Rameshwar Pipe Industries, Kotharia V. Income Tax Officer, Ward-3(1)(2), Rajkot

ITA 340/RJT/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1134 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 06-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUHAS MISTRY
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & MS. MADHUMITA ROY, JUDICIAL MEMBER ITA NO. 340/RJT/2017 (ASSESSMENT YEAR : 2013-14) RAMESHWAR PIPE INDUSTRIES VARDHMAN INDUSTRIAL AREA, SURVEY NO. 259/2, PLOT NO. 13, BEHIND KOTHARIA SOLVENT, KOTHARIA VS. ITO WARD-3(1)(2), RAJKOT [PAN NO. AAJFR8612E] (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI RASHMIN VEKARIYA, AR RESPONDENT BY : SHRI SUHAS MISTRY, SR. D.R. DATE OF HEARING 27.02.2020 DATE OF PRONOUNCEMENT 02.06.2020 O R D E R PER BENCH: THE INSTANT APPEAL FILED BY THE ASSESSEE IS DIRECTE D AGAINST THE ORDER DATED 07.07.2017 PASSED BY THE COMMISSIONER O F INCOME TAX (APPEALS)-3, RAJKOT ARISING OUT OF THE ORDER DATED 09.02.2016 PASSED BY THE ITO, WARD 3(1)(2), RAJKOT UNDER SECTION 14 3(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS TO THE ACT ) FOR THE ASSESSMENT YEAR (A.Y.) 2013-14. 2. THE MATTER RELATES TO ADDITION OF RS. 25 LAKHS M ADE UNDER SECTION 68 OF THE ACT BEING UNSECURED LOANS OBTAINE D FROM DIFFERENT PERSONS. - 2 - ITA NO.340/RJT/2017 RAMESHWAR PIPE INDUSTRIES VS. ITO ASST.YEAR 2013-14 3. AT THE TIME OF HEARING OF THE INSTANT APPEAL LD. COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE LOAN AMOUNT HAS BEEN REPAID BY THE ASSESSEE; THE DOCUMENT WHERE OF HAS ALSO BEEN SUBMITTED BEFORE US WITH THE COPY TO THE LD. DR. I T WAS FURTHER SUBMITTED THAT SINCE THE LOAN HAS BEEN ALREADY REPA ID THE ADDITION IS OF NO CONSEQUENCE AND THUS LIABLE TO BE DELETED. 4. WE HAVE HEARD THE RESPECTIVE PARTIES, WE HAVE AL SO PERUSED THE RELEVANT MATERIALS AVAILABLE ON RECORD INCLUDING OF UNSECURED LOANS. IT IS A SETTLED PRINCIPLE OF LAW THAT ONCE THE LOA N HAS BEEN REPAID BY THE ASSESSEE TO THE CONCERN CREDITORS ADDITION I S NOT PERMISSIBLE UNDER SECTION 68 OF THE ACT. SINCE, WE ARE SATISFI ED TO THE FACT OF REPAYMENT MADE BY THE ASSESSEE ON THE BASIS OF THE DOCUMENTS FILED BEFORE US WE FIND NO JUSTIFICATION IN CONFIRMING TH E ADDITION MADE BY THE AUTHORITIES BELOW AND HENCE THE SAME IS HEREBY DELETED. ASSESSEES APPEAL IS THUS ALLOWED. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 6. BEFORE PARTING WE WOULD LIKE TO MAKE CERTAIN OBS ERVATION RELATING TO THE ISSUE CROPPED UP UNDER PRESENT SCENARIO OF C OVID-19 PANDEMIC AS TO WHETHER WHEN THE HEARING OF THE MATTER WAS CO NCLUDED ON 27.02.2020 THE ORDER CAN BE PRONOUNCED TODAY I.E. O N 28.05.2020. THE ISSUE HAS ALREADY BEEN DISCUSSED BY THE CO-ORDI NATE BENCH IN THE CASE OF DCIT VS. JSW LTD. (ITA NOS. 6264 & 6103/MUM /2018) PRONOUNCED ON 14.05.2020 IN THE LIGHT OF WHICH IT I S WELL WITHIN THE - 3 - ITA NO.340/RJT/2017 RAMESHWAR PIPE INDUSTRIES VS. ITO ASST.YEAR 2013-14 TIME LIMIT PERMITTED UNDER RULE 34(5) OF THE APPELL ATE TRIBUNAL RULES, 1963 IN VIEW OF THE FOLLOWING OBSERVATIONS MADE THE REIN: 7. HOWEVER, BEFORE WE PART WITH THE MATTER, WE MUS T DEAL WITH ONE PROCEDURAL ISSUE AS WELL. WHILE HEARING OF THESE A PPEALS WAS CONCLUDED ON 8TH JANUARY 2020, THIS ORDER THEREON I S BEING PRONOUNCED TODAY ON THE DAY OF 14TH MAY, 2020, MUCH AFTER THE EXPIRY OF 90 DAYS FROM THE DATE OF CONCLUSION OF HE ARING. WE ARE ALSO ALIVE TO THE FACT THAT RULE 34(5) OF THE INCOME TAX APPELLATE TRIBUNAL RULES 1963, WHICH DEALS WITH PRONOUNCEMENT OF ORDER S, PROVIDES AS FOLLOWS: (5) THE PRONOUNCEMENT MAY BE IN ANY OF THE FOLLOWIN G MANNERS : (A) THE BENCH MAY PRONOUNCE THE ORDER IM MEDIATELY UPON THE CONCLUSION OF THE HEARING. (B) IN CASE WHERE THE ORDER IS NOT PRONO UNCED IMMEDIATELY ON THE CONCLUSION OF THE HEARING, THE BENCH SHALL GIVE A D ATE FOR PRONOUNCEMENT. (C) IN A CASE WHERE NO DATE OF PRONOUNCE MENT IS GIVEN BY THE BENCH, EVERY ENDEAVOUR SHALL BE MADE BY THE BENCH TO PRONOUNCE T HE ORDER WITHIN 60 DAYS FROM THE DATE ON WHICH THE HEARING OF THE CASE WAS CONCLUDED BUT, WHERE IT IS NOT PRACTICABLE SO TO DO ON THE GROUND OF EXCEPTIONAL A ND EXTRAORDINARY CIRCUMSTANCES OF THE CASE, THE BENCH SHALL FIX A FUTURE DAY FOR P RONOUNCEMENT OF THE ORDER, AND SUCH DATE SHALL NOT ORDINARILY (EMPHASIS SUPPLIED B Y US NOW) BE A DAY BEYOND A FURTHER PERIOD OF 30 DAYS AND DUE NOTICE OF THE DAY SO FIXED SHALL BE GIVEN ON THE NOTICE BOARD. - 4 - ITA NO.340/RJT/2017 RAMESHWAR PIPE INDUSTRIES VS. ITO ASST.YEAR 2013-14 8. QUITE CLEARLY, ORDINARILY THE ORDER ON AN APPE AL SHOULD BE PRONOUNCED BY THE BENCH WITHIN NO MORE THAN 90 DAYS FROM THE DATE OF CONCLUDING THE HEARING. IT IS, HOWEVER, IMPORTAN T TO NOTE THAT THE EXPRESSION ORDINARILY HAS BEEN USED IN THE SAID R ULE ITSELF. THIS RULE WAS INSERTED AS A RESULT OF DIRECTIONS OF HONBLE J URISDICTIONAL HIGH COURT IN THE CASE OF SHIVSAGAR VEG RESTAURANT VS A CIT [(2009) 317 ITR 433 (BOM)] WHEREIN THEIR LORDSHIPS HAD, INTER A LIA, DIRECTED THAT WE, THEREFORE, DIRECT THE PRESIDENT OF THE APPELLA TE TRIBUNAL TO FRAME AND LAY DOWN THE GUIDELINES IN THE SIMILAR LINES AS ARE LAID DOWN BY THE APEX COURT IN THE CASE OF ANIL RAI (SUPRA) AND TO ISSUE APPROPRIATE ADMINISTRATIVE DIRECTIONS TO ALL THE BENCHES OF THE TRIBUNAL IN THAT BEHALF. WE HOPE AND TRUST THAT SUITABLE GUIDELINES SHALL BE FRAMED AND ISSUED BY THE PRESIDENT OF THE APPELLATE TRIBUN AL WITHIN SHORTEST REASONABLE TIME AND FOLLOWED STRICTLY BY ALL THE BE NCHES OF THE TRIBUNAL. IN THE MEANWHILE(EMPHASIS, BY UNDERLINING , SUPPLIED BY US NOW), ALL THE REVISIONAL AND APPELLATE AUTHORITIES UNDER THE INCOME-TAX ACT ARE DIRECTED TO DECIDE MATTERS HEARD BY THEM WI THIN A PERIOD OF THREE MONTHS FROM THE DATE CASE IS CLOSED FOR JUDGM ENT. IN THE RULED SO FRAMED, AS A RESULT OF THESE DIRECTIONS, THE EXP RESSION ORDINARILY HAS BEEN INSERTED IN THE REQUIREMENT TO PRONOUNCE T HE ORDER WITHIN A PERIOD OF 90 DAYS. THE QUESTION THEN ARISES WHETHER THE PASSING OF THIS ORDER, BEYOND NINETY DAYS, WAS NECESSITATED BY ANY EXTRAORDINARY CIRCUMSTANCES. 9. LET US IN THIS LIGHT REVERT TO THE PREVAILING SI TUATION IN THE COUNTRY. ON 24TH MARCH, 2020, HONBLE PRIME MINIST ER OF INDIA TOOK - 5 - ITA NO.340/RJT/2017 RAMESHWAR PIPE INDUSTRIES VS. ITO ASST.YEAR 2013-14 THE BOLD STEP OF IMPOSING A NATIONWIDE LOCKDOWN, FO R 21 DAYS, TO PREVENT SPREAD OF COVID 19 EPIDEMIC, AND THIS LOCKD OWN WAS EXTENDED FROM TIME TO TIME. AS A MATTER OF FACT, EVEN BEFORE THIS FORMAL NATIONWIDE LOCKDOWN, THE FUNCTIONING OF THE INCOME TAX APPELLATE TRIBUNAL AT MUMBAI WAS SEVERELY RESTRICTED ON ACCOU NT OF LOCKDOWN BY THE MAHARASHTRA GOVERNMENT, AND ON ACCOUNT OF STRIC T ENFORCEMENT OF HEALTH ADVISORIES WITH A VIEW OF CHECKING SPREAD OF COVID 19. THE EPIDEMIC SITUATION IN MUMBAI BEING GRAVE, THERE WAS NOT MUCH OF A RELAXATION IN SUBSEQUENT LOCKDOWNS ALSO. IN ANY CAS E, THERE WAS UNPRECEDENTED DISRUPTION OF JUDICIAL WOK ALL OVER T HE COUNTRY. AS A MATTER OF FACT, IT HAS BEEN SUCH AN UNPRECEDENTED S ITUATION, CAUSING DISRUPTION IN THE FUNCTIONING OF JUDICIAL MACHINERY , THAT HONBLE SUPREME COURT OF INDIA, IN AN UNPRECEDENTED ORDER I N THE HISTORY OF INDIA AND VIDE ORDER DATED 6.5.2020 READ WITH ORDER DATED 23.3.2020, EXTENDED THE LIMITATION TO EXCLUDE NOT ONLY THIS LO CKDOWN PERIOD BUT ALSO A FEW MORE DAYS PRIOR TO, AND AFTER, THE LOCKD OWN BY OBSERVING THAT IN CASE THE LIMITATION HAS EXPIRED AFTER 15.0 3.2020 THEN THE PERIOD FROM 15.03.2020 TILL THE DATE ON WHICH THE L OCKDOWN IS LIFTED IN THE JURISDICTIONAL AREA WHERE THE DISPUTE LIES OR W HERE THE CAUSE OF ACTION ARISES SHALL BE EXTENDED FOR A PERIOD OF 15D AYS AFTER THE LIFTING OF LOCKDOWN. HONBLE BOMBAY HIGH COURT, IN AN ORDE R DATED 15TH APRIL 2020, HAS, BESIDES EXTENDING THE VALIDITY OF ALL INTERIM ORDERS, HAS ALSO OBSERVED THAT, IT IS ALSO CLARIFIED THAT WHILE CALCULATING TIME FOR DISPOSAL OF MATTERS MADE TIME-BOUND BY THIS COU RT, THE PERIOD FOR WHICH THE ORDER DATED 26TH MARCH 2020 CONTINUES TO OPERATE SHALL BE ADDED AND TIME SHALL STAND EXTENDED ACCORDINGLY, A ND ALSO OBSERVED - 6 - ITA NO.340/RJT/2017 RAMESHWAR PIPE INDUSTRIES VS. ITO ASST.YEAR 2013-14 THAT ARRANGEMENT CONTINUED BY AN ORDER DATED 26TH MARCH 2020 TILL 30TH APRIL 2020 SHALL CONTINUE FURTHER TILL 15TH JU NE 2020. IT HAS BEEN AN UNPRECEDENTED SITUATION NOT ONLY IN INDIA B UT ALL OVER THE WORLD. GOVERNMENT OF INDIA HAS, VIDE NOTIFICATION DATED 19TH FEBRUARY 2020, TAKEN THE STAND THAT, THE CORONA VIRUS SHOUL D BE CONSIDERED A CASE OF NATURAL CALAMITY AND FMC (I.E. FORCE MAJEUR E CLAUSE) MAY BE INVOKED, WHEREVER CONSIDERED APPROPRIATE, FOLLOWING THE DUE PROCEDURE. THE TERM FORCE MAJEURE HAS BEEN DEF INED IN BLACKS LAW DICTIONARY, AS AN EVENT OR EFFECT THAT CAN BE NEITHER ANTICIPATED NOR CONTROLLED WHEN SUCH IS THE POSITION, AND IT I S OFFICIALLY SO NOTIFIED BY THE GOVERNMENT OF INDIA AND THE COVID-19 EPIDEMI C HAS BEEN NOTIFIED AS A DISASTER UNDER THE NATIONAL DISASTER MANAGEMENT ACT, 2005, AND ALSO IN THE LIGHT OF THE DISCUSSIONS ABOV E, THE PERIOD DURING WHICH LOCKDOWN WAS IN FORCE CAN BE ANYTHING BUT AN ORDINARY PERIOD. 10. IN THE LIGHT OF THE ABOVE DISCUSSIONS, WE ARE OF THE CONSIDERED VIEW THAT RATHER THAN TAKING A PEDANTIC VIEW OF THE RULE REQUIRING PRONOUNCEMENT OF ORDERS WITHIN 90 DAYS, DISREGARDIN G THE IMPORTANT FACT THAT THE ENTIRE COUNTRY WAS IN LOCKDOWN, WE SH OULD COMPUTE THE PERIOD OF 90 DAYS BY EXCLUDING AT LEAST THE PERIOD DURING WHICH THE LOCKDOWN WAS IN FORCE. WE MUST FACTOR GROUND REALIT IES IN MIND WHILE INTERPRETING THE TIME LIMIT FOR THE PRONOUNCEMENT O F THE ORDER. LAW IS NOT BROODING OMNIPOTENCE IN THE SKY. IT IS A PRAGMA TIC TOOL OF THE SOCIAL ORDER. THE TENETS OF LAW BEING ENACTED ON TH E BASIS OF PRAGMATISM, AND THAT IS HOW THE LAW IS REQUIRED TO INTERPRETED. THE - 7 - ITA NO.340/RJT/2017 RAMESHWAR PIPE INDUSTRIES VS. ITO ASST.YEAR 2013-14 INTERPRETATION SO ASSIGNED BY US IS NOT ONLY IN CON SONANCE WITH THE LETTER AND SPIRIT OF RULE 34(5) BUT IS ALSO A PRAGM ATIC APPROACH AT A TIME WHEN A DISASTER, NOTIFIED UNDER THE DISASTER M ANAGEMENT ACT 2005, IS CAUSING UNPRECEDENTED DISRUPTION IN THE FU NCTIONING OF OUR JUSTICE DELIVERY SYSTEM. UNDOUBTEDLY, IN THE CASE OF OTTERS CLUB VS DIT [(2017) 392 ITR 244 (BOM)], HONBLE BOMBAY HIGH COURT DID NOT APPROVE AN ORDER BEING PASSED BY THE TRIBUNAL BEYON D A PERIOD OF 90 DAYS, BUT THEN IN THE PRESENT SITUATION HONBLE BOM BAY HIGH COURT ITSELF HAS, VIDE JUDGMENT DATED 15TH APRIL 2020, HE LD THAT DIRECTED WHILE CALCULATING THE TIME FOR DISPOSAL OF MATTERS MADE TIME-BOUND BY THIS COURT, THE PERIOD FOR WHICH THE ORDER DATED 26TH MARCH 2020 CONTINUES TO OPERATE SHALL BE ADDED AND TIME SHALL STAND EXTENDED ACCORDINGLY. THE EXTRAORDINARY STEPS TAKE N SUO MOTU BY HONBLE JURISDICTIONAL HIGH COURT AND HONBLE SUPRE ME COURT ALSO INDICATE THAT THIS PERIOD OF LOCKDOWN CANNOT BE TRE ATED AS AN ORDINARY PERIOD DURING WHICH THE NORMAL TIME LIMITS ARE TO R EMAIN IN FORCE. IN OUR CONSIDERED VIEW, EVEN WITHOUT THE WORDS ORDINA RILY, IN THE LIGHT OF THE ABOVE ANALYSIS OF THE LEGAL POSITION, THE PE RIOD DURING WHICH LOCKOUT WAS IN FORCE IS TO EXCLUDED FOR THE PURPOSE OF TIME LIMITS SET OUT IN RULE 34(5) OF THE APPELLATE TRIBUNAL RULES, 1963. VIEWED THUS, THE EXCEPTION, TO 90-DAY TIME-LIMIT FOR PRONOUNCEME NT OF ORDERS, INHERENT IN RULE 34(5)(C), WITH RESPECT TO THE PRON OUNCEMENT OF ORDERS WITHIN NINETY DAYS, CLEARLY COMES INTO PLAY IN THE PRESENT CASE. OF COURSE, THERE IS NO, AND THERE CANNOT BE ANY, BAR O N THE DISCRETION OF THE BENCHES TO REFIX THE MATTERS FOR CLARIFICATIONS BECAUSE OF CONSIDERABLE TIME LAG BETWEEN THE POINT OF TIME WHE N THE HEARING IS - 8 - ITA NO.340/RJT/2017 RAMESHWAR PIPE INDUSTRIES VS. ITO ASST.YEAR 2013-14 CONCLUDED AND THE POINT OF TIME WHEN THE ORDER THER EON IS BEING FINALIZED, BUT THEN, IN OUR CONSIDERED VIEW, NO SUC H EXERCISE WAS REQUIRED TO BE CARRIED OUT ON THE FACTS OF THIS CAS E. 6. ON THE BASIS OF THE OBSERVATION MADE IN THE AFOR ESAID JUDGMENT WE EXCLUDE THE PERIOD OF LOCKDOWN WHILE COMPUTING T HE LIMITATION PROVIDED UNDER RULE 34(5) OF THE INCOME TAX (APPELL ATE TRIBUNAL) RULE 1963. ORDER IS, THUS, PRONOUNCED IN THE OPEN COURT . 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 02/06/2020 SD/- SD/- (WASEEM AHMED) (MS. MADHUM ITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 02/06/2020 TANMAY, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , ! /DR,ITAT, RAJKOT 6. '# $% / GUARD FILE. / BY ORDER, //TRUE COPY/ / / ( DY./ASSTT.REGISTRAR) , ! / ITAT, RAJKOT