Smt.Sreelatha Ramdas, Trivandrum V. The ACIT, Trivandrum

ITA 439/COCH/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2140 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 04-02-2019
• Assessment Year: 2008-2009
• Appeal Filed On: 24-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A S BINDHU
• Keywords: Business income; Revision of order; Rectification of order; Bonafide belief; Transactions in derivatives; Period of limitation; Question of law; Reasonable cause; Difference of opinion; Condonation of delay; Revised return; Set aside; Capital Gains
• Section: 250; 264; 254(2); 13; 88E; 22; 28; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFOR E S/ SHRI CHANDRA POOJARI , AM & GEORGE GEORGE K., J M I .T . A. NO . 439 / COCH/ 20 18 ASSESSMENT YEAR : 2008 - 09 SMT. SREELATHA RAMDAS, TC/17/1029(1), LAVANIA, POOJAPURA, THIRUVANANTHAPURAM - 695 014. [PAN: A CPPR 2786R] VS. THE ASSISTANT COMMISSIONER OF INCOME - TAX, CIRCLE - 1 (2) , TRIVANDRUM. (ASSESSEE - APPELLANT) (REVENUE - RESPONDENT) A SSESSEE BY SHRI RAJ A KANNAN, ADV. REVENUE BY SMT. A.S. BINDHU, SR. DR D ATE OF HEARING 22 /0 7 /2019 DATE OF PRONOUNCEMENT / 0 7 /201 9 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) , TRIVANDRUM DATED 19/07/2018 AND PERTAIN TO THE ASSESSMENT YEAR 2008 - 09. 2. THE ASSESSEE HAS FILED THE FOLLOWING GROUNDS OF APPEAL: A) THE ORDER OF THE COMMISSIONER OF INCOME TAX ( APPEALS) IS AGAINST LAW AND FACTS AND CIRCUMSTANCES OF THE CASE. THE ORDER, IF ALLOWED TO STAND, W OULD OCCASION A TRAVESTY OF JUSTICE AND CAUSE IRREPARABLE LOSS AND HARDSHIP TO THE APPELLANT. B) THE APPELLATE COMMISSIONER ERRED IN DENYING THE APPELLANT THE ELIGIBLE DEDUCTION UNDER SECTION 88E OF THE ACT STATING THAT THE CLAIM FOR DEDUCTION WAS NOT PREFERRED BY THE APPELLANT IN THE RETURN OF INCOME, ORIGINALLY FILED. THE APPELLATE COMMISSIONER OUGHT TO HAVE FOU ND THAT THE APPELLANT IN THE RETURNS FILED HAD TREATED THE TRANSACTION IN SECURITIES AS FALLING UNDER THE HEAD CAPITAL GAINS AND THEREFORE AT THAT POINT OF TIME COULD NOT HAVE CLAIMED THE DEDUCTION OF SECURITIES TRANSACTION TAX. IT WAS ONLY CONSEQUENT TO T HE CHANGE OF HEAD OF INCOME BY THE ASSESSING ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 2 AUTHORITY FROM CAPITAL GAINS TO INCOME FROM BUSINESS OR PROFESSION, THAT THE ELIGIBILITY AROSE UNDER SECTION 88E. THE ERRONEOUS FINDING OF THE APPELLATE COMMISSIONER AND THE CONSEQUENTIAL DENIAL OF ELIGIBLE DEDU CTION UNDER SECTION 88E, NEEDS TO BE SET ASIDE BY THIS HON'BLE TRIBUNAL. C) IT IS SETTLED THAT THE ASSESSEE IS ENTITLED TO RAISE ADDITIONAL GROUNDS BEING QUESTIONS OF LAW ARISING FROM THE FACTS FOUND BY THE AUTHORITIES UNDER THE ACT. IN THE INSTANT CASE F ROM THE FREQUENCY OF THE TRANSACTION AND THE PERIOD OF HOLDING OF THE SHARES, THE ASSESSING AUTHORITY TREATED CERTAIN TRANSACTION IN SECURITIES AS INCOME FROM BUSINESS OR PROFESSION. CONSEQUENT TO SUCH CHANGE OF HEAD OF INCOME BY THE ASSESSING AUTHORITY, T HE APPELLANT BECAME ENTITLED TO THE DEDUCTION OF THE SECURITIES TRANSACTION ACT, WHICH IS A QUESTION OF LAW THAT WAS RAISED IN ANNEXURE - B RECTIFICATION PETITION HAS ALSO IN ANNEXURE - C APPEAL. THEREFORE, THE APPELLATE COMMISSIONER COULD NOT HAVE DISMISSED T HE APPEAL, STATING THAT THE CLAIM FOR DEDUCTION UNDER SECTION 88E WAS NOT PREFERRED BY THE APPELLANT IN THE ORIGINAL RETURN FILED BY HER. [SEE NATIONAL THERMAL POWER CO.LTD. VS. COMMISSIONER OF INCOME TAX (1998) 229 ITR 383 CSC)]. D) THE NON - CONSIDERATION OF THE DEDUCTION UNDER SECTION 88E CONSEQUENT TO THE CHANGE OF HEAD OF INCOME BY THE ASSESSING AUTHORITY WAS AN ERROR APPARENT ON ANNEXURE - A ORDER. THE APPELLANT WITHIN THE TIME LIMIT CONTEMPLATED UNDER SECTION 154 HAD PREFERRED ANNEXURE - B PETITION AND TH E ASSESSING AUTHORITY SAT OVER IT TILL THE EXPIRY OF THE TIME LIMIT OF SECTION 154(7) OF THE ACT, THIS WAS A REASONABLE GROUND FOR THE DELAY IN FILING THE APPEAL AND THE APPELLATE COMMISSIONER OUGHT NOT TO HAVE IGNORED THE SAME. WHEN A PROVISION FOR RECTIF ICATION OF MISTAKE IS THERE UNDER SECTION 154 OF THE ACT, IT IS INCUMBENT ON THE ASSESSING AUTHORITY EITHER TO ALLOW OR REJECT THE PETITION FOR RECTIFICATION FILED BY THE ASSESSEE. THE APPELLATE COMMISSIONER IGNORING THE SAME COULD NOT HAVE HELD THAT THE A PPELLANT SHOULD HAVE FILED AN APPEAL ALSO AS A MATTER OF CAUTION. THE FINDING OF THE APPELLATE COMMISSIONER IS THIS REGARD IS LIABLE TO BE SET ASIDE BY THIS HON'BLE TRIBUNAL. FOR THESE AND OTHER GROUNDS AND DOCUMENTS TO BE SUBMITTED AT THE TIME OF HEARIN G, IT IS HUMBLY PRAYED THAT THE HON'BLE TRIBUNAL BE PLEASED TO ALLOW THE APPEAL, WITH CONSEQUENTIAL RELIEFS TO THE APPELLANT. 3. THE ASSESSEE HAS ALSO FILED PETITION FOR RAISING ADDITIONAL GROUND DATED WHICH READS AS FOLLOWS: ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 3 E. THE APPELLATE COMM ISSIONER OUGHT NOT TO HAVE WORDED THE ORDER IN THE DELAY CONDONATION PETITION AS APPEARING IN PARAGRAPH 2 OF THE ORDER DATED 19.07.2018. WHEN THE APPELLATE COMMISSIONER DECIDED TO CONSIDER THE APPEAL ON MERITS FOR ADVANCEMENT OF SUBSTANTIAL CAUSE OF JUSTIC E, IT IS PRESUMED IN TERMS OF THE PROVISIONS OF SECTION 249 AND 250 OF THE INCOME TAX ACT, THAT THE DELAY IS CONDONED AND APPEAL IS ADMITTED. THE PRINCIPLE OF CONDONATION OF DELAY IS TO NOT TO DISMISS THE CASE ON THE GROUND OF TECHNICALITIES AND TO RENDER SUBSTANTIAL JUSTICE TO THE LITIGANT. THE CONCLUDING PORTION OF PARAGRAPH 2 OF THE ORDER OF THE APPELLATE COMMISSIONER REFLECTS THAT THE DELAY IS CONDONED. F. WITHOUT PREJUDICE TO GROUND - E, THE APPELLANT WOULD SUBMIT THAT THERE WAS NO REASON FOR DISMISSAL OF THE APPEAL ON THE GROUND OF DELAY AS THE CAUSE OF DELAY WAS PROPERLY EXPLAINED BEFORE THE APPELLATE COMMISSIONER. THE REASON FOR DELAY BEING PENDENCY OF THE RECTIFICATION PETITION AND THE RECTIFICATION PETITION BEING FILED EVEN BEFORE THE EXPIRY OF THE TIME LIMIT FOR FILING THE APPEAL, THERE WAS NO REASON FOR DOUBTING THE BONAFIDES IN FILING OF THE RECTIFICATION PETITION.. IT IS THEREFORE PRAYED THAT THE TRIBUNAL BE PLEASED TO ACCEPT THE ADDITIONAL GROUNDS RAISED AS GROUND NOS. E & F IN THE APPEAL. IF T HE PRAYER IN THE PETITION TO ACCEPT ADDITIONAL GROUNDS IS NOT GRANTED, THE PETITIONER WOULD BE PUT TO IRREPARABLE LOSS AND HARDSHIP. 3.1 WE FIND REASONABLE CAUSE FOR NOT RAISING THE ADDITIONAL GROUND ON AN EARLIER OCCASION . ACCORDINGLY, WE ADMIT THE A DDITIONAL GROUND FOR ADJUDICATION. 4. COMING TO THE FACTS OF THE CASE, THE ASSESSEE IS A DOCTOR BY PROFESSION AND RUNNING A DENTAL CLINIC. SHE WAS ALSO IN THE BUSINESS OF SHARE TRADING AND ACCORDING TO THE ASSESSING OFFICER BOTH AS A TRADER AS WELL AS I NVESTOR. THE ASSESSEE FILED HER RETURN FOR THE YEAR UNDER CONSIDERATION DECLARING A TOTAL INCOME OF RS.38,00,100/ - DURING THE SCRUTINY ASSESSMENT, IT WAS NOTICED THAT THE ASSESSEE HAD MADE A PROFIT OF RS.14,56,552/ - FROM SHARE TRADING AS A TRADER BASED ON THE REASON THAT THE HOLDING PERIOD OF SHARES FOR THE TRANSACTION WAS LESS THAN 60 DAYS DESPITE ASSESSEE CLAIMING THE SAME AS INVESTMENT AND FURTHER TO TAX ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 4 AS SHORT TERM CAPITAL GAIN. THUS, A SUM OF RS.14,56,552/ - WAS ADDED TO THE INCOME RETURNED AS BUSINE SS INCOME EARNED FROM SHARE TRADING BUSINESS. 5. ON APPEAL, THE CIT(A) NOTICED THAT . TH ERE WAS A DELAY OF MORE THAN 6 YEARS AND 7 MONTHS IN FILING THE APPEAL. THE REASON ADDUCED BY THE ASSESSEE A S SEEN FROM COLUMN 15 OF THE APPEAL MEMO FOR THE DELAY CA USED IS ' THAT THE INCOME TAX ASSESSMENT FOR THE AY 2008 - 09 OF THE ASSESSEE HAS BEEN COMPLETED BY THE ASSISTANT COMMISSIONER OF INCOME TAX BY ORDER DT.09.12.2 0 10. THAT THE TIME FOR FILING OF THE APPEAL BEFORE THE CIT (APPEALS) WAS TO EXPIRE ON 07.01.2011. I HAD FILED A RECTIFICATION REQUEST WITHIN THE TIME LIMIT U/S 154 ON 07.01.2011. THE DELAY IN FILING THE APPEAL IS DUE TO PENDENCY OF THE RECTIFICATION PETITION FROM THE DEPARTMENT. THE DEPARTMENT DID NOT ISSUE AN ORDER IN RESPONSE TO THE RECTIFICATION REQU EST/PETITION FILED BY ME ON 07.01.2011 AS ALSO ON 28.02.2017'. THE CIT(A) CONSIDERED THE ASSESSEE'S EXPLANATION BUT WAS UNABLE TO CONDONE THE DELAY FOR THE REASON THAT THE REQUEST MADE FOR THE RECTIFICATION WAS NOTHING TO DO WITH THE ADDITION MADE IN TH E ASSESSMENT COMPLETED WHICH IN TURN WAS BEING DISPUTED IN THE APPEAL. ACCORDING TO THE CIT(A), R ECTIFICATION WAS SOUGHT FOR THE CREDIT TO BE GIVEN U/S 88E OF THE ACT AND EVEN OTHERWISE, ASSESSEE COULD HAVE GOT THE RELIEF AT THE APPELLATE STAGE SUBJECT TO FILING THE APPEAL IN TIME AND FURNISHING THE NECESSARY DOCUMENTS IN THIS REGARD. THE CIT(A) WAS OF THE VIEW THAT THE ASSESSEE COULD HAVE A PPROACHED THE ASSESSING AUTHORITY AND FOLLOWED UP THE RECTIFICATION SOUGHT FOR. SINCE THE RECTIFICATION SOUGHT HAD N OTHING TO DO WITH THE ADDITION MADE, FOR THE SAKE OF CAUTION, THE CIT(A) OPINED THAT THE APPEAL COULD HAVE BEEN FILED ATLEAST AFTER REASONABLE TIME AND W HY IT WAS NOT FILED AFTER ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 5 REASONABLE TIME HAS NOT BEEN EXPLAINED YET. PROBABLY , THE CIT(A) OBSERVED THA T IT LOOKED TO BE A CASE OF AFTER THOUGHT WHICH IN TURN COULD NOT BE ENTERTAINED AFTER A VERY LONG PERIOD OF OVER 6 YEARS AND 7 MONTHS. IN VIEW OF THE ABOVE CIRCUMSTANCES , THE CIT(A) REJECTED THE REQUEST MADE FOR CONDONING THE DELAY IN FILING THE APPEAL A ND ACCORDINGLY, THE APPEAL FILED WAS DISMISSED. 6. AT THIS STAGE, WE FEEL IT IS APPROPRIATE TO CONSIDER ONLY THE GROUND RELATING TO DELAY IN FILING THE APPEAL BEFORE THE CIT(A). THE LD. AR SUBMITTED THAT THE ASSESSMENT ORDER WAS PASSED ON 09/12/2010 WH ICH WAS RECEIVED BY THE ASSESSEE ON 24/07/2018. T HE ASSESSING OFFICER TREATED THE INCOME FROM SHARE TRADING AS BUSINESS INCOME INSTEAD OF SHORT TERM CAPITAL GAIN. T HE CONTENTION OF THE ASSESSEE WAS THAT THE PROFIT MADE ON SALE OF SHARE HELD BY THE ASSESSE E FOR A SHORT PERIOD OF LESS THAN 60 DAYS IS TO BE TREATED AS SHORT TERM CAPITAL GAIN AND NOT AS BUSINESS INCOME. SINCE THE ASSESSING OFFICER TREATED AS BUSINESS INCOME, THE ASSESSEE FILED RECTIFICATION PETITION U/S. 154 OF THE ACT ON 07/01/2011 REQUESTIN G TO GRANT DEDUCTION U/S. 88E OF THE ACT ON PAYMENT OF STT ON INCOME ARISING FROM TAXABLE SECURITY TRANSACTIONS. HOWEVER, THE RECTIFICATION APPLICATION OF THE ASSESSEE WAS NOT ENTERTAINED BY THE ASSESSING OFFICER. HENCE, THE ASSESSEE HAD NOT FILED THE APPEAL BEFORE THE CIT(A). THUS, THERE WAS A DELAY OF 6 YEARS AND 7 MONTHS IN FILING THE APPEAL BEFORE THE CIT(A). ACCORDING TO THE LD. AR, THE DELAY WAS NOT AT ALL ATTRIBUTABLE TO THE ASSESSEE BUT ON ACCOUNT OF PURSUING ALTERNATIVE REMEDY. THE LD. AR REL IED ON THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF SREE AYYANAR SPINNING AND WEAVING MILLS LTD. VS. CIT (301 ITR 434) WHEREIN IT WAS STATED AS FOLLOWS: ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 6 THE SECTION 254(2) OF THE INCOME - TAX ACT, 1961 DEALING WITH THE POWER OF THE APPELLATE TRIBUNA L TO PASS ORDERS OF RECTIFICATION OF MISTAKES, IS IN TWO PARTS. THE FIRST PART REFERS TO THE SUO MOTO EXERCISE OF THE POWER OF RECTIFICATION WHEREAS THE SECOND PART REFERS TO RECTIFICATION AND AMENDMENT ON AN APPLICATION MADE BY THE ASSESSEE OR THE ASSESS ING OFFICER POINTING OUT THE MISTAKE FROM THE RECORD. WHERE THE APPLICATION FOR RECTIFICATION IS MADE WITHIN FOUR YEARS OF THE APPELLATE ORDER OF THE APPELLATE TRIBUNAL, THE APPELLATE TRIBUNAL HAS JURISDICTION TO PASS THE ORDER DISPOSING OF THE APPLICATIO N AND CANNOT REJECT THE APPLICATION ON THE GROUND THAT FOUR YEAR S HAVE ELAPSED. 7. T HE LD. DR SUBMITTED THAT T HE ASSESSES HA D FILED APPEAL BEFORE THE TRIBUNAL CHA LLENGING THE ORDER D A T E D 19/7/2018 PASSED BY CIT(A) RELATING TO ASSESSMENT YEAR 2008 - 09 . THERE WAS A DELAY OF 6 YEARS AND 7 MONTHS IN FILING APPEAL BEFORE C I T ( A ) , WHEN THE TIME LIMIT FOR FILING APPEAL BEFORE CIT(A) IS 30 DAYS FROM THE END OF RECEIPT OF ASSESSMENT ORDER AND THE TIME LIMIT FOR FILING THE APPEAL BEFORE CIT(A) WAS ON 7/1/2011. W HEN THE CIT(A) REQUESTED TO GIVE REASON FOR THE DELAY, ASSESSES REPLIED AS FOLLOWS; 'ASSESSEE FILED A RECTIFICATION APPLICATION U/S 154 ON 7/1/2011. THE DELAY IN FILING THE APPEAL WAS DUE TO PENDENCY OF THE RECTIFICATION APPLICATION BEFORE THE DEPT. DEPT D ID NOT ISSUE AN ORDER IN RESPONSE TO RECTIFICATION REQUEST/PETITION FILED BY THE ASSESIEE ON 7/1/2011 AS ALSO ON 28/2/2017.' ACCORDING TO THE LD. DR, T HE CIT ( A) REJECTED THIS REASON CITED BY THE ASSESSES BECAUSE, THE RECTIFICATION APPLICATION AND THE APPE AL BEFORE CIT(A) ARE ON DIFFERENT GROUNDS. THE LD. DR SUBMITTED THAT THE ISSUE RAISED BY THE ASSESSEE BEFORE CIT(A) WAS REGARDING TREATING THE INCOME FROM SHARE TRADING AS SHORT TERM CAPITAL GAIN EARNED ON INVESTMENT AND NOT AS BUSINESS INCOME. IT WAS SUB MITTED THAT THE ASSESSING OFFICER IN HIS ORDER D A T E D 9/12/2010 HAD ASSESSED IT AS BUSINESS INCOME FOR THE REASON THAT THE HOLDING PERIOD OF SHARES FOR THE TRANSACTION WAS LESS THAN 60 DAYS , WHEREAS THE RECTIFICATION APPLICATION WAS FILED ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 7 FOR GETTING THE CR EDIT U/S 8 8 E OF THE ACT. IT WAS SUBMITTED THAT SEC . 8 8 E IS ON PAYMENT OF STT ON INCOME ARISING FROM TAXABLE SECURITY TRANSACTIONS. THE LD. D R SUBMITTED THAT THE CIT(A) HA D ALSO RAISED THE DOUBT AS TO WHY THE ASSESSEE DID NOT FOLLOW UP THE RECTIFICATION RE QUEST WITH THE ASSESSING AUTHORITY. THUS, ACCORDING TO THE LD. D R, THE CIT(A) RIGHT FULLY REJECTED THE REASON GI V EN BY THE ASSESSEE FOR CONDONING THE DELAY AND CATEGORICALLY STATED IN HIS ORDER D A T E D 19/7/2018 THAT, IT IS ONLY A CASE OF AFTER THOUGHT BY TH E ASSESSEE AND THE REQUEST FOR CONDONING THE DELAY WAS REJECTED AND T HE CIT(A) HA D TO REJECT THE CONDONATION PETITION BECAUSE , THE REASON CITED BY THE ASSES SEE WAS FACTUALLY WRONG. IT WAS SUBMITTED THAT IN THE PETITION BEFORE THE ITAT D A T E D 5/2/2019 ASSES SES HA D STATED THAT, IT IS PRESUMED IN TERMS OF THE PROVISIONS OF SEC 249 AND 250 OF THE IT ACT, THAT THE DELAY WAS CONDONED AND THE APPEAL WAS ADMITTED. IT WAS TRUE THAT THE CIT(A) HA D D ECIDED THE APPEAL ON MERITS AND RENDERED SUBSTANTIAL JUSTICE TO THE L I TIGANT AND TO THAT EFFECT ASSESSEE'S ARGUMENT THAT APPEAL WAS DEEMED TO BE ADMITTED IN TERMS OF SEC 249 AND 250 OF THE IT ACT MAY BE CONSIDERED. ACCORDING TO THE LD. D R, THE APPEAL WAS DECIDED ON MERITS KEEPING IN MIND THE DICTUM 'AUDI ALTERAM PART UM I . E . NO ONE SHOULD BE CONDEMNED WITHOUT BEING HEARD. 8. WE HAVE CAREFULLY GONE THROUGH THE REASONS ADVANCED BY THE LD. AR FOR FILING THE APPEAL BEFORE THE CIT(A) BELATEDLY. THUS, THERE WAS A DELAY OF 6 YEARS AND 7 MONTHS IN FILING THE APPEAL BEFORE THE CI T(A). T HE PLEA OF THE ASSESSEE IS THAT THE ASSESSEE WAS AWAITING FOR THE ORDER OF THE ASSESSING OFFICER TO BE PASSED U/S. 154 OF THE ACT. AS PER SECTION 249(2) OF THE I.T. ACT, THE ASSESSEE SHALL PRESENT IT S APPEAL WITHIN 30 DAYS OF SERVICE OF NOTICE OF DEMAND RELATING TO THE ASSESSMENT. ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 8 THERE WAS INORDINATE DELAY OF 6 YEARS AND 7 MONTHS IN FILING THE APPEAL BEFORE THE CIT(A). ACCORDING TO THE LD. AR THE ASSESSEE FILED RECTIFICATION APPLICATION U/S. 154 WITHIN TIME AND IT WAS LEFT TO THE ASSESSING OFFI CER TO PASS THE ORDER U/S. 154 AND DISPOSE OF THE APPLICATION AND HE CANNOT REJECT THE APPLICATION ON THE GROUND THAT FOUR YEARS HAVE BEEN LAPSED TO PASS THE ORDER U/S. 154 OF THE ACT. HENCE, SHE HAD BEEN AWAITING FOR THE ORDER TO BE PASSED BY THE ASSESSIN G OFFICER IN REPLY TO HER APPLICATION FILED U/S. 154 OF THE ACT ON 07/01/2011. SINCE THE ASSESSING OFFICER HAD NOT PASSED THE ORDER YET, IT WAS DECIDED TO FILE APPEAL AGAINST THE AS SESSMENT ORDER DATED 09/12/2010 WHICH WAS FILED ON 03/08/2017 WITH A DELAY OF 6 YEARS AND 7 MONTHS. ACCORDING TO THE LD. AR , THERE IS REASONABLE CAUSE FOR FILING THE APPEAL BELATEDLY BEFORE THE CIT(A). THE DELAY WAS NEITHER WILLFUL NOR WANTON BUT DUE TO THE CIRCUMSTANCES BEYOND THE CONTROL OF THE ASSESSEE. THE ONLY REASON STA TED BY THE ASSESSEE IS THAT THE ASSESSEE HAD BEEN SEEKING ALTERNATIVE REMEDY BEFORE THE ASSESSING OFFICER BY FILING RECTIFICATION APPLICATION U/S. 154 OF THE ACT. 8.1 NOW WE SHALL EXAMINE THE REASON STATED BY THE ASSESSEE FOR NOT FILING THE APPEAL BEFO RE THE CIT(A) IN TIME. IN OUR O PINION, THE ASSESSEE MUST SHOW THAT SHE WAS DILIGENT IN TAKING PROPER STEPS AND THE DELAY WAS CAUSED NOTWITHSTANDING HER DUE DILIGENCE. IF SHE APPEARS TO BE GUILTY OF LATCHES OR NEGLIGENCE AND DOES NOT TAKE APPROPRIATE STEP S TO PERUSE HER REMEDY TILL ABOUT 6 YEARS AND 7 MONTHS, SHE MUST BE PREPARED TO HAVE HER REMEDY BARRED WITHOUT EXPECTING CONDONATION. IT IS FOR HER TO EXPLAIN THE REASON FOR THE DELAY AND IT IS NOT THE FUNCTION OF AUTHORITIES TO FIND THE CAUSE FOR DELAY. THE APPELLATE AUTHORITY HA S TO EXAMINE ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 9 WHETHER THE SUFFICIENT CAUSE HAS BEEN SHOWN BY HER FOR CONDONING THE DELAY AND WHETHER SUCH CAUSE IS ACCEPTABLE OR NOT. IN THE PRESENT CASE, THE ASSESSEE COULD NOT SHOW ANY REASON FOR FILING THE APPEAL BEFORE THE CI T(A) WITHIN THE LONG PERIOD OF 6 YEARS AND 7 MONTHS. T HE TIME LIMIT FOR PASSING THE ORDER U/S. 154 BY THE ASSESSING OFFICER IS FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER SAID TO BE AMENDED U/S. 154 OF THE ACT WAS PASSED. THEREFORE, E VEN AFTER THE EXPIRY OF THIS PERIOD, THE ASSESSEE HAS NOT FILED ANY APPEAL AGAINST THE ASSESSMENT ORDER. IN OUR OPINION, THE ASSESSEE CANNOT INDEFINITELY WAIT FOR THE RECTIFICATION ORDER TO BE PASSED BY THE ASSESSING OFFICER. THE ASSESSEE HEREIN WANTS TO TAKE THE BENEFITS OF HER WRONG DOINGS WHICH IS EVIDENT FROM THE ABOVE NARRATED FACTS IN DETAIL. THE ASSESSEE, IN THE PRESENT SITUATION, APPEARS TO BE GUILTY OF LATCHES AND NEGLIGENCE AND DOES NOT TAKE APPROPRIATE ACTION IN FILING THE APPEAL WITHIN THE PR ESCRIBED TIME , MORE SO, EVEN AFTER THE EXPIRY OF FOUR YEARS TIME LIMIT FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ASSESSMENT ORDER WAS PASSED. EVEN SUBSTANTIAL JUSTICE SHOULD NOT BE DEFEATED BY TECHNICALITIES AND LIBERAL APPROACH IS TO BE ADOPTED BUT THAT DOES NOT MEAN THAT ANY PLEA WITHOUT ANY POSSIBLE OR ACCEPTABLE BASIS AND EVEN WITHOUT HEARING, SEMBLANCE OR RATIONALITY HAS TO BE ACCEPTED AND DELAY HAS TO BE ACCEPTED AND CONDONED WHICH SHALL BE AGAINST THE VERY SPIRIT OF LAW . THE TIME PRESCRIBED F OR FILING THE APPEAL WILL BECOME ME A NINGLESS IN SUCH AN EVEN T . M E RE L Y BECAUSE SUBSTANTIAL JUSTICE IS TO BE DONE, WE CANNOT IGNORE LAW OF LIMITATION AND THAT ALSO WHEN THERE IS NO SUFFICIENT AND REASONABLE CAUSE FOR SUCH INORDINATE DELAY . ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 10 8.2 IN THE PRESENT CASE, THE ASSESSEE OTHER THAN FILING RECTIFICATION PETITION U/S. 154 OF THE ACT ON 07/01/2011 HAS HARDLY MADE ANY CORRESPONDENCE WITH THE ASSESSING OFFICER SO AS TO FOLLOW UP THE PROCEEDING U/S. 154 OF THE ACT. THOUGH THE ASSESSEE STATED BEFORE U S THAT IT HAS FILED ONE MORE APPLICATION ON 28/02/2017, THE COPY OF WHICH HAS NOT BEEN MADE AVAILABLE TO US. EVEN IF IT IS THERE, IT IS ONLY HOODWINKING THE APPELLATE PROCEEDINGS. IF THE ASSESSEE KNOWS THAT THERE WERE NO PROPER STEPS TAKEN BY THE ASSESSIN G OFFICER TO PASS THE ORDER U/S. 154 OF THE ACT, THE ASSESSEE SHOULD HAVE TAKEN PROPER STEPS TO FILE THE APPEAL AGAINST THE ASSESSMENT ORDER BEFORE THE CIT(A) WITHIN THE TIME LIMIT. THE ASSESSEE CANNOT TAKE SHELTER THAT THERE WAS FAILURE ON THE PART OF TH E ASSESSING OFFICER TO PASS THE ORDER U/S. 154 OF THE ACT AGAINST THE RECTIFICATION APPLICATION FILED BY THE ASSESSEE. IN VIEW OF THESE FACTS, THERE IS NO SUFFICIENT CAUSE TO CONDONE THE DELAY OF 6 YEARS AND 7 MONTHS AND IT CANNOT BE CONDONED ONLY ON EQU ITABLE GROUNDS. IN OUR OPINION, THE ASSESSEE HAS NOT EXPLAINED THE PROPER REASONS FOR THE INORDINATE DELAY IN FILING THE APPEAL BEFORE THE CIT(A) AND IT CANNOT BE SAID THAT THE ASSESSEE WAS PURSUING WRONG REMEDY DURING THE PERIOD OF 6 YEARS AND 7 MONTHS. IT IS THE PRIMARY DUTY OF THE ASSESSEE TO ESTABLISH SUFFICIENT CAUSE FOR NOT FILING THE APPEAL IN TIME. THE REASON ADVANCED BY THE ASSESSEE IS VERY VAGUE AND CANNOT BE SAID THAT THE ASSESSEE IS ACTUALLY INTERESTED IN PURSUING THE ISSUE BEFORE THE LOWER A UTHORITIES. IN OUR OPINION, THE TRIBUNAL HAS NO POWER TO EXTEND THE PERIOD OF LIMITATION ON EQUITABLE GROUNDS AND IT IS WELL ESTABLISHED PRINCIPLE THAT THE APPELLATE AUTHORITY HELPS THE VIGILANT AND NOT INDOLENT AND IN THE CASE BEFORE US, THE ASSESSEE HAS NOT BEEN VIGILANT AND THE TRIBUNAL CANNOT FIND WAYS AND MEANS TO GIVE RELIEF TO THE ASSESSEE AND CONDONE ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 11 THE INORDINATE DELAY OF 6 YEARS AND 7 MONTHS. THUS, THERE IS NO QUESTION OF EXERCISING LIBERAL APPROACH WITH THE INTENTION OF ADVANCING JUSTICE. ACC ORDINGLY, IN THE PRESENT CASE, THERE IS NO SUFFICIENT CAUSE FOR PRESENTING THE APPEAL BEFORE THE CIT(A). 8.3 IN THIS CONTEXT IT IS PERT INENT TO ASCERTAIN THE MEANING OF EXPRESSION SUF FICIENT CAUSE APPEARING IN SECT ION 253(5) OF THE LIMITATION ACT (3 6 OF 1963) . THE PROPOSITION IN THE MATTER IS WELL SETT LED. THE DELHI HIGH COUR T IN THE CASE OF SUDHIR KUMAR ANAND V. DR.VIJAY KUMAR ANAND AND OTHERS AIR 2012 DELHI 97 HAS HELD AS UNDER : LIMITATION ACT (36 OF 1963) S.5 CONDONATION OF DELAY SUF F ICIEN T CAUSE SUIT FOR DECLARATION, PARTIT ION AND POSSESSION F I LED RELYING UPON PROBATE CASE F ILED EARLIER AF TER DISMISSAL OF PROBATE CASE FOR NON PROSECUT ION, PLAINT IF LOST INTEREST IN MAT TER NO VALID EXPLANAT I ON GIVE N AS TO WHY NO STEPS WERE TAKEN FOR ITS RESTORAT ION MERE STATEMENT THAT RELEVANT F ILE WAS LOST IN SOME OFF ICE OR SOME C ONFUSION ABOUT ADVOCATES APPEAR ING IN MAT TER, CANNOT BE TREATED AS SUFF ICIENT CAUSE DELAY NOT CONDONED. THE WORDS SUFF ICIENT CAUSE FOR NOT MAKING THE APPLICAT ION WITH IN THE PERIOD OF LIMITATION NO DOUBT IS TO BE APPL IED IN A REASONABLE MANNER BUT DEPENDING UPON THE FACTS AND CI RCUMSTANCES OF EACH CASE. PARTY HAS TO GIVE SATISFACTORY EXPLANATION. UNLESS SUFF ICIENT CAUSE IS EXPLAINED FOR CONDONAT ION OF DELAY, PRAYER MAY NOT BE GRANTED. IN ADDIT ION TO THIS, THE COURT MUST TAKE INTO ACCOUNT THE CONDUCT OF THE PARTY AND ITS BONAF IDE. THE CO URT HAS TO SEE WHETHER SUBSTANT IAL JUSTICE WOULD BE DONE BY CONDONING THE DELAY. IT CANNOT BE OVERLOOKED THAT ON EXPIR Y OF THE PERIOD OF LIMI TATION PRESCRIBED FOR SEEKING LEGAL REMEDY RIGHTS ACCRUE IN FAVOUR OF OTHER SIDE. ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 12 8. 5 THE JUDGMENT OF THE SUPREME COURT RELIED UPON BY THE ASSESSEE IN THE CASE OF SREE AYYANAR SPINNING AND WEAVING MILLS LTD. VS. CIT (301 ITR 434) IS NOT APPLICABLE T O THE FACTS OF THE ASSESSEES CASE WHICH IS WITH REGARD TO POWER OF TRIBUNAL TO PASS ORDER UNDER SECTION 254(2) OF THE ACT WHERE THE APPLICATION FOR RECTIFICATION WAS FILED WITHIN THE PERIOD OF FOUR YEARS FROM THE DATE OF RECEIPT OF THE ORDER AND DOES NOT LAY DOWN ANY RATIO WITH REGARD TO CONDONATION OF DELAY BY THE CIT(A) WHEN THERE WAS INORDINATE DELAY IN FILING THE APPEAL BEFORE HIM. 8. 6 IN THE PRESENT CASE, THE ASSESSEE HAS FAILED TO EXPLAIN THE CAUSE OF DELAY IN FILING THE APPEAL BEFORE THE CIT(A ). THEREFORE, IT IS EVIDENT THAT THE ASSESSEE ADOPTED CALLOUS APPROACH WHICH DEMONSTRATED UTTER INDIFFERENCE IN THE MATTER. IN SUCH A SITUATION, SUFFICIENT CAUSE DOES NOT EXIST TO CONDONE THE DELAY AND THE DELAY REMAINS UNEXPLAINED. IN OUR OPINION, THER E IS COMPLETE NEGLIGENCE ON THE PART OF THE ASSESSEE AND COMPLETE ABSENCE OF DUE DILIGENCE TO PURSUE THE MATTER IN QUESTION. IT CANNOT BE SAID THAT THE CASE OF THE ASSESSEE FALLS UNDER THE CATEGORY WHICH I S BEYOND THE CONTROL OF THE ASSESSEE. AS DISCUSSED EARLIER, THE ASSESSEE HAS FAILED TO SHOW SUFFICIENT CAUSE FOR NOT FILING THE APPEAL WITHIN THE PERIOD OF LIMITATION WITHOUT EXPLAINING THE DELAY TILL THE ACTUAL DATE OF FILING THE APPEAL. IN OTHER WORDS, THE WHOLE PERIOD OF DELAY IS NOT AT ALL EXPLAINED AS HELD IN THE CASE OF RAMLAL AND OTHERS V. REWA COALFIELDS LTD., [AIR 1962 SC 361] WHERE IN IT WAS HELD THAT IT IS NOT THE CASE OF THE ASSESSEE WHETHER THE ASSESSEE EXER C ISED DUE DILIGENCE SO AS TO FILE LEGAL REMEDY. CONSEQUENTLY, WE ARE IN COMPLETE AGREE MENT WITH THE CIT(A) IN DISMISSING THE APPEAL OF THE ASSESSEE AND NOT ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 13 CONDONING THE DELAY OF 6 YEARS AND 7 MONTHS. THUS, WE DISMISS THE APPEAL OF THE ASSESSEE. SINCE WE HAVE DISMISSED THE APPEAL OF THE ASSESSEE AS UNADMITTED, WE REFRAIN FROM GOING INTO OT HER GROUNDS INCLUDING ADDITIONAL GROUNDS OF APPEAL OF THE ASSESSEE. 9 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH JULY, 2019 SD/ - (GEORGE GEORGE K.) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KO CHI DATED: 25 TH JULY , 2019 GJ ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 14 ITA NO.439/COCH/2019 SMT.SREELATHA RAMDAS PER GEORGE GEORGE K, JM : I HAVE CAREFULLY PERUSED MY LEARNED BROTHERS ORDER AND RESPECTFULLY DISAGREE WITH THE CONCLUSIONS REACHED BY HIM, HENCE, I PROCEED TO WRITE A SEPARATE ORDER. 2. BRIEF FACTS NECESSARY FOR THE DISPOSAL OF APPEAL IS RECAPITULATED BELOW : THE ASSESSEE IS A DOCTOR BY PROFESSION, WHO RUNS A DENTAL CLINIC. FOR THE ASSESSMENT YEAR 2008 - 2009, THE ASSESSEE FILED HER RETURN OF INCOME ON 14.10.2008 DECLARING TOTAL INCOME OF RS.38,00,100. IN THE RETURN OF INCOME, THE ASSESSEE HAD DISCLOSED INCOME FROM BOTH L ONG T ERM C APITAL G AINS (LTCG) AND S HORT T ERM C APITAL G AINS (STCG) ON SALE OF SHARES. THE STCG DECLARED IN THE RETURN OF INCOME WAS RS.29,29,408. OUT OF RS.29,29,408 DECLARED AS STCG , THE ASSESSING OFFICER WAS OF THE VIEW THAT A SUM OF RS.14,56,552 SHOULD BE ASSESSED AS INCOME FROM BUSINESS. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE AG REED TO ASSESS THE ABOVE SAID SUM DECLARED AS SHORT TERM CAPITAL GAINS AS INCOME FROM BUSINESS (REFER PARA 3.4 OF THE ASSESSMENT ORDER). THE ASSESSING OFFICER ACCORDINGLY TREATED PURCHASE AND SALE OF SHARES WITHIN 60 DAYS AS INCOME FROM BUSINESS AND NO T AS STCG , AS DECLARED IN THE RETURN OF INCOME. ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 15 3. THE ASSESSEE FILED A RECTIFICATION APPLICATION ON 07.01.2010 U/S 154 OF THE I.T.ACT. IN THE SAID RECTIFICATION APPLICATION, THE PRAYER WAS FOR GRANT OF DEDUCTION U/S 88E OF THE I.T.ACT BEING SECURITY TR ANSACTION TAX PAID BY THE ASSESSEE. IT IS AN ADMITTED FACT THAT THE RECTIFICATION APPLICATION SO FILED HAS NOT BEEN DISPOSED OFF AS ON DATE. THE LEARNED AR SUBMITTED THAT THE CHARTERED ACCOUNTANT WAS ORALLY INFORMED THAT THE RECTIFICATION APPLICATION CANNO T BE DISPOSED OFF IN VIEW OF TIME LIMIT PROVIDED U/S 154(7) OF THE I.T.ACT. 4. THE ASSESSEE FILED AN APPEAL TO THE FIRST APPELLATE AUTHORITY ALONG WITH A PETITION FOR CONDONING THE DELAY IN FILING THE APPEAL. IT WAS SUBMITTED BEFORE THE FIRST APPELLATE A UTHORITY THAT , ONCE TRANSACTIONS IN SECURITY IS SUBJECTED TO THE TAX UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION THE ASSESSING AUTHORITY OUGHT TO HAVE GRANTED DEDUCTION OF THE SECURITY TRANSACTION TAX PAID BY THE ASSESSEE, GOING BY THE PRO VISIONS OF SECTION 88E OF THE I.T.ACT . THE SECURITY TRANSACTION TAX CLAIMED AS DEDUCTION WAS RS.1,69,812. AS REGARDS THE DELAY IN FILING THE APPEAL, IT WAS SUBMITTED THAT THE ASSESSEE HAS FILED THE RECTIFICATION APPLICATION FOR CLAIM OF DEDUCTION U/S 88E OF THE I.T.ACT BEFORE THE ASSESSING OFFICER U/S 154 OF THE I.T.ACT WELL WITHIN THE TIME LIMIT SPECIFIED FOR FILING THE APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. IT WAS STATED THAT THE ASSESSEE BONAFIDELY BELIEVED THAT THE RECTIFICATION APPLICATION WOULD HAVE BEEN DISPOSED OFF AND SINCE THE SAME IS PENDING THE ASSESSEE IS LEFT WITH NO OTHER REMED Y OTHER THAN TO FILE THE APPEAL TO THE CIT(A). THEREFORE, IT IS ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 16 PRAYED THAT DELAY MAY BE CONDONED AND THE ISSUE MAY BE DECIDED ON MERITS. 5. THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE AS TIME BARRED, HOWEVER, HE PROCEEDED TO DISPOSE OFF THE APPEAL O N MERITS FOR SUBSTANTIAL CAUSE OF JUSTICE. ON MERITS, THE CIT(A) CONFIRMED THE A.O.S STAND THAT THE SUM OF RS.14,56,552 SHOULD BE ASSESSED AS INCOME FROM BUSINESS INSTEAD OF STCG . AS REGARDS THE CLAIM OF DEDUCTION U/S 88E OF THE I.T.ACT, THE CIT(A) HE LD THAT SINCE THE ASSESSEE HAD NOT MADE A CLAIM IN THE RETURN OF INCOME, THE SAME CANNOT BE CONSIDERED BY HIM. 6. THE ASSESSEE BEING AGGRIEVED BY THE ORDER OF THE CIT(A), HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. THE CONTENTIONS RAISED BY BOTH SI DES HAVE BEEN ELABORATELY MENTIONED IN MY LEARNED BROTHERS ORDER, HENCE, THE SAME IS NOT REITERATED. THEREFORE, I SHALL DIRECTLY ADJUDICATE THE ISSUES RAISED. 7 . I HAVE CAREFULLY PERUSED THE MATERIAL ON RECORD AND HEARD THE RIVAL SUBMISSIONS. THE CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE AS TIME BARRED BUT AT THE SAME TIME HE ALSO PROCEEDED TO ADJUDICATE THE ISSUES ON MERITS. ADMITTEDLY, THERE WAS A DELAY OF 6 YEARS AND 7 MONTHS IN FILING THE APPEAL BEFORE THE CIT(A). IT IS ALSO AN ADMITTED FACT THAT THE ASSESSEE HAS FILED RECTIFICATION APPLICATION BEFORE THE ASSESSING OFFICER WELL WITHIN ONE MONTH FROM THE DATE OF RECEIPT OF ASSESSMENT ORDER BY THE ASSESSEE. UNDOUBTEDLY, THE RECTIFICATION IS NOT DISPOSED OFF TILL ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 17 DATE. THE PRAYER OF THE RECTIFICATION APPLICATION AND THE GROUNDS RAISED BEFORE THE CIT(A) IS IDENTICAL, VIZ., TO GRANT DEDUCTION U/S 88E OF THE I.T.ACT (COPY OF RECTIFICATION APPLICA TION IS PLACED ON RECORD AT PAGES 22 AND 23 OF THE APPEAL MEMO AND GROUNDS RAISED BEFORE THE CIT(A) ARE PLACED AT PAGE 21 OF THE APPEAL MEMO). ACCORDING TO ME, WHEN THE CIT(A) DECIDE D TO CONSIDER THE APPEAL ON MERITS FOR ADVANCEMENT OF SUBSTANTIAL CAUSE OF JUSTICE, IT IS PRESUMED THAT IN TERMS OF PROVISIONS OF SECTION 249 AND SECTION 250 OF THE I.T.ACT THAT THE DELAY IS CONDONED AND THE APPEAL IS ADMITTED. THE PRINCIPLE OF CONDONATION OF DELAY IS TO NOT TO DISMISS THE CASE ON THE GROUND OF TECHNICALITIES BU T TO RENDER SUBSTANTIAL JUSTICE TO THE LITIGANT S. THE CONCLUDING PORTION OF PARA 2 OF THE IMPUGNED ORDER OF THE CIT(A) REFLECTS THAT THE DELAY IS CONDONED. EVEN ASSUMING THE DELAY WAS NOT CONDONED BY THE CIT(A), ACCORDING TO ME, THE CAUSE OF DELAY IN FILIN G THE APPEAL BEFORE THE CIT(A) WAS PROPERLY EXPLAINED AND HE OUGHT TO HAVE CONDONED THE DELAY . THE REASON FOR THE DELAY WAS THE PENDENCY OF THE RECTIFICATION PETITION AND THE RECTIFICATION PETITION BEING FILED EVEN BEFORE THE EXPIRY OF THE TIME LIMIT FOR F ILING THE APPEAL, THERE WAS NO REASON FOR DOUBTING THE BONAFIDES OF THE ASSESSEE . 7.1 AS REGARDS THE CIT(A) TREATING THE SUM OF RS.14,56,552 AS INCOME FROM BUSINESS INSTEAD OF STCG , THE ASSESSEE DOES NOT HAVE ANY GRIEVANCE. IN FACT THE ASSESSEE HAD C ONCEDED BEFORE THE ASSESSING OFFICER THAT THE AMOUNT CAN BE ASSESSED AS INCOME FROM BUSINESS. THEREFORE ON MERITS THE ONLY ISSUE THAT IS SURVIVING FOR CONSIDERATION IS NON - GRANT OF DEDUCTION ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 18 U/S 88 E OF THE I.T.ACT. THE ASSESSEE HAS FILED THE RETURN OF INCOME BY TREATING SALE OF SECURITY AS FALLING UNDER THE HEAD CAPITAL GAINS. THEREFORE, AT THAT POINT OF TIME, THEY COULD NOT HAVE CLAIMED THE DEDUCTION OF SECURITY TRANSACTION TAX U/S 88E OF THE I.T .ACT. IT IS ONLY CONSEQUENT TO THE CHANGE OF HEAD BY THE ASSESSING AUTHORITY FROM CAPITAL GAINS TO INCOME FROM BUSINESS OR PROFESSION THAT THE ELIGIBILITY AROSE U/S 88E OF THE I.T.ACT. HENCE, THE CIT(A)S CONCLUSION THAT THE ASSESSEES CLAIM WAS NOT M ADE IN THE RETURN OF INCOME IS NOT A VALID REASONING FOR DENYING THE DEDUCTION U/S 88E OF THE I.T.ACT. IT IS A SETTLED POSITION OF LAW THAT THE ASSESSEE IS ENTITLED TO RAISE ADDITIONAL GROUND BEING QUESTION OF LAW IN VIEW OF THE JUDGMENT OF THE HONBLE APE X COURT IN THE CASE OF NATIONAL TERMAL POWER CO. LTD. V. CIT [(1998) 229 ITR 383 (SC) . IN THE INSTANT CASE, AS MENTIONED EARLIER, SINCE THE HEAD OF INCOME WAS CHANGED BY THE ASSESSING OFF ICER, THE CIT(A) COULD NOT HAVE DISMISSED THE APPEAL STATING THE CLAI M OF DEDUCTION U/S 88E OF THE I.T.ACT WAS NOT PREFERRED BY THE ASSESSEE IN THE ORIGINAL RETURN FILED BY THE ASSESSEE. 7 . 2 THE LEARNED A.M. HAS DISMISSED THE APPEAL OF THE ASSESSEE SOLELY ON THE GROUND THAT THERE WAS NO SUFFICIENT CAUSE FOR CONDONING THE DELAY IN FILING THE APPEAL BEFORE THE CIT(A) . LEARNED BROTHER WAS OF THE VIEW THAT THE ASSESSEE WAS NOT DILIGENT IN PURSUING THE RECTIFICATION APPLICATION FILED BEFORE THE A.O. AND THE APPEAL WAS FILED BEFORE THE CIT(A) WITH AN INORDINATE DELAY OF 6 YEARS AND 7 MONTHS. ADMITTEDLY, THERE IS A DELAY OF 6 YEARS AND 7 MONTHS IN FILING THE APPEAL BEFORE THE CIT(A). NORMALLY, SUCH A LONG DELAY IN FILING THE APPEAL CANNOT ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 19 BE CONDONED WITHOUT SUFFICIENT CAUSE AND THE ASSESSEE HAS TO PROVE THAT THERE WAS NO LATCHES ON HER PART IN FILING OF THE APPEAL BELATEDLY . AS MENTIONED EARLIER, THE ASSESSEE HAD FILED A RECTIFICATION APPLICATION U/S 154 OF THE I.T.ACT BEFORE THE ASSESSING OFFICER WITHIN THE TIME LIMIT SPECIFIED FOR FILIN G THE APPEAL BEFORE THE CIT(A), I.E. WITHIN ONE MONTH FROM THE DATE OF RECEIPT OF ASSESSMENT ORDER BY THE ASSESSEE , W HEREAS, THE TIME LIMIT IN FILING THE RECTIFICATION APPLICATION U/S 154 OF THE I.T.ACT IS 4 YEARS FROM THE DATE OF RECEIPT OF THE ORDER SOUGHT TO BE RECTIFIED). THE PRAYER / RELIEF SO UGHT IN THE RECTIFICATION APPLICATION FILED BEFORE THE ASSESSING OFFICER AND THE APPE AL FILED BEFORE THE CIT(A) IS IDENTICAL. ONCE THE RECTIFICATION APPLICATION IS FILED WITHIN THE TIME, THE ORDER COU LD HAVE BEEN PASSED AT ANY TIME. THE TIME LIMIT OF 4 YEA RS WOULD NOT APPLY INASMUCH AS THE APPLICATION WAS FILED WITHIN TH E TIME LIMIT, THOUGH, SECTION 154 (7) PROVIDES THAT NO ORDER CAN BE PASSED AFTER 4 YEARS FROM THE END OF THE FINANCIAL YEAR THE ORDERS SOUGHT TO BE REVISED IS RECEIVED BY EITHER PARTIES. THIS VIEW WAS UPHELD IN THE FOLLOWING JUDICIAL PRONOUNCEMENTS: - (I) SREE AYYANAR SPINNING & WEAVING MILLS LTD. V. CIT [(2008) 301 ITR 434 (SC)] (II) HARSHVARDHAN CHEMICALS & MINERALS LTD. V. UNION OF INDIA [256 ITR 677 (RAJ.)] (III) DESAI INVESTMENTS PVT. LTD. V. ITO REPORTED IN 10 TAXMANN.COM 71. 7 .3 THE FURTHER QUESTION MAY ARISE WHY THE ASSESSEE DID NOT FILE THE APPEAL BEFORE THE CIT(A) , IMMEDIATELY AFTER THE TIME ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 20 LIMIT SPECIFIED U/S 154(7) OF THE I.T.ACT WAS OVER (I.E. 4 YEARS). THE LEARNED AR HAS SUBMITTED THAT T HE ASSESSEE AND HER REPRESENTATIVE WERE UNDER BONAFIDES BELIEF THAT THE ASSESSING OFFICER WOULD FOLLOW THE BINDING JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF SREE AYYANAR SPINNING & WEAVING MILLS LTD. (SUPRA) AND WOULD DISPOSE OFF THE RECTIFICATION APPLICATION EVEN BEYOND THE PERIOD OF 4 YEARS , HOWEVER, ON ENQUIRY WITH THE A.O., IT WAS ORALLY INTIMATED THAT RECTIFICATION APPLICATION COULD NOT BE DISPOSED OFF. THEREAFTER THE ASSESSEE RECEIVED LEGAL ADVICE THAT IT IS SAFER TO FILE AN APPEAL AGAINST THE ASSESSMENT ORDER. IN THIS CONTEXT I HAVE NO REASON TO DISBELIEVE THE STATEMENT MADE BY AN ADVOCATE ACROSS THE BAR. AS MENTIONED EARLIER, THE ASSESSEE WAS DILIGENT IN FILING OF RECTIFICATION APPLICATION WITHIN THE TIME LIMIT SPECIFIED FOR FILING AN APPEAL BEFORE THE CIT(A) (EVEN THOUGH THE TIME LIMIT FOR FILING RECTIFICATION APPLICATION WAS FOUR YEARS). THEREFORE, ACCORDING TO ME, THE BONAFIDES OF THE ASSESSEE CANNOT BE DOUBTED AND THE DELAY IN FILING THE APPEAL BEFORE THE CIT(A) IS TO BE CONDONED. 7.4 THE HONBLE HIGH COURT OF JAMMU & KASHMIR IN THE CASE OF FAISAL HAMEED V. ITAT & ANR. [IT APEAL NO.2 OF 2012 AND IA NO.359 OF 2012 ORDER DATED 13 TH SEPTEMBER, 2012] HAD HELD THAT WHEN THE ASSESSEE HAD BEEN PURSUING ONE REMEDY OR OTHER AND IF HE FILES AN APPEAL AS PER THE LEGAL ADVICE TENDERED TO HIM, IN SUCH AN EVENT IT WOULD CONSTITUTE SUFFICIENT CAUSE FOR CONDONING THE DELAY. ACCORDINGLY, THE HONBLE JAMMU & KASHMIR HIGH COURT CONDONED THE DELAY OF 890 DAYS. THE RELEVANT FINDING OF THE HONBLE J&K HIGH COURT READS AS FOLLOW: - ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 21 IT IS EVIDENT FROM THE NARRATION OF FACTS THAT THE ASSESSEE - APPELLANT HAS BEEN PURSUING ONE REMEDY OR THE OTHER BY FILING THE APPEALS AS PER THE LEGAL ADVICE TENDERED TO HIM. IT IS WELL SETTLED THAT IF A LITIGANT HAS INI TIATED PROCEEDINGS ON THE BASIS OF LEGAL ADVICE TENDERED TO HIM, SUCH AN EVENT WOULD CONSTITUTE SUFFICIENT CAUSE FOR CONDONING THE DELAY. IN THAT REGARD, WE PLACE RELIANCE ON THE PROVISIONS OF SECTION 14 OF THE LIMITATION ACT, SVT.1995 (1935 A.D.), WHICH P ROVIDES THAT IF A PERSON HAS BEEN PROSECUTING WITH DUE DILIGENCE ANOTHER CIVIL PROCEEDINGS THEN THE PERIOD SPENT ON SUCH PROCEEDINGS SHOULD BE EXCLUDED, PROVIDED PROCEEDINGS ARE BASED ON THE SAME CAUSE OF ACTION AND IT IS PROSECUTED IN GOOD FAITH IN SUCH A COURT ON ACCOUNT OF DEFECT OF JURISDICTION OR OTHER CAUSE OF A LIKE NATURE. EVEN OTHERWISE, WE ARE OF THE CONSIDERED OPINION THAT RIGHT OF ONE APPEAL IS RECOGNIZED IN ALL JURISDICTIONS AND THE MATTER OUGHT TO HAVE BEEN DECIDED BY THE TRIBUNAL ON MERITS. A CCORDINGLY, WE ARE OF THE VIEW, THAT THE APPLICATION SEEKING CONDONATION OF DELAY OF 890 DAYS IS LIABLE TO BE ACCEPTED. 7.5 THE HONBLE SUPREME COURT IN THE CASE OF K.SUBBARAYUDU AND OTHERS V. THE SPECIAL DEPUTY COLLECTOR (LAND ACQUISITION) [CIVIL APPEAL NO.9288 OF 2017 ORDER DATED 19 TH JULY, 2017] HAD HELD AS UNDER: - 12. THE TERM SUFFICIENT CAUSE IS TO RECEIVE LIBERAL CONSTRUCTION SO AS TO ADVANCE SUBSTANTIAL JUSTICE, WHEN NO NEGLIGENCE, IN ACTION OR WANT OF BONA FIDE IS ATTRIBUTABLE TO THE APPELLANTS, THE COURT SHOULD ADOPT A JUSTICE - ORIENTED APPROACH IN CONDONING THE DELAY. IN STATE OF NAGALAND V. LIPOK A.O. AND OTHERS (2005) 3 SCC 752:2005 (4) JT 10, IT WAS HELD AS UNDER: - SECTION 5 IS TO BE CONSTRUED LIBERALLY SO AS TO DO SUBSTANTIAL J USTICE TO THE PARTIES. THE PROVISION CONTEMPLATES THAT THE COURT HAS TO GO INTO THE POSITION OF THE PERSON CONCERNED AND TO FIND OUT IF THE DELAY CAN BE SAID TO HAVE BEEN RESULTED FROM THE CAUSE WHICH HE HAD ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 22 ADDUCED AND WHETHER THE CAUSE RECORDED IN THE PE CULIAR CIRCUMSTANCES OF THE CASE IS SUFFICIENT. 7.6 THE HONBLE SUPREME COURT IN THE CASE OF COLLECTOR, LAND ACQUISITION V. MST.KATIJI & OTHERS [(1987) 167 ITR 471 (SC)] HAD HELD AS FOLLOWS: - THE LEGISLATURE HAS CONFERRED THE POWER TO CONDONE DELAY BY E NACTING SECTION 51 OF THE LIMITATION ACT OF 1963 IN ORDER TO ENABLE THE COURTS TO DO SUBSTANTIAL JUSTICE TO PARTIES BY DI SPOSING OF MATTERS ON DE MERITS'. THE EXPRESSION 'SUFFICIENT CAUSE ' EMPLOYED BY THE LEGISLATURE IS ADEQUATELY ELASTIC TO ENABLE THE COU RTS TO APPLY THE LAW IN A MEANINGFUL MANNER WHICH SUBSERVES THE ENDS OF JUSTICE THAT BEING THE LIFE - PURPOSE OF THE EXISTENCE OF THE INSTITUTION OF COURTS. IT IS COMMON KNOWLEDGE THAT THIS COURT HAS BEEN MAKING A JUSTIFIABLY LIBERAL APPROACH IN MATTERS INST ITUTED IN THIS COURT. BUT THE MESSAGE DOES NOT APPEAR TO HAVE PERCOLATED DOWN TO ALL THE OTHER COURTS IN THE HIERARCHY. AND SUCH A LIBERAL APPROACH IS ADOPTED ON PRINCIPLE AS IT IS REALIZED THAT : 1. ORDINARILY, A LITIGANT DOES NOT STAND TO BENEFIT BY LODGING AN APPEAL LATE. 2. REFUSING TO CONDONE DELAY CAN RESULT IN A MERITORIOUS MATTER BEING THROWN OUT AT THE VERY THRESHOLD AND CAUSE OF JUSTICE BEING DEFEATED. AS AGAINST THIS, WHEN DELAY IS CONDO NED, THE HIGHEST THAT CAN HAPPEN IS THAT A CAUSE WOULD BE DECIDED ON MERITS AFTER HEARING THE PARTIES. 3. ' EVER Y DAY'S DELAY MUST BE EXPLAINED ' DOES NOT MEAN THAT A PEDANTIC APPROACH SHOULD BE MADE. WHY NOT EVERY HOUR'S DELAY, EVERY SECOND'S DELAY? THE DO CTRINE MUST BE APPLIED IN A RATIONAL, COMMON SENSE AND PRAGMATIC MANNER. 4. WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATIONS 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 OF 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 RESO RTING TO DELAY. IN FACT, HE RUNS A SERIOUS RISK. 6. IT MUST BE GRASPED THAT THE JUDICIARY IS RESPECTED NOT ON ACCOUNT OF ITS POWER TO LEGALIZE INJUSTICE ON TECHNICAL GROUNDS BUT BECAUSE IT IS CAPABLE OF REMOVING INJUSTICE AND IS EXPECTED TO DO SO. 7. 7 THE WHOLE MATTER CAN BE EXAMINED FROM A DIFFERENT ANGLE . THE BOARD IN ITS CIRCULAR DATED 11 TH APRIL, 1995 (CIRCULAR NO.14 ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 23 (XL - 35) OF 1955 HAD CATEGORICALLY STATED THAT THE OFFICERS OF THE DEPARTMENT MUST NOT TAKE ADVANTAGE OF THE IGNORANCE OF AN ASSESSEE A S TO HIS RIGHTS. IT IS FURTHER STATED IN BOARD CIRCULAR THAT IT IS THE DUTY OF THE OFFICER TO ASSIST A TAX PAYER IN THE MATTER OF CLAIMING AND SECURING RELIEF. THIS CIRCULAR ISSUED BY THE BOARD HAS NOT BEEN REVOKED / SUPERSEDED BY ANY OTHER CIRCULAR. THE C IRCULAR ISSUED BY THE BOARD IS BINDING ON THE DEPARTMENT. THE HONBLE KERALA HIGH COURT IN THE CASE OF PAREKH BROTHERS V. CIT [(1984) 150 ITR 105 (KER.)] IN REFERENCE TO THE JURISDICTION PRESCRIBED U/S 264 OF THE I.T.ACT HELD THE COMMISSIONER IN EXERCISE O F HIS REVISIONARY POWERS MAY PASS SUCH ORDERS AS HE MAY THINK FIT, WHICH IS NOT PREJUDICIAL TO THE ASSESSEE. IT WAS FURTHER HELD BY THE HONBLE HIGH COURT THAT THERE IS NOTHING IN U/S 264 OF THE I.T.ACT WHICH PLACES ANY RESTRICTION ON THE COMMISSIONERS RE VISIONAL POWER TO GIVE RELIEF TO THE ASSESSEE IN A CASE WHERE THE ASSESSEE DETECTS A MISTAKE ON ACCOUNT OF WHICH HE WAS OVER - ASSESSED AFTER THE ASSESSMENT WAS COMPLETED. IN THE INSTANT CASE, THE ASSESSEE COULD NOT HAVE CLAIMED DEDUCTION U/S 88E OF THE I.T.ACT IN THE RETURN OF INCOME FILED SINCE THE SALE OF SHARE WAS DECLARED AS INCOME FR OM STCG . WHEN THE ASSESSING OFFICER CHANGED THE HEAD OF INCOME FROM THAT OF STCG TO INCOME FROM BUSINESS OR PROFESSION , T HE ASSESSING OFFICER OUGHT TO HAVE GRANTED AN OPPORTUNITY TO THE ASSESSEE TO RAISE A CLAIM WITH REGARD TO THE ELIGIBLE DEDUCTIONS, IF ANY. IN THE INSTANT CASE, NO SUCH OPPORTUNITY WAS GRANTED BY THE ASSESSING OFFICER NOR HAS HE ACTED UPON THE RECTIFICATION APPLICATION FILED BY THE ASSESSEE WITHIN THE TIME LIMIT SPECIFIED IN GROSS VIOLATION OF LAW DECLARED ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 24 BY THE HONBLE APEX COURT IN THE CASE OF SREE AYYANAR SPINNING & WEAVING MILLS LTD.(SUPRA) . THEREFORE, I AM OF THE VIEW THAT THE DELAY IN FILING THE APPEAL BEFORE THE CIT(A) IS TO BE CONDONED SINCE THE ASSESSEE WAS PURSUING THE RELIEF IN THE RECTIFICATION APPLICATION AND I ACCORDINGLY CONDONE THE SAME. THE ASSESSEE SHOULD BE GIVEN AN OPPORTUNITY TO PROVE HER CASE THAT SHE IS ENTITLED TO DEDUCTION U/S 88E OF THE I.T.ACT. FOR LIMITED PURPOSE FOR EXAMINING THE ELIGIBILITY OF DEDUCTION U/S 88E OF THE I.T.ACT, THE ISSUE IS RESTORED TO THE A SSESSING OFFICER. IT IS ORDERED ACCORDINGLY. SD/ - (GEORGE GEORGE K.) JUDICIAL MEMBER COCHIN, DATED 14 TH AUGUST, 2019. ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 25 ITA NO.439/COCH/2019 SMT.SREELATHA RAMDAS ORDER U/S 255 (4) OF THE I.T.ACT, 1961 SINCE THERE IS DIFFERENCE OF OPINION, THE FOLLOWING QUESTIONS OF DIFFERENCE ARE REFERRED TO THE HONBLE PRESIDENT FOR NOMINATING THIRD MEMBER TO RESOLVE THE ISSUE: - (I) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THERE IS SUFFICIENT CAUSE ON THE PART OF THE ASSESSEE FOR NOT FILING THE APPEAL WITHIN THE PERIOD OF LIMITATION? (II) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE DELAY OF SIX YEARS AND SEVEN MONTHS IN FILING APPEAL BEFORE THE CIT(A) REQUIRES TO BE CONDONED IN ORDER TO ADVANCE SUBSTANTIAL CAUSE OF JUSTICE AND WHETHER THE CAUSE OF JUSTICE REQUIRES A LIBERAL VIEW SHOULD BE TAKEN? WE DIRECT THE REGISTRY TO PLACE THE CASE RECORDS BEFORE THE HONBLE PRESIDENT FOR NOMINATING A THIRD MEMBER. SD/ - SD/ - (GEORGE GEORGE K) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 19.08.2019. ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 26 IN THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN BFORE SHRI N.V.VASUDEVAN, VICE - PRESIDENT (THIRD MEMBER) ITA NO.439/COCH/201 8 (ASSESSMENT YEAR :2008 - 09) SMT. SREELATHA RAMDAS TC/17/1029(1), LAVANIA, POOJAPPURA, THIRUVANANTHAPURAM - 695 014. PAN NO.ACPPR2786R APPELLANT VS THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 1(2), TRIVANDRUM RESPONDENT APPELLANT BY : SHRI RAJA KANNAN, ADV OCATE REVENUE BY: SHRI.MRITUNJAYA SHARMA, SR.DR DATE OF HEARING : 07 - 01 - 2020 DATE OF PRONOUNCEMENT : 17.01.2020 O R D E R THE ABOVE APPEAL CAME UP FOR CONSIDERATION BEFORE THE DIVISION BENCH. THERE WAS DIFFERENCE OF OPINION BETWEEN THE MEMBERS CONSTITUTING THE DIVISION BENCH. THE HONBLE PRESIDENT IN EXERCISE OF HIS POWERS U/S.255(4) OF THE INCOME TAX ACT, 1961 (ACT) HAS NO MINATED ME AS A THIRD MEMBER. THE MEMBERS OF THE DIVISION BENCH HAVE AGREED ON THE FOLLOWING QUESTIONS AS THE QUESTIONS WHICH WILL PROJECT THE DIFFERENCE OF OPINION BETWEEN THE MEMBERS CONSTITUTING THE DIVISION BENCH. (I) WHETHER IN THE FACTS AND CIRCUMSTAN CES OF THE CASE, THERE IS SUFFICIENT CAUSE ON THE PART OF THE ASSESSEE FOR NOT FILING THE APPEAL WITHIN THE PERIOD OF LIMITATION? (II) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE DELAY OF SIX YEARS AND SEVEN MONTHS IN FILING APPEAL BEFORE THE C IT(A) REQUIRES TO BE CONDONED IN ORDER TO ADVANCE SUBSTANTIAL CAUSE OF JUSTICE AND WHETHER THE CAUSE OF JUSTICE REQUIRES A LIBERAL VIEW SHOULD BE TAKEN? 2. THE FACTS AND CIRCUMSTANCES UNDER WHICH THE AFORESAID QUESTION WAS REFERRED TO THIRD MEMBER ARE THAT THE ASSESSEE IS A DOCTOR BY PROFESSION. FOR AY 2008 - 09 SHE FILED A RETURN OF INCOME DECLARING TOTAL INCOME OF RS.38,00,100/ - . IN THE COURSE OF ASSESSMENT PROCEEDINGS U/S.143(3) OF THE ACT, THE ASSESSING OFFICER ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 27 (AO) TREATED A SUM OF RS.14,56,552/ - WHICH WAS DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME AS SHORT TERM CAPITAL GAIN(STCG) AS INCOME FROM BUSINESS. THE CHANGE OF HEAD OF INCOME WOULD RESULT IN HIGHER RATE OF TAX ON INCOME FROM BUSINESS THAN THE RATE OF TAX ON SHORT TERM CAPITAL GAIN. THE ORDER OF ASSESSMENT MENTIONS THE FACT THAT THE ASSESSEE HAS AGREED TO THE CHANGE OF HEAD OF INCOME IN RESPECT OF A SUM OF RS.14,56,552/ - . THE ORDER OF ASSESSMENT WAS PASSED BY THE AO ON 9.12.2010 AND WAS SERVED ON THE ASSESSEE ON 17.12.2010. 3. THE ASSESSEE FILED AN APPLICATION DATED 7.1.2011 U/S.154 OF THE ACT ON 12.1.2011 BEFORE THE AO. IN THE AFORESAID APPLICATION THE ASSESSEE SUBMITTED THAT IN THE ASSESSMENT CONCLUDED A SUM OF RS.14,56,552/ - DECLARED AS STCG WAS CONSIDERED AS INCOME FR OM BUSINESS. THE ASSESSEE POINTED OUT THAT THE ASSESSEE HAD PAID SECURITIES TRANSACTION TAX OF RS.2,13,754/ - COMPRISING OF RS.32,635/ - RELATING TO TRANSACTIONS IN DERIVATIVES AND A SUM OF RS.1,69,812/ - RELATING TO TRANSACTIONS WHICH HAS BEEN TREATED AS BUSINESS INCOME. THE ASSESSEE POINTED OUT THAT IN TERMS OF SEC.88E OF THE ACT IT WAS ENTITLED TO REBATE FROM THE TAXES PAYABLE ON TRANSACTIONS IN SECURITIES WHICH ARE TREATED AS BUSINESS INCOME AND THE SAME SHOULD BE ALLOWED. THE PROVISIONS OF SEC.88E OF THE ACT, READS THUS: REBATE IN RESPECT OF SECURITIES TRANSACTION TAX. 88E. (1) WHERE THE TOTAL INCOME OF AN ASSESSEE IN A PREVIOUS YEAR INCLUDES ANY INCOME, CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION', ARISING FROM TAXABLE SECURITIES TRANSACTIONS, HE SHALL BE ENTITLED TO A DEDUCTION, FROM THE AMOUNT OF INCOME - TAX ON SUCH INCOME ARISING FROM SUCH TRANSACTIONS, COMPUTED IN THE MANNER PROVIDED IN SUB - SECTION (2), OF AN AMOUNT EQUAL TO THE SECURITIES TRANSACTION TAX PAID BY HIM IN RESPECT OF THE TAXABLE SECURITIES TRANSACTIONS ENTERED INTO IN THE COURSE OF HIS BUSINESS DURING THAT PREVIOUS YEAR: PROVIDED THAT NO DEDUCTION UNDER THIS SUB - SECTION SHALL BE ALLOWED UNLESS THE ASSESSEE FURNISHES ALONG WITH THE RETURN OF INCOME, EVIDEN CE OF PAYMENT OF SECURITIES TRANSACTION TAX IN THE PRESCRIBED FORM: PROVIDED FURTHER THAT THE AMOUNT OF DEDUCTION UNDER THIS SUB - SECTION SHALL NOT EXCEED THE AMOUNT OF INCOME - TAX ON SUCH INCOME COMPUTED IN THE MANNER PROVIDED IN SUB - SECTION (2). (2) FOR THE PURPOSES OF SUB - SECTION (1), THE AMOUNT OF INCOME - TAX ON THE INCOME ARISING FROM THE TAXABLE SECURITIES TRANSACTIONS, REFERRED TO IN THAT ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 28 SUB - SECTION, SHALL BE EQUAL TO THE AMOUNT CALCULATED BY APPLYING THE AVERAGE RATE OF INCOME - TAX ON SUCH INCOME. (3) NO DEDUCTION UNDER THIS SECTION SHALL BE ALLOWED IN, OR AFTER, THE ASSESSMENT YEAR BEGINNING ON THE 1ST DAY OF APRIL, 2009. EXPLANATION. FOR THE PURPOSES OF THIS SECTION, THE EXPRESSIONS, 'TAXABLE SECURITIES TRANSACTION' AND 'SECURITIES TRAN SACTION TAX' SHALL HAVE THE SAME MEANINGS RESPECTIVELY ASSIGNED TO THEM UNDER CHAPTER VII OF THE FINANCE (NO. 2) ACT, 2004. 4. ALONG WITH THE APPLICATION U/S.154 OF THE ACT, THE ASSESSEE ALSO ENCLOSED FORM NO.10DB EVIDENCING PAYMENT OF SECURITIES TRAN SACTION TAX. 5. ADMITTEDLY, NO ORDERS WERE PASSED ON THE AFORESAID APPLICATION FILED BY THE ASSESSEE U/S.154 OF THE ACT. IN TERMS OF SEC.154(7) OF THE ACT, THE TIME LIMIT FOR PASSING AN ORDER U/S.154 OF THE ACT IS WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE AMENDED WAS PASSED. THE ORDER U/S.143(3) OF THE ACT WAS PASSED ON 9.12.2010 I.E., IN FY 2009 - 10 AND THEREFORE THE PERIOD OF LIMITATION FOR PASSING THE ORDER U/S.154 OF THE ACT WOULD BE ON OR BEFORE 31.3.2014. 6. SINCE NO ORDER WAS PASSED ON THE APPLICATION U/S.154 OF THE ACT AND SINCE THE TIME LI MIT FOR PASSING SUCH ORDERS HAS ALREADY EXPIRED, THE ASSESSEE FILED APPEAL AGAINST THE ORDER DATED 9.12.2010 PASSED U/S.143(3) OF THE ACT BEFORE THE FIRST APPELLATE AUTHORITY VIZ., COMMISSIONER OF INCOME TAX (APPEALS) {CIT(A)}. THE TIME LIMIT FOR F ILING APPEAL BEFORE THE CIT(A) IN TERMS OF SEC.248(2) OF THE ACT WAS 30 DAYS FROM THE DATE OF SERVICE OF ORDER OF ASSESSMENT I.E., 30 DAYS FROM 17.12.2010. THE APPEAL HOWEVER WAS FILED BY THE ASSESSEE ONLY ON 3.8.2017. THEREFORE THERE WAS A DELAY OF ABOU T 6 YEARS AND 7 MONTHS IN FILING APPEAL BEFORE CIT(A). 7. IN THE APPLICATION FILED FOR CONDONATION OF DELAY IN FILING THE APPEAL, THE ASSESSEE SUBMITTED THAT SINCE THE ASSESSEE HAD FILED APPLICATION U/S.154 OF THE ACT FOR THE VERY SAME RELIEF WHICH HE SEEKS BEFORE THE CIT(A) IN THE APPEAL AGAINST THE ORDER U/S.143(3) OF THE ACT DATED 9.12.2010 AND SINCE NO ORDERS WERE PASSED ON THE APPLICATION U/S.154 OF THE ACT, THE ASSESSEE IS CONSTRAINED TO FILE THE APPEAL BEFORE CIT(A). THE ASSESSEE SUBMITTED TH AT SINCE SHE WAS PURSUING ALTERNATIVE RELIEF AND SINCE IN THOSE PROCEEDINGS NO ORDERS WERE PASSED BY THE AO, THE DELAY IN FILING THE APPEAL SHOULD BE CONDONED. THE RELIEF SOUGHT IN ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 29 THE APPEAL FILED BY THE ASSESSEE BEFORE CIT(A) AGAINST THE ORDER DATED 9.1 2.2010 PASSED U/S.143(3) OF THE ACT WAS TO ALLOW DEDUCTION U/S.88E OF THE ACT. 8. THE CIT(A) DID NOT CONDONE THE DELAY IN FILING THE APPEAL BEFORE HIM. THE REASONS GIVEN BY HIM WERE; (I) THE ASSESSEE COULD HAVE GOT THE SAME RELIEF WHICH HE SOUGHT IN THE APPLICATION U/S.154 OF THE ACT BY FILING APPEAL IN TIME. (II) THE ASSESSEE SHOULD HAVE FOLLOWED WITH THE AO AND URGED HIM TO PASS ORDER ON THE APPLICATION U/S.154 OF THE ACT. (III) THE ASSESSEE BY WAY OF ABUNDANT CAUTION SHOULD HAVE ALSO FILED APPE AL BEFORE CIT(A) NOTWITHSTANDING HIS HAVING FILED APPLICATION U/S.154 OF THE ACT. HAVING REFUSED TO CONDONE THE DELAY, THE CIT(A) HOWEVER DECIDED THE APPEAL ON MERITS ALSO BY OBSERVING AS FOLLOWS: HOWEVER, FOR THE ADVANCEMENT OF SUBSTANTIAL CAUSE OF JU STICE, I PREFER TO DECIDE THE APPEAL ON MERIT AS WELL AS UNDER. HE PROCEEDED TO HOLD THAT THE ACTION OF THE AO IN TREATING PART OF THE INCOME DECLARED UNDER THE HEAD SHORT TERM CAPITAL GAIN ON SALE OF SHARES AS BUSINESS INCOME WAS JUSTIFIED AND CAL LED FOR NO INTERFERENCE. IT REQUIRES TO BE STATED HERE THAT THE RELIEF SOUGHT FOR BY THE ASSESSEE IN THE APPEAL WAS ONLY DEDUCTION U/S.88E OF THE ACT AND THE ASSESSEE NEVER SOUGHT TO MAKE A CLAIM REGARDING THE CORRECTNESS OF THE ACTION OF THE AO I N CHANGING THE HEAD OF INCOME FROM CAPITAL GAIN TO INCOME FROM BUSINESS IN RESPECT OF INCOME FROM SALE OF SHARES. WITH REGARD TO THE GROUND OF ALLOWING DEDUCTION U/S.88E OF THE ACT, HE HELD THAT THE ASSESSEE HAD NOT CLAIMED SUCH RELIEF IN THE RETUR N OF INCOME AND SINCE HE DID NOT FILE A REVISED RETURN OF INCOME ENCLOSING EVIDENCE FOR PAYMENT OF STT, THE CLAIM FOR DEDUCTION CANNOT BE ENTERTAINED. 9. AGAINST THE AFORESAID ORDER OF THE CIT(A), THE ASSESSEE FILED APPEAL BEFORE THE TRIBUNAL. IN THE O RIGINAL GROUNDS OF APPEAL THE ASSESSEE HAD CHALLENGED THE DECISION OF CIT(A) ONLY ON MERITS AND DID NOT CHALLENGE THE ORDER OF THE CIT(A) IN SO FAR IT RELATES TO THE ACTION OF THE CIT(A) IN REFUSING TO CONDONE THE DELAY IN FILING APPEAL BEFORE HIM. THE ASSESSEE HOWEVER FILED AN APPLICATION FOR LEAVE TO RAISE ADDITIONAL GROUNDS OF APPEAL AND THOSE ADDITIONAL GROUNDS OF APPEAL, THE ASSESSEE SUBMITTED THAT SINCE THE CIT(A) DECIDED THE APPEAL ON MERITS ALSO, HE IS DEEMED TO HAVE CONDONE D THE DELAY IN FILING APPEAL. THE ASSESSEE ALSO RAISED A GROUND STATING THAT THE FACT THAT THE ASSESSEE HAS SOUGHT RELIEF U/S.88E OF THE ACT BY FILING RECTIFICATION APPLICATION WITHIN THE TIME LIMIT LAID DOWN FOR FILING APPEAL AGAINST THE ORDER OF ASSES SMENT AND THE FACT THAT NO ORDER WAS PASSED ON SUCH APPLICATION WITH THE TIME LIMIT FOR PASSING ORDER U/S.154 OF THE ACT AND THE ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 30 FACT THAT THE ASSESSEE AFTER WAITING SUFFICIENTLY FOR ALTERNATIVE RELIEF AND HAVING FAILING TO GET SUCH RELIEF AND THEREAFTER FILING THE APPEAL BEFORE THE CIT(A), OUGHT TO HAVE BEEN ACCEPTED AS REASONABLE AND SUFFICIENT CAUSE FOR THE DELAY IN FILING THE APPEAL AND OUGHT TO HAVE CONDONED THE DELAY IN FILING THE APPEAL BEFORE CIT(A). THOSE GROUNDS WERE ADMITTED FOR ADJUDICAT ION BY THE DIVISION BENCH WHICH HEARD THE APPEAL. 10. THE HONBLE ACCOUNTANT MEMBER (AM) HELD THAT THE DELAY IN FILING THE APPEAL WAS RIGHTLY NOT CONDONED BY THE CIT(A) FOR THE FOLLOWING REASONS: (I) THE TIME LIMIT FOR PASSING ORDER U/S.154 OF THE ACT WAS 4 YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE AMENDED WAS PASSED AND THAT YEAR EXPIRED ON 31.3.2015. THE APPEAL BEFORE CIT(A) WAS FILED ONLY ON 3.8.2017. THE ASSE SSEE WAS GUILTY OF LATCHES AND NEGLIGENCE IN NOT TAKING APPROPRIATE ACTION IN FILING APPEAL WITH THE PRESCRIBED TIME OR AT LEAST AFTER THE TIME LIMIT FOR PASSING ORDER U/S.154 OF THE ACT EXPIRED. ON THE ABOVE ASPECT, THE SUBMISSION OF THE ASSESSEE WAS THAT THE HONBLE SUPREME COURT IN THE CASE OF SREE AYYANAR SPINNING AND WEAVING MILLS LTD. VS. CIT 301 ITR 434(SC) HAD TAKEN A VIEW IN THE CONTEXT OF TIME LIMIT FOR PASSING RECTIFICATION ORDER U/S.254(2) OF THE ACT WHICH LAYS DOWN A TIME LIMIT OF 4 YEARS FROM THE DATE OF THE ORDER OF THE TRIBUNAL. THE HONBLE SUPREME COURT TOOK THE VIEW THAT WHERE APPLICATION FOR RECTIFICATION WAS FILED WITHIN THE PERIOD OF 4 YEARS TIME FROM THE DATE OF THE TRIBUNAL ORDER THEN THE ORDER CAN BE PASSED BY THE TRIBUNAL CAN B E EVEN BEYOND THE PERIOD OF 4 YEARS FROM THE DATE OF THE TRIBUNAL ORDER. BASED ON THE SAME ANALOGY, THE ASSESSEE SUBMITTED THAT THE AO COULD PASS THE ORDER U/S.154 OF THE ACT, EVEN BEYOND THE PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT FINANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE RECTIFIED WAS PASSED. THEREFORE THE ASSESSEE WAITED FOR THE ORDER U/S.154 OF THE ACT EVEN AFTER THE PERIOD OF TIME FOR PASSING THE ORDER U/S.154 OF THE ACT HAD EXPIRED. ON THE ABOVE SUBMISSION, THE HONBLE AM IN HIS ORDER HELD THAT THE AFORESAID DECISION WAS IN THE CONTEXT OF POWER OF TRIBUNAL TO PASS ORDER U/S.254(2) OF THE ACT AND HAD NO RELEVANCE TO THE CASE OF THE ASSESSEE. (II) IT WAS TRUE THAT SUBSTANTIAL JUSTICE SHOULD BE RENDERED AND RIGHTS OF PARTIES CA NNOT BE DEFEATED BY TECHNICALITIES BUT ONE CANNOT IGNORE LAW OF LIMITATION, ESPECIALLY WHEN THERE IS INORDINATE DELAY. (III) THE HONBLE AM THEREFORE WAS OF THE VIEW THAT THE DELAY IN FILING APPEAL WAS RIGHTLY NOT CONDONED BY THE CIT(A). SINCE THE APP EAL BEFORE CIT(A) WAS LIABLE TO BE DISMISSED ON THE GROUND THAT THE APPEAL WAS NOT FILED WITHIN TIME, THE HONBLE AM DID NOT GO INTO THE MERITS OF THE APPEAL REGARDING ALLOWING DEDUCTION U/S.88E OF THE ACT. 11. THE HONBLE JUDICIAL MEMBER (JM) H OWEVER WAS OF THE VIEW THAT THE DELAY IN FILING THE APPEAL BEFORE THE CIT(A) OUGHT TO HAVE BEEN CONDONED BY THE CIT(A) FOR THE FOLLOWING REASONS: (I) WHEN THE CIT(A) DECIDED TO CONSIDER THE APPEAL ON MERITS FOR ADVANCEMENT OF SUBSTANTIAL CAUSE OF JUSTICE , IT IS PRESUMED THAT IN TERMS OF ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 31 PROVISIONS OF SEC.249 AND 250 OF THE ACT, THE DELAY IS DEEMED TO HAVE BEEN CONDONED AND THE APPEAL WAS DEEMED TO HAVE BEEN ADMITTED. (II) EVEN OTHERWISE, DELAY IN FILING THE APPEAL BEFORE CIT(A) WAS OWING TO REASONABLE AN D SUFFICIENT CAUSE AND THE CIT(A) OUGHT TO HAVE CONDONED THE DELAY. THE ISSUE THAT SURVIVED FOR CONSIDERATION BY CIT(A) WAS ONLY DEDUCTION U/S.88E OF THE ACT. THE ASSESSEE COULD NOT HAVE CLAIMED THIS DEDUCTION IN THE RETURN OF INCOME BECAUSE IT WAS ONLY CONSEQUENT TO THE ACTION OF THE AO IN TREATING SHORT TERM CAPITAL GAIN DECLARED BY THE ASSESSEE AS INCOME FROM BUSINESS IN THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE ASSESSEE BECAME ENTITLED TO MAKE A CLAIM FOR DEDUCTION U/S.88E OF THE ACT AND THEREFORE HE COULD NOT HAVE MADE SUCH A CLAIM IN THE RETURN OF INCOME FILED. (III) THE ASSESSEE WAS PURSUING ALTERNATIVE REMEDY U/S.154 OF THE ACT AND THE TIME LIMIT FOR PASSING ORDER U/S.154 OF THE ACT EXPIRED ON 31.3.2015. THE APPEAL BEFORE CIT(A) WAS FILED ON LY ON 3.8.2017. THE ASSESSEE WAS NOT GUILTY OF LATCHES AND NEGLIGENCE IN NOT TAKING APPROPRIATE ACTION IN FILING APPEAL WITHIN THE PRESCRIBED TIME OR AT LEAST AFTER THE TIME LIMIT FOR PASSING ORDER U/S.154 OF THE ACT EXPIRED BECAUSE THE ASS ESSEES BELIEF THAT IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SREE AYYANAR SPINNING AND WEAVING MILLS LTD. (SUPRA), THAT WHERE APPLICATION FOR RECTIFICATION WAS FILED WITHIN THE PERIOD OF 4 YEARS TIME FROM THE DATE OF THE TRIBUNAL ORDER THEN THE ORDER CAN BE PASSED BY THE TRIBUNAL CAN BE EVEN BEYOND THE PERIOD OF 4 YEARS FROM THE DATE OF THE TRIBUNAL ORDER AND THAT BASED ON THE SAME ANALOGY, THE ASSESSEE BELIEVED THAT THE AO COULD PASS THE ORDER U/S.154 OF THE ACT, EVEN BEYOND THE PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT FINANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE RECTIFIED WAS PASSED. THE HONBLE JM THEREFORE HELD THAT THE BONAFIDE BELIEF OF THE ASSESSEE CANNOT BE DOUBTED. (IV) THE HONBLE JM RELIED ON THE DECISION OF THE HONBLE JAMMU & KASHMIR HIGH COURT IN THE CASE OF FAISAL HAMEED VS. ITAT AND ANOTHER IT APPEAL NO.2 OF 2012 AND IA NO.359 OF 2012 ORDER DATED 13 TH SEPTEMBER, 2012 WHEREIN IT WA S HELD THAT WHEN AN ASSESSEE PURSUES ONE REMEDY OR OTHER AND IF HE FILES AN APPEAL AS PER LEGAL ADVICE TENDERED TO HIM, IN SUCH AN EVENT IT WOULD CONSTITUTE SUFFICIENT CAUSE FOR CONDONING THE DELAY. BESIDES THE ABOVE, THE HONBLE JM ALSO WAS OF THE VIEW THAT THE TERM SUFFICIENT CAUSE HAS TO RECEIVE LIBERAL CONSTRUCTION FOR ADVANCEMENT OF SUBSTANTIAL JUSTICE AND WHEN THERE IS NO NEGLIGENCE OR WANT OF BONA FIDE ATTRIBUTABLE TO A LITIGANT COURT SHOULD ADOPT JUSTICE ORIENTED APPROACH IN CONDONING THE DEL AY AND IN THIS REGARD REFERRED TO THE FOLLOWING DECISIONS OF HONBLE SUPREME COURT IN THIS REGARD VIZ., K.SUBBARAYUDU AND OTHERS VS THE SPECIAL DEPUTY COLLECTOR (LAND ACQUISITION) CIVIL APPEAL NO.9288 OF 2017 DATED 19.7.2017, COLLECTOR OF LAND ACQUISITION VS. MST.KATIJI & OTHERS 167 ITR 471 (SC). THE HONBLE JM ALSO RELIED ON CBDT CIRCULAR NO.14(XL - 35) OF 1955 DATED 11.4.1955 WHEREIN IT HAS BEEN INSTRUCTED THAT OFFICERS OF THE DEPARTMENT MUST NOT TAKE ADVANTAGE OF THE IGNORANCE OF ASSESSEE AS ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 32 TO HIS RIG HTS AND THAT IT IS THE DUTY OF THE OFFICE TO ASSIST A TAX PAYER IN THE MATTER OF CLAIMING AND SECURING RELIEF. (V) THE HONBLE JM THEREFORE HELD THAT THE DELAY IN FILING APPEAL SHOULD BE CONDONED AND HE CONDONED THE DELAY. HE ALSO HELD THAT THE ISSUE OF ALL OWING RELIEF U/S.88E OF THE ACT SHOULD BE EXAMINED AFRESH BY THE AO IN THE LIGHT OF THE FACT THAT THE ASSESSEE COULD NOT HAVE MADE CLAIM FOR SUCH DEDUCTION IN THE RETURN OF INCOME OWING TO THE FACT THAT THE CHANGE IN HEAD OF INCOME WAS KNOWN ONLY AFTE R THE CONCLUSION OF THE ASSESSMENT PROCEEDINGS BEFORE THE AO. 12. IT IS IN THE LIGHT OF THESE TWO DIFFERENT OPINIONS EXPRESSED BY THE DIVISION BENCH THAT I HAVE BEEN NOMINATED TO EXPRESS MY OPINION AS A THIRD MEMBER ON THE ISSUE SET OUT IN THE FIRST PARAGRAPH OF THIS ORDER. 13. I HAVE HEARD THE RIVAL SUBMISSIONS. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED PLEA AS WAS PUT FORTH BEFORE THE DIVISION BENCH AND RELIED ON THE ORDER OF THE HONBLE JM. THE LEARNED DR RELIED ON THE ORDER OF THE HONBL E AM. 14. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND THE OPINION OF THE HONBLE AM AND THE HONBLE JM IN THEIR ORDERS. I AGREE WITH THE OPINION OF THE HONBLE JM. AS HELD BY HIM WHEN THE CIT(A) DECIDED TO CONSIDER THE APPEAL ON MERITS FOR ADVANCEMENT OF SUBSTANTIAL CAUSE OF JUSTICE, IT IS PRESUMED THAT IN TERMS OF PROVISIONS OF SEC.249 AND 250 OF THE ACT, THE DELAY IS DEEMED TO HAVE BEEN CONDONED AND THE APPEAL WAS DEEMED TO HAVE BEEN ADMITTED. I DERIVE SUPPORT FOR THE ABOVE PROPOSITIO N FROM THE DECISION OF THE HONBLE MADRAS MADRAS HIGH COURT IN THE CASE OF VIJAYESWARI TEXTILES LTD VS. CIT (2003)(131 TAXMAN 833) ON IDENTICAL CIRCUMSTANCES, I.E., IN THE CASE BEFORE HONBLE MADRAS HIGH COURT, THE TRIBUNAL HAD REFUSED TO CONDONE THE DELAY, BUT DISPOSED THE APPEAL ON MERITS ALSO. THE HONBLE MADRAS HIGH COURT OBSERVED AS UNDER: - 7. MATTERS RELATING TO CONDONATION OF DELAY ARE INDEED DISCRETIONARY AND ARE NORMALLY LEFT TO THE TRIBUNAL AND THIS COURT WILL NOT ORDINARILY INTERFERE WITH THE DISCRETION. IN THIS CASE, AS WE HAVE ALREADY POINTED OUT, THE TRIBUNAL DID NOT STOP WITH THE ORDER DECLINING TO CONDONE THE DELAY, BUT CONSIDERED THE MATTER ON MERITS AND HAS PRACTICALLY TREATED THE APPEAL AS BEING PROPERLY BEFORE IT AND HAS ANS WERED THE QUESTION BROUGHT BEFORE IT WITH REFERENCE TO THE MATERIAL PLACED ON RECORD. IT IS IN THE CIRCUMSTANCES, WE HOLD THAT THE TRIBUNAL WAS IN ERROR IN NOT CONDONING THE DELAY. THE QUESTION REGARDING THE CORRECTNESS OF THE TRIBUNALS HOLDING THAT T HE DELAY IS NOT TO BE CONDONED IS THEREFORE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. ACCORDING TO THE RATIO OF THE ABOVE SAID DECISION, IF THE APPEAL IS ADJUDICATED ON MERITS, THEN REFUSING TO CONDONE THE DELAY IS AN ERROR. ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 33 15. I AM ALSO OF THE VIEW THAT THE ASSESSEE COULD NOT HAVE CLAIMED DEDUCTION U/S.88E OF THE ACT IN THE RETURN OF INCOME BECAUSE IT WAS ONLY CONSEQUENT TO THE ACTION OF THE AO IN TREATING SHORT TERM CAPITAL GAIN DECLARED BY THE ASSESSEE AS INCOME FROM BUSINESS IN THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE ASSESSEE BECAME ENTITLED TO MAKE A CLAIM FOR DEDUCTION U/S.88E OF THE ACT. THE ASSESSEE WAS PURSUING ALTERNATIVE REM EDY U/S.154 OF THE ACT. THOUGH THE TIME LIMIT FOR PASSING ORDER U/S.154 OF THE ACT EXPIRED ON 31.3.2015 AND THE APPEAL BEFORE CIT(A) WAS FILED ONLY ON 3.8.2017, THE ASSESSEE CANNOT BE SAID TO BE GUILTY OF LATCHES AND NEGLIGENCE TILL THE TIME LIMIT FOR PASSING ORDER U/S.154 OF THE ACT EXPIRED. THE BELIEF OF THE ASSESSEE BASED ON LEGAL ADVICE IN THAT WHERE APPLICATION FOR RECTIFICATION WAS FILED WITHIN THE PERIOD OF 4 YEARS THAT THE AO COULD PASS THE ORDER U/S.154 OF THE ACT, EVEN BEYOND THE PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT FINANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE RECTIFIED WAS PASSED CANNOT BE SAID TO BE NOT BONA FIDE BELIEF. I AGREE WITH THE CONCLUSION OF THE HONBLE JM, BASED ON THE RATIO LAID DOWN IN SEVERAL JUDICIAL PRONOUNCEM ENTS ON CONDONATION OF DELAY IN FILING APPEAL THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, DISCRETION OUGHT TO HAVE BEEN EXERCISED TO CONDONE THE DELAY. I AGREE WITH THE OPINION OF THE HONBLE JM THAT THE DELAY IN FILING APPEAL SHOULD BE CONDONED AN D HIS ACTION IN CONDONING THE DELAY. I ALSO AGREE WITH HIS CONCLUSION THAT THE ISSUE OF ALLOWING RELIEF U/S.88E OF THE ACT SHOULD BE EXAMINED AFRESH BY THE AO IN THE LIGHT OF THE FACT THAT THE ASSESSEE COULD NOT HAVE MADE CLAIM FOR SUCH DEDUCTION IN T HE RETURN OF INCOME, OWING TO THE FACT THAT THE CHANGE IN HEAD OF INCOME WAS KNOWN ONLY AFTER THE CONCLUSION OF THE ASSESSMENT PROCEEDINGS BEFORE THE AO. 16. THE APPEAL WILL NOW BE LISTED BEFORE THE DIVISION BENCH FOR PASSING ORDER GIVING EFFECT TO THE OP INION OF THE MAJORITY OF MEMBERS. SD/ - (N.V.VASUDEVAN) VICE PRESIDENT (THIRD MEMBER) PLACE: BANGALORE DATED: 17.01.2020 ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 34 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI CHANDRA POOJARI, AM & SHRI GEORGE GEORGE K, JM ITA NO.439/COCH/2018 : ASST.YEAR 2008 - 2009 SMT.SREELATHA RAMDAS TC 17/1029(1), LAVANIA, POOJAPURA, THIRUVANANTHAPURAM PIN 695 014. PAN : ACPPR2786R. VS. THE ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 1(2) THIRUVANANTHAPURAM (APPELLANT) (RESPONDENT) APPELLANT BY : SRI.RAJAKANNAN, ADVOCATE RESPONDENT BY : SRI. MRITHUNJAYA SHARMA, SR.DR DATE OF HEARING : 09.03.2020 DATE OF PRONOUNCEMENT : 09.03.2020 O R D E R PER GEORGE GEORGE K, JM : AS THERE WAS A DIFFERENCE OF OPINION BETWEEN THE MEMBERS IN RESPECT OF THE AFORESAID APPEALS AND CROSS OBJECTION, THE MEMBERS REFERRED THE FOLLOWING QUESTION FOR CONSIDERATION BY A THIRD MEMBER. (1) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, T HERE IS SUFFICIENT CAUSE ON THE PART OF THE ASSESSEE FOR NOT FILING THE APPEAL WITHIN THE PERIOD OF LIMITATION? (2) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE DELAY OF SIX YEARS AND SEVEN MONTHS IN FILING APPEAL BEFORE THE CIT(A) REQUIRES TO BE CONDONED IN ORDER TO ADVANCE SUBSTANTIAL CAUSE OF JUSTICE AND WHETHER THE CAUSE OF JUSTICE REQUIRES A LIBERAL VIEW SHOULD BE TAKEN? 2. THE HONBLE PRESIDENT HAS NOMINATED SHRI N.V.VASUDEVAN, VICE - PRESIDENT FOR A DECISION AS THIRD MEMBER ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 35 ON THE POINT OF DIFFERENCE BETWEEN THE MEMBERS CONSTITUTING THE DIVISION BENCH. THE THIRD MEMBER VIDE HIS ORDER DATED 17 TH JANUARY, 2020, BY AGREEING WITH THE VIEW TAKEN BY THE JUDICIAL MEMBER, OBSERVED AS FOLLOWS: - 14. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND THE OPINION OF THE HON'BLE AM AND THE HON'BLE JM IN THEIR ORDERS. I AGREE WITH THE OPINION OF THE HON'BLE JM. AS HELD BY HIM WHEN THE CIT(A) DECIDED TO CONSIDER THE APPEAL ON MERITS FOR ADVANCEMENT OF S UBSTANTIAL CAUSE OF JUSTICE, IT IS PRESUMED THAT IN TERMS OF PROVISIONS OF SEC.249 AND 250 OF THE ACT, THE DELAY IS DEEMED TO HAVE BEEN CONDONED AND THE APPEAL WAS DEEMED TO HAVE BEEN ADMITTED. I DERIVE SUPPORT FOR THE ABOVE PROPOSITION FROM THE DECISION O F THE HON'BLE MADRAS MADRAS HIGH COURT IN THE CASE OF VIJAYESWARI TEXTILES LTD VS. CIT (2003)(131 TAXMAN 833) ON IDENTICAL CIRCUMSTANCES, I.E., IN THE CASE BEFORE HON'BLE MADRAS HIGH COURT, THE TRIBUNAL HAD REFUSED TO CONDONE THE DELAY, BUT DISPOSED THE AP PEAL ON MERITS ALSO. THE HON'BLE MADRAS HIGH COURT OBSERVED AS UNDER: - '7. MATTERS RELATING TO CONDONATION OF DELAY ARE INDEED DISCRETIONARY AND ARE NORMALLY LEFT TO THE TRIBUNAL AND THIS COURT WILL NOT ORDINARILY INTERFERE WITH THE DISCRETION. IN THIS C ASE, AS WE HAVE ALREADY POINTED OUT, THE TRIBUNAL DID NOT STOP WITH THE ORDER DECLINING TO CONDONE THE DELAY, BUT CONSIDERED THE MATTER ON MERITS AND HAS PRACTICALLY TREATED THE APPEAL AS BEING PROPERLY BEFORE IT AND HAS ANSWERED THE QUESTION BROUGHT BEFO RE IT WITH REFERENCE TO THE MATERIAL PLACED ON RECORD. IT IS IN THE CIRCUMSTANCES, WE HOLD THAT THE TRIBUNAL WAS IN ERROR IN NOT CONDONING THE DELAY. THE QUESTION REGARDING THE CORRECTNESS OF THE TRIBUNAL'S HOLDING THAT THE DELAY IS NOT TO BE CONDONED IS T HEREFORE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE.' ACCORDING TO THE RATIO OF THE ABOVE SAID DECISION, IF THE APPEAL IS ADJUDICATED ON MERITS, THEN REFUSING TO CONDONE THE DELAY IS AN ERROR. 15. I AM ALSO OF THE VIEW THAT THE ASSESSEE COULD NOT HAVE CLAIMED DEDUCTION U/S.88E OF THE ACT IN THE RETURN OF INCOME BECAUSE IT WAS ONLY CONSEQUENT TO THE ACTION OF THE AO IN TREATING SHORT TERM CAPITAL GAIN DECLARED BY THE ASSESSEE AS INCOME FROM BUSINESS IN THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE ASSESSEE BECAME ENTITLED TO MAKE A CLAIM FOR ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 36 DEDUCTION U/S.88E OF THE ACT. THE ASSESSEE WAS PURSUING ALTERNATIVE REMEDY U/S.154 OF THE ACT. THOUGH THE TIME LIMIT FOR PASSING ORDER U/S.154 OF THE ACT EXPIRED ON 31.3.2015 AND THE APPEAL BEFORE CIT(A ) WAS FILED ONLY ON 3.8.2017, THE ASSESSEE CANNOT BE SAID TO BE GUILTY OF LATCHES AND NEGLIGENCE TILL THE TIME LIMIT FOR PASSING ORDER U/S.154 OF THE ACT EXPIRED. THE BELIEF OF THE ASSESSEE BASED ON LEGAL ADVICE IN THAT WHERE APPLICATION FOR RECTIFICATION WAS FILED WITHIN THE PERIOD OF 4 YEARS THAT THE AO COULD PASS THE ORDER U/S.154 OF THE ACT, EVEN BEYOND THE PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT FINANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE RECTIFIED WAS PASSED CANNOT BE SAID TO BE NOT BONA FID E BELIEF. I AGREE WITH THE CONCLUSION OF THE HON'BLE JM, BASED ON THE RATIO LAID DOWN IN SEVERAL JUDICIAL PRONOUNCEMENTS ON CONDONATION OF DELAY IN FILING APPEAL THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, DISCRETION OUGHT TO HAVE BEEN EXERCISED TO CO NDONE THE DELAY. I AGREE WITH THE OPINION OF THE HON'BLE JM THAT THE DELAY IN FILING APPEAL SHOULD BE CONDONED AND HIS ACTION IN CONDONING THE DELAY. I ALSO AGREE WITH HIS CONCLUSION THAT THE ISSUE OF ALLOWING RELIEF U/S.88E OF THE ACT SHOULD BE EXAMINED A FRESH BY THE AO IN THE LIGHT OF THE FACT THAT THE ASSESSEE COULD NOT HAVE MADE CLAIM FOR SUCH DEDUCTION IN THE RETURN OF INCOME, OWING TO THE FACT THAT THE CHANGE IN HEAD OF INCOME WAS KNOWN ONLY AFTER THE CONCLUSION OF THE ASSESSMENT PROCEEDINGS BEFORE T HE AO. 3. IN VIEW OF THE MAJORITY OPINION, THE ORDER OF THE CIT(A) IS SET ASIDE AND THE APPEAL FILED BY THE ASSESSEE IS RESTORED TO THE ASSESSING OFFICER FOR EXAMINING THE ELIGIBILITY OF DEDUCTION U/S 88E OF THE I.T.ACT. IT IS ORDERED ACCORDINGLY. 4. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 09 TH DAY OF MARCH, 2020. SD/ - SD/ - ( CHANDRA POOJARI ) ( GEORGE GEORGE K ) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN ; DATED : 09 TH MARCH, 2020. DEVADAS G* ITA NO. 439 /COCH /201 8 . SMT.SREELATHA RAMDAS . 37 COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, COCHIN 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT (A) - I, TRIVANDRUM. 4. THE PR.CIT, TRIVANDRUM. 5. DR, ITAT, COCHIN 6. GUARD FILE.