Quality Bags Exporters (P) Ltd., Kolkata V. A.C.I.T., CC-IV, Kol, Kolkata

ITA 2787/KOL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4585 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 16-08-2016
• Assessment Year: 2001-2002
• Appeal Filed On: 16-12-2013
• Court: TRIBUNAL
• Department Lawyers: DEBASISH ROY
• Keywords: Bonafide belief; Retrospective amendment; Reasonable cause; Condonation of delay
• Section: 143(3); 80HHC; 147; 148; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM & DR.ARJUN LAL SAINI, AM] I.T.A NOS. 2787 TO 27 90/KOL/2013 ASSESSMENT YEARS : 2001-02,2002-03,2 003-04 & 2004-05 QUALITY BAGS EXPORTERS (P)LTD. -VS.- A.C.I .T., CENTRAL CIRCLE-IV, KOLKATA KOLKATA [PAN : AAACQ 0402 D) (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI SUBASH AGARWA L, ADVOCATE FOR THE RESPONDENT : SHRI DEBASISH ROY, JCIT , SR.DR DATE OF HEARING : 16.08.2016. DATE OF PRONOUNCEMENT : 02.09.2016. ORDER PER N.V.VASUDEVAN, JM THESE ARE APPEALS BY THE ASSESSEE AGAINST THE COMM ON ORDER DATED 16.09.2013 OF CIT(A)-CENTRAL-I, KOLKATA RELATING TO AY 2001-02 TO 2004-05. 2. THE ASSESSEE IS A COMPANY. FOR ALL THE AFORESA ID ASSESSMENT YEARS ORIGINAL ASSESSMENTS WERE COMPLETED U/S 143(3) OF THE INCOME TAX ACT, 1961 (ACT) AFTER ALLOWING DEDUCTION U/S 80HHC OF THE ACT. THE ASSESS MENT FOR ALL THE AFORESAID ASSESSMENT YEARS WAS REOPENED BY ISSUE OF A NOTICE U/S 148 OF THE ACT. THE REASON FOR REOPENING ASSESSMENTS U/S 147 OF THE ACT HAVE BEEN SET OUT IN THE ORDER OF ASSESSMENT AS FOLLOWS :- HOWEVER , AFTER NOTICING THE CBDT CIRCULAR F.NO.1 53/193/2004 TPT. WHICH CLARIFIED THAT PROFIT ON SALE OF DEPB LICENCES ARE NOT COVERE D UNDER THE PROVISIONS OF SECTION 28(IIIA). THEREFORE NOT ENTITLED FOR ENHANCED DEDUC TION U/S.80HHC(3) ON SAID EXPORT INCENTIVE AND THAT ASSESSEE'S ENTIRE EXPORT INCENTI VES INCLUDES PROFIT ON SALE OF DEPB LICENCES OF RS.1784429/- ON WHICH EXCESS DEDUCTION WAS GRANTED U/S.80HHC OF RS.1427543/- A SHOW CAUSE LETTER WAS SENT WHY ASSES SMENT SHOULD NOT BE REOPENED U/S 2 ITA NO.2787 TO 2790/KOL/2013 QUALITY BAGS EXPORTERS (P)LTD. A.YR.2001-02 TO 2004-05 2 147 VIDE THIS OFFICE LETTER DATED 10.08.2005. HOWEV ER, NO NOTICE U/S 148 WAS ISSUED AS THE MATTER WAS OPEN BEFORE CBDT FOR RECONSIDERATION OF THE AFORESAID CLARIFICATION. 3. IN ALL THE ASSESSMENT YEARS SIMILAR OBSERVATI ONS WERE MADE AND ASSESSMENTS WERE CONCLUDED BY THE AO BY OBSERVING AS FOLLOWS :- TAXATION LAWS AMENDMENT BILL-II OF 2008 HAS BROUGH T AN AMENDMENT TO SECTION 80HHC WITH RETROSPECTIVE EFFECT WHEREIN ENHANCE DEDUCTION U/S.80HHC ON SALE OF DEPB LICENCES WAS WITHDRAWN WHERE EXPORT TURNOVER OF THE ASSESSEE IS OVER 10 CRORES. AS ASSESSEE'S EXPORT TURNOVER FOR PREVIOUS YEAR UNDER CONSIDERATI ON EXCEEDED RS. 10 CRORES AND THAT BUSINESS PROFIT INCLUDES INCENTIVES IN THE FORM OF SALE OF DEPB LICENSES OF RS.1784419/-. ON WHICH EXCESSIVE DEDUCTION U/S 80HHC. OF RS.14275 43/- WAS GRANTED A NOTICE U/S.148 WAS ISSUED. IN RESPONSE TO THE SAME AR OF ASSESSEE REQUESTED TO TREAT THE RETURN FILED ORIGINALLY ON 15.10.2001 AS RETURN IN RESPONSE TO N OTICE U/S.148. A NOTICE U/S.143(2) WAS ISSUED. IN RESPONSE TO THE SAME SHRI ANIL MANDANEWALA AR OF THE ASSESSEE ATTENDED AND AGREED FOR WITHDRAWAL OF EXCESS DEDUCTION U/8.80HHC IN RESPECT OF EXPORT INCENTIVE IN THE FORM OF SALE OF DEPB LICENSES AS IT IS IN CONFORMITY WITH THE AMENDED PROVISION OF SECTION 80HHC BROUGHT OUT BY TAXATION LAWS AMENDMENT BILL OF 2005. 4. AGAINST THE AFORESAID ORDERS OF AO THE ASSESSEE PREFERRED APPEAL BEFORE CIT(A). 5. THERE WAS A DELAY OF 2380 DAYS IN FILING THE APPEALS BEFORE CIT(A). THE SAME WAS EXPLAINED BY THE ASSESSEE IN AN APPLICATION FOR CON DONATION OF DELAY AS FOLLOWS :- THE APPELLANT-ASSESSEE RECEIVED THE ORDER U/S. 147 /143(3) ALONG WITH A DEMAND NOTICE U/S. 156 ON 27.06.2006 AND THE LAST DATE OF FILING THE APPEAL WAS 26.07.2006. THE APPELLANT-ASSESSEE FAILED TO FILE THE APPEAL WITHIN THE PRESCRIBED TIME DUE TO THE REASONS STATED AS UNDER (1) IN THE INSTANT YEAR, THE APPELLANT-ASSESSEE CLA IMED EXEMPTION U/S 80HHC TO THE TUNE OF RS. 1,34,76,630/- WHICH WAS ALLOWED BY THE LD. A O. VIDE AN ORDER U/S 143(3). (2) SUBSEQUENTLY, THE CASE WAS REOPENED AND FINALLY THE REASSESSMENT WAS COMPLETED BY THE LD. AO. BY PASSING AN ORDER U/S 143(3)1 147. IN THE REASSESSMENT SO FRAMED, THE LD. AG. MADE A DISALLOWANCE OF RS. 14,27,543/- IN RESPE CT OF DEDUCTION U/S 80HHC. (3) THE APPELLANT-ASSESSEE WAS UNDER A BONAFIDE BEL IEF BASED ON THE LEGAL ADVICE GIVEN BY HIS A/R SRI ANIL KR. MANDAWEWALA THAT THE DISALLOWA NCE U/S 80HHC WAS RIGHTLY MADE BY THE LD. AO. THEREFORE, NO APPEAL WAS FILED BY THE A PPELLANT-ASSESSEE. 3 ITA NO.2787 TO 2790/KOL/2013 QUALITY BAGS EXPORTERS (P)LTD. A.YR.2001-02 TO 2004-05 3 4. THE APPELLANT-ASSESSEE, ON RECEIPT OF A LETTER D ATED 15.1.2013 FROM THE A.O. ABOUT THE STANDING DEMAND DIRECTING THE ASSESSEE TO PAY THE S AME WITHIN 7 DAYS OF RECEIPT OF THE LETTER, APPROACHED SRI SUBASH AGARWAL, ADVOCATE ON OR AROUND 20.01.2013 TO WRITE A PETITION TO THE A.O. TO KEEP THE DEMAND PENDING FOR SOME MORE TIME BECAUSE OF THE FUND CRUNCH SINCE ITS REGULAR A/R WAS OUT OF STATION. 5) ON ENQUIRY BY THE LD. ADVOCATE, THE ENTIRE FACTS WERE EXPLAINED TO HIM. 6) THE LD. ADVOCATE EXPRESSED THE OPINION THAT IN V IEW OF A RECENT JUDGEMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF TOPMAN EXPORTS VS. CIT (2012) 342 ITR 49, THE BENEFIT OF DEDUCTION U/S 80HHC CANNOT BE DENIED IN RESPECT OF THE FACE VALUE OF THE DEPB LICENSES RECEIVED EVEN AFTER THE AMENDMENT MAD E BY THE TAXATION LAWS AMENDMENT ACT, 2005 IN SECTION 80HHC. (7) THE SAID ADVOCATE PREPARED THE APPEAL AND SENT THE PAPERS FOR SIGNATURE ON 29.01.2013. (8) AFTER SIGNATURE, THE PAPERS WERE RETURNED TO HI M ON 31.01.2013. ACCORDINGLY, THE APPEAL WAS FILED ON 31.01.2013. (9) FOR THE AFORESAID REASONS, THERE IS A DELAY IN FILING THE APPEAL OF AROUND 2380 DAYS. IN VIEW OF THE ABOVE CIRCUMSTANCES, THERE WAS A REA SONABLE CAUSE FOR NOT FILING THE APPEAL WITHIN TIME. THEREFORE, THE PETITIONER, MOST HUMBLY PRAYS THAT THE DELAY OF AROUND 2380 DAYS IN FILING THE APPEAL MAY PLEASE BE CONDONED. 6. THE CIT(A) IN THE IMPUGNED ORDER DEALT WITH T HE AFORESAID OBJECTIONS OF THE ASSESSEE AS FOLLOWS :- 4. I HAVE CONSIDERED THE FACTS OF THE CASE AND THE MATERIAL PLACED ON RECORD. I FIND THAT THE ASSESSMENT ORDERS UNDER APPEAL WERE MADE ON 02-06-2 006 AND 27-06-2006. HOWEVER, THE PRESENT APPEALS CONTESTING THOSE ORDERS WERE FILED ON ,31-01-2013. ALL THE 4 APPEALS ARE ADMITTEDLY DELAYED BY OVER 6 YEARS. IT CAN BE AR GUED THAT THERE HAS BEEN NO UNANIMITY AMONG THE JUDICIAL AUTHORITIES IN INTERPRETING THE IMPLICATIONS OF THE RETROSPECTIVE AMENDMENTS IN SECTION 80HRC BROUGHT ABOUT BY THE TA XATION LAWS (AMENDMENT) ACT, 2005. THE LEGAL OPINION INITIALLY GIVEN BY THE TAX CONSULTANT WAS ALSO SHARED BY MANY JUDICIAL AUTHORITIES. BUT THEN, THE FIRST JUDICIAL DECISION FAVOURABLE TO THE ASSESSEE CAME ON 11-08-2009 FROM THE HON'BLE SPECIAL BENCH, OF THE I TAT IN THE CASE OF M/S TOPMAN EXPORTS REPORTED IN[2009] 318 ITR (AT) 87 (MUMBAI) [SB]. THAT WAS THE OCCASION WHEN THE ASSESSEE COULD HAVE FILED THE APPEALS CONTESTIN G THE ASSESSMENT ORDERS PRESENTLY UNDER CONSIDERATION. BUT, THE ASSESSEE PREFERRED NO APPEA LS TILL 31-01 .. '2013. LAM OF THE OPINION THAT THE DELAY DURING THE PERIOD FROM 11-08-2009 TO 31-01-2013 CANNOT BE CONDONED. FOR, THERE CAN BE NO ,JUSTIFICATION FOR NOT ACTING FOR A PERIOD OF 3 1/2 YEARS. THE ASSESSEE HAS MADE NO- EFFORTS TO PURSUE ITS TAX CASES BY KEEPING ITSELF ABREAST OF THE GROWING LEGAL DEVELOPMENTS. ALSO, THE ASSESSEE HAS .MADE NO SINCE RE EFFORTS TO OBTAIN CORRECT LEGAL ADVICE EVEN THOUGH IT WAS FOR ITS OWN BENEFIT. THE ASSESSEE CANNOT BE. ALLOWED TO PREFER AN APPEAL WHENEVER IT LIKES AND THEN APPLY TO THE JUDI CIAL AUTHORITY FOR CONDONING. THE DELAY AS SUCH AN APPROACH COULD MEAN THROWING AWAY THE VE RY PROVISIONS INVOLVING LIMITATION. I 4 ITA NO.2787 TO 2790/KOL/2013 QUALITY BAGS EXPORTERS (P)LTD. A.YR.2001-02 TO 2004-05 4 AM AWARE THAT A JUDICIAL AUTHORITY IS GENERALLY EXP ECTED TO TAKE A LIBERAL VIEW WHILE DECIDING AN-APPLICATION FOR CONDONING THE DELAY. BU T, IN THE PRESENT CASE, I AM OF THE CONSIDERED VIEW THAT THE FACTS DO NOT JUSTIFY THE C ONDONATION OF DELAY. THERE HAS BEEN NO EFFORT ON THE PART OF THE ASSESSEE IN PURSUING ITS TAX MATTERS. IN VIEW OF THE ABOVE, I AM NOT SATISFIED THAT THERE WAS ANY REASONABLE CAUSE FOR N OT PRESENTING THE APPEALS IN TIME. I THEREFORE REFUSE TO CONDONE THE DELAY FILING OF THE APPEALS. IN CONSEQUENCE, THE APPEALS ARE NOT ADMITTED. 6. AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSEE HAS RAISED THE PRESENT APPEALS BEFORE THE TRIBUNAL. 7. WE HAVE HEARD THE SUBMISSIONS OF THE LD.COUNS EL FOR THE ASSESSEE AS WELL AS THE SUBMISSIONS OF THE LD. DR.. AT PAGE 179 OF THE AS SESSEES PAPER BOOK THE LD. COUNSEL FOR THE ASSESSEE WHO APPEARED BEFORE AO HAS GIVEN A CERTIFICATE WHICH READS AS FOLLOWS :- THIS IS TO CERTIFY THAT I HAD APPEARED IN THE COUR SE OF RE-ASSESSMENT PROCEEDINGS OF M/S.QUALITY BAGS EXPORTS (P)LTD FOR AYS: 2001-2,200 2-2003 AND 2003-2004 AND ALSO DURING THE NORMAL ASSESSMENT PROCEEDINGS U/S 143(3) FOR THE A.Y.:2004-2005 OF THE SAID COMPANY. IN THE COURSE OF THE RE-ASSESSMENT/ ASSESS MENT PROCEEDINGS, I AGREED TO THE WITHDRAWAL OF DEDUCTION U/S 80HHC ON THE BASIS OF T HE TAXATION LAWS AMENDMENT BILL, 2005, WHEREBY AN AMENDMENT WAS MADE IN SEC. 80HHC W ITH RETROSPECTIVE EFFECT WITHDRAWING DEDUCTION U/S 80HHC ON EXPORT INCENTIVE S, WHERE AN ASSESSEES TURNOVER EXCEEDED RS.10 CRORES. ON THE BASIS OF THE SAID AME NDMENT, I ALSO SUGGESTED THE ASSESSEE THAT NO PURPOSE WOULD BE SERVED IN FILING THE APPEA L AS THE DISALLOWANCE WAS MADE IN CONSONANCE WITH THE ABOVE STATED AMENDMENT MADE IN THE LAW. 8. IT IS THUS CLEAR THAT THE ASSESSEE HAD GUIDED BY A PROFESSION ADVICE DID NOT THINK IT FIT TO FILE ANY APPEAL AGAINST THE IMPUGNED ORDERS OF T HE AO. IT IS CLEAR FROM THE RECORD THAT THE AO ISSUED A LETTER DATED 15.01.2013 DEMANDING T HE PAYMENT OF ARREARS OF TAXES ARISING OUT OF THE ORDER OF ASSESSMENT U/S ,147 R.W .S.143(3) OF THE ACT. IT IS ALSO SEEN THAT IN THAT CONNECTION THE ASSESSEE HAD MET THE PRESENT LAWYER SHRI SUBASH AGARWAL WHO ADVISED THE ASSESSEE THE CORRECT LEGAL POSITION PUR SUANT TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF TOPMAN EXPORTS (SUPRA) . THEREAFTER THE APPEAL HAS BEEN FILED BY THE ASSESSEE BEFORE CIT(A). IT IS CLEAR FR OM THE EVIDENCE ON RECORD THAT THE DELAY IN FILING THE APPEAL WAS DUE TO NON AVAILABIL ITY OF A PROPER PROFESSIONAL ADVICE TO 5 ITA NO.2787 TO 2790/KOL/2013 QUALITY BAGS EXPORTERS (P)LTD. A.YR.2001-02 TO 2004-05 5 THE ASSESSEE. IN A SIMILAR SITUATION IN THE CASE OF SHRI ANUPAM BISWAS VS ITO IN ITA NO.2198/KOL/2014 ORDER DATED 09.12.2015.. THIS TRIB UNAL HAS TAKEN THE FOLLOWING VIEW :- 6. I FIND THAT THE ISSUE WHETHER DEDUCTION U/S.10 (10C) OF THE ACT SHOULD BE ALLOWED TO RBI EMPLOYEES RETIRING UNDER OERS IS NO LONGER RES INTEGRA AND HAS BEEN CONCLUDED IN SEVERAL DECISIONS INCLUDING THE DECISION IN THE CAS E OF CIT VS. KOODATHIL KALIYATAN AMBUJAKSHN (2008) 219 CTR (BOM) 80. IN FACT THE CB DT IN INSTRUCTION DATED 8.5.2009 HAS ACCEPTED THIS DECISION AND OPINED THAT EMPLOYEE S OF RBI WHO ACCEPTED ;OERS WOULD BE ENTITLED TO THE BENEFIT OF SEC.10(10C) OF THE AC T. 7. NOW THE SITUATION IN THE PRESENT CASE IS THAT T HE ASSESSEE WOULD BE ENTITLED TO THE BENEFIT OF DEDUCTION U/S.10(10C) OF THE ACT BUT THE DELAY IN FILLING THE APPEAL WOULD BE THE ONLY HURDLE IN NOT GETTING SUCH BENEFIT. TAX LIABI LITY HAS TO BE IN ACCORDANCE WITH LAW AND NO TAX SHALL BE LEVIED OR COLLECTED SAVE UNDER THE AUTHORITY OF LAW. THERE CANNOT BE A LIABILITY TO TAX BY DEFAULT. KEEPING IN VIEW THE P RINCIPLES EMANATING FROM THE DECISIONS REFERRED TO ABOVE AND KEEPING IN VIEW THE FACT THAT THE ASSESSEE WOULD BE OTHERWISE ENTITLED TO THE BENEFIT OF DEDUCTION U/S.10(10C) OF THE ACT AND KEEPING IN MIND THE CIRCUMSTANCES IN WHICH THE APPEAL OF THE ASSESSEE W AS FILED BELATEDLY, WE ARE OF THE VIEW THAT THE DELAY IN FILING THE APPEAL SHOULD BE CONDO NED. WHEN THE VERY LIABILITY OF THE ASSESSEE WAS NON-EXISTENT THE DELAY IN FILING APPEA L SHOULD BE CONDONED. I AM OF THE VIEW THAT THE DELAY IN FILING THE APPEAL WAS DUE TO A RE ASONABLE CAUSE. I ACCORDINGLY CONDONE THE DELAY IN FILING THE APPEAL. 8. AS FAR AS THE MERITS OF THE CLAIM OF THE ASSESS EE FOR DEDUCTION U/S 10(10C) OF THE ACT, AS ALREADY OBSERVED BY ME, THE ISSUE WHETHER DEDUCTIO N U/S.10(10C) OF THE ACT SHOULD BE ALLOWED TO RBI EMPLOYEES RETIRING UNDER OERS IS NO LONGER RES INTEGRA AND HAS BEEN CONCLUDED IN SEVERAL DECISIONS INCLUDING THE DECISI ON IN THE CASE OF CIT VS. KOODATHIL KALIYATAN AMBUJAKSHN (2008) 219 CTR (BOM) 80. IN F ACT THE CBDT IN INSTRUCTION DATED 8.5.2009 HAS ACCEPTED THIS DECISION AND OPINED THAT EMPLOYEES OF RBI WHO ACCEPTED OERS WOULD BE ENTITLED TO THE BENEFIT OF SEC.10(10C ) OF THE ACT. IN VIEW OF THE ABOVE, WE HOLD THAT THE CLAIM FOR DEDUCTION U/S.10(10C) OF TH E ACT HAS TO BE ALLOWED TO THE ASSESSEE. THE FACT THAT THE ASSESSEE VOLUNTARILY OFFERED THE SUM IN QUESTION TO TAX CANNOT BE THE BASIS TO SUSTAIN THE LEVY OF TAX. I THEREFORE HOLD THAT THERE WAS A MISTAKE APPARENT ON THE FACE OF THE RECORD AND THE APPLICATION U/S.154 OF T HE ACT FILED BY THE ASSESSEE OUGHT TO BE ALLOWED. I DIRECT THE AO TO ALLOW DEDUCTION ACCORD INGLY. 9. ON AN IDENTICAL STATUTORY AMENDMENT TO SECTIO N 80HHC OF THE ACT WHEN THERE WAS DELAY IN FILING APPEAL BEFORE THE TRIBUNAL, THE DEL AY WAS CONDONED BY THE HONBLE MUMBAI BENCH OF ITAT IN THE CASE OF PAHILAJRAI JAID ISHIN VS JCIT IN ITA NO.1398/MUM/2012 ORDER DATED 28.08.2013. THE DELAY IN THAT CASE WAS A DELAY OF 1598 DAYS WHICH WAS CONDONED BY THE TRIBUNAL OBSERVING A S FOLLOWS :- 6 ITA NO.2787 TO 2790/KOL/2013 QUALITY BAGS EXPORTERS (P)LTD. A.YR.2001-02 TO 2004-05 6 2. THE APPEAL IS HOWEVER DELAYED BY 1598 DAYS. THE APPEAL WHICH WAS DUE TO BE FILED WITHIN THE STATUTORY TIME LIMIT OF 60 DAYS FROM THE DATE OF RECEIPT OF ORDER OF CIT(A), HAS BEEN FILED BY THE ASSESSEE ONLY ON 29.2.2012. THE ASSESSEE HAS FILED CONDONATION APPLICATION REQUESTING OR CON DONATION OF DELAY. TH E ASSESSEE IN THE CONDONATION APPLICATION HAS SUBMITTED THAT CLAIM OF THE ASSESSE E HAD BEEN REJECTED BY THE AO IN VIEW OF THE RETROSPECTIVE AMENDMENT MADE TO SECTION 80HH C OF THE TAXATION LAWS AMENDMENT ACT 2005. IT HAS ALSO BEEN SUBMITTED THAT APPELLATE AUTHORITIES WERE ALSO NOT ALLOWING CLAIM IN RESPECT OF DEPB INCOME AND THE ASSESSEE HA D, THEREFORE, BEEN ADVISED THAT NO PURPOSE WILL BE SERVED IN FILING THE APPEAL BEFORE THE TRIBUNAL. HOWEVER THE POSITION WAS MADE CLEAR BY THE JUDGMENT OF HON 'BLE SUPREME COUR T IN CASE OF TOPMAN EXPORTS LTD DATED 8.2.2012 (342 ITR 49) AFTER WHICH THE ASSESSE E WAS ADVISED TO FILE THE APPEAL WHICH WAS THE REASON FOR LONG DELAY AND ACCORDINGLY IT HA S BEEN REQUESTED THAT THE DELAY MAY BE CONDONED. 2.1 THE LEARNED AR FOR THE ASSESSEE SUBMITTED THAT THERE WAS NO LACK OF DUE DILIGENCE IN FILING OF THE APPEAL AND THE DELAY WAS NOT DELIBERA TE. THEREFORE, THE DELAY WAS REQUIRED TO BE CONDONED. RELIANCE WAS PLACED ON THE JUDGMENT OF HON 'BLE HIGH COURT OF BOMBAY IN CASE OF REMEX CONSTRUCTION/REMEX ELECTRICALS VS ITO AND OTHERS ( 166 ITR 18) IN WHICH DELAY OF THREE YEARS HAS BEEN CONDONED. REFERENCE W AS ALSO MADE TO THE RECENT DECISION DATED 8.2.2013 OF THE KOLKATA BENCH OF TRIBUNAL IN CASE OF MAGNUM EXPORTS VS. ACIT IN ITA NO. 1111/KOL/ 2012 IN WHICH UNDER SIMILAR SITUA TION THE BENCH HAD CONDONED THE DELAY OF 2078 DAYS IN FILING THE APPEAL. THE LEARNE D DR HAD NO SERIOUS OBJECTION IN THE MATTER. 2.2 WE HAVE PERUSED THE RECORDS AND CONSIDERED MATT ER CAREFULLY. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE SATISFIED THA T THERE WAS REASONABLE CAUSE FOR DELAY IN FILING THE APPEAL. WE, THEREFORE, IN THE INTERES T OF JUSTICE, CONDONE THE DELAY AND ADMIT THE APPEAL FOR ADJUDICATING THE DISPUTE. 10. THE HONBLE ITAT, KOLKATA IN THE CASE OF SUR AJMALL EXPORTS IN ITA NO.410/KOL/2013 ORDER DATED 30.11.2015 ON THE SAME RETROSPECTIVE AMENDMENT HAS ALSO TAKEN A SIMILAR VIEW AND CONDONED THE DELAY OF 2041 DAYS DELAY OF FILING THE APPEAL BY OBSERVING AS FOLLOWS :- 4. AT THE OUTSET, IT IS NOTED THAT THERE IS A DELA Y OF 2041 DAYS ON THE PART OF THE ASSESESE IN FILING THIS APPEAL BEFORE THE TRIBUNAL. IN THIS REGARD, THE ASSESSEE HAS MOVED AN APPLICATION SEEKING CONDONATION OF THE SAID DELAY, WHICH IS DULY SUPPORTED BY AN AFFIDAVIT FILED BY ITS CHARTERED ACCOUNTANT. THE REASONS GIVE N BY THE ASSESESE FOR THE DELAY IN FILING THIS APPEAL ARE AS UNDER:- 3. THE PROCEEDINGS COMPLETED U/S 143(3) OF THE ACT WAS REOPENED FOR REASSESSMENT U/S 147 OF THE ACT AND REASSESSMENT ORDER U/S 147 O F THE INCOME TAX ACT, 1961 WAS PASSED BY THE ASSESSING OFFICER ON 19.12.2006. IN T HE SAID REASSESSMENT ORDER, THE ASSESSING OFFICER HAS CATEGORICALLY NOTED THAT: 7 ITA NO.2787 TO 2790/KOL/2013 QUALITY BAGS EXPORTERS (P)LTD. A.YR.2001-02 TO 2004-05 7 IT MAY BE NOTED THAT THE CASE WAS REOPENED IN PURSU ANCE OF THE AMENDMENT BROUGHT INTO SECTION 80HHC READ WITH SECTION 28(IIID) OF TH E ACT BY THE TAXATION LAWS AMENDMENT ACT 2005 WITH RETROSPECTIVE EFFECT FROM 0 1/4/1998. 4. THE APPELLANT, BEING AN EXPORTER WITH TURNOVER D URING THE RELEVANT ASSESSMENT YEAR EXCEEDING 10 CRORE, WAS NOT IN A POSITION TO DISCHA RGE THE BURDEN CAST UPON IT UNDER THE THIRD PROVISO RETROSPECTIVELY INSERTED W.E.F 1-4-19 98 IN SECTION 80HHC OF THE INCOME- TAX ACT, 1961 BY THE TAXATION LAWS AMENDMENT ACT 20 05 (HEREINAFTER THE AMENDMENT ACT) FOR AVAILING THE DEDUCTION UNDER SUB-SECTION ( 1) TO THE EXTENT OF PROFIT REFERRED IN SUB-SECTION (1B) OF SECTION 80HHC OF THE INCOME-TAX ACT, 1961. 5. THE ASSESSING OFFICER, FOLLOWING THE AMENDMENT A CT DISALLOWED THE DEDUCTION U/S 80HHC OF THE ACT ON PROFIT ON THE TRANSFER OF THE D UTY ENTITLEMENT PASSBOOK SCHEME (DEPB). 6. THE APPELLANT CARRIED THE MATTER TO THE COMMISSI ONER OF INCOME-TAX (APPEAL). THE ISSUE INVOLVED IS PURELY LEGAL IN NATURE. THE INDIA N EXPORTERS GRIEVANCES FORUM (IEGF), AN ASSOCIATION OF EXPORTERS OF WHICH THE AP PELLANT IS A MEMBER FILED A WRIT PETITION IN THE HON'BLE HIGH COURT BOMBAY CHALLENGI NG THE CONSTITUTIONAL VALIDITY OF THE AMENDMENT ACT. THE DEDUCTION U/S 80HHC OF THE ACT W AS DISALLOWED BY THE ASSESSING OFFICER MERELY ON THE GROUND ON THE AMENDMENT ACT. ON FILING OF THE TRANSFER PETITION BY THE UNION OF INDIA WITH A PRAYER TO TRANSFER ALL THE PETITIONS FILED IN VARIOUS HIGH COURT, THE HON'BLE SUPREME COURT WAS SEIZED OF THE MATTER TO THE CHALLENGE TO THE CONSTITUTIONAL VALIDITY OF THE AMENDMENT ACT. IT WA S IN THIS BACKGROUND THAT THE APPELLANT REQUESTED THE COMMISSIONER OF INCOME-TAX (APPEAL) TO KEEP THE APPEAL IN ABEYANCE AS THE MATTER WAS SUB-JUDICE BEFORE THE AP EX COURT. 7. THE REQUEST OF THE APPELLANT TO KEEP THE APPEAL IN ABEYANCE, WAS NOT ACCEDED BY THE CIT(A). THE CIT(A) IN ITS IMPUGNED ORDER DATED 10-0 4-2007 HAS DISMISSED THE APPEAL OF THE APPELLANT. WHILE DISMISSING THE APPEAL, THE CIT(A) HAD MADE FOLLOWING OBSERVATIONS IN PARAGRAPH 8 OF THE IMPUGNED ORDER: AS REGARDS GROUND NO. 1, SHRI MUNDRA AGREED THAT TH E AO'S ACTION WAS IN CONFORMITY WITH THE PROVISIONS OF THE AMENDED LAW. IN FACT, THE APPELLANT IS CHALLENGING THE VALIDITY OF THE RETROSPECTIVE AMEND MENT. THIS IS AN ISSUE WHICH CANNOT BE DECIDED IN THE PROCEEDINGS BEFORE ME. 8. THE ISSUE BEING CHALLENGE TO THE VALIDITY OF THE AMENDMENT ACT, COULD BE DECIDED ONLY BY THE CONSTITUTIONAL COURT BEING THE HIGH COU RT OR THE SUPREME COURT. THIS ISSUE COULD NOT HAVE BEEN AGITATED BEFORE THIS TRIBUNAL. APPROACHING THIS TRIBUNAL BEFORE THE CONSTITUTIONAL VALIDITY IS DECIDED BY THE HIGH/SUPR EME COURT WOULD RESULT IN DISMISSAL OF APPEAL FOR WANT OF JURISDICTION OF THIS TRIBUNAL TO DECIDE SUCH CONSTITUTIONAL QUESTIONS, WHICH WAS RELIED UPON BY THE APPELLANT. 9. IN THE FACTS AND CIRCUMSTANCES THAT APPELLANT AC CEPTED THE ADVICE OF HIS CA AND UNDER A BONAFIDE BELIEF, DILIGENTLY PURSUED THE CHA LLENGE TO THE CONSTITUTIONAL VALIDITY OF THE AMENDMENT ACT, THROUGH ITS ASSOCIATION IEGF BEF ORE APPROACHING THIS TRIBUNAL. 8 ITA NO.2787 TO 2790/KOL/2013 QUALITY BAGS EXPORTERS (P)LTD. A.YR.2001-02 TO 2004-05 8 THE PETITIONS CHALLENGING THE CONSTITUTIONAL VALIDI TY OF THE AMENDMENT ACT WAS TRANSFERRED BY THE APEX COURT TO THE GUJARAT HIGH C OURT. 10. THE GUJARAT HIGH COURT HEARD THE PETITIONS TRAN SFERRED TO IT AS PER THE APEX COURT ORDER. THE DIVISION BENCH OF ACTING CJ SHRI BHASKAR BHATTACHARYA AND JUSTICE SHRI J.B. PATRA PASSED AN ORDER AND JUDGMENT DATED 02-07-2012 IN AVANI EXPORTS VS. COMMISSIONER OF INCOME-TAX [(2012) 23 TAXMANN.COM 6 2 (GUJARAT)] IN WHICH PARAGRAPH 25, 26 & 27 OF THE SAID JUDGMENT READS AS UNDER: 25. IN THE CASE BEFORE US, IT IS NOT ONE WHERE THE EXECUTIVE HAS FAILED TO CARRY OUT THE OBJECT OF THE PARLIAMENT NECESSITATING EXER CISE OF CONTROL BY RETROSPECTIVE AMENDMENT WHAT THE EXECUTIVE OUGHT TO HAVE ACHIEVED. IN THE PRESENT CASE, ACCORDING TO THE FINANCE MINISTER PRE SENTING THE BILL, A VALID PIECE OF LEGISLATION HAS BEEN WRONGLY INTERPRETED B Y THE TRIBUNAL. WE HAVE ALREADY POINTED OUT THAT ACCORDING TO THE EXISTING LAW, IF A VALID PIECE OF LEGISLATION IS WRONGLY INTERPRETED BY THE TRIBUNAL, THE AGGRIEVED PARTY SHOULD MOVE HIGHER JUDICIAL FORUM FOR CORRECT INTERPRETATI ON. AS POINTED BY THE APEX COURT IN THE CASE OF PRITVI COTTON MILLS LTD (SUPRA ), THE LEGISLATURE DOES NOT POSSESS OR EXERCISE POWER TO REVERSE THE DECISION I N EXERCISE OF JUDICIAL POWER. THUS, WE ARE OF THE VIEW THAT THE PRINCIPLES LAID D OWN IN THE CASE OF R. C. TOBACCO (P) LTD. (SUPRA) HAS NO APPLICATION TO THE FACTS OF THE PRESENT CASE. THE IMPUGNED AMENDMENT GRANTING BENEFIT RESTRICTING IT TO A CLASS OF ASSESSEE WHOSE TURNOVER IS LESS THAN RS. 10 CRORE IS PERMISSIBLE P ROSPECTIVELY BUT THE WAY IT HAS BEEN ENACTED, IT TAKES AWAY AN ENJOYED RIGHT OF A C LASS OF CITIZEN WHO AVAILED OF THE BENEFIT BY COMPLYING WITH THE REQUIREMENTS OF T HE THEN PROVISIONS OF LAW. 26. ON CONSIDERATION OF THE ENTIRE MATERIALS ON REC ORD, WE, THEREFORE, FIND SUBSTANCE IN THE CONTENTION OF THE LEARNED COUNSEL FOR THE PETITIONERS THAT THE IMPUGNED AMENDMENT IS VIOLATIVE FOR ITS RETROSPECTI VE OPERATION IN ORDER TO OVERCOME THE DECISION OF THE TRIBUNAL, AND AT THE S AME TIME, FOR DEPRIVING THE BENEFIT EARLIER GRANTED TO A CLASS OF THE ASSESSEES WHOSE ASSESSMENTS WERE STILL PENDING ALTHOUGH SUCH BENEFIT WILL BE AVAILABLE TO THE ASSESSEES WHOSE ASSESSMENTS HAVE ALREADY BEEN CONCLUDED. IN OTHER W ORDS, IN THIS TYPE OF SUBSTANTIVE AMENDMENT, RETROSPECTIVE OPERATION CAN BE GIVEN ONLY IF IT IS FOR THE BENEFIT OF THE ASSESSEE BUT NOT IN A CASE WHERE IT AFFECTS EVEN A FEWER SECTION OF THE ASSESSES. 27. WE, ACCORDINGLY, QUASH THE IMPUGNED AMENDMENT O NLY TO THIS EXTENT THAT THE OPERATION OF THE SAID SECTION COULD BE GIVEN EFFECT FROM THE DATE OF AMENDMENT AND NOT IN RESPECT OF EARLIER ASSESSMENT YEARS OF T HE ASSESSEES WHOSE EXPORT TURNOVER IS ABOVE RS. 10 CRORE. IN OTHER WORDS, THE RETROSPECTIVE AMENDMENT SHOULD NOT BE DETRIMENTAL TO ANY OF THE ASSESSES. 11. THE APPELLANT INITIATED ACTION TO FILE THE APPE AL WITH TRIBUNAL BELIEVING THAT THE PETITION OF IEGF, AMONG OTHERS, IS DISPOSED BY THE GUJARAT HIGH COURT. WHEN THE APPELLANT APPROACHED THE IEGF, HE WAS TOLD THAT IEG F PETITION IS NOT INCLUDED IN THE 9 ITA NO.2787 TO 2790/KOL/2013 QUALITY BAGS EXPORTERS (P)LTD. A.YR.2001-02 TO 2004-05 9 BATCH OF PETITION DECIDED BY THE GUJARAT HIGH COURT . THE APPELLANT WAITED FOR SOME TIME IN THE HOPE THAT SIMILAR ORDER WOULD BE PASSED IN THE MATTER OF IEGF. WHEN THE APPELLANT FOUND THAT IEGF MATTER WAS PENDING IN THE APEX COURT, HE APPROACHED ADVOCATE MR. AKHILESHWAR SHARMA, ADVOCATE FOR HIS O PINION WHO HAD APPEARED FOR VARIOUS PETITIONERS IN THE GUJARAT HIGH COURT IN TH E GROUP MATTER IN AVANI EXPORTS VS. COMMISSIONER OF INCOME- TAX. THE ADVOCATE MR. SHARM A BY HIS OPINION ADVISED THE APPELLANT THAT THE GUJARAT HIGH COURT WHILE PASSING THE JUDGMENT IN THE AVANI EXPORTS HAS ACTED AS JURISDICTIONAL HIGH COURT FOR THE ENTI RE COUNTRY AND THEREFORE, THE APPELLANT MAY NOW FILE APPEAL IN THE ITAT KOLKATA R ELYING UPON THE GUJARAT HIGH COURT JUDGMENT. THE APPELLANT THEREAFTER, FILED THI S APPEAL. 12. THE APPELLANT HUMBLY SUBMITS TO THIS HON'BLE TR IBUNAL THAT THERE WAS NO WILFUL NEGLIGENCE OR MALA FIDE INTENTION ON THE PART OF TH E APPELLANT. THE APPELLANT HAS BEEN PROSECUTING WITH DUE DILIGENCE WITH BONAFIDE BELIEF THAT ISSUE BEING CONSTITUTIONAL IN NATURE HAS TO BE RESOLVED BY THE CONSTITUTIONAL COU RT BEFORE THE SAME CAN BE RELIED UPON BY THEM IN THEIR APPEAL IN THE TRIBUNAL. THE DELAY IS THE RESULT OF THE COMPLEX CIRCUMSTANCES CREATED AFTER THE AMENDMENT ACT, ITS CHALLENGE BEFORE VARIOUS HIGH COURT, THE ACTION OF THE UNION OF INDIA IN FILING T HE VARIOUS TRANSFER PETITION IN THE APEX COURT, THE ORDER OF THE APEX COURT TRANSFERRING THE PETITION TO THE GUJARAT HIGH COURT, THE FAILURE ON THE PART OF THE UNION OF INDIA IN NO T INCLUDING THE PETITION OF IEGF IN THE LIST OF CASES PENDING BEFORE THE APEX COURT AND THE VARIOUS HIGH COURT. THE BRIEF HISTORY OF LITIGATION SURROUNDING THE AMENDMENT ACT, ITS JO URNEY TO VARIOUS FORUMS AND THE PRESENT STATUS OF THE IEGF PETITION IS GIVEN LATER IN THIS SUBMISSION. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON THE APPLICATION FILED BY THE ASSESSEE FOR CONDONATION OF DELAY IN FILING THIS APPEAL. IT IS OBSERVED THAT IN THE IDENTICAL FACTS AND CIRCUMSTANCES INVOLVED IN THE CASE OF MAGNUM EXPORT , THE COORDINATE BENCH OF THIS TRIBUNAL HAS CONDONED A SIMILAR DELAY OF 2078 DAYS ON THE PART OF THE ASSESSEE IN FILING ITS APPEAL FOR THE SIMILAR REASONS VIDE ITS ORDER DATED 08.02.2013 PASSED IN ITA NO. 1111/KOL/2012. THIS DECISION OF THE COORDINATE BENC H OF THIS TRIBUNAL CITED BY THE LD. COUNSEL FOR THE ASSESESE THUS IS SQUARELY APPLICABL E IN THE PRESENT CASE AND THIS POSITION IS NOT DISPUTED EVEN BY THE LD. D.R. AT THE TIME OF HEARING BEFORE US, WE, THEREFORE, CONDONE THE DELAY ON THE PART OF THE ASSESSEE IN FI LING THIS APPEAL BEFORE THE TRIBUNAL AND PROCEED TO DISPOSE OF THE SAID APPEAL ON MERIT. 11. AN IDENTICAL VIEW WAS TAKEN BY THE ITAT, KOL KATA TRIBUNAL IN ITA NO.1111/KOL/2012 IN THE CASE OF MAGNUM EXPORT ORDER DATED 08.02.2013 WHEREIN THERE WAS A DELAY OF 2078 DAYS IN FILING THE APPEAL. KEEP ING IN MIND THE PROCEEDINGS ON THE ISSUE WE ARE OF THE VIEW THAT THE CIT(A) OUGHT TO H AVE CONDONED THE DELAY ON THE PART OF THE ASSESSEE IN FILING THE APPEAL BEFORE CIT(A). WE THEREFORE, FOR THE REASONS GIVEN ABOVE, CONDONE THE DELAY IN FILING THE APPEAL BY TH E ASSESSEE BEFORE CIT(A) AS THE DELAY 10 ITA NO.2787 TO 2790/KOL/2013 QUALITY BAGS EXPORTERS (P)LTD. A.YR.2001-02 TO 2004-05 10 IN FILING THE APPEAL WAS OCCASIONED BY REASONABLE A ND SUFFICIENT CAUSE AS SET OUT IN THE PETITION FOR CONDONATION OF DELAY. 12. THE LD. COUNSEL FOR THE ASSESEE MADE THE SUBMI SSIONS THAT IF THE DELAY IS CONDONED THE ISSUES MAY BE SENT TO THE AO FOR CONSIDERING TH E CLAIM OF THE ASSESSEE AS THE SAME WAS NOT CONSIDERED IN THE ORIGINAL ASSESSMENT PROCE EDINGS. WE ARE OF THE VIEW THAT THE REQUEST MADE BY THE LD. COUNSEL FOR THE ASSESSEE IS ACCEPTABLE AND ACCORDINGLY THE ISSUE IS SENT BACK TO THE AO FOR CONSIDERATION AFRESH IN THE LIGHT OF THE JUDICIAL PRONOUNCEMENTS REFERRED TO BY THE LD. COUNSEL FOR T HE ASSESSEE BEFORE US. 13. IN THE RESULT THE APPEALS OF THE ASSESSEE AR E ALLOWED. ORDER PRONOUNCED IN THE COURT ON 02.09.2016. SD/- SD/- [DR.ARJUN LAL SAINI] [ N.V.VASUDEVA N ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 02.09.2016. [RG PS] COPY OF THE ORDER FORWARDED TO: 1. QUALITY BAGS EXPORTERS (P)LTD., 7C, KIRAN SHANKA R ROY ROAD, KOLKATA-700001. 2. A.C.I.T., CENTRAL CIRCLE-IV, KOLKATA. 3. CIT(A)-CENTRAL-I, KOLKATA 4. CIT-CENTRAL- I, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSTT.REGISTRAR, ITAT, KOLKATA BENCHES 11 ITA NO.2787 TO 2790/KOL/2013 QUALITY BAGS EXPORTERS (P)LTD. A.YR.2001-02 TO 2004-05 11