SKYLARK VIDEO VISION, MUMBAI V. ITO 24(3)(3), MUMBAI

ITA 7423/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0556 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 25-07-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 16-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Keywords: Depreciation; Period of limitation
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH SMC, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER ITA NO.7423/M/2016 ASSESSMENT YEAR: 2006-07 M/S. SKYLARK VIDEO VISION, 12, SIRAJ MANSION, 5 TH ROAD, LOKMANYA TILAK NAGAR, GOREGAON (WEST), MUMBAI-62 PAN: AACFS4308R VS. INCOME TAX OFFICER-24(3)(3), C-11, R. NO.705, PRATYAKSHKAR BHAVAN, BANDRA KURLA COMPLEX, MUMBAI -51 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : MS. AARTI SATHE, A.R. REVENUE BY : MS. N. HEMALATHA, D.R. DATE OF HEARING : 14.12.2017 DATE OF PRONOUNCEMENT : 30.01.2018 O R D E R PER D.T. GARASIA, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 29.04.16 OF THE COMMISSIONER OF INC OME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEAR 2006-07. 2. THE SHORT FACTS OF THE CASE ARE AS UNDER: THE ASSESSEE IS A FIRM. DURING THE RELEVANT YEAR U NDER CONSIDERATION THE ASSESSEE ENGAGED IN BUSINESS OF H IRING OF AUDIO- VISUAL EQUIPMENTS. THE ASSESSMENT ORDER U/S 143(3) OF THE ACT WAS PASSED. THE REVISION ORDER WAS UNDER SECTION 263 O F THE ACT. UNDER SECTION 263 OF THE ACT, THE ASSESSING OFFICER (HERE INAFTER REFERRED TO AS THE AO) WAS DIRECTED TO EXAMINE THE CLAIM OF DEP RECIATION ITA NO.7423/M/2016 M/S. SKYLARK VIDEO VISION 2 ALLOWABLE TO THE ASSESSEE ON LCD COMPUTERIZED MULTI MEDIA PROJECTS. THE ASSESSEE HAD CLAIMED DEPRECIATION ON THE SAME @ 60% WHILE THE LD. CIT(A) WAS OF A VIEW THAT CORRECT RATE OF DEPRE CIATION SHOULD BE 15%. THE ASSESSEE DID NOT AGITATE UNDER SECTION 26 3. IN CONSEQUENCE TO SECTION 263, THE DEPRECIATION WAS AL LOWED @ 15% AND ASSESSEE DID NOT APPEAL BEFORE THE COMMISSIONER . THE ASSESSEE FILED THE APPEAL ON 26.03.14 WHICH WAS DELAYED NEAR LY 25 MONTHS. THEREFORE, COMMISSIONER DID NOT ACCEPT THE APPEAL O F THE ASSESSEE AND DELAY WAS NOT CONDONED. THEREFORE, ASSESSEE IS IN APPEAL BEFORE ME. 3. DURING THE COURSE OF HEARING, THE LD. A.R. RELIE D UPON THE JURISDICTIONAL HIGH COURT IN THE CASE OF VIJAY VISH IN MEGHANI & ORS. IN ITA NO.493 & 508 OF 2015 WHEREIN THE HIGH COURT HAS CONDONED THE DELAY ON THE GROUND THAT WHILE CONDONING THE DE LAY IT IS PERMISSIBLE FOR COURT IN HIS DISCRETION TO IMPOSE T HE COST EVENTUALLY THE RIGHT AND EQUITY BALANCES. TO RENDER SUBSTANTI AL JUSTICE AND NOT TO ENRICH THE REVENUE THAT COST HAS BEEN IMPOSED. IT IS NOT THEREFORE, A CASE WHERE A STAY HAS TO BE ALLOWED TO RETAIN ANY B ENEFIT OR HAS BEEN BENEFITTED BY ANY SUCH DIRECTION. THEREFORE, THE C OURT HAS CONDONED THE DELAY BY IMPOSING THE COST OF RS .25 LAKHS IN BOTH THE APPEALS . THEREFORE, THE APPEAL MAY BE ALLOWED. IN THIS APPE AL THERE IS DELAY OF 25 MONTHS. THEREFORE, REASONABLE COST MAY BE IM POSED. 4. ON THE OTHER HAND, THE LD. D.R. OBJECTED TO IT. ITA NO.7423/M/2016 M/S. SKYLARK VIDEO VISION 3 5. HAVING HEARD BOTH THE PARTIES AND LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE, FOLLOWING THE JURISD ICTIONAL DECISION OF HIGH COURT IN THE CASE OF VIJAY VISHIN MEGHANI & ORS. IN ITA NO.493 & 508 OF 2015 HAS HELD AS UNDER: 20. IN NIRMALA DEVI (SUPRA), THE HONBLE SUPREME C OURT HELD AS UNDER: 5. THE ACCIDENT CLAIMS TRIBUNAL PRONOUNCED ITS AWA RD ON SEPTEMBER, 15, 1976, AFTER MAKING THE NECESSARY COMPUTATIONS AND DEDUCTIONS. THE APPEAL HAD TO BE F ILED ON OR BEFORE JANUARY 19, 1977 BUT WAS ACTUALLY FILE D 30 DAYS LATER. COUNSEL FOR THE PETITIONER IS STATED TO HAVE MADE THE MISTAKE IN THE CALCULATION OF THE PERIOD O F LIMITATION. HE HAD INTIMATED THE PARTIES ACCORDINGL Y WITH THE RESULT THAT THE PETITIONER WAS MISLED INTO INST ITUTING APPEAL LATE. THE HIGH COURT TOOK THE VIEW THAT THE LAWYERS IGNORANCE ABOUT THE LAW WAS NO GROUND FOR CONDONATI ON OF DELAY. RELIANCE WAS PLACED ON SOME DECISIONS OF THE PUNJAB HIGH COURT AND THERE WAS REFERENCE ALSO TO A RULING OF THE SUPREME COURT IN AIR 1972 SC 749. THE CONCLU SION WAS COUCHED IN THESE WORDS: 'THE ASSISTANT DIVISIONAL MANAGER OF THE COMPANY- APPELLANT IS NOT AN ILLITERATE OR SO IGNORANT PERSO N WHO COULD NOT CALCULATE THE PERIOD OF LIMITATION. SUCH LIKE APPEALS ARE FILED BY SUCH COMPANIES DAILY . THE FACTS OF THIS CASE CLEARLY SHOW, AS OBSERVED EARLIER, THAT THE MISTAKE IS NOT BONA FIDE AND THE APPELLANT HAS FAILED TO SHOW SUFFICIENT CAUSE TO CONDONE THE DELAY.' 6. WE ARE NOT ABLE TO AGREE WITH THIS REASONING. A COMPANY RELIES ON ITS LEGAL ADVISER AND THE MANAGER 'S EXPERTISE IS IN COMPANY MANAGEMENT AND NOT IN LAW. THERE IS NO PARTICULAR REASON WHY WHEN A COMPANY OR OTHER PERSON RETAINS A LAWYER TO ADVISE IT OR HIM ON LEGA L AFFAIRS RELIANCE SHOULD NOT BE PLACED ON SUCH COUNSEL. OF C OURSE, IF THERE IS GROSS DELAY TOO PATENT EVEN FOR LAYMAN OR IF THERE IS INCOMPREHENSIBLE INDIFFERENCE THE SHIELD O F LEGAL OPINION MAY STILL BE VULNERABLE. THE CORRECT LEGAL POSITION HAS BEEN EXPLAINED WITH REFERENCE TO THE SUPREME CO URT DECISION IN A JUDGMENT OF ONE OF ITS IN AIR 1971 KE R. 211 (AT P. 215): THE LAW IS SETTLED THAT MISTAKE OF COUNSEL MAY IN ITA NO.7423/M/2016 M/S. SKYLARK VIDEO VISION 4 CERTAIN CIRCUMSTANCES BE TAKEN INTO ACCOUNT IN CONDONING DELAY ALTHOUGH THERE IS NO GENERAL PROPOSITION THAT MISTAKE OF COUNSEL BY ITSELF IS ALWAYS A SUFFICIENT GROUND. IT IS ALWAYS A QUESTION WHETHER THE MISTAKE WAS BONA FIDE OR WAS MERELY A DEVICE TO COVER AN ULTERIOR PURPOSE SUCH AS LACHES ON THE PART OF THE LITIGANT OR AN ATTEMPT TO SAVE LIMITATION IN AN UNDERHAND WAY. THE HIGH COURT UNFORTUNATELY NEVER CONSIDERED THE MATTER FROM THIS ANGLE. IF IT HAD, IT WOULD HAVE SEEN QUITE CLEARLY THAT THERE WAS NO ATTEMPT TO AVOID THE LIMITATION ACT BU T RATHER TO FOLLOW IT ALBEIT ON A WRONG READING OF TH E SITUATION. THE HIGH COURT TOOK THE VIEW THAT MR. RAIZADA BEING AN ADVOCATE OF 34 YEARS' STANDING COULD NOT POSSIBLY MAKE THE MISTAKE IN VIEW OF THE CLEAR PROVISIONS ON THE SUBJECT OF APPEALS EXISTING UNDER SECTION 39(1) OF THE PUNJAB COURTS ACT AND THEREFORE, HIS ADVICE TO FILE THE APPEAL BEFORE THE DISTRICT COURT WOULD NOT COME TO THE RESCUE OF THE APPELLANT UNDER SEC. 5 OF THE LIMITATION ACT. THE SUPREME COURT UPSET THIS APPROACH.' 'I AM OF THE VIEW THAT LEGAL ADVICE GIVEN BY THE MEMBERS OF THE LEGAL PROFESSION MAY SOMETIMES BE WRONG EVEN AS PRONOUNCEMENT ON QUESTIONS OF LAW BY COURTS ARE SOME TIMES WRONG. AN AMOUNT OF LATITUDE IS EXPECTED IN SUCH CASES FOR, TO ERR IS HUMAN AND LAY MEN, AS LITIGANTS ARE, MAY LEGITIMATELY LEAN ON EXPERT COUNSEL IN LEGAL AS IN OTHER DEPARTMENTS, WITHOUT PROBING THE PROFESSIONAL COMPETENCE OF THE ADVICE. THE COURT MUST OF COURSE, SEE WHETHER, IN SUCH CASES THERE IS ANY TAINT OF MA LA FIDES OR ELEMENT OF RECKLESSNESS OR RUSE. IF NEITHE R IS PRESENT, LEGAL ADVICE HONESTLY SOUGHT AND ACTUALLY GIVEN, MUST BE TREATED AS SUFFICIENT CAUSE WHEN AN APPLICATION UNDER SECTION 5 OF THE LIMITATION ACT I S BEING CONSIDERED. THE STATE HAS NOT ACTED IMPROPERLY IN RELYING ON ITS LEGAL ADVISERS.' 7. WE HAVE CLARIFIED THE LEGAL POSITION REGARDING T HE PROPRIETY AND REASONABLENESS OF COMPANIES AND OTHER PERSONS RELYING UPON LEGAL OPINION IN THE MATTER OF COMPUTATION OF LIMITATION SINCE IT IS A PROBLEM WHI CH MAY ARISE FREQUENTLY. IF LEGAL ADVISER'S OPINIONS ARE T O BE SUBJECTED BY COMPANY MANAGERS TO FURTHER LEGAL SCRU TINY OF THEIR OWN, AN IMPOSSIBLE SITUATION MAY ARISE. IN DEED GOVERNMENT, A LARGE LITIGANT IN THIS COUNTRY, MAY F IND ITA NO.7423/M/2016 M/S. SKYLARK VIDEO VISION 5 ITSELF IN DIFFICULTY. THAT IS THE REASON WHY WE HAV E CHOSEN TO EXPLAIN AT THIS LENGTH THE APPLICATION OF SECTIO N 5 VIS-A- VIS COUNSEL'S MISTAKE.' THE ABOVE SUMS UP THE APPROACH OF A COURT RENDERING JUSTICE ACCORDING TO LAW. 21. WE FIND FROM PARAGRAPH 13 OF THE ORDER, BUT FOR THIS RELEVANT FACTORS AND TESTS, EVERYTHING ELSE HAS BEE N BROUGHT INTO THE ADJUDICATION BY THE TRIBUNAL. THE TRIBUNAL THOUGH AWARE OF THESE PRINCIPLES BUT POSSIBLY CARRIED AWAY BY THE FACT THAT THE DELAY OF 2984 DAYS IS INCAPABLE OF CO NDONATION. THAT IS NOT HOW A MATTER OF THIS NATURE SHOULD BE A PPROACHED. IN THE PROCESS THE TRIBUNAL WENT ABOUT BLAMING THE ASSESSEE AND THE PROFESSIONALS AND EQUALLY THE DEPARTMENT. T O OUR MIND, THEREFORE, THE TRIBUNALS ORDER DOES NOT MEET THE REQUIREMENT SET OUT IN LAW. THE TRIBUNAL HAS COMPLE TELY MISDIRECTED ITSELF AND HAS TAKEN INTO ACCOUNT FACTO RS, TESTS AND CONSIDERATIONS WHICH HAVE NO BEARING OR NEXUS W ITH THE ISSUE AT HAND. THE TRIBUNAL, THEREFORE, HAS ERRED I N LAW AND ON FACTS IN REFUSING TO CONDONE THE DELAY. THE EXPL ANATION PLACED ON AFFIDAVIT WAS NOT CONTESTED NOR WE FIND T HAT FROM SUCH EXPLANATION CAN WE ARRIVE AT THE CONCLUSION TH AT THE ASSESSEE WAS AT FAULT, HE INTENTIONALLY AND DELIBER ATELY DELAYED THE MATTER AND HAS NO BONA FIDE OR REASONAB LE EXPLANATION FOR THE DELAY IN FILING THE PROCEEDINGS . THE POSITION IS QUITE OTHERWISE. 22. IN THE LIGHT OF THE ABOVE DISCUSSION, WE ALLOW BOTH THE APPEALS. WE CONDONE THE DELAY OF 2984 DAYS IN FILIN G THE APPEALS BUT ON THE CONDITION OF PAYMENT OF COSTS, Q UANTIFIED TOTALLY AT RS.50,000/-. MEANING THEREBY, RS.25,000/ - PLUS RS.25,000/- IN BOTH APPEALS. THE COSTS TO BE PAID I N ONE SET TO THE RESPONDENTS WITHIN A PERIOD OF EIGHT WEEKS FROM TODAY. ON PROOF OF PAYMENT OF COSTS, THE TRIBUNAL SHALL RE STORE THE APPEALS OF THE ASSESSEE TO ITS FILE FOR ADJUDICATIO N AND DISPOSAL ON MERITS. WE CLARIFY THAT ALL CONTENTION S AS FAR AS MERITS OF THE CLAIM ARE KEPT OPEN. WE HAVE NOT EXP RESSED ANY OPINION ON THE SAME. 6. RESPECTFULLY FOLLOWING THE DECISION, I DIRECT TH E ASSESSEE TO DEPOSIT OF RS.5000/- IN PRIME MINISTERS RELIEF FU ND. ON DEPOSITING THIS AMOUNT, I CONDONE THE DELAY. ITA NO.7423/M/2016 M/S. SKYLARK VIDEO VISION 6 7. AS ASSESSEE HAS ALREADY PAID THE COST, I RESTORE THIS MATTER BACK TO THE FILE OF THE LD. CIT(A) AND THE LD. CIT(A) IS DIRECTED TO DECIDE THE APPEAL ON MERIT. 8. IN THE RESULT, APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.01.2018. SD/- (D.T. GARASIA) JUDICIAL MEMB ER MUMBAI, DATED: 30.01.2018. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.