Effluent & Water Treatment Engineers Pvt. Ltd., Kolkata V. ITO, Cir.11(1), Kolkata

ITA 68/KOL/2022

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 2080 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 01-02-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Keywords: Opportunity of being heard; Reasonable cause; Set aside
• Section: 143(3); 250; 251

Judgement Text

1 ITA No. 68/Kol/2022 Effluent & Water Treatment Engineers Pvt. Ltd., AY 2014-15 IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA [Before Shri Sanjay Garg, Judicial Member & Shri Girish Agrawal, Accountant Member] I.T.A. No. 68/Kol/2022 Assessment Year: 2014-15 M/s. Effluent & Water Treatment Engineers Pvt. Ltd. (PAN: AAACE5484B) Vs. Deputy Commissioner of Income-tax, Circle-11(1), Kolkata. Appellant Respondent Date of Hearing 31.03.2022 Date of Pronouncement 18.05.2022 For the Appellant Shri Anil Kochar, Advocate For the Respondent Smt. Ranu Biswas, Addl. CIT, DR ORDER Per Girish Agrawal, Accountant Member : This is an appeal preferred by the assessee against the order of Ld. CIT(A)-4, Kolkata dated 15.01.2020 for AY 2014-15 vide appeal No. 182/CIT(A)-4/19-20 against the assessment order passed by DCIT, Circle-11(1), Kolkata u/s/ 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) dated 08.11.2016. 2. This appeal of assessee is time barred by 689 days and a condonation petition has been filed. 2.1. We have duly considered rival contentions and gone through the record carefully. Sub-section 5 of Section 253 contemplates that the Tribunal may admit an appeal or permit filing of memorandum of cross-objections after expiry of relevant period, if it is satisfied that there was a sufficient cause for not presenting it within that period. Similarly, it has been used in section 5 of Indian Limitation Act, 1963. Whenever interpretation and construction of this expression has fallen for consideration before Hon'ble High Court as well as before the Hon'ble Supreme Court, then, Hon'ble Court were unanimous in their conclusion that this expression is to be used liberally. We may make reference to the following observations of the Hon'ble 2 ITA No. 68/Kol/2022 Effluent & Water Treatment Engineers Pvt. Ltd., AY 2014-15 Supreme court from the decision in the case of Collector Land Acquisition Vs. Mst. Katiji & Others, 1987 AIR 1353: "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 condoned the highest that can happen is that a cause would be decided on merits after hearing the parties. 3. "Every 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 doctrine must be applied in a rational common sense pragmatic manner. 4. When substantial justice and technical considerations are pitted against each other, 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 resorting to delay. In fact he runs a serious risk. 6. It must be grasped that 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." 2.2. Similarly, we would like to make reference to authoritative pronouncement of Hon'ble Supreme Court in the case of N. Balakrishnan Vs. M. Krishnamurthy (supra). It reads as under: "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 remedy is to repair the damage caused by reason of legal injury. Law of limitation fixes a life-span for such legal remedy for the redress of the legal injury so suffered. Time is precious and the wasted time would never revisit. During 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 fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. Law of limitation is thus founded on public policy. It is enshrined in the maxim Interest reipublicae up 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 remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time. A court knows that refusal to condone delay would result foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is always deliberate. This Court has held that the words "sufficient cause" under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shakuntala Devi lain Vs. Kuntal Kumari [AIR 1969 SC 575] and State of West Bengal 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 does not smack of mala fides or it is not put forth as part of a 3 ITA No. 68/Kol/2022 Effluent & Water Treatment Engineers Pvt. Ltd., AY 2014-15 dilatory strategy the court must show utmost consideration to the suitor. But when there is reasonable 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 altogether. It must be borne in mind that he is a looser and he too would have incurred quiet a large litigation expenses. It would be a salutary guideline that when courts condone the delay due to laches on the part of the applicant the court shall compensate the opposite party for his loss." 2.3. We do not deem it necessary to re-cite or recapitulate the proposition laid down in other decisions. It is suffice to say that the Hon'ble Courts are unanimous in their approach to propound that whenever the reasons assigned by an applicant for explaining the delay, then such reasons are to be construed with a justice oriented approach. 2.4. In light of the above, if we examine the facts then it would reveal that there is a delay of 690 days in filing of the appeal by the assessee. In its application it has been contended by the assessee that the delay in submission of the appeal occurred due to the fact that the assessee was totally in dark about the fate of the appeal pending before the CIT(A) which to assesse’s knowledge only upon receipt of the penalty notice u/s. 271(1)(c) issued by the NFAC on 25.01.2022. Thereafter, the assessee immediately took steps to submit the appeal before the ITAT which was done on 02.02.2022. Also vide order dated 10.01.2022 by the Hon’ble Supreme Court, the period from 15.03.2020 to 28.02.2022 is to be excluded for the purpose of computing the limitation period during the COVID-19 Pandemic. Considering the facts and the explanation of the assessee, we condone the delay in filing the appeal and admit it for adjudication. 3. Though the assessee has filed as many as 9 grounds of appeal but the sole issue involved in this appeal of the assessee is against the ex parte order passed by the Ld. CIT(A) without affording reasonable time to the assessee to comply with the hearing notice issued. 4. At the time of hearing Ld. Counsel for the assessee drew our attention to the fact that the Ld. CIT(A) has passed the impugned order ex parte without affording reasonable opportunity of being heard to the assessee. The Ld. CIT(A) only issued 4 ITA No. 68/Kol/2022 Effluent & Water Treatment Engineers Pvt. Ltd., AY 2014-15 three notices on 05.12.2019, 27.12.2019 and 08.01.2020 fixing the date of hearing on 20.12.2019, 07.01.2020 and 14.01.2020 respectively. According to the Ld. CIT(A) since notices for hearing on the above dates have been sent through Speed Post as well as through specific e-mail address given by the assessee in appeal memo and notice has not been revert back to the department, the Ld. CIT(A) dismissed the appeal of the assessee ex parte without giving sufficient opportunity of hearing to the assessee. So he urged before the bench to set aside the order of the Ld. CIT(A) and restore the matter to his file to pass a speaking order after affording reasonable opportunity of being heard to the assessee. On the other hand, the Ld. DR relied on the order of Ld. CIT(A) and urged before the bench to confirm the order of Ld. CIT(A). 5. We have heard rival submissions and gone through the facts and circumstances of the case. We find that in the first appellate order the Ld. CIT(A) stated that since notices for hearing on the above dates have been sent through Speed Post as well as through specific e-mail address given by the assessee in appeal memo and notice has not been revert back to the department, the appeal of the assessee is dismissed ex parte. This action of the Ld. CIT(A) cannot be countenanced. The assessee should be given proper opportunity to produce the documents and explanation in respect of the queries raised by the lower authorities. Since the assessee had reasonable cause for not producing the same before the lower authorities in such a scenario, we take note of the decision of the Hon’ble Supreme Court in the case of Tin Box Company vs. CIT reported in (2001) 249 ITR 216 (SC) wherein the Hon’ble Supreme Court has directed that the assessee should be given proper opportunity during the assessment proceedings and failure to do so then the matter should be remitted back to the A.O. The order of the Hon’ble Supreme Court in Tin Box Co. (supra) are as under: “1. It is unnecessary to go into great detail in these matters for there is a statement in the order of the Tribunal, the fact-finding authority, that reads thus : "We will straightaway agree with the assessee's submission that the Income-tax Officer had not given to the assessee proper opportunity of being heard." 2. That the assessee could have placed evidence before the first appellate authority or before the Tribunal is really of no consequence for it is the assessment order that counts. That order must be made after the assessee has been given a reasonable opportunity of selling out his case. We, therefore, do not agree with the Tribunal and the High Court that it was not necessary to set aside the order of assessment and remand the matter to 5 ITA No. 68/Kol/2022 Effluent & Water Treatment Engineers Pvt. Ltd., AY 2014-15 the assessing authority for fresh assessment after giving to the assessee a proper opportunity of being heard. 3. Two questions were placed before the High Court, of which the second question is not pressed. The first question reads thus : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not setting aside the assessment order in spite of a finding arrived at by it that the Income-tax Officer had not given a proper opportunity of hearing to the assessee ?" 4. In our opinion, there can only be one answer to this question which is inherent in the question itself : in the negative and in favour of the asses-see. 5. The appeals are allowed. The order under challenge is set aside. The assessment order, that of the Commissioner (Appeals) and of the Tribunal are also set aside. The matter shall now be remanded to the assessing authority for fresh consideration, as afore-stated. No order as to costs.” 6. We also find that no effective cognizance of the submissions made by the assessee in the course of the appellate proceedings have been taken by the Ld. CIT(A) while disposing of the appeal. The Act provides for the powers of Commissioner (Appeal) u/s. 251 which adequately deals with the powers in disposing of the appeal by the Ld. CIT(A). The section is reproduced as under: “Powers of the Commissioner (Appeals) 251. (1) In disposing off an appeal, the Commissioner (Appeals), shall have the following powers: (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment; or (aa) in an appeal against the order of assessment in respect of which the proceeding before the Settlement Commission abates under section 245HA, he may, after taking into consideration all the material and other information produced by the assessee before, or the results of the inquiry held or evidence recorded by, the Settlement Commission, in the course of the proceeding before it and such other material as may be brought on his record, confirm, reduce, enhance or annul the assessment; (b) in an appeal against an order imposing a penalty — he may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty; (c) in any other case — he may pass such orders in the appeal as he thinks fit. The Commissioner (Appeals) shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction. Explanation – In disposing of an appeal, the Commissioner (Appeals) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Commissioner (Appeals) by the appellant.” 6 ITA No. 68/Kol/2022 Effluent & Water Treatment Engineers Pvt. Ltd., AY 2014-15 7. Section 250 of the Act provides for procedure to be adopted and disposing of the appeal by the Ld. CIT(A). Sub-section (4) of section 250 of the Act provides that the Ld. CIT(A) may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the Assessing officer to make further inquiry and report the result of the same to the Commissioner (Appeals). Further, sub-section (6) provides that the CIT(A) shall pass an order in writing and shall set the points for determination, the decision thereon and the reasons for the decision. The section is reproduced as under: “250. Procedure in appeal (1) The 7 Deputy Commissioner (Appeals)] 8 or, as the case may be, the Commissioner (Appeals)] shall fix a day and place for the hearing of the appeal, and shall give notice of the same to the appellant and to the 9 Assessing] Officer against whose order the appeal is preferred. (2) The following shall have the right to be heard at the hearing of the appeal- (a) the appellant, either in person or by an authorised representative; (b) the 10 Assessing] Officer, either- in person or by a representative. (3) The 1 Deputy Commissioner (Appeals)] 2 or, as the case may be, the Commissioner (Appeals)] shall have the power to adjourn the hearing of the appeal from time to time. (4) The 3 Deputy Commissioner (Appeals)] 4 or, as the case may be, the Commissioner (Appeals)] may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the 5 Assessing] Officer to make further inquiry and report the result of the same to the 6 Deputy Commissioner (Appeals)] 7 or, as the case may be, the Commissioner (Appeals)]. (5) The 8 Deputy Commissioner (Appeals)] 9 or, as the case may be, the Commissioner (Appeals)] may, at the hearing of an appeal, allow the appellant to go into any ground of appeal not specified in the grounds of appeal, if the 10 Deputy Commissioner (Appeals)] 11 or, as the case may be, the Commissioner (Appeals)] is satisfied that the omission of that ground from the form of appeal was not wilful or unreasonable. (6) The order of the 12 Deputy Commissioner (Appeals)] 13 or, as the case may be, the Commissioner (Appeals)] disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision. (7) On the disposal of the appeal, the 14 Deputy Commissioner (Appeals)] 15 or, as the case may be, the Commissioner (Appeals)] shall communicate the order passed by him to the assessee and to the 16 Chief Commissioner or Commissioner]. 8. Principles governing the exercise of powers by the First Appellate Authority are contemplated under sections 250 and 251 of the Act, breach of which has far reaching consequences on the administration of justice culminating in the litigant approaching the higher appellate authority. It is required that the first appellate authority viz. CIT(A) will appreciate the evidence, consider the arguments and apply the law on the given set of facts and circumstances and arrive at findings. 7 ITA No. 68/Kol/2022 Effluent & Water Treatment Engineers Pvt. Ltd., AY 2014-15 9. Keeping in mind the provision of sections 250 and 251 of the Act and the decision of the Hon’ble Supreme Court in the case of Tin Box Ltd. (supra) referred as above it is incumbent upon the Ld. CIT(A) to pass a speaking order on the merits of the case by examining, verifying and analyzing the material on record. Since there are no meritorious finding given by the Ld. CIT(A) on the submissions made by the assessee and also considering the grounds raised by the assessee where the Ld. CIT(A) has passed an ex parte order without giving opportunity of being heard, we find it fit to remit the matter back to the file of the Ld. CIT(A) for his objective and meritorious observations and findings on the submissions made by the assessee. Needless to say the assessee be given reasonable opportunity of being heard and the assessee shall also be cooperating for the effective disposal of the appeal and will be at liberty to make further submissions as deem fit. Since the matter is restored to the file of Ld. CIT(A) for meritorious adjudication by passing a speaking order in terms of our observations made hereinabove, we are not expressing any views on the merits of the case so as to limit the appellate procedure before the Ld. CIT(A). The observations herein made by us in remanding the matter back to the file of Ld. CIT(A) will not impair or injure the case of the Revenue nor will it cause any prejudice to the defense/explanation of the assessee. Accordingly, we set aside the impugned order of the Ld. CIT(A) and restore the matter back to the file of the Ld. CIT(A) to decide afresh after affording reasonable opportunity of being heard to the assessee and the assessee is directed to be diligent in the appellate proceedings. 10. In the result, the appeal of assessee is allowed for statistical purpose. Order is pronounced in the open court on 18th May, 2022. Sd/- Sd/- (Sanjay Garg) (Girish Agrawal) Judicial Member Accountant Member Dated: 18.05.2022 JD, Sr. PS 8 ITA No. 68/Kol/2022 Effluent & Water Treatment Engineers Pvt. Ltd., AY 2014-15 Copy of the order forwarded to: 1. Appellant– M/s. Effluent & Water Treatment Engineers (P) Ltd., P-22, 10 th floor, CIT Road, Entally, Kolkata-700 014. 2. Respondent – DCIT, Circle-11(1), Kolkata 3. CIT(A)-4, Kolkata. (sent through e-mail). 4. CIT , Kolkata. 5. DR, ITAT, Kolkata, (sent through e-mail). True Copy By Order Assistant Registrar ITAT, Kolkata Bench, Kolkata