M/s. Machino Plastics Ltd., Gurgaon V. DCIT, New Delhi

ITA 4962/DEL/2011

• Counselvise Citation: 496220114 RSA 2011
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 10-01-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 08-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R S NEGI
• Keywords: Depreciation; Condonation of delay
• Section: 271(1)(c); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E NEW DELHI) BEFORE G.D. AGRAWAL, HON'BLE VICE-PRESIDENT AND SHR I RAJPAL YADAV: HONBLE JUDICIAL MEMBER ITA NO.4962/DEL/2011 ASSESSMENT YEAR: 2005-06 M/S. MACHINO PLASTICS LTD., VS. DEPUTY COMMISSIONE R OF IT, 3, MARUTI, JOINT VENTURE COMPLEX, CIRCLE 6(1), DELHI GURGAON ROAD, GURGAON (HR.) NEW DELHI. (PAN: AAACM6984G) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI RAJ ESH MALHOTRA, CA ASSESSEE BY: SHRI RS NEG I, SR.DR DATE OF HEARING : 10.01.2012 DATE OF PRONOUNCEMENT : 10.01.2012 ORDER PER RAJPAL YADAV:JUDICIAL MEMBE R THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF LEARNED CIT(APPEALS) DATED 10.08.2011 PASSED FOR ASSESSMENT YEAR 2005-06. THE GRIEVANCE OF THE ASSESSEE IS THAT LEARNED CIT(APPEA LS) HAS CONFIRMED THE PENALTY AMOUNTING TO RS.11,70,000 IMPOSED UNDER SEC . 271(1)(C) OF THE INCOME-TAX ACT, 1961 BY HOLDING THAT APPEAL FILED B Y THE ASSESSEE IS TIME BARRED AND IT IS NOT MAINTAINABLE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE HAS FILED ITS RETURN OF INCOME ON 17.10.2005 DECLARING AN INCOME OF RS.1,81 ,24,033. AN ASSESSMENT ORDER WAS FRAMED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 2 1961 ON 14.12.2007 AT A TOTAL INCOME OF RS.2,14,72, 220. LEARNED ASSESSING OFFICER HAS MADE VARIOUS DISALLOWANCES, OUT OF THAT ONE ITEM RELATES TO DISALLOWANCE OF DEPRECIATION ON THE MARUTI ZEN (MOU LD) AMOUNTING TO RS.31,92,131. ASSESSING OFFICER HAS INITIATED PENAL TY PROCEEDINGS AND IMPOSED A PENALTY OF RS.11,70,000. ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, THE PENALTY ORDER WAS SERVED UPON THE COM PANY ON 3.4.2010. IT WAS RECEIVED THROUGH SPEED POST BY THE SECURITY GUARD O F THE COMPANY SHRI JUGAL KISHORE SAHU. THE ORDER WAS HANDED OVER TO SHRI ARV IND SHUKLA, MANAGER(ACCOUNTS) OF THE COMPANY IN THE DUE COURSE WHO LOOKS AFTER THE INCOME-TAX MATTERS OF THE COMPANY. SHRI SHUKLA HAD KEPT THE ORDER IN HIS DRAWER AND ITS SLIPPED OUT OF HIS MIND TO TAKE FURT HER COURSE OF ACTION IN THIS REGARD. ON 15.7.2010, HE WAS SEARCHING SOME OTHER D OCUMENTS IN HIS DRAWER AND THEN THIS ORDER CAME TO HIS NOTICE AND HE REALI ZED HIS MISTAKE. HE IMMEDIATELY MADE ARRANGEMENT FOR FILING THE APPEAL. IN THIS WAY, THE APPEAL HAS BECOME TIME BARRED BY 76 DAYS. THE ASSESSEE APP LIED FOR CONDONATION OF DELAY IN FILING THE APPEAL BEFORE THE LEARNED CIT(A PPEALS) UNDER SEC. 249(3) OF THE ACT. THE ASSESSEE HAS FILED AFFIDAVIT OF SHR I ARVIND SHUKLA. HOWEVER, THE LEARNED CIT(APPEALS) DID NOT ACCEPT TH E EXPLANATION OF THE ASSESSEE AND DISMISSED THE APPEAL ON THE GROUND OF LIMITATION ALONE. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT WAS A BONA FIDE 3 MISTAKE AT THE END OF SHRI ARVIND SHUKLA, MANAGER ( A/C). LEARNED FIRST APPELLATE AUTHORITY OUGHT TO HAVE CONDONED THE DELA Y AND DECIDED THE APPEAL ON MERIT. HE PRAYED THAT THE DELAY BE CONDON ED AND LEARNED CIT(APPEALS) BE DIRECTED TO DECIDE THE APPEAL ON ME RIT. ON THE OTHER HAND, LEARNED DR RELIED UPON THE ORDER OF THE LEARNED CIT (APPEALS) AND SUBMITTED THAT ASSESSEE FAILED TO GIVE ANY PLAUSIBL E EXPLANATION FOR THE DELAY IN FILING THE APPEAL. 3. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS. TH E COURTS AND THE QUASI-JUDICIAL BODIES ARE EMPOWERED TO CONDONE THE DELAY IF A LITIGANT SATISFIED THE COURT THAT THERE WERE SUFFICIENT REAS ONS FOR AVAILING THE REMEDY AFTER EXPIRY OF THE LIMITATION. SUCH REASONING SHOU LD BE TO THE SATISFACTION OF THE COURT. THE EXPRESSION SUFFICIENT CAUSE OR REAS ON AS PROVIDED IN SUB- SECTION (5) OF SECTION 253 SUB 3 OF 249 OF THE IT A CT IS USED IN IDENTICAL POSITION IN THE LIMITATION ACT AND THE CPC. SUCH EX PRESSION HAS ALSO BEEN USED IN OTHER SECTIONS OF THE IT ACT SUCH AS SECTIO NS 274, 273, ETC. THE EXPRESSION SUFFICIENT CAUSE WITHIN THE MEANING OF SECTION 5 OF THE LIMITATION ACT AS WELL AS SIMILAR OTHER PROVISIONS, THE AMBIT OF EXERCISE OF POWERS THEREUNDER HAVE BEEN SUBJECT-MATTER OF CONSI DERATION BEFORE THE HONBLE SUPREME COURT ON VARIOUS OCCASIONS. IN THE CASE OF STATE OF WEST 4 BENGAL V. ADMINISTRATOR, HOWRAH MUNICIPALITY AIR 1972 SC 749 THE HONBLE SUPREME COURT WHILE CONSIDERING THE SCOPE O F EXPRESSION SUFFICIENT CAUSE FOR CONDONATION OF DELAY HAS HEL D THAT THE SAID EXPRESSION SHOULD RECEIVE A LIBERAL CONSTRUCTION SO AS TO ADVA NCE THE SUBSTANTIAL JUSTICE WHEN NO NEGLIGENCE OR INACTION OR WANT OF BONA FIDE IS IMPUTABLE TO PARTY. 4. IN THE CASE OF N. BALAKRISHNAN V. M. KRISHNAMURTHY AIR 1998 SC 3222, THERE WAS A DELAY OF 883 DAYS IN FILING AN AP PLICATION FOR SETTING ASIDE THE EX PARTE DECREE FOR WHICH APPLICATION FOR CONDONATION OF DE LAY WAS FILED. THE TRIAL COURT HAVING FOUND THAT SUFFICIENT CAUSE WAS MADE OUT FOR CONDONATION OF DELAY CONDONED THE DELAY. HOWEVER, T HE HONBLE HIGH COURT REVERSED THE ORDER OF THE TRIAL COURT. THE HONBLE SUPREME COURT WHILE RESTORING THE ORDER OF THE TRIAL COURT HAS OBSERVED IN PARAS 8, 9 AND 10 AS UNDER : 8. THE APPELLANTS CONDUCT DOES NOT ON THE WHOLE W ARRANT TO CASTIGATE HIM AS AN IRRESPONSIBLE LITIGANT. WHAT HE DID IN DEFENDING TH E SUIT WAS NOT VERY MUCH FAR FROM WHAT A LITIGANT WOULD BROADLY DO. OF COURSE, IT MAY BE SAID THAT HE SHOULD HAVE BEEN MORE VIGILANT BY VISITING HIS ADVOCATE AT SHORT INT ERVALS TO CHECK UP THE PROGRESS OF THE LITIGATION. BUT DURING THESE DAYS WHEN EVERYBOD Y IS FULLY OCCUPIED WITH HIS OWN AVOCATION OF LIFE AN OMISSION TO ADOPT SUCH EXTRA V IGILANCE NEED NOT BE USED AS GROUND TO DEPICT HIM AS A LITIGANT NOT AWARE OF HIS RESPON SIBILITIES, AND TO VISIT HIM WITH DRASTIC CONSEQUENCES. 9. IT IS AXIOMATIC THAT CONDONATION OF DELAY IS A M ATTER OF DISCRETION OF THE COURT. SECTION 5 OF THE LIMITATION ACT DOES NOT SAY THAT S UCH DISCRETION CAN BE EXERCISED 5 ONLY IF THE DELAY IS WITHIN A CERTAIN LIMIT. LENGTH OF DELAY IS NO MATTER, ACCEPTABILITY OF THE EXPLANATION IS THE ONLY CRITERION. SOMETIMES DELAY OF THE SHORTEST RANGE MAY BE UNCONDONABLE DUE TO A WANT OF ACCEPTABLE EXPLANATION, WHEREAS IN CERTAIN OTHER CASES, DELAY OF A 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 POSI TIVE EXERCISE OF DISCRETION AND NORMALLY THE SUPERIOR COURT SHOULD NOT DISTURB SUCH FINDING, MUCH LESS IN REVISIONAL JURISDICTION, UNLESS THE EXERCISE OF DISCRETION WAS ON WHOLLY UNTENABLE GROUNDS OR ARBITRARY OR PERVERSE. BUT IT IS A DIFFERENT MATTER WHEN THE FIRST COURT REFUSES TO CONDONE THE DELAY. IN SUCH CASES, THE SUPERIOR COUR T WOULD BE FREE TO CONSIDER THE CAUSE SHOWN FOR THE DELAY AFRESH AND IN ITS OWN FIN DING EVEN UNTRAMMELLED BY THE CONCLUSION OF THE LOWER COURT. 10. ** ** ** THE PRIMARY FUNCTION OF A COURT IS TO ADJUDICATE TH E DISPUTE BETWEEN THE PARTIES AND TO ADVANCE SUBSTANTIAL JUSTICE. THE TIME-LIMIT FIXE D FOR APPROACHING THE COURT IN DIFFERENT SITUATIONS IS NOT BECAUSE ON THE EXPIRY O F SUCH TIME A BAD CAUSE WOULD TRANSFORM INTO A GOOD CAUSE. [EMPHASIS SUPPLIED] THE HONBLE SUPREME COURT FURTHER OBSERVED THAT RUL ES OF LIMITATION ARE NOT MEANT TO DESTROY THE RIGHTS OF THE PARTIES. THEY ARE MEANT T O SEE THAT PARTIES DO NOT RESORT TO DILATORY TACTICS, BUT SEEK THE REMEDY PROMPTLY. THE HONBLE COURT FURTHER OBSERVED THAT REFUSAL TO CONDONE THE DELAY WOULD RESULT IN F ORECLOSING A SUITOR FROM PUTTING FORTH HIS CAUSE. THERE IS NO PRESUMPTION THAT DELAY IN APPROACHING THE COURT IS ALWAYS DELIBERATE. THE HONBLE SUPREME COURT IN SLP [CIVIL NO. 12980 OF 1986, DECIDED ON 19TH FEB., 1987, IN THE CASE OF COLLECTOR, LAND ACQUISITION V. MST. KATIJI (1987) 62 CTR (SYN) 23 (SC)] HAS LAID DOWN THE FOLLOWING GUID ELINES : 1. ORDINARLY A LITIGANT DOES NOT STAND TO BENEFIT B Y LODGING AN APPEAL LATE. 2. REFUSING TO CONDONE DELAY CAN RESULT IN A MERITO RIOUS MATTER BEING THROWN OUT AT THE VERY THRESHOLD AND CAUSE OF JUSTICE BEING DEFEA TED. AS AGAINST THIS WHEN DELAY IS CONDONED THE HIGHEST THEN CAN HAPPEN IS THAT A CAUS E WOULD BE DECIDED ON MERITS AFTER HEARING THE PARTIES. 6 3. EVERY DAYS DELAY MUST BE EXPLAINED DOES NOT M EAN THAT A PEDANTIC APPROACH SHOULD BE MADE, WHY NOT EVERY HOURS DELAY, EVERY S ECONDS DELAY. THE DOCTRINE MUST BE APPLIED ON A RATIONAL COMMONSENSE PRAGMATIC MANN ER. 4. WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERA TIONS ARE PITTED AGAINST EACH OTHER, CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERR ED, FOR THE OTHER SIDE CANNOT CLAIM TO HAVE VESTED RIGHT IN INJUSTICE BEING DONE BECAUSE O F 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 RESORTING TO DELAY. IN FACT HE RUNS A SERIOUS RI SK. 6. IT MUST BE GRASPED THAT JUDICIARY IS RESPECTED N OT ON ACCOUNT OF ITS POWER TO LEGALIZE INJUSTICE ON TECHNICAL GROUNDS BUT BECAUSE IT IS CA PABLE OF REMOVING INJUSTICE AND IS EXPECTED TO SO. MAKING A JUSTICE-ORIENTED APPROACH FROM THIS PERSPE CTIVE; THERE WAS SUFFICIENT CAUSE FOR CONDONING THE DELAY IN THE INSTITUTION OF THE A PPEAL. THE FACT THAT IT WAS THE STATE WHICH WAS SEEKING CONDONATION AND NOT A PRI VATE PARTY WAS ALTOGETHER IRRELEVANT. 5. ADVERTING TO THE PRESENT CASE, IT WOULD REVEAL T HAT ASSESSEE HAS FILED THE AFFIDAVIT OF SHRI ARVIND SHUKLA, MANAGER (A/C) WHO HAS DEPOSED THAT HE HAD RECEIVED THE PENALTY ORDER WELL IN TIME BUT HE PUT THE ORDER IN HIS DRAWER AND IT SLIPPED FROM HIS MIND TO TAKE FURTHER ACTION . IT MUST BE REMEMBERED IN EVERY CASE OF DELAY, THERE CAN BE SOME LAPSE ON THE PART OF LITIGANT CONCERNED BUT THAT ALONE IS NOT ENOUGH TO TURN DOWN THE PLEA AND SHUT THE DOOR AGAINST HIM. EVEN FOR THE SAKE OF ARGUMENT, FOR A MOMENT, WE ASSUME THAT THERE 7 WAS SOME NEGLIGENCE ON THE PART OF MANAGER(A/C) IN NOT MAKING THE ARRANGEMENTS FOR TAKING FURTHER ACTION ON THE PENAL TY ORDER, CAN THAT NEGLIGENCE SHOULD COST THE ASSESSEE A PENALTY OF RS .11,70,000. TO OUR MIND, THE PUNISHMENT IN THE SHAPE OF PENALTY IS DISPROPOR TIONATE TO THE NEGLIGENCE, EVEN IF IT IS ON THE PART OF THE MANAGER(A/C.). LEA RNED CIT(APPEALS) NOWHERE POINTED OUT THAT ASSESSEE HAD ADOPTED ANY D ILATORY STRATEGY. IT WILL NOT GAIN ANYTHING BY FILING THE APPEAL AGAINST A PE NALTY ORDER AFTER EXPIRY OF LIMITATION. THERE IS NO DELIBERATE ATTEMPT AT THE E ND OF ASSESSEE TO MAKE IT APPEAL TIME BARRED, THEREFORE, WE ARE OF THE VIEW T HAT ENDS OF JUSTICE WOULD MEET IT WE CONDONE THE DELAY AND DIRECT THE LEARNED CIT(APPEALS) TO DECIDE THE APPEAL ON MERIT. ACCORDINGLY, WE ALLOW THE APPE AL OF THE ASSESSEE, CONDONE THE DELAY IN FILING THE APPEAL BEFORE THE L EARNED CIT(APPEALS) AND REMIT THE ISSUE RELATING TO PENALTY TO THE FILE OF LEARNED FIRST APPELLATE AUTHORITY FOR ADJUDICATION ON MERIT. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. SD/- SD/- ( G.D. AGRAWAL ) ( RAJPAL YADAV ) VICE- PRESIDENT JUDICIAL MEMBER DATED: 10/01/2012 MOHAN LAL 8 COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR