PARAS STEEL CORPORATION, MUMBAI V. ITO 13(2)(4), MUMBAI

ITA 7211/MUM/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6639 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 14-12-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: GAJENDRA GOLECHHA
• Keywords: Depreciation; Business expenditure; TDS
• Section: 143(2); 44AB; 13

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI C. N. PRASAD , JM & SHRI S. RIFAUR RAHMAN, AM ./ I.T.A. NO . 7211 / MUM/ 2018 ( / ASSESSMENT YEAR: 2011 - 12 ) M/S PARAS STEEL CORPORATION 505, GUPTA BHAWAN, AHMEDABAD STREET, CARNACABUNDER, MUMBAI - 400 009 / VS. ITO 13(2)(4) R.NO. 412, 4 TH FLOOR AAYAKARBHAVAN, M. K. ROAD, MUMBAI - 400 020 ./ ./ PAN NO. AA AFP 1172 A ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI GAJENDRA GOLECHHA , AR / RESPONDENTBY : SHRI KIRAN UNAVEKAR, DR / DATE OF HEARING : 25.02 .2020 / DATE OF PRONOUNCEMENT : 23.07.2020 / O R D E R PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER : THE PRESENT A PPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. COMMIS S IONER OF INCOME TAX (APPEALS) 58 IN 2 I.T.A. NO. 7211 /MUM/201 8 M/S PARAS STEEL CORPORATION SHORT REFERRED AS LD. CIT(A) , MUMBAI, DATED 04.09.2018 FOR A SSESSMENT YEAR (IN SHORT A Y ) 2011 - 12 . 2 . THE BRIEF FACTS OF THE CASE ARE, ASSESSEE FILED ITS RETURN OF INCOME ON 27.09.2011 ALONG WITH AUDIT REPORT UNDER SECTION 44AB BY DECLARING TOTAL INCOME OF 20, 410/ . THE RETURN WAS PROCESSED UNDER SECTION 143 (1) OF THE ACT , SUBSEQUENTLY SELECTED FOR SCRUTINY UNDER SECTION 143 (3) OF THE ACT . THE NOTICES UND ER SECTION 143(2) AND 142 (1) OF THE ACT, WERE ISSUED AND SERVED O N THE ASSESSEE. IN RESPONSE, AR OF THE ASSESSEE ATTENDED AND FURNISHED THE RELEVANT INFORMATION AS CALLED FOR. 3. DURING ASSESSMENT PROCEEDINGS, ASSESSING OFFICER OBSERVED THAT ASSESSEE IS CARRYING ON THE BUSINESS OF DEALING IN IRON AND S TEEL. ASSESSEE HAS DECLARED A TURNOVER OF 2,30,59, 382/ AND D ECLARED A GROSS PROFIT OF 24,68, 439 / - AND NET PROFIT OF 9, 408/ 4. AO OBSERVED THAT ASSESSEE HAS CLAIMED COMMISSIO N OF 2,99, 272/ IN ITS PROFIT AND LOSS ACCOUNT. HE NOTICED THAT ASSESSEE HAS PAID TO SHRI KAMALAKAR JAIN 1,66, 415/ AT THE RATE OF 5% AND PAID TO SHRI TARUN KUMAR JAIN 78, 245/ AT THE RATE OF 3% 3 I.T.A. NO. 7211 /MUM/201 8 M/S PARAS STEEL CORPORATION AS COMMISSION AND SIMILAR PAYMENTS WERE GIVEN TO OTHER PARTIES @ 0.44% TO 0.47%. THE ASSESSEE WAS ASKED TO EXPLAIN THE VARIATIONS IN GIVING COMMISSIONS. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE THAT IT HAS PAID SALES COMMISSION TO MR KAMAL KUMAR JAI N AND MR. TARUN KUMAR JAIN AND TO OTHER PARTIES PAID AS PURCHASE COMMISSION. IT ALSO SUBMITTED THAT THE ABOVE PARTIES ARE NOT RELATED TO ANY PARTNERS AND TDS HAS BEEN DEDUCTED AS APPLICABLE. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, ASSESSING OFFICER DISALLOWED COMMISSION OVER AND ABOVE 1.5% AND OP INED THAT CONSIDERING THE BUSINESS OF THE ASSESSEE 1.5% IS NORMAL COMMISSION. 5. HE FURTHER OBSERVED THAT ASSESSEE HAS DEBITED 64, 465/ AS MOTOR CAR EXPEN SES AND NOTICED THAT IN THE DEPRECIATION SCHEDULE, THERE IS NO CAR BELONGS TO THE ASSESSEE. AFTER CO NSIDERING THE SUBMISSIONS OF THE ASSESSEE, HE DISALLOWED 50% OF THE EXPENSES CLAIMED BY THE ASSESSEE AS NON BUSINESS EXPENDITURE. 6. FURTHER HE OBSERVED THAT ASSESSEE HAS CLAI MED TELEPHONE EXPENSES OF 40,0 93/ . AFTER VERIFICATION OF THE TELEPHONE BILLS, 4 I.T.A. NO. 7211 /MUM/201 8 M/S PARAS STEEL CORPORATION HE OBSERVED THAT THERE IS ELEMENT OF PERSONAL USE CANNOT BE RULED OUT, ACCORDINGLY HE DISALLOWED 20% OF THE TELEPHONE EXPENSES. 7. AGGRIEVED WITH THE ABOVE ORDER , ASSESSEE PREFERRED AN APPEAL BEFORE LD CIT(A). SINCE, THERE WAS NO REPRESENTATION BEFORE LD C IT(A) IN SEVERAL OCCASIONS, LD CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE BY SUSTAINING THE ADDITIONS MADE BY THE ASSESSING OFFICER. AGGRIEVED WITH THE ABOVE ORDER, ASSESSEE IS IN APPEAL BEFORE US RISING FOLLOWING GROUNDS OF APPEAL. 1) THE LEARNED CIT (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION OF RS.1,55,614/ - ON ACCOUNT OF COMMISSION PAID. THE REASONS ASSIGNED BY HIM FOR DOING THE SAME ARE WRONG AND INSUFFICIENT. PROVISIONS OF THE ACT OUGHT TO HAVE BEEN PROPERLY CONSTRUED BEFORE DOING THE SAME. REG ARD BEING HAD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, THE SAID ADDITION OUGHT NOT TO HAVE BEEN MADE. 2) ADDITION MADE ON ACCOUNT OF COMMISSION IS ALSO WRONG AND HIGHLY EXCESSIVE AS THE SAME WAS WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSE OF THE B USINESS. 3) THE A.O, HAS FURTHER ERRED IN NOT SUMMONING THE PARTIES TO WHOM COMMISSION WAS PAID WHEN COMPLETE 5 I.T.A. NO. 7211 /MUM/201 8 M/S PARAS STEEL CORPORATION DETAILS OF THE COMMISSION SO PAID ALONG WITH THE ADDRESSES OF THE PARTIES TO WHOM THE COMMISSION WAS PAID SPECIFYING THEIR PAN NO. WERE FURNISHE D TO THE A.O 4) THE LEARNED CIT (APPEALS) HAS ERRED IN CONFIRMING THE DISALLOWING MOTOR CAR EXPENSES AT50% AT RS.32,232/ - . THE REASONS ASSIGNED BY HIM FOR DOING THE SAME ARE WRONG AND INSUFFICIENT. PROVISIONS OF THE ACT OUGHT TO HAVE BEEN PROPERLY CONSTR UED BEFORE DISALLOWING THE SAME. REGARD BEING HAD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, THE SAID DIS - ALLOWANCE OUGHT NOT TO HAVE BEEN MADE. 5) THE LEARNED CIT (APPEALS) HAS ERRED IN CONFIRMING THE DISALLOWING 20% TELEPHONE EXPENSES AT RS.8,019/ - . THE REASONS ASSIGNED BY HIM FOR DOING THE SAME ARE WRONG AND INSUFFICIENT. PROVISIONS OF THE ACT OUGHT TO HAVE BEEN PROPERLY CONSTRUED BEFORE DISALLOWING THE SAME. REGARD BEING HAD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, THE SAID DIS - ALLOWANCE OUGHT NOT TO HAVE BEEN MADE. 6) THE LEARNED CIT (APPEALS) HAS ERRED IN CONFIRMING THE INTEREST U/S 234D AT RS. 10,217/ - REASONS ASSIGNED BY HIM FOR DOING THE SAME ARE WRONG AND INSUFFICIENT. PROVISIONS OF THE ACT OUGHT TO HAVE BEEN PROPERLY CONSTRUED BEFORE LEV YING THE SAME. 6 I.T.A. NO. 7211 /MUM/201 8 M/S PARAS STEEL CORPORATION 7) ORDER PASSED IS BAD IN LAW AND CONTRARY TO THE PROVISIONS OF THE ACT. 8) APPELLANT LEAVES TO ADD/MODIFY/ DELETE/ALTER ANY/ALL GROUNDS OF APPEAL. 8 . ASSESSEE HAS FILED 8 GROUNDS OF APPEAL, IN WHICH GROUNDS 1,2, 3 ARE ON COMMISSION, GRO UND NO. 4 IS ON MOTOR CAR EXPENSES, GROUND NO. 5 IS ON TELEPHONE EXPENSES, GROUND NO. 6 ON INTEREST UNDER SECTION 234D AND GROUND NUMBERS 7 AND 8 ARE GENERAL. THE GROUND NO. 6 IS CONSEQUENTIAL, GROUND NUMBERS 7 AND 8 ARE GENERAL, ACCORDINGLY GROUND NO. 6, 7 AND 8 ARE DISMISSED. 8. AT THE TIME OF HEARING, LD AR BROUGHT TO OUR NOTICE FINDINGS OF ASSESSING OFFICER AND SUBMITTED THAT ASSESSING OFFICER HAS NOT CONSIDERED THE SUBMISSIONS OF THE ASSESSEE THAT ASSESSEE HAS PAID COMMISSION IN DIFFERENT PERCENTAGES ON PURCHASE AND SALES . HE SUBMITTED THAT ASSESSEE HAS PAID AS PER THE INDUSTRY NORMS AND THE PERCENTAGE OF COMMISSION ON SALES IS DIFFERENT THAN PURCHASE COMMISSION , NONE OF THE PARTIES TO WHOM ASSESSEE HAS PAID COMMISSION ARE NOT RELATIVES . I T IS PURELY A BUSINESS TRANSACTION . HE BROUGHT TO OUR NOTICE DEBIT NOTES AND DOCUMENTS IN SUPPORT OF PAYMENT OF COMMISSION TO ALL THE PARTIES . HE 7 I.T.A. NO. 7211 /MUM/201 8 M/S PARAS STEEL CORPORATION SUBMITTED THAT THE PAYMENT IS PURELY FOR BUSINESS PURPOSE AND HE BROUGHT TO OUR NOTICE ITA NO. 2069/DELHI/2016 IN SUPPORT OF HIS CONTENTION. 9. WITH REGARD TO GROUND NO. 4 AND NO. 5, HE SUBMITTED THAT THE AD HOC DISALLOWANCE IS MADE BY THE ASSESSING OFFICER IS EXCESSIVE AND SUBMITTED THAT REASONABLE PERCENTAGE MAY BE CONSIDERED. 10. ON THE OTHER HAND LD D R SUBMITTED THAT ASSE SSEE IS NOT MAINTAINING CONSISTENCY IN GIVING COMMISSION TO ITS AGENTS AND HE SUBMITTED THAT THE CASE RELIED BY THE ASSESSEE ARE DISTINGUISHABLE. WITH REGARD TO DISALLOWANCE ON COST OF MAINTENANCE OF CAR, HE SUBMITTED THAT THERE IS NO CAR OWNED BY THE ASSE SSEE, THEREFORE THE MATTERS OF CAR EXPENSES ON WHICH ASSESSING OFFICER HAS DISALLOWED 50% OF THE EXPENDITURE WHICH ACCORDING TO HIM, IS PROPER AND REASONABLE CONSIDE RING THE FACT THAT ASSESSEE HAVE UTILISED FOR PERSONAL PURPOSES. HE ALSO SUBMITTED THAT SIM ILAR REASON APPLICABLE FOR TELEPHONE EXPENSES ALSO. 8 I.T.A. NO. 7211 /MUM/201 8 M/S PARAS STEEL CORPORATION 11. CONSIDERED THE RIVAL SUBMISSIONS AND MATERIAL ON RECORD. WE NOTICED THAT ASSESSEE IS IN BUSINESS OF DEALING IN IRON AND STEEL. AS PER THE BILLS AND VOUCHERS SUBMITTED BEFORE US, WE NOTICED THAT ASSESS EE HAS PAID COMMISSION ON PURCHASES AS WELL AS SALES. IT IS NOT NECESSARY THAT THE COMMISSION APPLICABLE ON PURCHASE AND SALES SHOULD BE SIMILAR AND EQUAL. IT IS THE BUSINESS OF THE ASSESSEE AND IT HAS DECIDED TO INCUR THE ABOVE SAID EXPENDITURE FOR THE PU RPOSE OF ITS BUSINESS AND IT IS THE ASSESSEE WHO IS RESPONSIBLE FOR EARNING THE I NCOME OF THE BUSINESS. IT IS IN BETTER POSITION TO DECIDE ON THE RELEVANT EXPENDITURE TO BE INCURRED FOR THE PURPOSE OF EARNING THE ABOVE SAID INCOME. FURTHER IT IS BROUGHT TO OUR NOTICE THAT NONE OF THE AGENTS WHO ARE IN RECEIPT OF COMMISSION ARE RELATED TO THE ASSESSEE OR ITS PARTNERS. THEREFORE THE EXPENDITURE INCURRED BY THE ASSESSEE IS INCURRED PURELY FOR THE PURPOSE OF BUSINESS. WE NOTICED THAT THE COORDINATE BENCH OF IT AT, DELHI HAS HELD IN THE SIMILAR CIRCUMSTANCES AS BELOW IN THE CASE OF KAY DEE INDUSTRIES VERSUS JOINT COMMISSIONER OF INCOME TAX ITA NO. 2069/DELHI/2016 , FOR THE SAKE OF CLARITY IT IS REPRODUCED BELOW: 9 I.T.A. NO. 7211 /MUM/201 8 M/S PARAS STEEL CORPORATION 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION S AND ALSO PERUSED THE ORDERS OF THE LOWER AUTHORITIES. THE ASSESSEE HAS PAID COMMISSION TO ONE M/S. ASHAPURA ASSOCIATES, AHMEDABAD, @ 7% OF THE SALES AT AHMEDABAD DEPOT. FOR THE PAYMENT OF THE COMMISSION THE ASSESSEE HAS ENTERED INTO AN AGREEMENT ON 1ST A PRIL, 2006 WITH THE COMMISSION AGENT, WHO IS ALSO RESPONSIBLE FOR THE RECOVERY OF SALEPROCEEDS AS PER CLAUSE 7 OF THE AGREEMENT. THIS IS NOT THE FIRST YEAR OF THE PAYMENT OF COMMISSION TO THAT PARTY. THE RECIPIENT OF THE COMMISSION INCOME IS ALSO NOT RELAT ED PARTY UNDER PROVISIONS OF SECTION 40A(2) OF THE ACT. THE LEARNED LOWER AUTHORITIES HAVE DISALLOWED THE PAYMENT WITHOUT SHOWING ANY REASON EXCEPT STATING THAT THERE IS NO BUSINESS EXIGENCY SHOWN BY ASSESSEE. IT IS AN ESTABLISHED LAW THAT IN WHAT MANNER T HE ASSESSEE SHOULD CARRY ON HIS BUSINESS SHOULD BE LEFT TO THE ASSESSEE ONLY. THE REVENUE AUTHORITIES ARE ONLY AUTHORIZED TO SEE WHETHER THE EXPENDITURE HAS BEEN LAID OUT OR EXPENDED BY THE ASSESSEE FOR THE PURPOSES OF THE BUSINESS OR NOT. IN THE PRESENT C ASE, THE AMOUNT OF COMMISSION FOR THIS YEAR HAVE BEEN PAID @ 7% AND TOTAL COMMISSION PAID IS RS.32,61,849/ - OUT OF WHICH THE DISALLOWANCE OF RS.9,31,957/ - HAS BEEN MADE HOLDING THAT 2% OF THE TOTAL COMMISSION PAID IS EXCESSIVE. SUCH POWERS ARE ONLY AVAILAB LE WHEN THE PAYMENT IS MADE TO A RELATED PARTY. IT IS NOT THE CASE OF 10 I.T.A. NO. 7211 /MUM/201 8 M/S PARAS STEEL CORPORATION THE REVENUE THAT THE PARTY HAS NOT RENDERED SERVICES TO ASSESSEE. IN VIEW OF THIS, WE REVERSE THE FINDING OF THE LOWER AUTHORITIES AND DIRECT THE LEARNED ASSESSING OFFICER TO DELETE THE DISALLOWANCE OF RS.9,31,957/ - . 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE, IS ALLOWED. 12. RESPECTFULLY FOLLOWING THE ABOVE DECISION, WE DIRECT ASSESSING OFFICER TO DELETE THE ADDITION MADE ON PAYMENT OF COMMISSION. 13. WITH REGARD TO DISALLOWANCE OF CAR EXPENDITURE AND TELEPHONE EXPEND ITURE, WE NOTICED THAT THE CAR MAY BE BELONGS TO PARTNERS AND SINCE IT IS USED FOR THE PURPOSE OF BUSINESS, THERE MAY BE CHANCE THAT ASSESSEE MIGHT HAVE USED FOR PERSONAL PURPOSES AND IT IS PROPER AND REASONABLE TO DISAL LOW 20% OF THE EXPENDITURE . ACCORDINGLY GROUND NO. 4 IS PARTLY ALLOWED . 13.1 WITH REGARD TO TELEPHONE EXPENDITURE, WE DO NOT HAVE THE OPPORTUNITY TO VERIFY THE BILLS NOR IT IS SU BMITTED BEFORE US. THEREFORE, IF THE TELEPHONE BILLS ARE IN THE NAME OF THE ASSES SEE, THEN AO CANNOT DISALLOW THE EXPENDITURE. IF THE TELEPHONE ARE INSTALLED IN THE RESIDENCE OF THE PARTNERS, THEN THE ACTION OF THE AO IS JUSTIFIED. ACCORDINGLY, WE ARE REMITTING THIS ISSUE TO THE 11 I.T.A. NO. 7211 /MUM/201 8 M/S PARAS STEEL CORPORATION FILE OF AO TO VERIFY AND ALLOW THE EXPENDITURE AS PER A BOVE DIRECTION. AS A RESULT, THIS GROUND IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 14. ACCORDINGLY APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. 15 . IT IS PERTINENT TO MENTION HERE THAT THIS ORDER IS PRONOUNCED AFTER A PERIOD OF 90 DAYS FROM THE DATE O F CONCLUSION OF THE HEARING. IN THIS REGARD, WE PLACE RELIANCE ON THE DECISION OF CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF JSW LTD IN ITA NOS. 6264 & 6103/MUM/2018 DATED 14.5.2020, WHEREIN THIS ISSUE HAS BEEN ADDRESSED IN DETAIL ALLOWING TIME TO P RONOUNCE THE ORDER BEYOND 90 DAYS FROM THE DATE OF CONCLUSION OF HEARING BY EXCLUDING THE DAYS FOR WHICH THE LOCKDOWN ANNOUNCED BY THE GOVERNMENT WAS IN FORCE. THE RELEVANT OBSERVATIONS OF THIS TRIBUNAL IN THE SAID BINDING PRECEDENT ARE AS UNDER: - 7. HOWEVER , BEFORE WE PART WITH THE MATTER, WE MUST DEAL WITH ONE PROCEDURAL ISSUE AS WELL. WHILE HEARING OF THESE APPEALS WAS CONCLUDED ON 7TH JANUARY 2020, THIS ORDER THEREON IS BEING PRONOUNCED TODAY ON 14 TH DAY OF MAY, 2020, MUCH AFTER THE EXPIRY OF 90 DAYS FROM THE DATE OF CONCLUSION OF HEARING. WE ARE ALSO ALIVE TO THE FACT THAT RULE 34(5) OF THE INCOME TAX 12 I.T.A. NO. 7211 /MUM/201 8 M/S PARAS STEEL CORPORATION APPELLATE TRIBUNAL RULES 1963, WHICH DEALS WITH PRONOUNCEMENT OF ORDERS, PROVIDES AS FOLLOWS: (5) THE P RONOUNCEMENT MAY BE IN ANY OF THE FOLLOWING MANNERS: (A) THE BENCH MAY PRONOUNCE THE ORDER IMMEDIATELY UPON THE CONCLUSION OF THEHEARING. (B) IN CASE WHERE THE ORDER IS NOT PRONOUNCED IMMEDIATELY ON THE CONCLUSION OF THE HEARING, THE BENCH SHALL GIVE A DATE FORPRONOUNCEMENT. (C ) IN A CASE WHERE NO DATE OF PRONOUNCEMENT IS GIVEN BY THE BENCH, EVERY ENDEAVOUR SHALL BE MADE BY THE BENCH TO PRONOUNCE THE ORDER WITHIN 60 DAYS FROM THE DATE ON WHICH THE HEARING OF THE CASE WAS CONCLUDED BUT, WHERE IT IS NOT PRAC TICABLE SO TO DO ON THE GROUND OF EXCEPTIONAL AND EXTRAORDINARY CIRCUMSTANCES OF THE CASE, THE BENCH SHALL FIX A FUTURE DAY FOR PRONOUNCEMENT OF THE ORDER, AND SUCH DATE SHALL NOT ORDINARILY (EMPHASIS SUPPLIED BY US NOW) BE A DAY BEYOND A FURTHER PERIOD OF 3 0 DAYS AND DUE NOTICE OF THE DAY SO FIXED SHALL BE GIVEN ON THE NOTICEBOARD. 8 . QUITE CLEARLY, ORDINARILY THE ORDER ON AN APPEAL SHOULD BE PRONOUNCED BY THE BENCH WITHIN NO MORE THAN 90 DAYS FROM THE DATE OF CONCLUDING THE HEARING. IT IS, HOWEVER, IMPORTANT TO NOTE THAT THE EXPRESSION ORDINARILY HAS BEEN USED IN THE SAID RULE IT SELF. THIS RULE WAS INSERTED AS A RESULT OF DIRECTIONS OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SHIVSAGAR VEG RESTAURANT VS ACIT [(2009) 317 ITR 433 (BOM)] WHEREIN THEIR LORDSHIPS HAD, INTER ALIA, DIRECTED THAT WE, THEREFORE, DIRECT THE PRESID ENT OF THE APPELLATE TRIBUNAL TO FRAME AND LAY DOWN THE GUIDELINES IN THE SIMILAR LINES AS ARE LAID DOWN BY THE APEX COURT IN THE CASE OF ANIL RAI (SUPRA) AND TO ISSUE APPROPRIATE ADMINISTRATIVE DIRECTIONS TO ALL THE BENCHES OF THE TRIBUNAL IN THAT BEHALF . WE HOPE AND TRUST THAT SUITABLE GUIDELINES SHALL BE FRAMED AND ISSUED BY THE PRESIDENT OF THE APPELLATE TRIBUNAL WITHIN SHORTEST REASONABLE TIME AND FOLLOWED STRICTLY BY ALL THE BENCHES OF THE TRIBUNAL. IN THE MEANWHILE ( EMPHASIS, BY UNDERLINING, SUPPLIE D BY US NOW ), ALL THE REVISIONAL AND APPELLATE AUTHORITIES UNDER THE INCOME - TAX ACT ARE DIRECTED TO DECIDE MATTERS HEARD BY THEM WITHIN A 13 I.T.A. NO. 7211 /MUM/201 8 M/S PARAS STEEL CORPORATION PERIOD OF THREE MONTHS FROM THE DATE CASE IS CLOSED FOR JUDGMENT . IN THE RULED SO FRAMED, AS A RESULT OF THESE DIRECT IONS, THE EXPRESSION ORDINARILY HAS BEEN INSERTED IN THE REQUIREMENT TO PRONOUNCE THE ORDER WITHIN A PERIOD OF 90 DAYS. THE QUESTION THEN ARISES WHETHER THE PASSING OF THIS ORDER, BEYOND NINETY DAYS, WAS NECESSITATED BY ANY EXTRAORDINARY CIRCUMSTANCES. 9 . LET US IN THIS LIGHT REVERT TO THE PREVAILING SITUATION IN THE COUNTRY. ON 24TH MARCH, 2020, HONBLE PRIME MINISTER OF INDIA TOOK THE BOLD STEP OF IMPOSING A NATIONWIDE LOCKDOWN, FOR 21 DAYS, TO PREVENT THE SPREAD OF COVID 19 EPIDEMIC, AND THIS LOCKD OWN WAS EXTENDED FROM TIME TO TIME. AS A MATTER OF FACT, EVEN BEFORE THIS FORMAL NATIONWIDE LOCKDOWN, THE FUNCTIONING OF THE INCOME TAX APPELLATE TRIBUNAL AT MUMBAI WAS SEVERELY RESTRICTED ON ACCOUNT OF LOCKDOWN BY THE MAHARASHTRA GOVERNMENT, AND ON ACCOUN T OF STRICT ENFORCEMENT OF HEALTH ADVISORIES WITH A VIEW OF CHECKING SPREAD OF COVID 19. THE EPIDEMIC SITUATION IN MUMBAI BEING GRAVE, THERE WAS NOT MUCH OF A RELAXATION IN SUBSEQUENT LOCKDOWNS ALSO. IN ANY CASE, THERE WAS UNPRECEDENTED DISRUPTION OF JUDIC IAL WOK ALL OVER THE COUNTRY. AS A MATTER OF FACT, IT HAS BEEN SUCH AN UNPRECEDENTED SITUATION, CAUSING DISRUPTION IN THE FUNCTIONING OF JUDICIAL MACHINERY, THAT HONBLE SUPREME COURT OF INDIA, IN AN UNPRECEDENTED ORDER IN THE HISTORY OF INDIA AND VIDE ORDER DATED 6.5.2020 READ WITH ORDER DATED 23.3.2020, EXTENDED THE LIMITATION TO EXCLUDE NOT ONLY THIS LOCKDOWN PERIOD BUT ALSO A FEW MORE DAYS PRIOR TO, AND AFTER, THE LOCKDOWN BY OBSERVING THAT IN CASE THE LIMITATION HAS EXPIRED AFTER 15.03.2020 THEN THE PERIOD FROM 15.03.2020 TILL THE DATE ON WHICH THE LOCKDOWN IS LIFTED IN THE JURISDICTIONAL AREA WHERE THE DISPUTE LIES OR WHERE THE CAUSE OF ACTION ARISES SHALL BE EXTENDED FOR A PERIOD OF 15 DAYS AFTER THE LIFTING OF LOCKDOWN . HONBLE BOMBAY HIGH COURT, IN AN ORDER DATED 15TH APRIL 2020, HAS, BESIDES EXTENDING THE VALIDITY OF ALL INTERIM ORDERS, HAS ALSO OBSERVED THAT, IT IS ALSO CLARIFIED THAT WHILE CALCULATING TIME FOR DISPOSAL OF MATTERS MADE TIME - BOUND BY THIS COURT, THE PERIOD FOR WHICH THE ORDER DA TED 26TH MARCH 2020 CONTINUES TO OPERATE SHALL BE ADDED AND TIME SHALL STAND EXTENDED ACCORDINGLY , AND ALSO OBSERVED THAT ARRANGEMENT CONTINUED BY AN ORDER DATED 26TH MARCH 2020 TILL 30TH APRIL 2020 SHALL CONTINUE FURTHER TILL 15TH JUNE 2020 . IT HAS B EEN AN UNPRECEDENTED SITUATION NOT ONLY IN INDIA BUT ALL OVER THE WORLD. GOVERNMENT OF INDIA HAS, VIDE NOTIFICATION DATED 19 TH FEBRUARY 2020, TAKEN THE STAND THAT, THE CORONAVIRUS SHOULD 14 I.T.A. NO. 7211 /MUM/201 8 M/S PARAS STEEL CORPORATION BE CONSIDERED A CASE OF NATURAL CALAMITY AND FMC (I.E. F ORCE MAJEURE CLAUSE) MAYBE INVOKED, WHEREVER CONSIDERED APPROPRIATE, FOLLOWING THE DUE PROCEDURE. THE TERM FORCE MAJEURE HAS BEEN DEFINED IN BLACKS LAW DICTIONARY, AS AN EVENT OR EFFECT THAT CAN BE NEITHER ANTICIPATED NOR CONTROLLED WHEN SUCH IS THE POSITION, AND IT IS OFFICIALLY SO NOTIFIED BY THE GOVERNMENT OF INDIA AND THE COVID - 19 EPIDEMIC HAS BEEN NOTIFIED AS A DISASTER UNDER THE NATIONAL DISASTER MANAGEMENT ACT, 2005, AND ALSO IN THE LIGHT OF THE DISCUSSIONS ABOVE, THE PERIOD DURING WHICH LOCKD OWN WAS IN FORCE CAN BE ANYTHING BUT AN ORDINARYPERIOD. 1 0 .IN THE LIGHT OF THE ABOVE DISCUSSIONS, WE ARE OF THE CONSIDERED VIEW THAT RATHER THAN TAKING A PEDANTIC VIEW OF THE RULE REQUIRING PRONOUNCEMENT OF ORDERS WITHIN 90 DAYS, DISREGARDING THE IMPOR TANT FACT THAT THE ENTIRE COUNTRY WAS IN LOCKDOWN, WE SHOULD COMPUTE THE PERIOD OF 90 DAYS BY EXCLUDING AT LEAST THE PERIOD DURING WHICH THE LOCKDOWN WAS IN FORCE. WE MUST FACTOR GROUND REALITIES IN MIND WHILE INTERPRETING THE TIME LIMIT FOR THE PRONOUNCEM ENT OF THE ORDER. LAW IS NOT BROODING OMNIPOTENCE IN THE SKY. IT IS A PRAGMATIC TOOL OF THE SOCIAL ORDER. THE TENETS OF LAW BEING ENACTED ON THE BASIS OF PRAGMATISM, AND THAT IS HOW THE LAW IS REQUIRED TO INTERPRETED. THE INTERPRETATION SO ASSIGNED BY US I S NOT ONLY IN CONSONANCE WITH THE LETTER AND SPIRIT OF RULE 34(5) BUT IS ALSO A PRAGMATIC APPROACH AT A TIME WHEN A DISASTER, NOTIFIED UNDER THE DISASTER MANAGEMENT ACT 2005, IS CAUSING UNPRECEDENTED DISRUPTION IN THE FUNCTIONING OF OUR JUSTICE DELIVERY SY STEM. UNDOUBTEDLY, IN THE CASE OF OTTERS CLUB VS DIT [(2017) 392 ITR 244 (BOM)] , HONBLE BOMBAY HIGH COURT DID NOT APPROVE AN ORDER BEING PASSED BY THE TRIBUNAL BEYOND A PERIOD OF 90 DAYS, BUT THEN IN THE PRESENT SITUATION HONBLE BOMBAY HIGH COURT ITSELF HAS, VIDE JUDGMENT DATED 15 TH APRIL 2020, HELD THAT DIRECTED WHILE CALCULATING THE TIME FOR DISPOSAL OF MATTERS MADE TIME - BOUND BY THIS COURT, THE PERIOD FOR WHICH THE ORDER DATED 26TH MARCH 2020 CONTINUES TO OPERATE SHALL BE ADDED AND TIME SHALL STAND EXTENDED ACCORDINGLY . THE EXTRAORDINARY STEPS TAKEN SUOMOTU BY HONBLE JURISDICTIONAL HIGH COURT AND HONBLE SUPREME COURT ALSO INDICATE THAT THIS PERIOD OF LOCKDOWN CANNOT BE TREATED AS AN ORDINARY PERIOD DURING WHICH THE NORMAL TIME LIMITS ARE TO REMAI N IN FORCE. IN OUR CONSIDERED VIEW, EVEN WITHOUT THE WORDS ORDINARILY,INTHELIGHTOFTHEABOVEANALYSISOFTHELEGALPOSITION, THEPERIODDURINGWHICH LOCKOUT WAS IN FORCE IS TO EXCLUDED FOR THE PURPOSE OF TIME LIMITS SET OUT IN RULE 34(5) OF THE APPELLATE 15 I.T.A. NO. 7211 /MUM/201 8 M/S PARAS STEEL CORPORATION TRIBUNAL RULES, 1963. VIEWED THUS, THE EXCEPTION, TO 90 - DAY TIME - LIMIT FOR PRONOUNCEMENT OF ORDERS, INHERENT IN RULE 34(5)(C), WITH RESPECT TO THE PRONOUNCEMENT OF ORDERS WITHIN NINETY DAYS, CLEARLY COMES INTO PLAY IN THE PRESENT CASE. OF COURSE, THERE IS NO, AND T HERE CANNOT BE ANY, BAR ON THE DISCRETION OF THE BENCHES TO REFIX THE MATTERS FOR CLARIFICATIONS BECAUSE OF CONSIDERABLE TIME LAG BETWEEN THE POINT OF TIME WHEN THE HEARING IS CONCLUDED AND THE POINT OF TIME WHEN THE ORDER THEREON IS BEING FINALIZED, BUT T HEN, IN OUR CONSIDERED VIEW, NO SUCH EXERCISE WAS REQUIRED TO BE CARRIED OUT ON THE FACTS OF THIS CASE. 11. TO SUM UP, THE APPEAL OF THE ASSESSEE IS ALLOWED, AND APPEAL OF THE ASSESSING OFFICER IS DISMISSED. ORDER PRONOUNCED UNDER RULE 34(4) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1962, BY PLACING THE DETAILS ON THE NOTICEBOARD. 1 6 . RESPECTFULLY FOLLOWING THE AFORESAID JUDICIAL PRECEDENT, WE PROCEED TO PRONOUNCE THIS ORDER BEYOND A PERIOD OF 90 DAYS FROM THE DATE OF CONCLUSION OF HEARING. 17. ORDER PRONOUNCED AS PER RULE 34(5) OF ITAT RULES AND BY PLACING THE PRONOUNCEME NT LIS T IN THE NOTICE BOARD ON 23.07.2020 . SD/ - SD/ - ( C. N. PRASAD ) (S. RIFAUR RAHMAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 23.07 .2020 SR.PS . DHANANJAY 16 I.T.A. NO. 7211 /MUM/201 8 M/S PARAS STEEL CORPORATION / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI