS PER THE HOUSING SCHEMES FORMULATED BY GOVT OF INDIA AND KAR NATAKA. THE APPELLATE AUTHORITY, COMMISSIONER OF INCOME TAX (APPEALS)-5 IS INCORRECT IN SUSTAINING THE DISALLOWANCE OF GUARANT EE COMMISSION IN THE APPELLATE ORDER DT. L 7/08/2017 THE ASSESSING AUTHORITY HAS MIS LEAD HIMSELF IN DIS ALLOWING THE GUARANTEE COMMISSION EXPENSES ON THE SURMISE THAT G OVERNMENT HAS NOT PROVIDED ANY GUARANTEE DURING THE YEAR IGNORING THE FACTS AND DETAILS SUBMITTED BY THE APPELLANT WITH REGARD TO G UARANTEES ISSUED IN THE YEAR 2005 WHICH IS CONTINUING GUARANTEE AS P ER PARA 2 OF GUARANTEE AGREEMENT DT.24TH MARCH 2005 FOR ALL THE LOANS RAISED BY THE APPELLANT FOR IMPLEMENTATION OF THE HOUSING SCH EMES. THE ASSESSING AUTHORITY IS INCORRECT IN HOLDING THA T THE GUARANTEE COMMISSION PAID/PAYABLE IN RESPECT OF VARIOUS GRANT S AND LOANS DISPERSED TO BENEFICIARIES IS IN CONTRARY TO THE FA CT THAT LOANS ARE AVAILED BY THE APPELLANT FROM HUDCO UNDER THE GUARA NTEE OF GOVT OF KARNATAKA WITH LIABILITY TO PAY 1% COMMISSION FO R SUCH LIABILITY. THE ASSESSING AUTHORITY IS INCORRECT IN HOLDING THA T THE GOVT HAS NOT PROVIDED GUARANTEE TO HUDCO ON BEHALF OF THE APPELL ANT CO. DURING THE YEAR NOT CONSIDERING THE GUARANTEE ISSUED IN TH E EARLIER YEARS WITH CONTINUING GUARANTEE WITH LIABILITY TO PAY THE GUAR ANTEE COMMISSION ANNUALLY. THE ASSESSING OFFICER FAILED TO TAKE INTO CONSIDERA TION THE PAYMENT OF GUARANTEE COMMISSION TO THE GOVT OF KARNATAKA BY TH E APPELLANT FOR EACH OF THE YEARS COMMENCING FROM THE YEAR 2008-09 TO 2012-13. ITA NOS.2388 & 2389/BANG/2019 M/S. RAJIV GANDHI RURAL HOUSING CORPORATION LTD., B ENGALURU PAGE 3 OF 14 THE ASSESSING OFFICER HAS FAILED TO CONSIDER THE EV IDENCE PRODUCED BY THE APPELLANT FOR PAYMENT OF SUCH GUARANTEE COMMISS IONS DEPENDING ON ITS ABILITY TO PAY TOWARDS THE ACCRUED LIABILITY . FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT TH E TIME OF HEARING OF APPEAL, THE APPELLANT PRAYS THAT THE APPEAL BE ALLO WED IN THE INTEREST OF EQUITY AND JUSTICE. THE APPELLANT CRAVES FOR LEAVE, TO ADD, DELETE OR A MEND THE GROUNDS OF APPEAL AT T 1 TIME OF HEARING. 2. THE ISSUE IN THESE APPEALS IS WITH REGARD TO DIS ALLOWANCE OF GUARANTEE COMMISSION PAID TO GOVERNMENT OF KARNATAK A BY ASSESSEE AT RS.3,09,62,215 IN A.Y. 2013-14 & RS.3,15,00,000/ - IN THE A.Y. 2014-15 ON THE REASON THAT THERE IS NO NEXUS BETWEE N THE GUARANTEE COMMISSION PAID AND THE 1% COMMISSION PAID BY THE G OVERNMENT FOR MEETING THE DAY TO DAY ADMINISTRATIVE ACTIVITIE S. IN THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS TO PAY COMMISSION T O GOVERNMENT OF KARNATAKA @ 1% FROM THE LOAN AVAILED FROM HUDCO FRO M 2000-01 TO 2013-14. FURTHER, SEC.5 OF THE KARNATAKA CEILING O N GOVT. GUARANTEE ACT, 1999 PROVIDES THAT THE GOVT. SHALL C HARGE A MINIMUM OF 1% AS GUARANTEE COMMISSION WHICH SHALL NOT BE WA IVED UNDER ANY CIRCUMSTANCES. THE ASSESSING OFFICER HAS GIVEN A FINDING THAT THE GOK HAS NEITHER ALLOTTED FUNDS FOR THE EXPENSES TOWARDS THE GUARANTEE COMMISSION PAYABLE TO THE GOVT. NOT PROVI DED GUARANTEE TOWARDS THE LOAN TAKEN FROM HUDCO DURING THE YEAR. THE GOVT. HAS NOT PROVIDED GUARANTEE TO HUDCO ON BEHALF OF THE AP PELLANT DURING THE YEAR UNDER CONSIDERATION. HENCE, THERE IS NO Q UESTION OF MAKING A PROVISION FOR PAYMENT OF A NON-EXISTENT GUARANTEE COMMISSION TO THE GOVT. EVEN IF THE GOVT. WAS TO GIVE GUARANTEE LATER, THE GUARANTEE COMMISSION CANNOT BE TREATED AS EXPENSE IN THE HAND S OF THE APPELLANT WHEN IT IS NOT RECOGNIZING THE INCOME FRO M THE PROJECTS FOR WHICH LOANS HAVE BEEN TAKEN FROM HUDCO/FIS. THE GR ANT SO ITA NOS.2388 & 2389/BANG/2019 M/S. RAJIV GANDHI RURAL HOUSING CORPORATION LTD., B ENGALURU PAGE 4 OF 14 RECEIVED IS RECOGNIZED IN THE P&L A/C. GRANTS RECE IVED TOWARDS THE VARIOUS HOUSING SCHEMES ARE NOT REFLECTED IN THE P& L A/C. THE UTILIZATION OF THESE FUNDS IS ALSO NOT REFLECTED IN THE PO&L A/C. IN ORDER TO MEET THE FUNDING REQUIREMENT OF THESE HOUS ING SCHEMES, LOANS ARE TAKEN FROM HUDCO AND OTHER FIS WHICH ARE REPAID BY THE GOVT. ITSELF. THE LOANS DISBURSED TO THE BENEFICIA RIES OF THE VARIOUS SCHEMES ARE RECOVERED BY THE LOCAL IMPLEMENTING OFF ICERS AND THE SAME IS BEING DIRECTLY CREDITED TO THE GOVT. TREASU RY. HENCE, THE GUARANTEE COMMISSION PAID OR PAYABLE IS RELATED TO THE VARIOUS GRANTS AND LOANS DISBURSED TO BENEFICIARIES OF THE SCHEMES WHICH HAVE BEEN KEPT OUTSIDE THE PURVIEW OF THE P&L ACCOUNT. THERE IS THEREFORE NO QUESTION OF RECOGNIZING GUARANTEE COMMISSION AS A P &L ITEM AND ALLOWED. THERE IS NO NEXUS BETWEEN THE GUARANTEE C OMMISSION PAID AND THE 1% COMMISSION PAID BY THE GOVT. FOR MEETING ITS DAY TO DAY ADMINISTRATIVE ACTIVITIES. IN VIEW OF THE SAME, CI T(A) DID NOT FIND ANY INFIRMITY IN THE IMPUGNED ADDITION MADE BY THE ASSE SSING OFFICER, THEREFORE, THE APPEAL ON THIS GROUND WAS NOT ALLOWE D BY THE LD. CIT(A). 3. NOW THE ASSESSEE IS IN APPEAL BEFORE US. HOWEVE R, IT WAS NOTICED THAT THERE WAS A DELAY IN FILING THESE APPE ALS BEFORE THIS TRIBUNAL OF 714 DAYS IN ASSESSMENT YEAR 2013-14. T HE ASSESSEE IN ASSESSMENT YEAR 2013-14 RECEIVED THE ORDER OF FIRST APPELLATE AUTHORITY ON 7.10.2017 AND TIME LIMIT TO FILE THE A PPEAL BEFORE THIS TRIBUNAL WAS 60 DAYS FROM THE DATE OF RECEIPT OF OR DER FROM FIRST APPELLATE AUTHORITY. THE APPEAL FOR THE ASSESSMENT YEAR 2013-14 WAS FILED ON 20.11.20019 BEFORE THIS TRIBUNAL. THUS, T HERE WAS A DELAY OF 714 DAYS IN FILING APPEAL BEFORE THIS TRIBUNAL I N ASSESSMENT YEAR 2013-14. ITA NOS.2388 & 2389/BANG/2019 M/S. RAJIV GANDHI RURAL HOUSING CORPORATION LTD., B ENGALURU PAGE 5 OF 14 3.1 FOR THE A.Y. 2014-15, THE ASSESSEE RECEIVED FIR ST APPELLATE ORDER OF THE CIT(A) ON 27.2.2018 AS PER THE AFFIDAV ITS FILED BY THE ASSESSEE BEFORE THE TRIBUNAL FOR THE A.Y. 2014-15. THUS, THERE WAS DELAY OF 517 DAYS IN FILING APPEAL BEFORE THIS TRIB UNAL FOR THE A.Y. 2014-15. THE ASSESSEE FILED THE CONDONATION PETITI ON ON 17.2.2021 ACCOMPANIED BY THE AFFIDAVIT FOR CONDONATION OF DEL AY IN THESE ASSESSMENT YEARS. IT IS TO BE NOTED THAT THE ASSES SEE FILED THREE AFFIDAVITS AND PETITION FOR CONDONATION FOR EACH AS SESSMENT YEAR OF VARIOUS DATES SUPPORTING THE DELAY IN FILING THE AP PEALS. WE REPRODUCE THESE AFFIDAVITS AND THE PETITION FOR A.Y . 2014-15 AS FOLLOWS: AFFIDAVIT DATED 23.9.2020 (A.Y. 2014-15) 1. THAT I AM THE MANAGING DIRECTOR OF RAJIV GANDHI RUR AL HOUSING CORPORATION LIMITED. 2. THAT AN APPEAL WAS PREFERRED BY THE COMPANY AGAINST THE ASSESSMENT ORDER DT.26 DECEMBER 2016 PASSED BY THE ACIT CIRCLE 5(1)(1) BAN GALORE FOR THE AY 2014- 15. 3. THAT THE COMMISSIONER OF THE INCOME TAX (APPEALS)-5 BANGALORE PASSED ORDER U/S 250 WITH ORDER DT.22 AUGUST 2018 AND THE APPELLATE ORDER WAS SAID TO HAVE BEEN RECEIVED. 4. THAT THE COMMISSIONER OF INCOME TAX (APPEALS)-5 BANGALORE HAVING ALLOWED THE MAJORITY OF GROUNDS OF APPEAL HAS CLAIMED DISALLOWANCE OF EXPENSES OF RS.3,15,00,000 WITH REGARD TO GUARANTEE COMMISSION PAID/PAYABLE TO GOVERNMENT OF KARNATAKA FOR ISSUE OF GUARANTEE TO HUDCO FOR AVAILING VARIOUS LOANS. 5. THAT DUE TO ADMINISTRATIVE DELAYS AND FREQUENT CHAN GES IN THE ACCOUNTS, THE FILE WAS NOT PLACED FOR PREFERRING APPEAL BEFORE TH E HONOURABLE INCOME TAX TRIBUNAL WITH REGARD TO DISALLOWANCE OF GUARANTEE COMMISSION PAID/PAYABLE TO GOVERNMENT OF KARNATAKA. 6. THAT DECISION WAS TAKEN BY MANAGEMENT TO PREFER AN APPEAL BEFORE HONOURABLE APPELLATE TRIBUNAL BANGALORE BENCH AGAINST THE ORDER OF THE ASSESSING AUTHORITY IN RESPECT OF DISALLOWANCE OF EXPENSES CLAIMED TOWARDS GUARANTEE COMMISSION PAID/PAYABLE TO GOVERNMENT OF KARNATAKA BY FILING AN APPLICATION OF CONDONATION OF 571 DAYS DELAY IN PREFERRING APPEAL BEFORE THE HONOURABLE INCOME TAX APPELLATE TRIBUNAL. 7. THAT I DR. V RAM PRASATH MANOHAR, MANAGING DIRECTOR DO HEREBY SOLEMNLY AFFIRM THAT THE CONTENTS IN PARA 1 TO 6 ARE TRUE AN D CORRECT. ITA NOS.2388 & 2389/BANG/2019 M/S. RAJIV GANDHI RURAL HOUSING CORPORATION LTD., B ENGALURU PAGE 6 OF 14 CONDONATION PETITION DATED 12.11.2019: (A.Y 2014-15 ) THE APPLICANT COMPANY IS A WHOLLY OWNED GOVERNMENT COMPANY WITH 100% HELD BY GOVT OF KARNATAKA SOLELY WITH THE OBJECT OF IMPL EMENTING BOTH RURAL & URBAN HOUSING SCHEMES/PROGRAMMES OF THE GOVERNMENT OF IND IA AND GOVERNMENT OF KARNATAKA AS A NODAL AGENCY. THE APPLICANT CO. IS E STABLISHED WITH THE OBJECT TO FORMULATE, PROMOTE, IMPLEMENT, DEVELOP, MAINTAIN, O PERATE, CONSTRUCT, ERECT, BUILD, REMODEL, REPAIR, EXECUTE, IMPROVE, ADMINISTE R, CONTROL AND MANAGING HOUSING, SHELTER AND OTHER RELATED SCHEMES OF NEW C ONSTRUCTION, UPGRADATION, REPAIR, RENEWAL RENOVATION OF EXISTING STRUCTURES A ND BUILDINGS, IN RURAL AND URBAN AREAS OF KARNATAKA; EITHER ON ITS OWN OR ENTR USTED BY THE STATE/CENTRAL GOVERNMENT TO THE COMPANY SUCH AS RURAL ASHRAYA HOU SING SCHEME, URBAN ASHRAYA HOUSING SCHEME, AMBEDKAR HOUSING SCHEME OR OUT OF THE FUNDS MADE AVAILABLE TO THE COMPANY BY PERSONS, FIRMS, COMPANI ES, INSTITUTIONS, ASSOCIATIONS, ORGANISATIONS, SOCIETIES, LOCAL BODIES AND STATE/CE NTRAL GOVERNMENT, PARTICULARLY FOR ECONOMICALLY WEAKER SECTIONS AND SPECIAL OCCUPA TIONAL CATEGORIES RICH AS BEEDI-WORKERS, WEAVERS, FISHERMEN, ARTISANS, HAMAIS , MINE WORKERS AND OTHER SUCH CATEGORIES AS ARE IDENTIFIED, DEFINED, RECOGNI SED BY THE STATE/CENTRAL GOVERNMENT FROM TIME TD TIME. FOR THE AY 2014-15 THE ASSESSMENT WAS COMPLETED BY ACIT CIRCLE 5(1)(1)BANGALORE U/S 143(3) DT.26 DECEMBER 2016. THE SAID ORDER WAS DISPUTED, PREFERRING AN APPEAL B EFORE THE COMMISSIONER OF INCOME TAX (APPEALS)-5 BANGALORE. THE (APPEALS)-5 B ANGALORE PASSED AN ORDER U/S 250 OF INCOME TAX WITH ORDER DT.22 AUGUST 2018 AND THE SAID ORDER IS SERVED ON THE APPLICANT ON 27 FEB 2018. S THE APPLICANT BEING A GOVERNMENT CO. DUE TO FREQUEN T CHANGES IN THE PERSONS HEADING THE FINANCE AND ACCOUNTING DEPT. THEIR DECI SION TO PREFER FURTHER APPEAL WITH REGARD TO SUSTAINING DISALLOWANCE OF GUARANTEE COMMISSION PAID/PAYABLE TO GOVERNMENT OF KARNATAKA COULD NOT HE FINALISED. THE PRESENT MANAGING DIRECTOR ON REVIEW OF THE ORDERS OF THE COMMISSIONER OF INCO ME TAX(APPEALS)-5 DT.22 AUGUST 2018 AND THE DECISION OF THE BOARD OF DIRECT ORS HAS DECIDED TO PREFER AN APPEAL BEFORE THE HONOURABLE APPELLATE TRIBUNAL BAN GALORE BENCH WITH A REQUEST TO CONDONE THE DELAY WHICH IS BEYOND STATUT ORY LIMIT OF 60 DAYS. THE APPLICANT BEING A GOVERNMENT CO. IS ACCOUNTABLE TO STATE AND CENTRAL GOVERNMENT FOR ALL THE FUNDS WHICH ARE ALLOCATED FO R IMPLEMENTATION OF THE SCHEME AND CANNOT AFFORD TO PAY INCOME TAX ON DISAL LOWANCES WHICH IS ACTUALLY ALLOWABLE CONSIDERING THE PROVISIONS OF INCOME TAX. THE FREQUENT CHANGES IN THE OFFICE STAFF OF THE ACC OUNTS DEPT AND OFFICE OF THE TOP MANAGEMENT IS THE GENUINE REASON FOR NOT FILING AN APPEAL WITHIN THE STATUTORY TIME LIMIT OF 60 DAYS. THE APPLICATION IS THEREFORE FILED FOR CONDONATION OF DELAY CONSIDERING THE REASON FOR NOT PREFERRING THE APPEAL WITHIN THE STATUTORY TIME LIMIT. ITA NOS.2388 & 2389/BANG/2019 M/S. RAJIV GANDHI RURAL HOUSING CORPORATION LTD., B ENGALURU PAGE 7 OF 14 IT IS SUBMITTED THAT THE APPLICANT WHICH IS A GOVER NMENT CO WILL BE PUT TO ADMINISTRATIVE AND FINANCIAL HARDSHIP IF THE DELAY IS NOT CONDONED. ON THE OTHER HAND THE REVENUE IS NOT PUT TO ANY LOSS OR HARDSHIP IF THE DELAY IS CONDONED. RELIANCE IS PLACED ON THE JUDGEMENT OF THE HONOURAB LE APEX COURT IN THE CASE OF THE COLLECTOR, LAND ACQUISITION VS. MST. KATIJI AND OTHERS (1987) 167 ITR 471 AND ALSO IN THE CASE OF CONCORD INDIA INSURANCE CO. LTD., VS. SMT. NIRMALA DEVI AND OTHERS 118 ITR 507. FURTHER THE APPELLANT RELIE S ON ANOTHER DECISION OF THE HON'BLE APEX COURT IN THE CASE OF RADHA KRISHNA RAI VS. ALLAHABAD BANK .& OTHERS [2009] 9 SCC 733 AND CIT VS. WEST BENGAL INF RASTRUCTURE DEVELOPMENT FINANCE CORPORATION LIMITED (2011) 334 ITR 269 (SC) . AFFIDAVIT DATED 14.11.2019: (A.Y. 2014-15) 1. THAT I AM THE MANAGING DIRECTOR OF RAJIV GANDHI HO USING CORPORATION LIMITED . 2. THAT AN APPEAL WAS PREFERRED BY THE COMPANY AGAINST THE ASSESSMENT ORDER DATED 26 DECEMBER, 2016 PASSED BY THE ACIT CIRCLE 5 (1)(1) BANGALORE FOR THE A.Y. 2014-15. 3. THAT THE COMMISSIONER OF THE INCOME TAX (APPEALS)-5 BANGALORE PASSED U./S 250 WITH ORDER DATED 22 AUGUST, 2018 AND THE APPELL ATE ORDER WAS SAID TO HAVE RECEIVED ON 27 FEB 2018 4. THAT THE COMMISSIONER OF INCOME TAX (APPEALS)-5 BAN GALORE HAVING ALLOWED THE MAJORITY OF GROUNDS OF APPEAL HAS CLAIMED DISAL LOWANCE OF EXPENSES OF RS.3,15,00,000 WITH REGARD TO GUARANTEE COMMISSION PAID/PAYABLE TO GOVERNMENT OF KARNATAKA FOR ISSUE OF GUARANTEE TO H UDCO FOR AVAILING VARIOUS LOANS. 5. THAT DUE TO ADMINISTRATIVE DELAYS AND FREQUENT CHAN GES IN THE ACCOUNTS, THE FILE WAS NOT PLACED FOR PREFERRING APPEAL BEFORE TH E HONOURABLE INCOME TAX TRIBUNAL WITH REGARD TO DISALLOWANCE OF GUARANTEE C OMMISSION PAID/PAYABLE TO GOVERNMENT OF KARNATAKA. 6. THAT DECISION WAS TAKEN BY MANAGEMENT TO PREFER AN APPEAL BEFORE HONOURABLE APPELLATE TRIBUNAL BANGALORE BENCH AGAINST THE ORDE R OF THE ASSESSING AUTHORITY IN RESPECT OF DISALLOWANCE OF EXPENSES CL AIMED TOWARDS GUARANTEE COMMISSION PAID/PAYABLE TO GOVERNMENT OF KARNATAKA FOR FILING AN APPLICATION OF CONDONATION OF DELAY IN PREFERRING APPEAL BEFORE THE HONOURABLE INCOME TAX APPELLATE TRIBUNAL. 7. THAT I DR. V. RAM PRASATH MANOHAR, MANAGING DIRECTO R DO HEREBY SOLEMNLY AFFIRM THAT THE CONTENTS IN PARA 1 TO 6 ARE TRUE AN D CORRECT. ITA NOS.2388 & 2389/BANG/2019 M/S. RAJIV GANDHI RURAL HOUSING CORPORATION LTD., B ENGALURU PAGE 8 OF 14 AFFIDAVIT DATED 17.02.2021: (A.Y. 2014-15) 1. THAT I AM THE MANAGING DIRECTOR OF RAJIV GANDHI HO USING CORPORATION LIMITED SINCE 10 TH DEC 2020. 2. THAT AN APPEAL HAVE BEEN PREFERRED U/S 253 OF THE I NCOME TAX ACT, BEFORE THE HON'BLE TRIBUNAL BELATED BY 571 DAYS FOR THE A.Y. 2 014-15 WITH APPLICATION AND AFFIDAVIT FOR CONDONATION OF DELAY. 3. THE APPLICATION FOR DELAY CONDONATION AND THE AFFID AVIT HAS BEEN FILED ALONG WITH THE APPEAL STATING THE REASONS BEST KNOWN AT T HAT TIME. 4. THAT THE DELAY IS ALSO CAUSED DUE TO NON FILING BY THE PREDECESSOR IN OFFICE AS MANAGING DIRECTOR AND NON AVAILABILITY OF RECORDS T O THE OFFICE STAFF TO PUT UP THE FILE FOR ASSIGNING THE WORK OF FILING THE APPEA L TO THE H R SURESH AND CO., CHARTERED ACCOUNTANT OFFICE. 5. THAT ON OBSERVATION OF THE C&AG'S DURING PROPRIETY AUDIT DURING THE YEAR 2019, DECISION TO FILE THE APPEAL WAS TAKEN WITH DE LAY CONDONATION APPLICATION. 6. THAT THE REASONS STATED IN THE DELAY CONDONATION AP PLICATION IS ALSO BASED ON FACTS AND REALITY. 7. THAT I SINDHU B. RUPESH, MANAGING DIRECTOR DO H EREBY SOLEMNLY AFFIRM THAT THE CONTENTS IN PARA 1 TO 6 ARE TRUE AND CORRECT. WE HAVE CAREFULLY GONE THROUGH THE ABOVE AVERMENTS MADE IN THE ABOVE AFFIDAVITS AND THE AVERMENTS ARE VARYING FROM ONE AFFIDAVIT TO ANOTHER AFFIDAVIT. 4. THE ASSESSEE ALSO FILED DETAILS OF APPOINTMENT O F MANAGING DIRECTORS TO THE ASSESSEE COMPANY. SL.NO. EVENT DATE DOCUMENT REF ERENCE PG.NO. 1 APPOINTMENT OF SHRI B. BHEEMAPPA, KAS AS MANAGING DIRECTOR, RAJIV GANDHI HOUSING CORPORATION LTD. (RGHCL) 10 AUGUST 2017 ORDER VE 251 HAM 2017 1 ITA NOS.2388 & 2389/BANG/2019 M/S. RAJIV GANDHI RURAL HOUSING CORPORATION LTD., B ENGALURU PAGE 9 OF 14 2 APPOINTMENT OF SHRI ANBU KUMAR V., IAS AS MANAGING DIRECTOR, RAJIV GANDHI HOUSING CORPORATION LIMITED (RGHCL) 28 SEPTEMBER, 2017 NOTIFICATION NO.DPAR 442 SAS 2017 2 3 CIT(A) ORDER RECEIVED 7 TH OCTOBER, 2017 AS MENTIONED IN FORM 36 4 IMPLEMENTATION OF E- OFFICE (APPLICATION DEVELOPED BY NIC FOR OFFICE ADMINISTRATION) 01 DECEMBER, 2017 NOTE NO.RGRHCL 1 ADM 2017-18 3 5 APPOINTMENT OF SHRI V. RAM PRASATH MANOHAR, IAS AS MANAGING DIRECTOR, RAJIV GANDHI HOUSING CORPORATION LTD. (RGHCL) 6 SEPTEMBER, 2019 NOTIFICATION NO.DPAR 462 SAS 2018 4-6 6 AUDIT OBJECTION RELATING TO INCOME TAX BY OFFICE OF THE PRINCIPAL ACCOUNTANT GENERAL (G&SSA) KARNATAKA BENGALURU 21 OCTOBER, 2019 AUDIT ENQUIRY NO.3/CERTIFICATION AUDIT/2018-19 7-10 7 APPOINTMENT OF SHRI DATTATREYA V. SHINDAGI AS GENERAL MANAGER (FINANCE & ACCOUNTS) I/C IN PLACE OF SHRI B.N. BIRADAR 21 OCTOBER, 2019 OFFICE ORDER NO.55/2019-20 11 8 APPEAL FILED IN FORM 36 BEFORE HONBLE ITAT 19 NOVEMBER, 2019 5. WE HAVE ALSO CAREFULLY GONE THROUGH THE ABOVE ST ATEMENT SHOWING THE APPOINTMENT OF THE MANAGING DIRECTOR TO THE ASSESSEE COMPANY ON VARIOUS OCCASIONS. AS SEEN FROM THE REC ORDS, THE ASSESSEE HAS RECEIVED THE FIRST APPELLATE ORDER FOR THE ASSESSMENT ITA NOS.2388 & 2389/BANG/2019 M/S. RAJIV GANDHI RURAL HOUSING CORPORATION LTD., B ENGALURU PAGE 10 OF 14 YEAR 2013-14 ON 7.10.2017 AND FOR ASSESSMENT YEAR 2 014-15 ASSESSEE HAS RECEIVED ON 27.2.2018. THE APPEAL HAS BEEN FILED BY ASSESSEE FOR BOTH ASSESSMENT YEARS ARE AS FOLLOWS: ASSESSMENT YEAR DATE OF RECEIPT OF CIT(A) ORDER DATE OF FILING THE APPEAL BEFORE THIS TRIBUNAL NUMBER OF DAYS DELAY 2013 - 14 07.10.2017 20.11.2019 714 DAYS 2014 - 15 27.02.2018 20.11.2019 571 DAYS 6. NOW THE CLAIM OF THE ASSESSEE IN AFFIDAVIT IS TH AT THERE WAS NO HEAD OF OFFICE I.E. MANAGING DIRECTOR IN THE ASSESS EE COMPANY AND THUS IT DELAYED IN PUT UP THE FILE FOR ASSIGNING TH E WORK FOR FILING THE APPEAL BEFORE SURESH & CO., CHARTERED ACCOUNTANTS A ND ALSO ONLY AFTER THE OBSERVATION OF C&AG DURING THE PROPRIETAR Y AUDIT DURING THE YEAR 2019 DECISION TO FILE APPEAL BEFORE THIS T RIBUNAL WAS TAKEN. HENCE, THE DELAY IN FILING THESE APPEALS TO BE COND ONED. 7. WE HAVE CAREFULLY GONE THROUGH ALL THE APPEALS FILE D BY THE ASSESSEE. AS SEEN FROM THE ABOVE, SHRI ANBU KUMAR V., IAS WAS APPOINTED AS MANAGING DIRECTOR W.E.F. 28.9.2017. H E HOLD THE OFFICE TILL 6.9.2019 AND HE WAS TRANSFERRED VIDE GOVERNMEN T ORDER NO.DPAR 462 SAS 2018 DATED 6.9.2019 AND VIDE VERY SAME ORDE R DR. V. RAM PRASANTH MANOHAR, IAS HAS BEEN APPOINTED S MANAGING DIRECTOR W.E.F. 6.9.2019 AND THERE IS NO SUBSTANCE IN THE AR GUMENT OF THE ASSESSEES COUNSEL THAT THERE WAS NO HEAD OF OFFICE I.E. MANAGING DIRECTOR TO TAKE CARE DAY TO DAY AFFAIRS OF THE ASS ESSEE COMPANY. THE AVERMENT MADE BY PRESENT MANAGING DIRECTOR SMT. SIN DHU B. RUPESH IN HER AFFIDAVIT DATED 17.2.2021 IS AGAINST THE FACTS BROUGHT ON RECORD. HENCE, WE CANNOT GIVE ANY CREDIT TO SUC H SELF-SERVING AFFIDAVIT MADE BY MANAGING DIRECTOR IN HER AFFIDAVI T SO AS TO CONDONE THE DELAY. THUS, THERE WAS NO RECORD TO INDICATE A S TO WHAT WAS THE REAL CAUSE FOR DELAY IN FILING THE APPEAL BEFORE TH IS TRIBUNAL. AT THIS ITA NOS.2388 & 2389/BANG/2019 M/S. RAJIV GANDHI RURAL HOUSING CORPORATION LTD., B ENGALURU PAGE 11 OF 14 POINT OF TIME, IT IS APPROPRIATE TO GO THROUGH THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF COLLECTOR LAND ACQUISI TION VS. MST KATIJI 167 ITR 471, WHEREIN IT WAS HELD THAT WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATIONS ARE PITTED AGAINST EAC H OTHER, THE CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRED, FO R THE OTHER SIDE CANNOT CLAIM TO HAVE A VESTED RIGHT IN JUSTICE BEING DONE BECAUSE OF NON- DELIBERATE DELAY. IN THIS CASE, AN APPEAL PREFERRE D BY STATE OF JAMMU & KASHMIR ARISING OUT OF A DECISION ENHANCING COMPE NSATION IN RESPECT OF ACQUISITION OF LANDS OF A PUBLIC PURPOSE TO THE EXTENT OF NEARLY RS.14 LAKHS BY MAKING AN UPWARD REVISION OF THE ORDER OF 800% WHICH ALSO RAISED IMPORTANT QUESTIONS AS REGARDS PRINCIPLES OF VALUATION WAS DISMISSED AS TIME BARRED BEING 4 DAYS BEYOND TIME B Y REJECTING AN APPLICATION FOR CONDONATION OF DELAY. HENCE, THE C OLLECTOR OF LAND ACQUISITION FILED APPEAL BY SPECIAL LEAVE BEFORE TH E APEX COURT. THE HONBLE SUPREME COURT HELD THAT THERE IS NO WARRANT FOR ACCORDING A STEP-MOTHERLY TREATMENT WHEN THE STATE IS THE APPLI CANT PRAYING FOR CONDONATION OF DELAY. IN FACT EXPERIENCE SHOWS THA T ON ACCOUNT OF A IMPERSONAL MACHINERY AND THE INHERITED BUREAUCRATIC METHODOLOGY IMBUED WITH THE NOTE-MAKING, FILE-PUSHING AND PASSI NG-ON-THE-BUCK ETHOS, DELAY ON ITS PART IS LESS DIFFICULT TO UNDER STAND THOUGH MORE DIFFICULT TO APPROVE. IN ANY EVENT, THE STATE WHIC H REPRESENTS THE COLLECTIVE CAUSE OF COMMUNITY, DOES NOT DESERVE LIT IGANT NON-GRATA STATUS. THE COURTS, THEREFORE, HAVE TO BE INFORMED OF THE SPIRIT AND THE PHILOSOPHY OF THE PROVISION IN THE COURSE OF THE IN TERPRETATION OF THE EXPRESSION SUFFICIENT CAUSE. SO ALSO THE SAME AP PROACH HAS TO BE EVIDENCED IN ITS APPLICATION TO MATTERS AT HAND WIT H THE END IN VIEW TO DO EVEN-HANDED JUSTICE ON MERITS IN PREFERENCE TO T HE APPROACH WHICH SETTLES A DECISION ON MERITS. ON FACTS IT WAS FOUN D THAT THERE EXISTED SUFFICIENT CAUSE FOR THE DELAY. THEREFORE, THE ORD ER OF THE HIGH COURT DISMISSING THE APPEAL BEFORE IT AS TIME BARRED WAS SET ASIDE AND THE DELAY OF 4 DAYS WAS CONDONED. ITA NOS.2388 & 2389/BANG/2019 M/S. RAJIV GANDHI RURAL HOUSING CORPORATION LTD., B ENGALURU PAGE 12 OF 14 8. WE ARE WELL AWARE OF THE ABOVE FACTS OF THE JUDGEME NT AND THE FINDINGS OF THE HONBLE SUPREME COURT. HOWEVER, IN EXERCISING DISCRETION U/S 5 OF THE LIMITATION ACT WE SHOULD AD OPT A PRAGMATIC APPROACH. A DISTINCTION MUST BE MADE BETWEEN A CAS E WHERE THE DELAY IS INORDINATE AND A CASE WHERE THE DELAY IS O F A FEW DAYS. WHEREAS, IN THE FORMER CASE, THE CONSIDERATION OF P REJUDICE TO THE OTHER SIDE WILL BE A RELEVANT FACTOR SO THE CASE CA LLS FOR A MORE CAUTIOUS APPROACH BUT IN THE LATTER CASE NO SUCH CO NSIDERATION MAY ARISE AND SUCH A CASE DESERVES A LIBERAL APPROACH. NO HARD AND FAST RULE CAN BE LAID DOWN IN THIS REGARD. THE COURT HA S TO EXERCISE THE DISCRETION ON THE FACTS OF EACH CASE KEEPING IN MIN D THAT IN CONSIDERING THE EXPRESSION SUFFICIENT CAUSE, THE PRINCIPLE OF ADVANCING SUBSTANTIAL JUSTICE IS OF PRIME IMPORTANC E. IT IS PERTINENT TO NOTE THAT IN THE CASE OF MST. KATIJI (SUPRA) THE DELAY WAS ONLY 4 DAYS. IT WAS CLEARLY LAID BY HONBLE SUPREME COURT THAT A DISTINCTION MUST BE MADE BETWEEN THE CASE WHERE THE DELAY IS IN ORDINATE AND A CASE WHERE THE DELAY IS OF A FEW DAYS. THE LAW ASS ISTS THOSE WHO ARE VIGILANT, NOT THOSE WHO SLEEP OVER THEIR RIGHTS. T HIS PRINCIPLE IS EMBODIED IN THE DICTUM: VIGILANTIBUS NON DORMIENTIB US JURA SUBVENIUNT. THE DELAY CANNOT BE CONDONED SIMPLY B ECAUSE THE ASSESSEES CASE IS HARD AND CALLS FOR SYMPATHY OR M ERELY OUT OF BENEVOLENCE TO THE PARTY SEEKING RELIEF. IN GRANTI NG THE INDULGENCE AND CONDONING THE DELAY IT MUST BE PROVED BEYOND TH E SHADOW OF DOUBT THAT THE APPELLANT WAS DILIGENT AND WAS NOT G UILTY OF NEGLIGENCE WHATSOEVER. THE SUFFICIENT CAUSE WITHIN THE CONTEM PLATION OF THE LIMITATION PROVISION MUST BE A CAUSE WHICH IS BEYON D THE CONTROL OF THE PARTY INVOKING THE AID OF THE PROVISIONS. THE HONBLE SUPREME COURT IN THE CASE OF RAMLAL V. REWA COALFIELDS LTD. AIR 1962 SC 361 HAS HELD THAT THE CAUSE FOR THE DELAY IN FILING THE APPEAL WHICH BY DUE CARE AND ATTENTION COULD HAVE BEEN AVOIDED CANN OT BE A SUFFICIENT ITA NOS.2388 & 2389/BANG/2019 M/S. RAJIV GANDHI RURAL HOUSING CORPORATION LTD., B ENGALURU PAGE 13 OF 14 CAUSE WITHIN THE MEANING OF THE LIMITATION PROVISIO N. WHERE NO NEGLIGENCE, NOR INACTION, OR WANT OF BONAFIDES CAN BE IMPUTED TO THE ASSESSEE A LIBERAL CONSTRUCTION OF THE PROVISIONS H AS TO BE MADE IN ORDER TO ADVANCE SUBSTANTIAL JUSTICE. SEEKERS OF JU STICE MUST COME WITH CLEAN HANDS AND SHALL NOT MAKE ANY FALSE STATE MENT IN CONDONATION PETITIONS OR AFFIDAVIT FILED BY THEM BE FORE THE COURT. 9. AS WE HAVE POINTED OUT ON EARLIER OCCASION IN TH IS ORDER, THE AFFIDAVIT MADE BY ASSESSEE MANAGING DIRECTOR SAYING THAT THERE WAS NO MANAGING DIRECTOR DURING THE PERIOD OF DELAY IS NOT AT ALL CORRECT. 10. BEING SO, ASSESSEE JUSTIFIED THE DELAY ONLY WIT H REFERENCE TO THE AFFIDAVIT OF SMT. SINDHU B. RUPESH, MANAGING DIRECT OR AS ON DATE. IN THE SAID AFFIDAVIT, SMT. SINDHU B. RUPESH STATED THAT THE DELAY WAS CAUSED DUE TO NON-FILING OF THE PREDECESSOR IN OFFICE AS MANAGING DIRECTOR AND NON-AVAILABILITY OF RECORDS TO THE OFF ICE STAFF TO PUT UP THE FILE FOR ASSIGNING THE WORK BY FILING THE APPEA L TO THE H.R. SURESH & CO., CHARTERED ACCOUNTANTS. FURTHER, IT WAS SUBM ITTED THAT ONLY ON OBSERVATION OF C&AG DURING THE PROPRIETARY AUDIT DURING THE YEAR 2019 DECISION TO FILE THE APPEAL WAS TAKEN WITH THE DELAY CONDONATION APPLICATION AND THUS DELAY WAS CAUSED IN FILING APP EAL BEFORE THIS TRIBUNAL. THIS CLEARLY SHOWS THAT DELAY WAS DUE TO THE NEGLIGENCE AND INACTION ON THE PART OF ASSESSEE. THE ASSESSEE COULD HAVE VERY WELL AVOIDED THE DELAY BY EXERCISING DUE CARE AND A TTENTION AND NEED NOT WAIT FOR CAGS OBSERVATIONS TO FILE THESE APPEA LS. IN OUR OPINION, THERE EXISTS NO SUFFICIENT AND GOOD REASON FOR THE DELAY OF 714 DAYS IN A.Y. 2013-14 & 571 DAYS IN A.Y. 2014-15. WE, TH EREFORE, DISMISS THE APPEALS AS UNADMITTED AND THE APPEALS OF THE AS SESSEE ARE DISMISSED AS THERE WAS NO REASONABLE CAUSE ON THE P ART OF ASSESSEE FOR NOT FILING THE APPEALS WITHIN THE PERIOD OF LIM ITATION. SINCE WE HAVE DISMISSED THE APPEALS BY UN-ADMITTING THE APPE ALS, WE REFRAIN ITA NOS.2388 & 2389/BANG/2019 M/S. RAJIV GANDHI RURAL HOUSING CORPORATION LTD., B ENGALURU PAGE 14 OF 14 FROM GOING INTO OTHER GROUNDS OF APPEALS RAISED BY THE ASSESSEE ON MERITS. 11. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE ARE DISMISSED IN LIMINE. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH MAR, 2021 SD/- (BEENA PILLAI) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER BANGALORE, DATED 9 TH MAR 2021. VG/SPS COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.