Kitty Steels Limited, Hyderabad V. DCIT, Hyderabad

ITA 840/HYD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66230 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 12-07-2011
• Assessment Year: 1996-1997
• Appeal Filed On: 04-06-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V SRINIVAS
• Assessee Lawyers: T S AJAY GANDHI
• Keywords: Search and seizure; Period of limitation; Additional evidence; Reasonable cause; Condonation of delay

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER I.T.A. NO. 840/HYD/2010 A.Y. 1996-97 M/S. KITTY STEELS LTD. GHATKESAR, RR DIST., AP PAN/GIR NO. K-1 VS. THE DCIT CENTRAL CIRCLE-1 HYDERABAD APPELLANT RESPONDENT I.T.A. NO. 841/HYD/2010 A.Y. 1996-97 M/S. KITTY STEELS LTD. GHATKESAR, RR DIST., AP PAN/GIR NO. K-1 VS. THE JCIT SPECIAL RANGE-2 HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SRI T.S. AJAY GANDHI RESPONDENT BY: SRI V. SRINIVAS DATE OF HEARING: 11.07.2012 DATE OF PRONOUNCEMENT: 10.09.2012 O R D E R PER CHANDRA POOJARI, AM: THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAI NST THE DIFFERENT ORDERS OF THE CIT(A)-I, HYDERABAD DATED 1 1.5.2010 FOR ASSESSMENT YEAR 1996-97. 2. THE FIRST GROUND IN THESE APPEALS IS WITH REGARD TO DISMISSING OF APPEALS IN LIMINE BY THE CIT(A) IN LI MINE BY NOT CONDONING THE DELAY IN FILING THE APPEALS BEFORE HI M. THE OTHER GROUND IN ITA NO. 840/HYD/2010 IS WITH REGARD TO SU STAINING OF ADDITIONS MADE BY THE ASSESSING OFFICER AND UPHOLDI NG LEVY OF INTEREST U/S. 234A, 234B, 234C AND 201(1A) OF INCOM E-TAX ACT, 1961. THE CIT(A) IN THESE CASES NEITHER ADJUDICATE D THE ISSUES RELATING TO MERIT OF THE ADDITIONS NOR LEVY OF INTE REST OR LEVY OF PENALTY. BEING SO, THESE GROUNDS RAISED BY THE ASS ESSEE RELATING TO ITA NOS. 840 & 841 / HYD/2010 M/S. KITTY STEELS LTD. ======================== 2 THESE ISSUES ARE PREPOSTEROUS. ACCORDINGLY, THE SA ME ARE DISMISSED AS NOT MAINTAINABLE. 3. NOW WE WILL DEAL WITH THE ISSUE RELATING TO NON-ADM ISSION OF APPEALS BY THE CIT(A) ON THE REASON THAT THERE IS A SUBSTANTIAL DELAY IN FILING THE APPEALS AND, THEREFORE, THE DEL AY IS NOT CONDONED. BRIEF FACTS OF THE ISSUE ARE THAT THE AP PEAL RELATING TO QUANTUM ADDITIONS FOR A.Y. 1996-97 WAS FILED BY THE ASSESSEE BEFORE THE CIT(A) BELATEDLY AND THERE WAS A DELAY O F AROUND 10 YEARS IN FILING THE APPEAL. SIMILAR IS THE CASE IN RESPECT OF PENALTY APPEAL. THE ASSESSEE EXPLAINED BEFORE THE CIT(A) THAT THE APPEAL WAS FILED BELATEDLY. ALONG WITH THE APPEAL, THE AS SESSEE FILED AN AFFIDAVIT STATING THE REASON FOR DELAY IN FILING TH E APPEAL AND REQUESTING FOR CONDONING THE DELAY AND ADMISSION OF THE APPEAL. IN THE SAID AFFIDAVIT THE DIRECTOR OF THE ASSESSEE COM PANY SUBMITTED THAT THE COMPANY WAS TO FILE AN APPEAL AGAINST THE ORDER DATED 30.3.1999 FOR A.Y. 1996-97 WITHIN 30 DAYS FROM THE DATE OF SERVICE OF ASSESSMENT ORDER. THERE WAS A SEARCH AND SEIZURE OPERATION ON THE COMPANY AND THE RESIDENTIAL PREMISES OF THE DIR ECTOR ON 26.7.1995. FOLLOWING THE SEARCH, THE DEPARTMENT HA D INITIATED CRIMINAL PROCEEDINGS AGAINST THE DIRECTOR IN CHARGE OF THE AFFAIRS OF THE COMPANY AND ITS FAMILY MEMBERS. THESE WERE HARR OWING TIMES FOR THE DIRECTORS AND THE SOLE AIM WAS TO AVOID THE EXTREMELY PERNICIOUS EFFECT OF THE PROCEEDINGS WHICH WAS COMP LETELY ILLEGAL. THE DIRECTORS OF THE COMPANY WERE SO DISTURBED IN T HOSE YEARS THAT THEIR HEALTH SUFFERED, BUSINESS RUINED AND HAD NO S TRENGTH OR EQUANIMITY WITH WHICH THEY COULD HAVE ATTENDED THE OBLIGATIONS OF THE COMPANY. LATER THE CRIMINAL PROCEEDINGS WERE QU ASHED AND THE SEARCH WAS DECLARED COMPLETELY ILLEGAL. HOWEVER THESE TOOK A LONG TIME AND DRAINED THEIR ENERGY AND RESOURCES IN ALL MANNERS. IN THE MEAN TIME THE BUSINESS OF THE COMPANY SUFFER ED A LOT. THE PROFITABILITY OF THE COMPANY DECLINED, HUGE DEBTS P ILED UP ON ACCOUNT OF THE LOSSES AND THE COMPANY HAD TO FILE P ETITION BEFORE ITA NOS. 840 & 841 / HYD/2010 M/S. KITTY STEELS LTD. ======================== 3 THE BIFR. AFTER PROLONGED INVESTIGATION THE COMPAN Y WAS DECLARED SICK IN THE YEAR 2006. IN DUE COURSE, THE COMPANY H AD TOTALLY FORGOTTEN ABOUT THE ORDER OF THE INCOME-TAX DEPARTM ENT AND ITS IMPLICATION. BECAUSE OF THIS THE APPEAL WAS DELAYED ON ACCOUNT OF BONA FIDE REASON AND WAS NOT INTENTIONAL. THE ASSES SEE REQUESTED FOR CONDONATION OF DELAY AND ADMISSION OF APPEAL. 4. ON APPEAL, THE CIT(A) FOUND THAT THERE IS NO GOOD A ND SUFFICIENT REASON TO CONDONE THE INORDINATE DELAY O F AROUND 10 YEARS IN FILING THE APPEAL. ACCORDINGLY, HE DISMIS SED BOTH QUANTUM AND PENALTY APPEALS. AGAINST THIS, THE ASS ESSEE IS IN APPEAL BEFORE US. 5. THE LEARNED AR SUBMITTED THAT THE MAIN ISSUE IS WHE THER THE CIT(A) WAS RIGHT IN DECLINING TO CONDONE THE DE LAY OF ABOUT 10 YEARS IN THE ASSESSEE FILING THE APPEALS BEFORE HIM . THE AR NARRATED THE FOLLOWING REASONS FOR THE DELAY IN FIL ING THE APPEALS BEFORE THE CIT(A): THE MANAGEMENT OF THE COMPANY WAS NOT AWARE OF THE ASSESSMENT AND PENALTY ORDERS TILL IT RECEIVED A LE TTER OF THE DEPARTMENT IN BIFR PROCEEDINGS IN FEBRUARY 2009 (A COPY OF THE LETTER SUBMITTED DURING HEARING). ONLY THEN DID THE COMPANY KNOW OF DEMANDS EXISTING AGAINST IT. ON ENQ UIRIES DONE INTERNALLY, IT WAS BELIEVED THAT THE ORDERS CO ULD HAVE BEEN SERVED ON, AND REMAINED UNATTENDED AT, LOWER LEVELS . THE ASSESSEE GOT PHOTO COPIES OF THE ORDERS AT DIFF ERENT DATES FROM THE DEPARTMENT, RESULTING IN THE APPEALS BEING FILED AT DIFFERENT DATES. THE DEPARTMENT RAISED DEMANDS AGGREGATING TO ABOUT RS. 10 CRORES BUT NO RECOVERIES WERE ATTEMPTED. AS SUCH, T HE MANAGEMENT REMAINED UNAWARE OF THE ORDERS. THERE IS NO DOUBT WHATSOEVER THAT BOTH THE ASSESSME NT AND ITA NOS. 840 & 841 / HYD/2010 M/S. KITTY STEELS LTD. ======================== 4 PENALTY ORDERS WOULD HAVE BEEN SET ASIDE IF THEY WE RE CONSIDERED ON MERITS. THE AGGREGATE DEMAND IN THEM IS ABOUT RS. 10 CRORES. THE COMPANY AND THE GROUP WERE DEEPLY ENGAGED IN FI GHTING BATTLES ON SEVERAL FRONTS SIMULTANEOUSLY. THESE INC LUDED: - INCOME TAX SEARCH AND ASSESSMENT PROCEEDINGS - CRIMINAL PROSECUTION PROCEEDINGS LAUNCHED BY INCOME TAX DEPARTMENT - SEVERAL SEARCH AND SURVEY PROCEEDINGS BY CENTRAL EX CISE DEPARTMENT - SEARCH AND SURVEY PROCEEDINGS BY COMMERCIAL TAXES DEPARTMENT - SEARCH AND SURVEY PROCEEDINGS BY CUSTOMS - SEVERAL APPLICATIONS TO BIFR INCLUDING APPEAL TO TR IBUNAL - PRESSURES OF RECOVERIES OF DEBTS FROM FINANCIAL INS TITUTIONS - LABOUR UNREST, STRIKE AND SETTLEMENT BY INDUSTRIAL TRIBUNAL - MAJOR FIRE IN PREMISES - WINDING UP PROCEEDINGS BEFORE HIGH COURT FILED BY S EVERAL CREDITORS - HUGE LOSSES IN BUSINESS 6. THE AR SUBMITTED THAT A CURSORY VIEW OF THE ASSESSM ENT SHOWS THAT THE BEST JUDGMENT ASSESSMENT WAS PALPABL Y WRONG AND UNJUSTIFIED. THE ASSESSEE IS A PUBLICLY LISTED COMP ANY WITH AUDITED ACCOUNTS. IT WAS FUNDED BY PUBLIC FINANCIAL INSTITU TIONS. AO IGNORED THE ACCOUNTS AND THE FACT THAT AUDIT WAS DO NE. ALL ADDITIONS MADE WERE OF GROSS FIGURES DEBITED TO THE PROFIT AND LOSS ACCOUNT OF THE COMPANY SIMPLY BECAUSE THE ASSESSEE DID NOT APPEAR BEFORE THE AO. IT IS SUBMITTED THAT IF THE ASSESSMENT WERE TO BE SCRUTINISED ON MERITS, IT WOULD BE SET ASIDE WITHOUT ANY DOUBT ITA NOS. 840 & 841 / HYD/2010 M/S. KITTY STEELS LTD. ======================== 5 WHATSOEVER. THE AR SUBMITTED THAT PENALTY U/S. 271(1)(C) WAS LEVIED. A QUICK READING OF THE PENALTY ORDER WOULD CONVINCE ANYONE THAT IT WOULD NEVER STAND JUDICIAL SCRUTINY IF IT WERE C ONSIDERED ON MERITS. 7. THE LEARNED AR SUBMITTED THAT THE COMPANY WENT THRO UGH VERY DIFFICULT TIMES DURING THE PERIOD 1995 TO 2010 . SOME OF THE MAJOR INCIDENTS DESERVING MENTION ARE BELOW. 1. ON 26 JULY 1995 THERE WAS SEARCH AND SEIZURE BY INCOME TAX AUTHORITIES ON THE PREMISES OF COMPANY AND ON ITS DIRECTORS AND OFFICIALS. 2. VARIOUS WINDING UP PROCEEDINGS WERE FILED BY CREDIT ORS BEFORE HIGH COURT OF ANDHRA PRADESH HYDERABAD DURING 1996. 3. DURING THE FINANCIAL YEAR 1996-97, SEVERAL MAJOR CUSTOMERS LIKE SANGHI INDUSTRIES LTD., MESCO LTD., LOECHE INDIA PVT LTD., HAVE CANCELLED THEIR ORDERS WHICH REFLECTED BADLY ON THE PERFORMANCE OF THE COMPANY WHICH LEAD TO THE DOWNFALL IN THE PRODUCTIO N AND SUBSEQUENTLY COMPANY WENT INTO LOSSES. 4. ON 12 TH APRIL 1996 THERE WAS LABOUR UNREST AND AS A CONSEQUENCE OF WHICH THE LABOUR WENT ON STRIKE AND THE SAME WAS SETTLED BEFORE THE INDUSTRIAL TRIBUNAL ON 30.10.2006 VIDE EP NO 2/2006 AND AS PER THE ORDERS AMOUNTS WERE PAID TO THE RESPECTIVE WORKERS. 5. ON 15 MAY 1997, THERE WAS RAID BY SALES TAX AUTHORITIES ON THE PREMISES OF THE COMPANY AND SEVERAL RECORDS WERE SEIZED. 6. ON 14 OCTOBER 1997 THERE WAS A MAJOR FIRE ACCIDENT IN THE FACTORY PREMISES FOR WHICH COMPANY FILED AN FIR BEFORE GHATKESAR PS. ITA NOS. 840 & 841 / HYD/2010 M/S. KITTY STEELS LTD. ======================== 6 7. PROSECUTION PROCEEDINGS WERE CONDUCTED AND THE DIRECTORS WERE CONVICTED ON FEBRUARY 7, 1997. IN 2000, THE CONVICTION WAS SET ASIDE IN APPEAL. 8. THERE WAS SEARCH BY CUSTOMS OFFICIALS ON FEBRUARY 13, 1997 ON THE FACTORY PREMISES AND THE RESIDENTIA L PREMISES OF THE OFFICIALS. 9. IN THE YEAR 1998, DUE TO LABOUR UNREST AND CANCELLATION OF ORDERS COMPANY HAD INCURRED HEAVY LOSSES WHICH RESULTED IN SLIPPING OF BANK ACCOUNTS UNDER NP A. THEREAFTER BANKS AND FINANCIAL INSTITUTIONS PROCEEDED BEFORE DEBT RECOVERY TRIBUNA L. 10. COMPANY FILED A REFERENCE BEFORE BOARD FOR INDUSTRI AL AND FINANCIAL RECONSTRUCTION (BIFR) FOR THE FY 1997 - 98 AND GOT REGISTERED VIDE NO 171/1999. SINCE COMPANY WAS INCURRING LOSSES CONTINUOUSLY ITS NET WORTH HAD BECOME NEGATIVE. 11. THE COMPANY FILED ITS FURTHER REFERENCES VIDE CASE NO 272/2004 FOR THE FY 1998-99, CASE NO 278/2004 FOR THE YEAR 1999-2000 BEFORE THE BIFR AND GOT REGISTER ED RESPECTIVELY. 12. ON 27.01.2000 THE OFFICIALS OF THE CENTRAL EXCISE H AVE VISITED THE FACTORY PREMISES AND SEIZED CERTAIN DOCUMENTS VIDE PANCHNAMA DATED 27.1.2000. 13. THE INCOME TAX DEPARTMENT INITIATED PROCEEDINGS AGAINST THE COMPANY FOR TDS VIOLATIONS IN 1997. IT THEN LAUNCHED PROSECUTION PROCEEDINGS IN CC9/2000 DATED 17.2.2000 WITH REGARD TO ALLEGED TDS VIOLATIO NS. THIS WAS THE SECOND PROSECUTION FILED BY THE DEPARTMENT. THE PROCEEDINGS RELATING TO TDS ALSO WENT TO THE HIGH COURT TWICE IN WRIT PETITIONS. ITA NOS. 840 & 841 / HYD/2010 M/S. KITTY STEELS LTD. ======================== 7 14. FINANCIAL INSTITUTIONS (ICICI LTD) AND BANKS INITIA TED PROCEEDINGS UNDER SARFASI ACT 2002 AND COMPANY WAS UNDER CONSTANT THREAT OF TAKEOVER OF THE UNIT A ND CHANGE OF MANAGEMENT. 15. COMPANY WAS DECLARED SICK ON 21.4.2006 BY THE BIFR. 16. THERE WAS A SURVEY BY THE CENTRAL EXCISE AUTHORITIE S ON THE COMPANY ON 6.2.2008. 17. THERE WAS A SURVEY BY SERVICE TAX WING OF THE CENTR AL EXCISE DEPARTMENT ON 832009 8. THE AR SUBMITTED THAT THE COMPANY STANDS TO LOSE AB OUT RS. 10 CRORES BY NOT FILING THE APPEAL. THERE IS NO REASON FOR THE ASSESSEE NOT TO HAVE FILED THE APPEALS EXCEPT WHEN IT WAS PREVENTED BY GOOD CAUSE. ANY MANAGEMENT OF A MID-SI ZED SINGLE COMPANY FACING SUCH DIFFICULTIES FOR A PERIOD OF 15 YEARS IS LIKELY TO MAKE LAPSES IN STATUTORY COMPLIANCES, UNWITTINGLY A ND UNINTENTIONALLY. THE BEHAVIOUR AND THE DELAY IN FIL ING THE APPEAL BY THE ASSESSEE IS NOT ABNORMAL AND IS UNDERSTANDAB LE. ANOTHER MANAGEMENT IN THE SAME SITUATION IS LIKELY TO HAVE PERHAPS DONE THAT. IT DESERVES THE BENEFIT OF DOUBT. 9. THE AR FURTHER SUBMITTED THAT THE TOTAL TAX LEVIED WAS HUGE RUNNING INTO SEVERAL CRORE RUPEES. ANY PERSON, IN T HEIR PLACE, WITHOUT REASONABLE CAUSE, WOULD HAVE FILED THE APPE AL AND ATTEMPTED TO AVOID THE TAX EVEN IF IT WAS A LEGAL A ND FAIR ASSESSMENT. IN THIS CASE IT WAS BAD ASSESSMENT DON E AND BAD PENALTY LEVIED. THERE IS NO REASON FOR THEM NOT TO HAVE FILED THE APPEALS. IT IS AGAINST ALL HUMAN PROBABILITIES THAT THE ASSESSEE WOULD INTENTIONALLY LAPSE IN FILING THE APPEALS AND INCUR A LIABILITY WHICH WOULD CERTAINLY HAVE BEEN DELETED. IT IS ALSO SUBMITTED THAT THERE CAN BE NO PRESUMPTION OF DELIBERATENESS IN TH IS CASE AS THE ASSESSEE RUNS A VERY SERIOUS RISK OF A HUGE LOSS. ITA NOS. 840 & 841 / HYD/2010 M/S. KITTY STEELS LTD. ======================== 8 10. THE AR SUBMITTED THAT AS PER THE CIRCUMSTANCES NARR ATED, THERE IS NO NEGLIGENCE ON THE PART OF THE ASSESSEE. HE RELIED ON THE DECISION OF SUPREME COURT IN MST. KATIJI WHEREIN IT WAS HELD THAT THERE IS NO PRESUMPTION THAT DELAY IS OCCASIONED DE LIBERATELY, 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.' THIS APPLIES TO THE PRESENT CASE AS WELL. 11. THE AR FURTHER SUBMITTED THAT THERE IS NO MALA FIDE OR DILATORY STRATEGY. HE RELIED ON THE DECISION OF SU PREME COURT IN THE CASE OF N BALAKRISHNAN V M KRISHNAMURTHY, (1988) 7 SCC 123: WHEREIN THE APEX COURT HELD THAT THE TRIBUNAL HELD THAT IF THE EXPLANATION DOES NOT SMACK OF MALA FIDE OR IT IS NOT PUT FORTH AS A PART OF DILATORY STRATEGY, COURTS NEED TO SHOW UTMO ST CONSIDERATION TO SUCH LITIGANT. THERE HAS BEEN NO M ALA FIDE ON THE PART OF THE ASSESSEE NOR IS THERE A DILATORY STRATE GY - IT IS PLAIN DELAY. 12. THE AR SUBMITTED THAT GRAVE MISCARRIAGE OF JUSTICE ITSELF IS A GROUND TO CONDONE THE DELAY. HE RELIED ON THE JUDG EMENT OF SUPREME COURT IN THE CASE OF O.P. KATHPALIA VS. LAK HMIR SINGH AIR 1984 SC 1744, WHERE THE SUPREME COURT HELD THAT IF THE REFUSAL TO CONDONE THE DELAY RESULTS IN GRAVE MISCA RRIAGE OF JUSTICE, IT WOULD BE A GROUND TO CONDONE THE DELAY. IN THIS CASE, IF THE DELAY IS NOT CONDONED, IT WOULD RESULT IN THE TAX B EING LEVIED ON A BAD ASSESSMENT AND A PERNICIOUS PENALTY ORDER - A G RAVE MISCARRIAGE OF JUSTICE. THIS IS A REASONABLE GROUND BY ITSELF TO CONDONE DELAY. THE SUPREME COURT SAID IN MST KATIJ I (SUPRA): 'WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATI ONS ARE PITTED AGAINST EACH OTHER, THE CAUSE OF SUBSTANTIAL JUSTIC E DESERVES TO BE PREFERRED, FOR THE OTHER SIDE CANNOT CLAIM TO HAVE VESTED RIGHT IN ITA NOS. 840 & 841 / HYD/2010 M/S. KITTY STEELS LTD. ======================== 9 INJUSTICE BEING DONE BECAUSE OF A NON-DELIBERATE DE LAY.' FURTHER: 'REFUSING TO CONDONE DELAY CAN RESULT IN A MERITORI OUS 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 MERI TS AFTER HEARING THE PARTIES.' THE ABOVE OBSERVATIONS SQUAR ELY APPLY TO THE PRESENT CASE AND MAY KINDLY BE CONSIDERED. THE AR S UBMITTED THAT IN THE CASE OF HS SETHI & OTHERS, THE TRIBUNAL , HYDERABAD BENCH HAD OCCASION TO CONSIDER A DELAY OF OVER 1500 DAYS IN THE FILING OF AN APPEAL BEFORE IT BY THE DIRECTORS OF T HIS COMPANY AND THE TRIBUNAL WAS PLEASED TO CONDONE THE DELAY. THE RATIO OF THE ORDER IS APPLICABLE TO THE PRESENT CASE AS WELL. 13. THE LEARNED AR RELIED ON THE FOLLOWING JUDGEMENTS: I) IN THE CASE OF COLLECTOR, LAND ACQUISITION VS. MST. KATIJI AND ORS. (1987) 62 CTR (SC) 23 : (1987) 13 AIR 306(SC) , THE HON'BLE SUPREME COURT HELD THAT 'THE LEGISLATURE H AS CONFERRED THE POWER TO CONDONE DELAY BY ENACTING S. 5 OF THE LIMITATION ACT OF 1963 IN ORDER TO ENABLE THE C OURTS TO DO SUBSTANTIAL JUSTICE TO PARTIES BY DISPOSING O F MATTERS ON 'MERITS'. THE EXPRESSION 'SUFFICIENT CAU SE' EMPLOYED BY THE LEGISLATURE IS ADEQUATELY ELASTIC T O ENABLE THE COURTS TO APPLY THE LAW IN A MEANINGFUL MANNER WHICH SUBSERVES THE ENDS OF JUSTICE- THAT BE ING THE LIFE-PURPOSE OF THE EXISTENCE OF THE INSTITUTIO N OF COURTS. IT IS COMMON KNOWLEDGE THAT THIS COURT HAS BEEN MAKING A JUSTIFIABLY LIBERAL APPROACH IN MATTERS INSTITUTED IN THIS COURT. BUT THE MESSAGE DOES NOT APPEAR TO HAVE PERCOLATED DOWN TO ALL THE OTHER COURTS IN THE HIERARCHY. II) AUTO CENTRE, 278 ITR 291, (ALL) : 'THE APPROACH OF THE TRIBUNAL IS PEDANTIC, WHILE IN MATTERS OF CONDONATI ON OF ITA NOS. 840 & 841 / HYD/2010 M/S. KITTY STEELS LTD. ======================== 10 DELAY IT SHOULD BE PRAGMATIC AND LIBERAL. IN THE MA TTERS OF CONDONATION OF DELAY, A PRAGMATIC VIEW SHOULD BE TA KEN AND THERE SHOULD BE A LIBERAL APPROACH.' 'IT MUST B E GRASPED THAT THE JUDICIARY IS RESPECTED NOT ON ACCO UNT OF ITS POWER TO LEGALIZE INJUSTICE ON TECHNICAL GROUND S BUT BECAUSE IT IS CAPABLE OF REMOVING INJUSTICE AND IS EXPECTED TO DO SO.' III) IN SHAKUNTALA DEVI JAIN VS. KUNTAL KUMARI AIR 1969 SC 575, THE HON'BLE SUPREME COURT HELD THAT UNLESS WANT OF BONA FIDES OF SUCH INACTION OR NEGLIGENCE AS WOULD DEPRIVE A PARTY OF THE PROTECTION OF S. 5 IS PROVED , THE APPLICATION MUST NOT BE THROWN OUT OR ANY DELAY CAN NOT BE REFUSED TO BE CONDONED. IV) IN SHANKARRAO VS. CHANDRASENKUNWAR (1987) SUPPL. SC C 338, THE SUPREME COURT TOOK THE VIEW THAT THE COURT SHOULD NOT ADOPT AN INJUSTICE-ORIENTED APPROACH IN REJECTING THE APPLICATION FOR CONDONATION OF DELAY. V) IN NAND KISHORE V STATE OF PUNJAB, (1955) 6 SCC 614 , SUPREME COURT HAD CONDONED DELAY OF 31 YEARS. VI) ADDL CIT V STERLITE INDUSTRIES, 102 TIJ 53, MUM/ 6 SOT 497 VII) IN N. BALAKRISHNAN VS. M. KRISHNAMURTHY (1998) 7 SC C 123, THE APEX COURT EXPLAINED THE SCOPE OF LIMITATION AN D CONDONATION OF DELAY, OBSERVED THAT 'THE PRIMARY FUNCTION OF A COURT IS TO ADJUDICATE THE DISPUTE BE TWEEN THE PARTIES AND TO ADVANCE SUBSTANTIAL JUSTICE. THE TIME- LIMIT FIXED FOR APPROACHING THE COURT IN DIFFERENT SITUATIONS IS NOT BECAUSE ON THE EXPIRY OF SUCH TIM E A BAD CAUSE WOULD TRANSFORM INTO A GOOD CAUSE. RULES OF LIMITATION ARE NOT MEANT TO DESTROY THE RIGHTS OF P ARTIES. THEY ARE MEANT TO SEE THAT PARTIES DO NOT RESORT TO DILATORY TACTICS, BUT SEEK THEIR REMEDY FOR THE RED RESS OF ITA NOS. 840 & 841 / HYD/2010 M/S. KITTY STEELS LTD. ======================== 11 THE LEGAL INJURY SO SUFFERED, THE LAW OF LIMITATION IS THUS FOUNDED ON PUBLIC POLICY.' VIII) MADHYA PRADESH STATE ELECTRICITY BOARD V UNION OF I NDIA 331 ITR 50, (MP) : GENUINE HARDSHIP CAUSED BY NOT CONDONING DELAY HAS TO BE CONSIDERED. IX) CIT V SANMAC MOTOR FINANCE LTD, 322 ITR 309 (MAD) WHERE A DELAY OF 1826 DAYS WAS CONDONED FOR SUFFICIENT RE ASON. 14. THE LEARNED AR SUBMITTED THAT THE COMPANY CAME TO K NOW ABOUT THE DEMANDS AND THE ORDERS ONLY IN 2009 AFTER THE LETTE R OF THE DEPARTMENT IN THE BIFR MATTER CAME TO ITS NOTICE AND IT FILED APPEALS SOON AFTER THAT, AFTER OBTAINING COPIES FROM THE DEPARTMENT. IN VIEW OF THE ABOVE, I T IS PRAYED BY THE ASSESSEE THAT IT WAS PREVENTED BY SUFFICIENT CAUSE IN FILING THE APPEALS LATE AND THE CIT(A) OUGHT TO HAVE CONDONED THE DELAYS. THIS ALONE WOULD FURTHER THE CAUSE OF SUBSTANTIAL JUSTICE. THE DEPARTMENT STANDS TO LOSE NOTHING IF THE ISSUES ARE CONSIDERED ON MERIT. 15. IN THE REJOINDER, THE AR RELIED ON THE JUDGEMENT IN THE CASE OF DEVENDER KAUR & ORS. IN ITA NOS. 23-25/HYD/2000 DATED 8 TH AUGUST, 2008 16. THE LEARNED DR SUBMITTED THAT THE INORDINATE DELAY OF AROUND 10 YEARS CANNOT BE CONSIDERED AS REASONABLE AND THE APPEALS CANNOT BE ADMITTED AS THERE IS NO GOOD AND SUFFICIENT REASON TO ADMIT. HE FURTHER SUBMITTED THAT THE ASS ESSEE HAS ALWAYS BEEN NON-COOPERATIVE WITH THE DEPARTMENT AND HE RELIED ON THE JUDGEMENT OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. RAM MOHAN KABRA (257 ITR 773) WHEREIN HELD THAT ' THE PROVISIONS RELATING TO PRESCRIPTION OF LIMITATION I N EVERY STATUTE MUST NOT BE CONSTRUED SO LIBERALLY THAT IT WOULD HAVE TH E EFFECT OF TAKING AWAY THE BENEFIT ACCRUING TO THE OTHER PARTY IN A M ECHANICAL MANNER. WHERE THE LEGISLATURE SPELLS OUT A PERIOD OF LIMITATION AND PROVIDES FOR POWER TO CONDONE THE DELAY AS WELL, TH ERE SUCH DELAY CAN BE CONDONED ONLY FOR SUFFICIENT AND GOOD REASON S SUPPORTED BY ITA NOS. 840 & 841 / HYD/2010 M/S. KITTY STEELS LTD. ======================== 12 COGENT AND PROPER EVIDENCE. NOW IT IS A SETTLED PR INCIPLE OF LAW THAT THE PROVISIONS RELATING TO SPECIFIED PERIOD OF LIMI TATION MUST BE APPLIED WITH THEIR RIGOUT AND EFFECTIVE CONSEQUENCE S.' 17. FURTHER HE RELIED ON THE ORDER OF THE TRIBUNAL CHEN NAI BENCH THIRD MEMBER IN THE CASE OF JCIT VS. TRACTORS & FARM EQUIPMENTS LTD. (104 ITD 149) WHEREIN THE TRIBUNAL HELD THAT 'A DISTINCTION MUST BE MADE BETWEEN A CASE WHERE THE DELAY IS INORDINATE AND A CASE WHERE THE DELAY IS OF A FEW DAYS, WHEREAS IN THE FORMER CASE, THE CONSIDERATION OF PREJUDICE TO THE OTHER SIDE WILL B E A RELEVANT FACTOR, SO THE CASE CALLS FOR A MORE CAUTIOUS APPROACH, IN THE LATTER CASE, NO SUCH CONSIDERATION MAY ARISE AND SUCH A CASE DESERVES A LIBERAL APPROACH. NO HARD AND FAST RULE CAN BE LAID DOWN IN THIS REGARD. THE COURT HAS TO EXERCISE THE DISCRETION ON THE FACTS OF EACH CASE, KEEPING IN MI ND THAT IN CONSIDERING THE EXPRESSION SUFFICIENT CAUSE ; THE PRINCIPLE OF ADVANCING SUBSTANTIAL JUSTICE IS O F PRIME IMPORTANCE. [PARA 5] THE LAW ASSISTS THOSE WHO ARE VIGILANT, NOT THOSE WHO SLEEP OVER THEIR RIGHTS. THIS PRINCIPLE IS EMBODIED IN THE DICTUM: VIGILANTI BUS NON DORMIENTIBUS JURA SUBVENIUNT. [PARA 6] THE DELAY CANNOT BE CONDONED SIMPLY BECAUSE THE APPELLANTS CASE IS HARD AND CALLS FOR SYMPATHY OR MERELY OUT OF BENEVOLENCE TO THE PARTY SEEKING RELIEF. IN GRANTING THE INDULGENCE AND CONDONING TH E DELAY, IT MUST BE PROVED BEYOND THE SHADOW OF DOUBT THAT THE APPELLANT WAS DILIGENT AND WAS NOT GUILTY OF NEGLIGENCE, WHATSOEVER. THE SUFFICIENT CAUSE WITHIN THE CONTEMPLATION OF THE LIMITATION PROVISION MUST BE A CAUSE WHICH IS BEYOND THE' CONTROL OF THE' PARTY INVOKING THE AID OF THE PROVISIONS. THE CAUSE FOR THE DELAY IN FILING THE APPEAL, WHICH BY DUE CARE AND ATTENTION, COULD HAVE BEEN AVOIDED, CANNOT BE A SUFFICIENT CAUSE WITHIN THE MEANING OF THE LIMITATION PROVISION. WHERE NO NEGLIGENCE, OR INACTION, OR WANT OF BONA FIDES CAN BE IMPUTED TO THE APPELLANT, A LIBERAL CONSTRUCTION OF THE PROVISIONS HAS TO BE MADE IN ORDER TO ADVANCE SUBSTANTIAL JUSTICE. SEEKERS OF JUSTICE MUST COME WITH CLEAN HANDS. ITA NOS. 840 & 841 / HYD/2010 M/S. KITTY STEELS LTD. ======================== 13 IN THE INSTANT CASE, THE ASSESSEE JUSTIFIED THE DEL AY ONLY WITH REFERENCE TO THE AFFIDAVIT OF ITS DIRECTO R. IN THE SAID AFFIDAVIT IT WAS STATED THAT THE COMMISSIONER (APPEAL)'S ORDER WAS MISPLACED AND FORGOTTEN. IT WAS FOUND WHILE SORTING OUT THE UNWANTED PAPERS AND THEREAFTER STEPS WERE TAKEN FOR THE PREPARATION OF THE APPEAL AND CONSEQUENTLY THE DELAY WAS CAUSED THAT CLEARLY SHOWED THAT THE DELAY WAS DUE TO THE NEGLIGENCE AND INACTION ON THE PART OF THE ASSESSEE. THE ASSESSEE COULD HAVE VERY WELL AVOIDED THE DELAY BY THE EXERCISE OF DUE CARE AND ATTENTION. THERE EXISTED NO SUFFICIENT AND GOOD REASON FOR THE DELAY OF 310 DAYS. THEREFORE, REASONINGS ADDUCED BY THE ACCOUNTANT MEMBER WERE! TO BE CONCURRED WITH. (PARA 8)' 18. THE DR RELIED ON THE ORDER OF THE TRIBUNAL HYDERABA D BENCH IN THE CASE OF SHRI G. NAGABHUSHANAM, BALARAI, VS. ACITIN IT(SS)A NO. 28/HYD/2008 DATED 13 TH AUGUST, 2010 WHEREIN THE TRIBUNAL HELD AS UNDER: '3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THIS CASE, THERE WAS AN INORDINATE DELAY OF 4294 DAYS IN FILING THE APPEAL. THE MAIN CONTENTION OF THE ASSESSEE'S COUNSEL IS THAT THE ASSESSEE HAS NO MONEY TO PAY THE ADMITTED TAX AND PRAYED TO CONDONE THE DELAY. ACCORDING TO THE LEARNED COUNSEL, THE ASSESSEE WAS IN GREAT FINANCIAL HARDSHIP, AND AS SUCH, ADMITTED TAX WAS NOT PAID BEFORE FILING THE APPEAL ON EARLIE R OCCASIONS. THOUGH THE ASSESSEE HAS TAKEN THIS PLEA IN THE PETITION, NO EVIDENCE OF WHATSOEVER IS PLACE D BEFORE THIS TRIBUNAL EXPLAINING ITS FINANCIAL DIFFICULTIES. WE ARE NOT ABLE TO APPRECIATE THE FINANCIAL HARDSHIPS OF THE ASSESSEE WITHOUT ANY VALID RECORDS BEFORE US TO SUPPORT HIS CLAIM. WE AR E ALSO NOT ABLE TO UNDERSTAND WHETHER THE ASSESSEE IS HAVING SUFFICIENT CASH IN HAND OR BANK BALANCE. NO ASSET AND LIABILITY STATEMENT OR BANK ACCOUNT DETAI LS ARE FILED BY THE ASSESSEE BEFORE US. THE DELAY CANNOT BE CONDONED SIMPLY BECAUSE THE ASSESSEE'S CASE IS HARD AND CALLS FOR SYMPATHY OR MERELY OUT OF BENEVOLENCE TO THE PARTY SEEKING RELIEF. IN GRANTING THE INDULGENCE AND CONDONING THE DELAY, IT MUST BE PROVED BEYOND THE SHADOW OF DOUBT THAT ITA NOS. 840 & 841 / HYD/2010 M/S. KITTY STEELS LTD. ======================== 14 THE ASSESSEE WAS DILIGENT AND WAS NOT GUILTY OF NEGLIGENCE WHATSOEVER. THE SUFFICIENT CAUSE WITHIN THE CONTEMPLATION OF THE LIMITATION PROVISIONS MUST BE A CAUSE WHICH IS BEYOND THE CONTROL OF THE PARTY INVOKING THE AID OF THE PROVISIONS. THE CAUSE FOR T HE DELAY IN FILING THE APPEAL WHICH BY DUE CARE AND ATTENTION COULD HAVE BEEN AVOIDED CANNOT BE A SUFFICIENT CAUSE WITHIN THE MEANING OF THE LIMITATI ON PROVISION. WHERE NO NEGLIGENCE, NOR INACTION, OR WANT OF BONA FIDES CAN BE IMPUTED TO THE ASSESSEE A LIBERAL CONSTRUCTION OF THE PROVISIONS HAS TO BE MADE IN ORDER TO ADVANCE SUBSTANTIAL JUSTICE. SEEKERS OF JUSTICE MUST COME WITH CLEAN HANDS. AS THE PETITION OF THE ASSESSEE CLEARLY SHOWS THAT THE DELAY WAS DUE TO NEGLIGENCE AND INACTION ON THE PART OF THE ASSESSEE. THE ASSESSEE COULD HAVE VERY WELL AVOIDED THE DELAY BY EXERCISING DUE CARE AND ATTENTION. IN OUR OPINION, THERE EXISTS NO SUFFICIE NT AND GOOD REASON FOR THE INORDINATE DELAY OF 4294 DAYS. ACCORDINGLY, WE DISMISS THE APPEAL OF THE ASSESSEE WITHOUT ADMITTING THE SAME.' 19. THE DR RELIED ON THE ORDER OF THE TRIBUNAL IN THE C ASE OF AGRICULTURAL MARKETING COMMITTEE VS. ADIT (EXEMPTIO NS-I) IN ITA NOS. 1275 & 1276/HYD/2011 DATED 10 TH FEBRUARY, 2012 WHEREIN IT WAS HELD AS UNDER: '4. IN THESE CASES, THERE ARE DELAYS OF 1559 DAYS IN FILING THE APPEAL FOR THE ASSESSMENT YEAR 2003-04 AND 1529 DAYS FOR ASSESSMENT YEAR 2004-05. THE ASSESSEE FILED PETITIONS FOR CONDONING THE SAID DELAYS AND PRAYED FOR ADMITTING THESE APPEALS. WE HAVE GONE THROUGH THE REASONS ADVANCED BY THE ASSESSEE IN ITS PETITIONS. IT IS ADMITTED FACT THAT THERE IS NO HARD AND FAST RULE WHICH CAN BE LAID DOWN IN THE MATTER OF CONDONATION OF DELAY AND COURTS SHOULD ADOPT A PRAGMATIC APPROACH AND DISCRETION ON THE FACTS OF E ACH CASE KEEPING IN MIND THAT IN CONSIDERING THE EXPRES SION 'SUFFICIENT CAUSE' THE PRINCIPLES OF ADVANCING SUBS TANTIAL JUSTICE IS OF PRIME IMPORTANCE AND THE EXPRESSION' SUFFICIENT CAUSE' SHOULD RECEIVE A LIBERAL CONSTRUC TION. A LIBERAL VIEW OUGHT TO BE TAKEN IN TERMS OF DELAY OF FEW DAYS. HOWEVER, WHEN THERE WAS INORDINATE DELAY, ONE SHOULD BE VERY CAUTIOUS WHILE CONDONING THE DELAY. IN THE CASE OF COLLECTOR LAND ACQUISITION VS. MST. KAT IJI ITA NOS. 840 & 841 / HYD/2010 M/S. KITTY STEELS LTD. ======================== 15 (167 ITR 471) (SC) WHEREIN THE SUPREME COURT LAID DOWN THE FOLLOWING SIX' PRINCIPLES BEFORE CONDONING THE DELAY:- '(I) ORDINARILY, A LITIGANT DOES NOT STAND TO BENE FIT BY LODGING AN APPEAL LATE. (II) REFUSING TO CONDONE DELAY CAN RESULT IN A MERITORIOUS MATTER BEING THROWN AT THE VERY THRESHO LD AND CAUSE OF JUSTICE BEING DEFEATED. AS AGAINST THI S, WHEN DELAY IS CONDONED, THE HIGHEST THAT CAN HAPPEN IS THAT A CAUSE WOULD BE DECIDED ON MERITS AFTER HEARING THE PARTIES. (III) 'EVERY DAY'S DELAY MUST BE EXPLAINED' DOES N OT 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 SENS E AND PRAGMATIC MANNER. (IV) WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATION ARE PITTED AGAINST EACH OTHER, THE CA USE 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 DELI BERATE DELAY. (V) THERE IS NO PRESUMPTION THAT DELAY IS OCCASION ED 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 S ERIOUS RISK. (VI) IT MUST BE GRASPED THAT THE JUDICIARY IS RESP ECTED NOT ON ACCOUNT OF ITS POWER TO LEGALISE INJUSTICE O N TECHNICAL GROUNDS BUT BECAUSE IT IS CAPABLE OF REMO VING INJUSTICE AND IS EXPECTED TO DO SO.' 5. IN THE CASE OF VEDABAI ALIAS VAIJAYANATBAI BABUR AO PATIL (253 ITR 798) THE APEX COURT CLEARLY LAID DOW N THAT THE DISTINCTION MUST BE MADE BETWEEN A CASE WHERE DELAY IS INORDINATE AND A CASE WHERE THE DELA Y IS OF A FEW DAYS. THE LAW ASSISTS THOSE WHO ARE VIGILANT, NOT THOSE WHO SLEEP OVER THEIR RIGHTS. 6. THE DELAY CANNOT BE CONDONED SIMPLY BECAUSE THE ASSESSEE'S CASE IS HARD AND CALLS FOR SYMPATHY OR MERELY OUT OF BENEVOLENCE TO THE PARTY SEEKING RELI EF. IN ITA NOS. 840 & 841 / HYD/2010 M/S. KITTY STEELS LTD. ======================== 16 GRANTING THE INDULGENCE AND CONDONING THE DELAY, IT MUST BE PROVED BEYOND THE SHADOW OF DOUBT THAT THE ASSESSEE WAS DILIGENT AND WAS NOT GUILTY OF NEGLIGE NCE WHATSOEVER. THE SUFFICIENT CAUSE WITHIN THE CONTEMPLATION OF THE LIMITATION PROVISION MUST BE A CAUSE WHICH IS BEYOND THE CONTROL OF THE PARTY INVO KING THE AID OF THE PROVISIONS. THE HON'BLE SUPREME COUR T IN THE CASE OF RAMLAL V. REWA COALFIELDS LIMITED AIR 1 962 SC 361 HAS HELD THAT THE CAUSE FOR THE DELAY IN FIL ING THE APPEAL WHICH BY DUE CARE AND ATTENTION COULD HA VE BEEN AVOIDED, CANNOT BE A SUFFICIENT CAUSE WITHIN T HE MEANING OF THE LIMITATION PROVISION. WHERE NO NEGLIGENCE, NOR INACTION, OR WANT OF BONA FIDES CAN BE IMPUTED TO THE ASSESSEE A LIBERAL CONSTRUCTION OF T HE PROVISIONS HAS TO BE MADE IN ORDER TO ADVANCE SUBSTANTIAL JUSTICE. SEEKERS OF JUSTICE MUST COME W ITH CLEAN HANDS. IN THE PRESENT CASE, THE REASONS ADVAN CED BY THE ASSESSEE DO NOT SHOW ANY GOOD AND SUFFICIENT REASON TO CONDONE THE DELAYS. THE DELAYS ARE NOT PROPERLY EXPLAINED BY THE ASSESSEE. WE FIND NO REAS ON FOR CONDONING SUCH DELAYS FOR THE ASSESSMENT YEARS UNDER CONSIDERATION. THE DELAY IS NOTHING BUT NEGLIGENCE AND INACTION OF THE ASSESSEE WHICH HAVE BEEN VERY WELL AVOIDED BY THE EXERCISE OF DUE CARE AND ATTENTION. IN OUR OPINION, THERE EXISTS NO SUFFICIE NT OR GOOD REASON FOR CONDONING INORDINATE DELAYS OF MORE THAN 1500 DAYS FOR THE YEARS UNDER CONSIDERATION. I N VIEW OF THE ABOVE, WE DO NOT FIND ANY MERIT IN THE ARGUMENTS ADVANCED BY THE LEARNED COUNSEL FOR THE ASSESSEE. 7. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSESSEE ARE DISMISSED.' 20. FURTHER HE RELIED ON THE SPECIAL BENCH DECISION IN THE CASE OF DY. CIT V. OMAN INTERNATIONAL BANK SAOG [2006] 100 ITD 285 (DELHI)(SB) FOR THE PROPOSITION THAT THIRD MEMBER D ECISION IS AS GOOD AS SPECIAL BENCH DECISION AND IT SHOULD BE FOL LOWED. HE RELIED ON THE ORDER HE ALSO RELIED ON THE ORDER OF TRIBUNAL IN THE CASE OF AP HOUSING BOARD VS. DIT (EXEMPTIONS) IN IT A NO. 110/HYD/08 DATED 14.5.2010 WHEREIN DELAY OF 1013 DA YS IN FILING THE APPEAL WAS REJECTED BECAUSE THE ASSESSEE COULD NOT PROVE SUFFICIENT CAUSE FOR FILING THE APPEAL BELATEDLY. ITA NOS. 840 & 841 / HYD/2010 M/S. KITTY STEELS LTD. ======================== 17 21. THE LEARNED DR ALSO RELIED ON THE JUDGEMENT OF DELH I HIGH COURT IN THE CASE OF M.S. NULON INDIA LTD. VS. CIT (219 ITR 736) (DEL) WHEREIN HELD THAT THE ASSESSEE BEING IN THE P ROFESSION OF TAX CONSULTANT CANNOT JUSTIFIABLY CLAIM THAT IT HAD NO PROPER LEGAL GUIDANCE. THE DELAY COULD NOT BE CONDONED ON THIS COUNT. HE SUBMITTED THAT THE ASSESSEE HAS NOT EXPLAINED THE D ELAY IN SUFFICIENT REASONS AND THE REASONS GIVEN ARE NOT SU PPORTED BY PROPER EVIDENCE. HE ALSO RELIED ON THE JUDGEMENT O F SUPREME COURT IN THE CASE OF J.B. ADVANI & CO. (72 ITR 395) , RAJU RAMACHANDRA BHANGDE (148 ITR 391) (BOM), MST. KATIJ I (167 ITR 471) (SC), TRIBUNAL DECISION IN THE CASE OF KANTILA L K. ADVANI (25 ITD 57) (BOM), IN THE CASE OF LR TALWAR (52 ITD 44) (DEL) AND MAHENDRA FINANCIAL CORPORATION (29 ITD 302) (HYD). THE RATIO OF ALL THESE DECISIONS IS THAT IN DECIDING A PLEA FOR CONDONATION OF DELAY A COURT CANNOT CONSIDER THE MERITS OF A CASE. A TIME BARRED APPEAL STRIKES AT THE VERY ROOT OF THE COURT'S JURI SDICTION. TILL SUCH TIME THE DELAY IS CONDONED THE COURT HAS NO LEGAL A UTHORITY TO HEAR THE CASE. FOR THIS THE ASSESSEE MUST SHOW NOT JUST REASONABLE CAUSE BUT SUFFICIENT CAUSE. THE DR SUBM ITTED THAT THE ASSESSEE WAS IN TOUCH WITH THE INCOME TAX DEPARTMEN T ON VARIOUS ISSUES, AND WAS CARRYING ON ITS ACTIVITIES WITHOUT LET OR HINDRANCE. FARM FROM EXPLAINING 'EACH DAY'S DELAY', THE ASSESS EE IS UNABLE TO OFFER EVEN A GENERALISED EXPLANATION. UNDER THE CI RCUMSTANCES, THE DELAY DOES NOT EVEN PASS THE TEST OF 'REASONABL E CAUSE', NOT TO SPEAK OF 'SUFFICIENT CAUSE'. 22. FURTHER THE DR ARGUED THAT THE DELAY IN FILING OF T HESE APPEALS WAS INORDINATE. IT HAD TO BE BORNE IN MIND THAT THE DELAY IS ABOUT 10 YEARS IN THESE CASES. SUCH EXCEPTIONAL DELAY COULD NOT BE EXPLAINED AWAY BY PLEADING VARIOUS DIFFICULTIES OF THE ASSESSEES'. INCOME-TAX ACT PROVIDES A PERIOD OF 30 DAYS TO FILE AN APPEAL AGAINST THE ORDER OF THE ASSESSING OFFICER B EFORE THE CIT(A). ITA NOS. 840 & 841 / HYD/2010 M/S. KITTY STEELS LTD. ======================== 18 A LINE WAS, THEREFORE, REQUIRED TO BE DRAWN UP TO W HICH THE ASSESSEE COULD PLEAD THE DIFFICULTIES SUCH AS : THE MANAGEMENT OF THE COMPANY WAS NOT AWARE OF THE ASSESSMENT AND PENALTY ORDERS TILL IT RECEIVED A LE TTER OF THE DEPARTMENT IN BIFR PROCEEDINGS IN FEBRUARY 2009 (A COPY OF THE LETTER SUBMITTED DURING HEARING). ONLY THEN DID THE COMPANY KNOW OF DEMANDS EXISTING AGAINST IT. ON ENQ UIRIES DONE INTERNALLY, IT WAS BELIEVED THAT THE ORDERS CO ULD HAVE BEEN SERVED ON, AND REMAINED UNATTENDED AT, LOWER LEVELS . THE ASSESSEE GOT PHOTO COPIES OF THE ORDERS AT DIFF ERENT DATES FROM THE DEPARTMENT, RESULTING IN THE APPEALS BEING FILED AT DIFFERENT DATES. THE DEPARTMENT RAISED DEMANDS AGGREGATING TO ABOUT RS. 10 CRORES BUT NO RECOVERIES WERE ATTEMPTED. AS SUCH, T HE MANAGEMENT REMAINED UNAWARE OF THE ORDERS. THERE IS NO DOUBT WHATSOEVER THAT BOTH THE ASSESSME NT AND PENALTY ORDERS WOULD HAVE BEEN SET ASIDE IF THEY WE RE CONSIDERED ON MERITS. THE AGGREGATE DEMAND IN THEM IS ABOUT RS. 10 CRORES. THE COMPANY AND THE GROUP WERE DEEPLY ENGAGED IN FI GHTING BATTLES ON SEVERAL FRONTS SIMULTANEOUSLY. THESE INC LUDED: - INCOME TAX SEARCH AND ASSESSMENT PROCEEDINGS - CRIMINAL PROSECUTION PROCEEDINGS LAUNCHED BY INCOME TAX DEPARTMENT - SEVERAL SEARCH AND SURVEY PROCEEDINGS BY CENTRAL EX CISE DEPARTMENT - SEARCH AND SURVEY PROCEEDINGS BY COMMERCIAL TAXES DEPARTMENT - SEARCH AND SURVEY PROCEEDINGS BY CUSTOMS ITA NOS. 840 & 841 / HYD/2010 M/S. KITTY STEELS LTD. ======================== 19 - SEVERAL APPLICATIONS TO BIFR INCLUDING APPEAL TO TR IBUNAL - PRESSURES OF RECOVERIES OF DEBTS FROM FINANCIAL INS TITUTIONS - LABOUR UNREST, STRIKE AND SETTLEMENT BY INDUSTRIAL TRIBUNAL - MAJOR FIRE IN PREMISES - WINDING UP PROCEEDINGS BEFORE HIGH COURT FILED BY S EVERAL CREDITORS - HUGE LOSSES IN BUSINESS 23. ACCORDING TO THE DR THE EXPRESSION USED IN SECTION 249(3) WAS NOT MERELY REASONABLE CAUSE BUT 'SUFFICIENT CAU SE'. THE EXPRESSION 'SUFFICIENT CAUSE' WAS MORE STRICT AND R ESTRICTS YOU THAN 'REASONABLE CAUSE'. THE ASSESSEE WAS REQUIRED TO EXPLAIN EACH DAY OF DELAY. ACCORDING TO THE DR THE EXPLANA TION GIVEN BY THE ASSESSEE AS ENUMERATED IN PARA 5 OF THIS ORDER IS NOT EASY TO BELIEVE AND IT IS NOT SUBSTANTIATED. HE SUBMITTED THAT THE VARIOUS DECISIONS RELIED ON BY THE ASSESSEE'S COUNSEL ARE D ISTINGUISHABLE AS THEY ARE DELIVERED ON THEIR OWN FACTS. ACCORDIN G TO THE DR THE ASSESSEE'S REQUEST FOR CONDONATION OF DELAY WAS RIG HTLY TURNED DOWN BY THE LEARNED CIT(A) AND THE ASSESSEES HEREIN DID NOT DESERVE ANY INTERFERENCE ON THE PART OF THE TRIBUNA L. FURTHER, HE SUBMITTED THAT THE ASSESSEE IN THE CASE OF DAVINDER KAUR & OTHERS OF SIMILAR GROUP HAVE FILED THEIR APPEALS IN ITA NO S. 23- 25/HYD/2000 WHEREIN THE DELAY WAS ONLY 1579 DAYS. WHEN THE ASSESSEES OF SIMILAR GROUP WERE ABLE TO FILE THE AP PEALS WITH A SHORT DELAY OF 1579 DAYS HOW COULD BE SUCH AN INORD INATE DELAY IN THE PRESENT CASES. ACCORDING TO THE DR, THE ASSESS EES HAVE NOT EXERCISED DUE CARE OR ATTENTION FOR FILING THE APPE ALS WITHIN THE STATUTORY TIME LIMIT AND THE ASSESSEES SHOWN UTTER DISREGARD TO THE STATUTORY PROVISIONS OF THE ACT. 24. WE HAVE CAREFULLY CONSIDERED THE VARIOUS SUBMISSION S. THE ISSUE BEFORE US IS WHETHER THE CIT(A) IS JUSTIFIED IN REFUSING TO ITA NOS. 840 & 841 / HYD/2010 M/S. KITTY STEELS LTD. ======================== 20 CONDONE THE DELAY AROUND 10 YEARS IN FILING THESE A PPEALS AGAINST THE ORDER PASSED BY THE ASSESSING OFFICER. THE ASS ESSEE'S HEREIN EXPLAINED THE DELAY IN FILING THE APPEALS AS NARRAT ED IN PARA 5 OF THIS ORDER ON ACCOUNT OF THE FOLLOWING REASONS: THE MANAGEMENT OF THE COMPANY WAS NOT AWARE OF THE ASSESSMENT AND PENALTY ORDERS TILL IT RECEIVED A LE TTER OF THE DEPARTMENT IN BIFR PROCEEDINGS IN FEBRUARY 2009 (A COPY OF THE LETTER SUBMITTED DURING HEARING). ONLY THEN DID THE COMPANY KNOW OF DEMANDS EXISTING AGAINST IT. ON ENQ UIRIES DONE INTERNALLY, IT WAS BELIEVED THAT THE ORDERS CO ULD HAVE BEEN SERVED ON, AND REMAINED UNATTENDED AT, LOWER LEVELS . THE ASSESSEE GOT PHOTO COPIES OF THE ORDERS AT DIFF ERENT DATES FROM THE DEPARTMENT, RESULTING IN THE APPEALS BEING FILED AT DIFFERENT DATES. THE DEPARTMENT RAISED DEMANDS AGGREGATING TO ABOUT RS. 10 CRORES BUT NO RECOVERIES WERE ATTEMPTED. AS SUCH, T HE MANAGEMENT REMAINED UNAWARE OF THE ORDERS. THERE IS NO DOUBT WHATSOEVER THAT BOTH THE ASSESSME NT AND PENALTY ORDERS WOULD HAVE BEEN SET ASIDE IF THEY WE RE CONSIDERED ON MERITS. THE AGGREGATE DEMAND IN THEM IS ABOUT RS. 10 CRORES. THE COMPANY AND THE GROUP WERE DEEPLY ENGAGED IN FI GHTING BATTLES ON SEVERAL FRONTS SIMULTANEOUSLY. THESE INC LUDED: - INCOME TAX SEARCH AND ASSESSMENT PROCEEDINGS - CRIMINAL PROSECUTION PROCEEDINGS LAUNCHED BY INCOME TAX DEPARTMENT - SEVERAL SEARCH AND SURVEY PROCEEDINGS BY CENTRAL EX CISE DEPARTMENT - SEARCH AND SURVEY PROCEEDINGS BY COMMERCIAL TAXES DEPARTMENT - SEARCH AND SURVEY PROCEEDINGS BY CUSTOMS - SEVERAL APPLICATIONS TO BIFR INCLUDING APPEAL TO TR IBUNAL - PRESSURES OF RECOVERIES OF DEBTS FROM FINANCIAL INS TITUTIONS - LABOUR UNREST, STRIKE AND SETTLEMENT BY INDUSTRIAL TRIBUNAL - MAJOR FIRE IN PREMISES - WINDING UP PROCEEDINGS BEFORE HIGH COURT FILED BY S EVERAL CREDITORS - HUGE LOSSES IN BUSINESS ITA NOS. 840 & 841 / HYD/2010 M/S. KITTY STEELS LTD. ======================== 21 25. BEFORE THE CIT(A) THE ASSESSEES ALSO EXPLAINED THAT THERE WAS A SEARCH AND SEIZURE OPERATION ON THE COMPANY A ND RESIDENTIAL PREMISES OF THE DIRECTORS ON 26.7.1995. FOLLOWING THE SEARCH, THE DEPARTMENT HAD INITIATED CRIMINAL PROCE EDINGS AGAINST THE DIRECTORS IN-CHARGE OF THE AFFAIRS OF THE COMPA NY AND THEIR FAMILY MEMBERS. THERE WERE HARROWING TIMES FOR THE DIRECTORS AND THE SOLE AIM WAS TO AVOID THE EXTREMELY PERNICIOUS EFFECT OF THE PROCEEDINGS WHICH WAS COMPLETELY ILLEGAL. THE DIRE CTORS OF THE COMPANY WERE SO DISTURBED IN THESE YEARS THAT THEIR HEALTH SUFFERED, BUSINESS RUINED, HAD NO STRENGTH OR EQUAN IMITY WITH WHICH THEY COULD HAVE ATTENDED THE OBLIGATIONS OF T HE COMPANY, WHILE CRIMINAL PROCEEDINGS WERE QUASHED AND SEARCH WAS DECLARED COMPLETELY ILLEGAL. HOWEVER, THIS TOOK A LONG TIME AND DRAWN THEIR ENERGY AND RESOURCES IN ALL MANNERS. IN THE MEANTI ME THE BUSINESS OF THE COMPANY SUFFERED A LOT. THE PROFIT ABILITY OF THE COMPANY HAD GONE DOWN, HUGE DEBTS MOUNTED UP, THE C OMPANY HAD TO FILE A PETITION BEFORE BIFR. AFTER PROLONGE D INVESTIGATION, THE COMPANY WAS DECLARED SICK IN THE YEAR 2006. D URING THIS TIME, THE ONLY MOTIVE OF THE ASSESSEES IS TO KEEP T HE COMPANY AS A GOING CONCERN AND HAD FORGOTTEN ALL THE INCOME-TAX MATTERS AND ITS IMPLICATIONS. THE CIT(A) DISMISSED THE PLEA OF THE ASSESSEES STATING THAT THE REASONS EXPLAINED BY THE ASSESSEES ARE VAGUE AND UNSUBSTANTIATED AND THOSE REASONS CANNOT BE TAKEN T O ESTABLISH SUFFICIENT CAUSE FOR FILING THE APPEAL BELATEDLY. 26. THERE WAS A DELAY OF 3800 DAYS IN THE CASE OF ITA N O. 840/HYD/2010 AS THE ASSESSMENT ORDER WAS PASSED ON 30.3.1999 AND THE APPEAL WAS FILED BEFORE THE CIT(A) ON 22.7. 2009. THUS THE DELAY WAS 3800 DAYS. IN THE CASE OF PENALTY ORDER WHICH WAS PASSED ON 22.9.1999, APPEAL WAS FILED BEFORE THE CI T(A) ON 22.7.2009. THUS THE DELAY WAS AROUND 3560 DAYS WIT H REFERENCE TO ITA NO. 841/HYD/2010. THE CONTENTION OF THE ASS ESSEES ITA NOS. 840 & 841 / HYD/2010 M/S. KITTY STEELS LTD. ======================== 22 COUNSEL IS THAT IN SIMILAR CIRCUMSTANCES, IN THE SA ME GROUP OF ASSESSEE VIZ., SMT. DAVINDER KAUR & ORS, IN ITA NO. 23-25/HYD/ 2000 ORDER DATED 8.8.2008 THE TRIBUNAL HAS CONDONED THE DELAY OF 1579 DAYS. ACCORDINGLY THE AR REQUESTED TO CONDONE THE DELAY OF AROUND 3800 DAYS. IN OUR OPINION, THE DELAYU OF 15 79 DAYS WAS CONDONED AS THE ASSESSEE WAS ABLE TO EXPLAIN THE DE LAY BEFORE THE TRIBUNAL WITH SUFFICIENT REASONS. IN THE CASES BEF ORE US THE DELAY WAS DOUBLE THE DELAY IN THE ABOVE CASES. THE ASSESS EE IS REQUIRED TO SHOW SUFFICIENT CAUSE THAT THE ASSESSEE WAS EIT HER BONA FIDE OR WAS PREVENTED BY SUFFICIENT CAUSE FROM PURSUING THE REMEDY. WHETHER SUFFICIENT CAUSE IS MADE OUT OR NOT IS ALWA YS DEPEND UPON THE FACTS OF THE CASE AND HAS TO BE ESTABLISHE D ON RECORD. THE ASSESSEE HAS TO ESTABLISH THAT THERE WAS NO NEG LIGENCE OR IN- ACTION OR WANT OF BONA FIDE AND THE RIGHT GRANTED U NDER LAW TO CHALLENGE THE ORDER WAS NOT ABANDONED. IT CANNOT B E OVERLOOKED THAT ON EXPIRY OF THE PERIOD OF LIMITATION PRESCRIB ED FOR SEEKING REMEDY, A CORRESPONDING RIGHT ACCRUES IN FAVOUR OF THE OTHER PARTY AND THE SAME SHOULD NOT BE LIGHTLY INTERFERED WITH. COMING TO THE FACTS OF THE PRESENT CASE, THE ASSESSEE HAS TO EXPL AIN THE PERIOD OF DELAY BY BRINGING THE MATERIAL ON RECORD TO SUPPORT THE SUFFICIENT CAUSE. THE ASSESSEE HAS TO SHOW THAT THE ASSESSEE IS VIGILANT DURING THIS PERIOD AND THE DELAY WAS BEYOND ITS CON TROL. CONDONING OF INORDINATE DELAY OF AROUND 10 YEARS S HOULD NOT FRUSTRATE THE LEGITIMATE EXPECTATION OF THE OTHER P ARTY AS THE REVENUE WOULD HAVE COME TO THE CONCLUSION THAT THE ORDER OF THE CIT(A) HAS BEEN ACCEPTED BY THE ASSESSEE AND REACHE D FINALITY, ESPECIALLY THE ASSESSEE SHOULD NOT TAKE UP THE REQU ISITE LEGAL REMEDIES FOR SUCH AN INORDINATE LENGTH OF TIME. TH E ASSESSEE PLACED RELIANCE ON VARIOUS JUDGEMENTS. THE OBSERVAT IONS IN A JUDGEMENT MUST BE READ IN THE CONTEXT IN WHICH THEY APPEAR AS EACH CASE DEPENDS ON ITS OWN FACTS. SLIGHTEST CHAN GE IN THE FACTS OF THE CASE WILL DIFFER THE DECISION. IN DECIDING THE CASES ONE ITA NOS. 840 & 841 / HYD/2010 M/S. KITTY STEELS LTD. ======================== 23 SHOULD AVOID THE TEMPTATION TO DECIDE THE CASE BY M ATCHING THE COLOUR OF ONE CASE AGAINST THE COLOUR OF ANOTHER. TO DECIDE, THEREFORE, ON WHICH SIDE OF THE LINE A CASE FALLS, THE BROAD RESEMBLANCE TO ANOTHER CASE IS NOT DECISIVE. BEING SO, WE ARE NOT IN A POSITION TO BORROW SUPPORT FROM ORDER/JUDGEMEN T CITED BY THE ASSESSEE. HOWEVER, CONSIDERING THE FINDINGS OF THE CIT(A) THAT THE ASSESSEE HAS NOT SUBSTANTIATED THE REASONS ADVANCED FOR DELAY BEFORE THE CIT(A), WE FEEL IT APPROPRIATE TO REMIT THE ISSUE BACK TO THE FILE OF THE CIT(A) WITH A DIRECTION TO THE ASSE SSEES TO PLACE NECESSARY EVIDENCE, AS PLEADED BEFORE US IN ITS PET ITION IN THE FORM OF ADDITIONAL EVIDENCE IN SUPPORT OF THEIR CLAIM, I F ANY, BEFORE THE CIT(A) AS THE DELAY OCCURRED BEFORE THE CIT(A) ONLY . IF THE ASSESSEES FAIL TO SUBSTANTIATE THEIR CLAIMS EVEN AF TER ADDITIONAL EVIDENCE, THE CIT(A) HAS TO DRAW ADVERSE INFERENCE THAT THE ASSESSEES HAVE NO REASONABLE AND SUFFICIENT CAUSE T O FILE THE APPEALS BY SUCH AN INORDINATE DELAY. 27. IN THE RESULT, BOTH THE APPEALS ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. .ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH SEPTEMBER, 2012. SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 10 TH SEPTEMBER, 2012 COPY FORWARDED TO: 1. M/S. KITTY STEELS LTD., C/O. M/S. GANDHI & GANDHI, CHARTERED ACCOUNTANTS, 1002, PAIGAH PLAZA, BASHEERBAGH, HYDER ABAD-500 063. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRC LE-1, 7 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD-500 0 04. 3. THE JOINT COMMISSIONER OF INCOME-TAX, SPECIAL RANGE -2, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD-500 004. 4. THE CIT(A)-I, HYDERABAD. 5. THE CIT (CENTRAL), HYDERABAD 6. THE DR A BENCH, ITAT, HYDERABAD. TPRAO