Sri Suresh Khatri, Kanpur V. Income Tax Officer- 3(4), Kanpur

ITA 781/LKW/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0048 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 13-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Condonation of delay; TDS
• Section: 40(a)(ia); 194C; 195

Judgement Text

I.T.A. NO.781/LKW/2017 ASSESSMENT YEAR:2013-14 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI A. D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO.781/LKW/2017 ASSESSMENT YEAR:2013-14 SHRI SURESH KHATRI, ARUGAN GUEST HOUSE, BARA DEVI, JUHI, KANPUR. PAN:ALMPK 2888D VS. INCOME TAX OFFICER-3(4), KANPUR. (APPELLANT) (RESPONDENT) O R D E R PER A. D. JAIN: V.P. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LEARNED CIT(A)-1, KANPUR DATED 21/08/2017 PERTAINING TO ASS ESSMENT YEAR 2013- 2014. IN THIS APPEAL THE ASSESSEE HAS TAKEN THE FO LLOWING GROUNDS: 1. BECAUSE THE CIT(A) HAS ERRED ON FACTS AND IN LA W IN UPHOLDING THE ADDITION OF RS.6,42,437/- MADE BY THE AO UNDER THE HEAD SHIPPING EXPENSES ON ACCOUNT OF NON DEDUCT ION OF TDS, WHICH ADDITION IS CONTRARY TO FACTS, BAD IN LA W BE DELETED. 2. BECAUSE THE CIT(A) HAS NOT CONSIDERED THE PROVIS IONS OF SECTION 200 AND 201(1A) OF THE ACT AND HAS WRONGLY TREATED THE ASSESSEE TO BE IN DEFAULT, THE ADDITION UPHELD BE D ELETED. APPELLANT BY SHRI RAKESH GARG, ADVOCATE RESPONDENT BY SHRI AJAY KUMAR, D.R. DATE OF HEARING 19/02/2020 DATE OF PRONOUNCEMENT 26 / 0 6 /20 20 I.T.A. NO.781/LKW/2017 ASSESSMENT YEAR:2013-14 2 3. BECAUSE THE CIT(A) HAS FAILED TO APPRECIATE THA T THE PROVISIONS OF SECTION 40(A)(IA) ARE TO BE READ ALON GWITH CHAPTER XVIIB OF THE ACT, AS REFERRED TO THEREIN, WHEREIN A PERSON TO WHOM THE PAYMENT HAVING BEEN MADE, HAVE DECLARED TH E SAME IN ITS INCOME, THEN THE PROVISIONS OF SECTION 40(A) (IA) WOULD NOT BE APPLICABLE, THE ORDER OF THE CIT(A) BE QUASHED. 4. BECAUSE THE CIT(A) HAS ERRED ON FACT AND IN LAW IN UPHOLDING THE ADDITION OF RS.50,250/- BEING DIFFERE NCE IN THE ACCOUNT OF M/S. ESKAY SALES CORPORATION, WHICH ADDI TION IS BAD IN LAW AND BE DELETED. 5. BECAUSE THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE FOLLOWING DISALLOWANCES, OUT OF EXPEN SES, WHICH DISALLOWANCES MADE BY THE ASSESSING OFFICER ARE ALL CONTRARY TO FACTS BAD IN LAW AND BE DELETED : (I) RS. 7,575/- OUT OF TRAVELLING EXPENSES, (II) RS.12,322/- OUT OF MISC. EXPENSES. THE ABOVE DISALLOWANCES ARE CONTRARY TO FACTS, BAD IN LAW AND BE DELETED. 2. AT THE OUTSET, LEARNED A. R. INVITED OUR ATTENTI ON TO THE FACT THAT THE APPEAL FILED BY THE ASSESSEE IS DELAYED BY 36 DAYS. HE ALSO INVITED OUR ATTENTION TO THE APPLICATION DATED 20/01/2018, FILE D BY THE ASSESSEE, FOR CONDONATION OF DELAY WHEREIN THE REASONS FOR DELAY IN FILING THE APPEAL HAVE BEEN EXPLAINED STATING THAT THE ASSESSEE TIED THE F OLDER IN WHICH THE ORDER WAS KEPT, WITH SOME OTHER FILES AND IT GOT BUNDLED WITH OTHER RECORDS; AND THAT THE APPEAL COULD BE FILED ONLY AFTER IT WAS TR ACED, INCURRING THE INORDINATE DELAY OF THIRTY SIX DAYS. IT WAS PRAYED THAT THE ASSESSEE WAS PREVENTED BY REASONABLE AND SUFFICIENT CAUSE IN NOT FILING THE APPEAL WITHIN THE PRESCRIBED TIME AND THEREFORE, THE DELAY MAY BE CONDONED AND THE APPEAL MAY BE HEARD ON MERITS. LEARNED D. R. HAD N O OBJECTION TO THE CONDONATION OF DELAY. FINDING THE PLAUSIBLE SUFFIC IENT CAUSE FOR DELAY IN I.T.A. NO.781/LKW/2017 ASSESSMENT YEAR:2013-14 3 FILING THE APPEAL, WE CONDONED THE DELAY AND DIRECT ED BOTH THE PARTIES TO ARGUE THE CASE ON MERITS. 3. GROUND NOS. 1 TO 3 OF THE APPEAL RELATE TO THE D ISALLOWANCE OF RS.6,42,437/- FOR NON DEDUCTION OF TAX AT SOURCE U/ S 40(A)(IA) OF THE ACT ON PAYMENT OF OCEAN FREIGHT, MADE TO NON-RESIDENT SHIP PING COMPANIES. THE ASSESSEE IS A PROPRIETARY CONCERN AND ENGAGED IN TH E BUSINESS OF MANUFACTURING OF LEATHER AND COTTON ITEMS. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD EXPORTED GOODS AND MADE PAYMENT OF RS.6,42,437/- TOWARDS SHIPPING EXPENSES IN THE NATU RE OF FREIGHT. THE ASSESSING OFFICER OBSERVED THAT THE PAYMENTS, MADE BY THE ASSESSEE, COME WITHIN THE PURVIEW OF SECTION 194C OF THE I.T. ACT AND ACCORDINGLY THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE ON THES E PAYMENTS. THE ASSESSING OFFICER DISALLOWED RS.6,42,437/- ON THE G ROUND THAT THE ASSESSEE FAILED TO DEDUCT TDS ON PAYMENTS MADE ON ACCOUNT OF FREIGHT AS PER THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. BEING AGGRIEVED WITH THE ACTION OF ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) WHO HAS ALSO SUSTAINED THE DISALLOWANCE. NO W THE ASSESSEE IS IN APPEAL BEFORE US. 4. DURING THE COURSE OF HEARING, THE LEARNED COUNS EL FOR THE ASSESSEE RELIED ON CBDT CIRCULAR NO. 723 DATED 19/09/1995, P LACED AT PAGE 5 OF THE PAPER BOOK, AND SUBMITTED THAT THE DISALLOWANCE CAN NOT BE MADE IN VIEW OF THIS CIRCULAR. CIRCULAR NO. 723 IS REPRODUCED BELO W: CIRCULAR: NO. 723, DATED 19-9-1995 1. REPRESENTATIONS HAVE BEEN RECEIVED REGARDING THE SCOPE OF SECTIONS 172, 194C AND 195 OF THE INCOME-TAX ACT, 1 961, IN CONNECTION WITH TAX DEDUCTION AT SOURCE FROM PAYMEN TS MADE TO THE FOREIGN SHIPPING COMPANIES OR THEIR AGENTS. I.T.A. NO.781/LKW/2017 ASSESSMENT YEAR:2013-14 4 2. SECTION 172 DEALS WITH SHIPPING BUSINESS OF NON- RESIDENTS. SECTION 172(1) PROVIDES THE MODE OF THE LEVY AND RE COVERY OF TAX IN THE CASE OF ANY SHIP, BELONGING TO OR CHARTE RED BY A NON- RESIDENT, WHICH CARRIES PASSENGERS, LIVESTOCK, MAIL OR GOODS SHIPPED AT A PORT IN INDIA. AN ANALYSIS OF THE PROV ISIONS OF SECTION 172 WOULD SHOW THAT THESE PROVISIONS HAVE T O BE APPLIED TO EVERY JOURNEY A SHIP, BELONGING TO OR CH ARTERED BY A NON-RESIDENT, UNDERTAKES FROM ANY PORT IN INDIA. SE CTION 172 IS A SELF-CONTAINED CODE FOR THE LEVY AND RECOVERY OF THE TAX, SHIP- WISE, AND JOURNEYWISE, AND REQUIRES THE FILING OF T HE RETURN WITHIN A MAXIMUM TIME OF THIRTY DAYS FROM THE DATE OF DEPARTURE OF THE SHIP. 3. THE PROVISIONS OF SECTION 172 ARE TO APPLY, NOTW ITHSTANDING ANYTHING CONTAINED IN OTHER ' PROVISIONS OF THE ACT . THEREFORE, IN SUCH CASES, THE PROVISIONS OF SECTIONS 194C AND 195 RELATING TO TAX DEDUCTION AT SOURCE ARE NOT APPLICABLE. THE REC OVERY OF TAX IS TO BE REGULATED, FOR A VOYAGE UNDERTAKEN FROM AN Y PORT IN INDIA BY A SHIP UNDER THE PROVISIONS OF SECTION 172 . 4. SECTION 194C DEALS WITH WORK CONTRACTS INCLUDING CARRIAGE OF GOODS AND PASSENGERS BY ANY MODE OF TRANSPORT OTHER THAN RAILWAYS. THIS SECTION APPLIES TO PAYMENTS MADE BY A PERSON REFERRED TO IN CLAUSES (A) TO (J) OF SUB-SECTION (1 ) TO ANY 'RESIDENT' (TERMED AS CONTRACTOR). IT IS CLEAR FROM THE SECTION THAT THE AREA OF OPERATION OF TDS IS CONFINED TO PA YMENTS MADE TO ANY 'RESIDENT'. ON THE OTHER HAND, SECTION 172 O PERATES IN THE AREA OF COMPUTATION OF PROFITS FROM SHIPPING BU SINESS OF NON-RESIDENTS. THUS, THERE IS NO OVERLAPPING IN THE AREAS OF OPERATION OF THESE SECTIONS. 5. THERE WOULD, HOWEVER, BE CASES WHERE PAYMENTS AR E MADE TO SHIPPING AGENTS OF NON-RESIDENT SHIP-OWNERS OR C HARTERERS FOR CARRIAGE OF PASSENGERS ETC., SHIPPED AT A PORT IN I NDIA. SINCE, THE AGENT ACTS ON BEHALF OF THE NON-RESIDENT SHIP-O WNER OR CHARTERER, HE STEPS INTO THE SHOES OF THE PRINCIPAL . ACCORDINGLY, PROVISIONS OF SECTION 172 SHALL APPLY AND THOSE OF SECTIONS 194C AND 195 WILL NOT APPLY. ' I.T.A. NO.781/LKW/2017 ASSESSMENT YEAR:2013-14 5 5. FROM THE READING OF THE ABOVE CIRCULAR, IT IS CL EAR THAT THE DISALLOWANCE WAS NOT REQUIRED TO BE MADE. ACCORDIN GLY, WE DELETE THE DISALLOWANCE SUSTAINED BY THE CIT(A). 6. GROUND NO. 4 OF THE APPEAL RELATES TO THE ADDITI ON OF RS.50,250/- MADE ON ACCOUNT OF DIFFERENCE BETWEEN THE OPENING B ALANCE IN THE ACCOUNT OF M/S ESKAY SALES CORPORATION AND IN THE ACCOUNTS OF THE ASSESSEE. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE U S THAT THIS DIFFERENCE IS COMING FROM LAST SEVERAL YEARS. COPY OF ACCOUNT OF M/S ESKAY SALES CORPORATION, AS APPEARING IN THE ASSESSEES BOOKS, ARE PLACED AT PAGES 37 TO 41 OF THE PAPER BOOK. LEARNED COUNSEL FOR THE ASSE SSEE SUBMITTED THAT THE DIFFERENCE IS BEING CARRIED OVER FROM EARLIER YEARS AND IT HAS TO BE ADJUSTED/RECONCILED. HE ALSO SUBMITTED THAT THE DI FFERENCE DOES NOT RELATE TO THE YEAR UNDER CONSIDERATION. KEEPING IN VIEW T HE ABOVE FACTS, WE DELETE THE ADDITION SUSTAINED BY CIT(A). 7. GROUND NO. 5 OF THE APPEAL RELATES TO THE DISA LLOWANCE OF EXPENSES ON AD HOC BASIS. THE ASSESSING OFFICER HAS DISALLO WED 10% OF TRAVELLING EXPENSES AND MISC. EXPENSES ON AD HOC BASIS. LEARNE D COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE ASSESSING OF FICER, WITHOUT POINTING OUT ANY DISCREPANCY IN THE BOOKS OF ACCOUNT, WHICH ARE TAX AUDITED, HAS SIMPLY MADE AD HOC DISALLOWANCE BY HOLDING THAT THE ASSESSEE PRODUCED SELF-MADE DEBIT VOUCHERS AND THESE EXPENSES ARE NOT OPEN TO FULL VERIFICATION AND DISALLOWED 10% OF THE TOTAL EXPEN SES UNDER THE HEAD TRAVELLING EXPENSES AND MISC. EXPENSES. WHEN THE AS SESSEE CARRIED THE MATTER IN APPEAL BEFORE LEARNED CIT(A), HE ALSO UPH ELD THE ACTION OF THE ASSESSING OFFICER. LEARNED A. R. SUBMITTED THAT IN A NUMBER OF CASES, DECIDED BY THIS BENCH AND VARIOUS HIGH COURTS, IT H AS BEEN HELD THAT AD HOC I.T.A. NO.781/LKW/2017 ASSESSMENT YEAR:2013-14 6 DISALLOWANCE, WITHOUT POINTING OUT ANY DISCREPANCY IN THE BOOKS OF ACCOUNT, CANNOT BE MADE. 8. LEARNED D. R., ON THE OTHER HAND, HEAVILY RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 9. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT ASSESSING OFFICER H AS MADE THE DISALLOWANCE SIMPLY BY HOLDING THAT THE ASSESSEE PRODUCED LEDGER ACCOUNT OF THESE EXPENSES WHICH ARE NOT OPEN TO FULL VERIFICATION AN D HENCE HAS DISALLOWED 10% OUT OF VARIOUS EXPENSES. THE ASSESSING OFFICER HAS NOWHERE POINTED OUT ANY SPECIFIC DISCREPANCY IN THE BOOKS OF ACCOUN T NOR HE HAS REJECTED THE SAME. IN OUR OPINION, THE ASSESSING OFFICER CANNOT MAKE AD HOC DISALLOWANCE. HON'BLE CALCUTTA HIGH COURT IN THE C ASE OF ASHOK SURANA VS. CIT [2016] 384 ITR 267 (CAL) HAS HELD AS UNDER: THE ASSESSEE WAS AN INDIVIDUAL ENGAGED IN THE BUSI NESS OF PRODUCING TELEVISION SERIALS AND HAD OFFICES AT CAL CUTTA, BANGALORE, DELHI AND MUMBAI. FOR THE ASSESSMENT YEA R 2001- 02, THE ASSESSEE HAD SHOWN TO HAVE INCURRED EXPENSE S ON ACCOUNT OF TELEPHONE. THE ASSESSING OFFICER DISALLO WED 20 PER CENT. OF THE EXPENDITURE ON THE GROUND THAT THE ASS ESSEE FAILED TO MAINTAIN A CALL BOOK FOR MONITORING CALLS AND TH AT A PART OF SUCH CALLS WERE FOR PERSONAL AND NON-BUSINESS USE. THE ASSESSEE ALSO CLAIMED EXPENSES OF THE MUMBAI OFFICE , PART OF WHICH WERE SUPPORTED BY INTERNAL DEBIT VOUCHERS AND CLAIMED GENERAL EXPENSES AND EXPENSES TOWARDS TEA AND TIFFI N, SUPPORTED BY DEBIT VOUCHERS. THE ASSESSING OFFICER, DISALLOWED 20 PER CENT. OF EXPENSES ON THE GROUND THAT THEY WE RE NOT VERIFIABLE. THE COMMISSIONER (APPEALS) CONFIRMED TH IS. THE TRIBUNAL RESTRICTED THE DISALLOWANCE. ON APPEAL: HELD, THAT IT WAS NOT THE CASE OF THE ASSESSING OFF ICER THAT THE ASSESSEE WAS UNABLE TO ADDUCE SATISFACTORY EVIDENCE THAT THE EXPENDITURE WAS INCURRED FOR THE PURPOSE OF HIS BUS INESS. WHEN APPROPRIATE EVIDENCE WAS ADDUCED, IT WAS NOT IN THE POWER OF I.T.A. NO.781/LKW/2017 ASSESSMENT YEAR:2013-14 7 THE ASSESSING OFFICER TO ARBITRARILY DISALLOW ANY I TEM OF EXPENDITURE ON THE GROUND THAT THE SUMS WERE NOT VE RIFIABLE. THERE WAS NO INDICATION AS TO WHAT STEP WAS TAKEN B Y THE ASSESSING OFFICER TO HAVE THOSE EXPENSES VERIFIED. IF THE ASSESSING OFFICER HAD NOT TAKEN PAINS TO HAVE THE E XPENSES VERIFIED, HE COULD NOT DISALLOW ANY PORTION OF THE EXPENDITURE ON THE GROUND THAT IT WAS NOT VERIFIABLE. THE EXPENSES WERE TO BE ALLOWED. IN VIEW OF THE ABOVE, GROUND NO. 5, TAKEN BY THE AS SESSEE, IS ALLOWED. 10. IT IS PERTINENT TO MENTION HERE THAT THIS ORDER IS BEING PRONOUNCED AFTER A PERIOD OF 90 DAYS FROM THE DATE OF CONCLUSION OF THE HEARING. IN THIS REGARD, WE PLACE RELIANCE ON THE D ECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF JSW LTD IN IT A NOS. 6264 & 6103/MUM/2018 DATED 14.5.2020, WHEREIN THIS ISSUE H AS BEEN ADDRESSED IN DETAIL ALLOWING TIME TO PRONOUNCE THE ORDER BEYO ND 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 THE TRIBUNAL IN THE SAID BINDING PR ECEDENT ARE AS UNDER:- 7. HOWEVER, BEFORE WE PART WITH THE MATTER, WE MU ST DEAL WITH ONE PROCEDURAL ISSUE AS WELL. WHILE HEARING OF THESE APPEALS WAS CONCLUDED ON 7TH JANUARY 2020, THIS ORD ER THEREON IS BEING PRONOUNCED TODAY ON 14 TH DAY OF MAY, 2020, MUCH AFTER THE EXPIRY OF 90 DAYS FROM THE DAT E OF CONCLUSION OF HEARING. WE ARE ALSO ALIVE TO THE FAC T THAT RULE 34(5) OF THE INCOME TAX APPELLATE TRIBUNAL RUL ES 1963, WHICH DEALS WITH PRONOUNCEMENT OF ORDERS, PROVIDES AS FOLLOWS: (5) THE PRONOUNCEMENT MAY BE IN ANY OF THE FOLLOW ING MANNERS : (A) THE BENCH MAY PRONOUNCE THE ORDER IMMEDIATELY UPON THE CONCLUSION OF THE HEARING. I.T.A. NO.781/LKW/2017 ASSESSMENT YEAR:2013-14 8 (B) IN CASE WHERE THE ORDER IS NOT PRONOUNCED IMMEDIATE LY ON THE CONCLUSION OF THE HEARING, THE BENCH SHALL G IVE A DATE FOR PRONOUNCEMENT. (C ) IN A CASE WHERE NO DATE OF PRONOUNCEMENT IS GI VEN BY THE BENCH, EVERY ENDEAVOUR SHALL BE MADE BY THE BEN CH TO PRONOUNCE THE ORDER WITHIN 60 DAYS FROM THE DATE ON WHICH THE HEARING OF THE CASE WAS CONCLUDED BUT, WH ERE IT IS NOT PRACTICABLE 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 (EMPH ASIS SUPPLIED BY US NOW) BE A DAY BEYOND A FURTHER PERIO D OF 30 DAYS AND DUE NOTICE OF THE DAY SO FIXED SHALL BE GIVEN ON THE NOTICE BOARD. 8. QUITE CLEARLY, ORDINARILY THE ORDER ON AN APPE AL 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 ITSELF. THIS RULE WAS INSERTED AS A RESULT OF DIRECTIONS OF HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SHIVSAGAR VEG RESTAURANT VS ACIT [(2009) 317 ITR 433 (BOM)] WHEREIN THEIR LORDSHIPS HAD, INTER ALIA, DIRECTED T HAT WE, THEREFORE, DIRECT THE PRESIDENT OF THE APPELLA TE TRIBUNAL TO FRAME AND LAY DOWN THE GUIDELINES IN TH E 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 SUI TABLE GUIDELINES SHALL BE FRAMED AND ISSUED BY THE PRESID ENT OF THE APPELLATE TRIBUNAL WITHIN SHORTEST REASONABL E TIME AND FOLLOWED STRICTLY BY ALL THE BENCHES OF THE TRI BUNAL. IN THE MEANWHILE (EMPHASIS, BY UNDERLINING, SUPPLIED BY US NOW), ALL THE REVISIONAL AND APPELLATE AUTHORITI ES UNDER THE INCOME-TAX ACT ARE DIRECTED TO DECIDE MATT ERS HEARD BY THEM WITHIN A PERIOD OF THREE MONTHS FROM THE DATE CASE IS CLOSED FOR JUDGMENT. IN THE RULE SO F RAMED, AS A RESULT OF THESE DIRECTIONS, THE EXPRESSION I.T.A. NO.781/LKW/2017 ASSESSMENT YEAR:2013-14 9 ORDINARILY HAS BEEN INSERTED IN THE REQUIREMENT T O PRONOUNCE THE ORDER WITHIN A PERIOD OF 90 DAYS. THE QUESTION THEN ARISES WHETHER THE PASSING OF THIS OR DER, BEYOND NINETY DAYS, WAS NECESSITATED BY ANY EXTRAORDINARY CIRCUMSTANCES. 9. LET US IN THIS LIGHT REVERT TO THE PREVAIL ING 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 LOCKDOWN WAS EXTENDED FROM TIME TO TIME. AS A MATTER OF FACT, EV EN BEFORE THIS FORMAL NATIONWIDE LOCKDOWN, THE FUNCTIO NING OF THE INCOME TAX APPELLATE TRIBUNAL AT MUMBAI WAS SEVERELY RESTRICTED ON ACCOUNT OF LOCKDOWN BY THE MAHARASHTRA GOVERNMENT, AND ON ACCOUNT 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 JUDICIAL WOK ALL OVER THE COUNTRY. AS A MATTER OF FACT, IT HAS B EEN SUCH AN UNPRECEDENTED SITUATION, CAUSING DISRUPTION IN THE FUNCTIONING OF JUDICIAL MACHINERY, THAT HONBLE SUPREME COURT OF INDIA, IN AN UNPRECEDENTED ORDER I N THE HISTORY OF INDIA AND VIDE ORDER DATED 6.5.2020 R EAD WITH ORDER DATED 23.3.2020, EXTENDED THE LIMITATION TO EXCLUDE NOT ONLY THIS LOCKDOWN PERIOD BUT ALSO A FE W MORE DAYS PRIOR TO, AND AFTER, THE LOCKDOWN BY OBSERVING THAT IN CASE THE LIMITATION HAS EXPIRED A FTER 15.03.2020 THEN THE PERIOD FROM 15.03.2020 TILL THE DATE ON WHICH THE LOCKDOWN IS LIFTED IN THE JURISDI CTIONAL 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, BESI DES EXTENDING THE VALIDITY OF ALL INTERIM ORDERS, HAS A LSO OBSERVED THAT, IT IS ALSO CLARIFIED THAT WHILE CAL CULATING TIME FOR DISPOSAL OF MATTERS MADE TIME-BOUND BY THI S I.T.A. NO.781/LKW/2017 ASSESSMENT YEAR:2013-14 10 COURT, THE PERIOD FOR WHICH THE ORDER DATED 26TH MA RCH 2020 CONTINUES TO OPERATE SHALL BE ADDED AND TIME S HALL STAND EXTENDED ACCORDINGLY, AND ALSO OBSERVED THAT ARRANGEMENT CONTINUED BY AN ORDER DATED 26TH MARCH 2020 TILL 30TH APRIL 2020 SHALL CONTINUE FURTHER TI LL 15TH JUNE 2020. IT HAS BEEN AN UNPRECEDENTED SITUATION NOT ONLY IN INDIA BUT ALL OVER THE WORLD. GOVERNMEN T OF INDIA HAS, VIDE NOTIFICATION DATED 19 TH FEBRUARY 2020, TAKEN THE STAND THAT, THE CORONAVIRUS SHOULD BE CONSIDERED A CASE OF NATURAL CALAMITY AND FMC (I.E. FORCE MAJEURE CLAUSE) MAYBE INVOKED, WHEREVER CONSIDERED APPROPRIATE, FOLLOWING THE DUE PROCEDURE . THE TERM FORCE MAJEURE HAS BEEN DEFINED IN BLACK S LAW DICTIONARY, AS AN EVENT OR EFFECT THAT CAN BE NEITHER ANTICIPATED NOR CONTROLLED WHEN SUCH IS TH E 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 DISA STER MANAGEMENT ACT, 2005, AND ALSO IN THE LIGHT OF THE DISCUSSIONS ABOVE, THE PERIOD DURING WHICH LOCKDOWN WAS IN FORCE CAN BE ANYTHING BUT AN ORDINARY PERI OD. 10. IN THE LIGHT OF THE ABOVE DISCUSSIONS, WE A RE OF THE CONSIDERED VIEW THAT RATHER THAN TAKING A PEDANTIC VIEW OF THE RULE REQUIRING PRONOUNCEMENT OF ORDERS WITHI N 90 DAYS, DISREGARDING THE IMPORTANT FACT THAT THE ENTI RE 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 PRONOUNCEMENT OF THE ORDER. LAW IS NOT BROODING OMNIPOTENCE IN THE SKY. IT IS A PRAGMA TIC TOOL OF THE SOCIAL ORDER. THE TENETS OF LAW BEING E NACTED ON THE BASIS OF PRAGMATISM, AND THAT IS HOW THE LAW IS REQUIRED TO INTERPRETED. THE INTERPRETATION SO ASSI GNED BY US IS 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 I.T.A. NO.781/LKW/2017 ASSESSMENT YEAR:2013-14 11 DISRUPTION IN THE FUNCTIONING OF OUR JUSTICE DELIVE RY SYSTEM. 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 TH E 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 SH ALL BE ADDED AND TIME SHALL STAND EXTENDED ACCORDINGLY . THE EXTRAORDINARY STEPS TAKEN SUO MOTU BY HONBLE JURISDICTIONAL HIGH COURT AND HONBLE SUPREME COURT ALSO INDICATE THAT THIS PERIOD OF LOCKDOWN CANNOT B E TREATED AS AN ORDINARY PERIOD DURING WHICH THE NORM AL TIME LIMITS ARE TO REMAIN IN FORCE. IN OUR CONSIDER ED VIEW, EVEN WITHOUT THE WORDS ORDINARILY, IN THE L IGHT OF THE ABOVE ANALYSIS OF THE LEGAL POSITION, THE PE RIOD DURING WHICH LOCKOUT WAS IN FORCE IS TO EXCLUDED FO R THE PURPOSE OF TIME LIMITS SET OUT IN RULE 34(5) OF THE APPELLATE TRIBUNAL RULES, 1963. VIEWED THUS, THE EXCEPTION, TO 90-DAY TIME-LIMIT FOR PRONOUNCEMENT O F 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, THE RE IS NO, AND THERE 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 THEN, IN OUR CONSIDERED VIEW, NO SUCH EXERCISE WAS REQUIRED TO BE CARRIED OUT ON THE FACTS OF THIS CAS E. 11. TO SUM UP, THE APPEAL OF THE ASSESSEE IS ALLOW ED, 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 DE TAILS ON THE NOTICE BOARD. I.T.A. NO.781/LKW/2017 ASSESSMENT YEAR:2013-14 12 11. RESPECTFULLY FOLLOWING THE AFORESAID JUDICIAL P RECEDENT, WE PROCEED TO PRONOUNCE THIS ORDER BEYOND A PERIOD OF 90 DAYS FRO M THE DATE OF CONCLUSION OF HEARING. 12. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS AL LOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 26/06/2020) SD/. SD/. ( T. S. KAPOOR ) ( A. D. JAIN ) ACCOUNTANT MEMBER VICE PRESIDENT DATED:26/06/2020 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW