TATA MARCOPOLO MOTORS LTD, MUMBAI V. DCIT 1(3), MUMBAI

ITA 4956/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92599 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 28-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N V NADKARNI
• Assessee Lawyers: F V IRANI
• Keywords: Share purchase agreement; Reasonable cause; Condonation of delay
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI G S PANNU, AM & SHRI AMIT SHUKLA, JM ITA NO.4956/MUM/2013 ASSESSMENT YEAR : 2008-09 TATA MARCOPOLO MOTORS LTD., 1 ST FLOOR, BOMBAY HOUSE, 24 HOMI MODI STREET, MUMBAI- 400 001 PAN AACCT5547J VS. DCIT 1(3), MUMBAI (APPELLANT) RESPONDENT) APPELLANT BY : SHRI F V IRANI RESPONDENT BY : SMT. N V NADKARNI DATE OF HEARING : 2 9 .04.2015 DATE OF PRONOUNCEMENT : 29.05. 2015 O R D E R PER AMIT SHUKLA, JUDICIAL MEMBER THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSE E AGAINST IMPUGNED ORDER DATED 05.04.2013, PASSED BY CIT(A)-20, MUMBAI, FOR THE QUANTUM OF ASSESSMENT PASSED U/S. 143(3) FOR A.Y. 2008-09. THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER FIRSTLY, ON NON-ADMISSION OF APPEAL BY THE CI T(A) AS THERE WAS A DELAY OF 72 DAYS, IN FILING OF APPEAL BEFORE THE CIT(A). THE O THER GROUNDS RELATE TO MERITS OF THE ADDITIONS, WHICH ARE AS UNDER: A) DISALLOWANCE OF LEASE AGREEMENT REGISTRATION OF RS. 52,02,000/-; B) DISALLOWANCE OF FACTORY LICENSE FEES OF RS.24,750/- ; ITA NO.4956/MUM/2013 2 C) DISALLOWANCE OF STAMP DUTY OF RS.5,99,950/- PAID ON ISSUE OF SHARE CERTIFICATES; D) DISALLOWANCE OF EMPLOYEES CONTRIBUTION TO PROVIDENT FUND; E) DISALLOWANCE OF EMPLOYEES CONTRIBUTION TO ESIC 2. BEFORE US, THE LEARNED SENIOR COUNSEL, SHRI FARR OKH V IRANI SUBMITTED THAT THERE WAS A DELAY IN FILING OF APPEAL BEFORE THE CI T(A) BY 72 DAYS. THE REASON FOR CONDONATION OF DELAY BEFORE THE CIT(A) HAVE BEEN IN CORPORATED BY THE CIT(A) AT PAGE 2 OF THE APPELLATE ORDER, WHICH FOR THE SAKE O F READY REFERENCE IS REPRODUCED HERE UNDER: THE ASSESSEE COMPANY IS IN THE BUSINESS OF MANUFAC TURE AND JOB WORK OF BUS BODIES. THE COMPANY COMMENCED ITS OPERATIONS IN TH E IMPUGNED ASSESSMENT YEAR, THAT IS, IN THE FINANCIAL YEAR ENDED MARCH 31 , 2008 AND HENCE THE YEAR IN RESPECT OF WHICH APPEAL IS FILED IS THE FIRST YEAR IN WHICH OPERATIONS HAVE STARTED. BEING THE FIRST YEAR OF ASSESSMENT AND TH E FACT THAT ASSESSEES OPERATIONS WERE LOCATED IN AND AROUND LUCKNOW, IT W AS DIFFICULT TO ORGANIZE THE LOGISTICS. FURTHER YOUR HONOUR WILL APPRECIATE THE FACT THE EM PLOYMENT OF SKILLED PROFESSIONALS IN SUCH SECOND TIER TOWNS IS ALWAYS D IFFICULT. THERE IS EXTREME ATTRITION RATE IN SUCH TOWNS WITH PROFESSIONALS FRE QUENTLY QUIT JOBS AT A VERY SHORT NOTICE. THE ASSESSEE COMPANY HAS BEEN A VICTIM OF A SIMILAR SITUATION WHERE ITS SENIOR MANAGER FINANCE MR. ALEKH ASHTHANA, SENIOR MANAGER FINANCE, WHO WAS RESPONSIBLE AND ENTRUSTED WITH THE INCOME TAX MATTE RS QUIT THE JOB ON DECEMBER 15, 2010. THOUGH A REPLACEMENT WAS IDENTI FIED AND APPOINTED, THE NEW APPOINTEE MR. RAKESH SHARMA, DESIGNATED AS MANA GER FINANCE, WAS NOT EXPERIENCED TO HANDLE INTRICATE INCOME TAX MATTERS SUCH AS FILING OF APPEALS, APPEARING BEFORE INCOME TAX OFFICIALS. THE OVERALL SITUATION RESULTED IN DELAY IN FILING OF THE AFORESAID APPEAL BEFORE YOUR GOODSELF WITHIN THE STATUTORY TIME LIMIT OF 30 DAYS. AS SOON AS THE DELAY WAS NOTICED BY THE MANAGEMENT, IT HAS IMMEDIATELY INITIATED PROCESS TO IDENTIFY AND APPOINT A TAX CON SULTANT WHO COULD PROFESSIONAL MANAGE THE INCOME TAX MATTERS OF THE A SSESSEE COMPANY. THE MANAGEMENT HAS ALSO TAKEN IMMEDIATE STEPS AND H AS PREPARED THE APPEAL PAPERS AND ARE BEING FILED ALONG WITH THIS APPLICAT ION. ITA NO.4956/MUM/2013 3 AS CAN BE SEEN FROM THE AFORESAID FACTS, YOUR HONOU R WILL AGREE THAT THE DELAY HAS NOT BEEN INTENTIONAL AND HAD CAUSED FOR A SUFFI CIENT AND REASONABLE CAUSE. UNDER THESE CIRCUMSTANCES, WE WOULD SOLEMNLY REQUES T YOUR HONOUR TO CONDONE THIS DELAY IN FILING OF APPEAL UNDER SEC. 2 49(3) OF THE INCOME TAX ACT. WE HOPE YOU WILL ACCEDE TO OUR SOLEMN REQUEST AND A DMIT THE ENCLOSED APPEAL. HOWEVER, THE LEARNED CIT(A) REJECTED THE ASSESSEES CONTENTION ON THE GROUND THAT THERE IS NO SUFFICIENT AND REASONABLE CAUSE FOR FIL ING APPEAL AFTER THE EXPIRY OF STATUTORY TIME LIMIT. MR. IRANI SUBMITTED THAT THE WORD SUFFICIENT CAUSE SHOULD BE CONSTRUED LIBERALLY AND IF THERE IS NO MALA FIDE OR DELIBERATE DELAY IN FILING OF THE APPEAL, THE DELAY SHOULD BE CONDONED. THE REASONS WHICH HAS BEEN SET OUT BEFORE THE CIT(A) FOR CONDONATION OF DELAY ITSELF GOES TO SHOW THAT THERE WAS NO MALA FIDE OR DELIBERATE DELAY IN FILING OF THE APPEAL. IN SU PPORT OF HIS CONTENTION, HE RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN T HE CASE OF COLLECTOR, LAND ACQUISITION VS. MST. KATIJI AND OTHERS (167 ITR 471 ) (SC) AND IN THE CASE OF N BALAKRISHNAN VS. M KRISHNAMURTHY (1998) 7 SCC 123. 3. ON THE OTHER HAND, THE LEARNED DR STRONGLY RELIE D UPON THE ORDER OF THE CIT(A) AND THE REASONS GIVEN BY THE CIT(A) FROM PAG ES 3- 4 OF THE APPELLATE ORDER. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS ON THE FIRST ISSUE OF NON ADMISSION OF APPEAL BY THE CIT(A) ON THE GROUND THAT THERE WAS D ELAY IN FILING OF FIRST APPEAL BY THE ASSESSEE BEFORE THE CIT(A) BY 72 DAYS. THE REA SONS SET OUT FOR CONDONATION OF DELAY BEFORE THE CIT(A) WAS THAT, THE COMPANY COMME NCED ITS OPERATIONS IN A.Y. 2008-09 ITSELF AND ASSESSEES OPERATIONS WERE LOCAT ED IN AND AROUND LUCKNOW AND, THEREFORE, IT WAS DIFFICULT TO ORGANIZE THE LOGISTI CS IN THE INITIAL PERIOD. THE SENIOR MANAGER, FINANCE, WHO WAS RESPONSIBLE AND ENTRUSTED WITH THE INCOME TAX MATTERS HAD QUIT THE JOB ON 15.12.2010, I.E. IMMEDIATELY AF TER THE PASSING OF THE ITA NO.4956/MUM/2013 4 ASSESSMENT ORDER. THE NEW INCUMBENT WAS NOT AWARE OF SUCH A STATUTORY TIME LIMIT AND, THEREFORE, IMMEDIATELY WHEN THE MANAGEMENT IN BOMBAY CAME TO KNOW ABOUT SUCH A DELAY, TOOK IMMEDIATE STEPS FOR FILING THE A PPEAL. THE LEARNED CIT(A) HELD THAT THIS IS NOT A REASONABLE CAUSE AND HAS GIVEN C ATENA OF CASE LAWS THAT SUCH A DELAY CANNOT BE CONDONED. IN THE MATTER OF CONDONA TION OF DELAY, THE PRIMARY OBJECT WHICH IS TO BE SEEN IS THAT, IT SHOULD NOT D ESTROY THE RIGHTS OF THE PARTY FOR A LEGAL REMEDY. THE WORD SUFFICIENT CAUSE HAS TO BE CONSTRUED LIBERALLY BECAUSE PRIMARY FUNCTION OF THE APPELLATE AUTHORITY OR COUR T IS TO ADJUDICATE THE DISPUTE BETWEEN THE PARTIES AND TO ADVANCE SUBSTANTIAL JUST ICE. THE TIME LIMIT FIXED FOR FILING THE APPEALS IS TO SEE WHERE THERE IS DILATOR Y TACTICS BY THE PARTIES OR TO SEEK THEIR REMEDY PROMPTLY. THIS PROPOSITION HAS BEEN W ELL EXPLAINED BY THE HONBLE SUPREME COURT IN THE CASE OF N BALAKRISHNAN VS. M K RISHNAMURTHY (SUPRA), WHEREIN THE HONBLE APEX COURT OBSERVED AND HELD AS UNDER: 9. IT IS AXIOMATIC THAT CONDONATION OF DELAY IS A MATTER OF DISCRETION OF THE COURT SECTION 5 OF THE LIMITATION ACT DOES NOT SAY THAT SUCH DISCRETION CAN BE EXERCISED ONLY IF THE DELAY IS WITHIN A CERTAIN LIM IT. LENGTH OF DELAY IS NO MATTER, ACCEPTABILITY OF THE EXPLANATION IS THE ONL Y CRITERION. SOMETIMES DELAY OF THE SHORTEST RANGE MAY BE UNCONDONABLE DUE TO WA NT OF ACCEPTABLE EXPLANATION WHEREAS IN CERTAIN OTHER CASES DELAY OF VERY LONG RANGE CAN BE CONDONED AS THE EXPLANATION THEREOF IS SATISFACTORY . ONCE THE COURT ACCEPTS THE EXPLANATION AS SUFFICIENT IT IS THE RESULT OF POSIT IVE EXERCISE OF DISCRETION AND NORMALLY THE SUPERIOR COURT SHOULD NOT DISTURB SUCH FINDING, MUCH LESS IN REVISIONAL JURISDICTION, UNLESS THE EXERCISE OF DIS CRETION WAS ON WHOLE UNTENABLE GROUNDS OR ARBITRARY OR PERVERSE. BUT IT IS A DIFFE RENT MATTER WHEN THE FIRST CUT REFUSES TO CONDONE THE DELAY. IN SUCH CASES, THE SU PERIOR CUT WOULD BE FREE TO CONSIDER THE CAUSE SHOWN FOR THE DELAY AFRESH AND I T IS OPEN TO SUCH SUPERIOR COURT TO COME TO ITS OWN FINDING EVEN UNTRAMMELLED BY THE CONCLUSION OF THE LOWER COURT. 10. THE REASON FOR SUCH A DIFFERENT STANCE IS THUS: THE PRIMARY FUNCTION OF A COURT IS TO ADJUDICATE TH E DISPUTE BETWEEN THE PARTIES AND TO ADVANCE SUBSTANTIAL JUSTICE. TIME LI MIT FIXED FOR APPROACHING THE ITA NO.4956/MUM/2013 5 COURT IN DIFFERENT SITUATIONS IN NOT BECAUSE ON THE EXPIRY OF SUCH TIME A BAD CAUSE WOULD TRANSFORM INTO A GOOD CAUSE. 11. RULE OF LIMITATION ARE NOT MEANT TO DESTROY THE RIGHT OF PARTIES. THEY ARE MEANT TO SEE THAT PARTIES DO NOT RESORT TO DILATORY TACTICS, BUT SEEK THEIR REMEDY PROMPTLY. THE OBJECT OF PROVIDING A LEGAL RE MEDY IS TO REPAIR THE DAMAGE CAUSED BY REASON OF LEGAL INJURY. LAW OF LIM ITATION FIXES A LIFE-SPAN FOR SUCH LEGAL REMEDY FOR THE REDRESS OF THE LEGAL INJU RY SO SUFFERED. TIME IS PRECIOUS AND THE WASTED TIME WOULD NEVER REVISIT. D URING EFFLUX OF TIME NEWER CAUSES WOULD SPROUT UP NECESSITATING NEWER PERSONS TO SEEK LEGAL REMEDY BY APPROACHING THE COURTS. SO A LIFE SPAN MUST BE FIXE D FOR EACH REMEDY. UNENDING PERIOD FOR LAUNCHING THE REMEDY MAY LEAD T O UNENDING UNCERTAINTY AND CONSEQUENTIAL ANARCHY. LAW OF LIMITATION IS THU S FOUNDED ON PUBLIC POLICY. IT IS ENSHRINED IN THE MAXIM INTEREST REIPUBLICAE U P SIT FINIS LITIUM (IT IS FOR THE GENERAL WELFARE THAT A PERIOD BE PUTT TO LITIGATION ). RULES OF LIMITATION ARE NOT MEANT TO DESTROY THE RIGHT OF THE PARTIES. THEY ARE MEANT TO SEE THAT PARTIES DO NOT RESORT TO DILATORY TACTICS BUT SEEK THEIR RE MEDY PROMPTLY. THE IDEA IS THAT EVERY LEGAL REMEDY MUST BE KEPT ALIVE FOR A LE GISLATIVELY FIXED PERIOD OF TIME. A COURT KNOWS THAT REFUSAL TO CONDONE DELAY WOULD R ESULT FORECLOSING A SUITOR FROM PUTTING FORTH HIS CAUSE. THERE IS NO PRESUMPTI ON THAT DELAY IN APPROACHING THE COURT IS ALWAYS DELIBERATE. THIS CO URT HAS HELD THAT THE WORDS 'SUFFICIENT CAUSE' UNDER SECTION 5 OF THE LIMITATIO N ACT SHOULD RECEIVE A LIBERAL CONSTRUCTION SO AS TO ADVANCE SUBSTANTIAL JUSTICE V IDE SHAKUNTALA DEVI JAIN VS. KUNTAL KUMARI [AIR 1969 SC 575] AND STATE OF WEST B ENGAL VS. THE ADMINISTRATOR, HOWRAH MUNICIPALITY [AIR 1972 SC 749 ]. IT MUST BE REMEMBERED THAT IN EVERY CASE OF DELAY THERE CAN BE SOME LAPSE ON THE PART OF THE LITIGANT CONCERNED. THAT ALONE IS NOT ENOUGH TO TURN DOWN HIS PLEA AND TO SHUT THE DOOR AGAINST HIM. IF THE EXPLANATION DO ES NOT SMACK OF MALA FIDES OR IT IS NOT PUT FORTH AS PART OF A DILATORY STRATE GY THE COURT MUST SHOW UTMOST CONSIDERATION TO THE SUITOR. BUT WHEN THERE IS REAS ONABLE GROUND TO THINK THAT THE DELAY WAS OCCASIONED BY THE PARTY DELIBERATELY TO GAIN TIME THEN THE COURT SHOULD LEAN AGAINST ACCEPTANCE OF THE EXPLANATION. WHILE CONDONING DELAY THE COULD SHOULD NOT FORGET THE OPPOSITE PARTY ALTOGETH ER. IT MUST BE BORNE IN MIND THAT HE IS A LOOSER AND HE TOO WOULD HAVE INCU RRED QUIET A LARGE LITIGATION EXPENSES. IT WOULD BE A SALUTARY GUIDELINE THAT WHE N COURTS CONDONE THE DELAY DUE TO LACHES ON THE PART OF THE APPLICANT THE COUR T SHALL COMPENSATE THE OPPOSITE PARTY FOR HIS LOSS. THUS, WE HOLD THAT THE LEARNED CIT(A) WAS NOT JUSTI FIED IN DISMISSING THE ASSESSEES APPEAL AS NOT ADMITTED ON THE GROUND THAT IT IS BAR RED BY LIMITATION. IN THE FACTS OF THE ASSESSEES CASE, WE CONDONE THE DELAY OF 72 DAY S IN FILING OF APPEAL BEFORE THE ITA NO.4956/MUM/2013 6 CIT(A) AND DIRECT THE LD. CIT(A) TO DECIDE THE ISSU E ON MERITS. ACCORDINGLY, THE APPEAL IS RESTORED BACK TO THE FILE OF THE CIT(A) T O ADJUDICATE THE ISSUE ON MERITS AND IN ACCORDANCE WITH LAW AFTER GIVING DUE AND EFF ECTIVE OPPORTUNITY OF HEARING TO THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF MAY 2015. SD/- SD/- (G S PANNU) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED : 29 TH MAY, 2015. SA / COPY OF THE ORDER FORWARDED TO : 1. /THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, E BENCH, ITAT, MUMBAI / BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI