M/S.COOL MINDS TECHNOLOGIES P. LTD,COCHIN V. THE ACIT, COCHIN

ITA 375/COCH/2016

AI Insights

The case involves Cool Minds Technologies Pvt. Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals)-II, Kochi, concerning the assessment year 2007-08. The primary issue was the denial of exemption under section 10B of the Income Tax Act, 1961, which the company initially claimed based on approval under the STP scheme, mistakenly equated with 100% EoU approval. The Income Tax Appellate Tribunal dismissed the initial appeal for non-prosecution, and subsequent attempts to revive the appeal through a miscellaneous application and writ petitions were unsuccessful. The High Court of Kerala eventually restored the matter to the Tribunal for a decision on merits, but the Tribunal dismissed the appeal due to the inordinate delay in filing.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 23352 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Other Referred Cases: CIT v. Sun Engineering Works Pvt. Ltd. 198 ITR 297, Rahul Mavi in WP(C) 17704/2024, H. Guruswamy & Ors v. A. Krishnaiah Civil Appeal No. 317 of 2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: LEENA LAL
• Assessee Lawyers: JOSEPH MARKOSE
• Keywords: Condonation of delay; Period of limitation
• Section: 148; 143(3); 10B

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH BEFORE SHRI INTURI RAMA RAO, AM AND SHRI KESHAV DUBEY, JM ITA No. 375/Coch/2016 Assessment Year: 2007-08 Cool Minds Technologies Pvt. Ltd. .......... Appellant 6th Floor, Cherupushpam Building Shanmugham Road, Kochi 682301 [PAN: AABCD6457G] vs. Dy. Commissioner of Income Tax .......... Respondent Central Circle - 4(1), Kochi Appellant by: Shri Joseph Markose, Advocate Respondent by: Smt. Leena Lal, Sr. D.R. Date of Hearing: 17.02.2025 Date of Pronouncement: 18.03.2025 O R D E R Per: Inturi Rama Rao, AM This appeal filed by the assessee-company is directed against the order of the Commissioner of Income Tax (Appeals)-II, Kochi [CIT(A)], dated 23.09.2014 for Assessment Year (AY) 2007-08. 2. This is an appeal restored by the Hon'ble High Court in Writ Appeal No. 717 of 2024 dated 04.06.2024 holding as under: - “8. Thus, taking note of the said precedent of this Court and finding it to be in confirmity with the statutory provisions 2 ITA No. 375/Coch/2016 Cool Minds Technologies Pvt. Ltd. under the IT Act and Rules, we allow this writ appeal by setting aside the impugned judgment of the learned Single Judge, as also Ext.P4 and P6 orders of the Income Tax Appellate Tribunal that were impugned in the writ petition, and direct the Appellate Tribunal to restore the appeal (ITA 375/Coch/2016) on its file and pass orders on merits after hearing the appellant, within an outer time limit of six months from the date of receipt of a copy of this judgment.” 3. Brief facts of the case are that the appellant is a company incorporated under the provisions of the Companies Act, 1956. It is engaged in the business of software development and exports. The return of income for AY 2007-08 was filed on 16.10.0227 declaring Nil income after claiming exemption u/s. 10B of the Act. 4. Against the said return of income, the assessment was completed by the AO vide order dated 13.11.2009 passed u/s. 143(3) of the Income Tax Act, 1961 (the Act) accepting the returned income. Subsequently the AO was of the opinion that exemption u/s. 10B of the Act of Rs. 45,43,302 /- was wrongly allowed as it was allowed on the basis of approval under STP scheme as the same cannot be equated with 100% EoU approval by the Central Government. Accordingly, a notice u/s. 148, was issued on 16,03,2912. In response to the notice u/s. 148 the return of income was filed on 20.04.2012 disclosing Nil Income after claiming deduction u/s. 10A of Rs. 45,43,302/-. Against the said return of income, the assessment was completed by the AO vide order dated 22.02.2013 passed u/s. 143(3) r.w.s. 147 of the Act at a total income 3 ITA No. 375/Coch/2016 Cool Minds Technologies Pvt. Ltd. of Rs. 45,53,302/-. While doing so, the AO has denied exemption u/s. 10B of the Act of 43,45,302/- by holding that the new claim made in the return filed in response to notice u/s. 148 cannot be entertained placing reliance on the decision of Hon'ble Supreme Court in the case of CIT v. Sun Engineering Works Pvt. Ltd. 198 ITR 297. 5. Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO. 6. Being aggrieved, the appellant is in appeal before this Tribunal in ITA No. 375/Coch/2016. The Tribunal vide order dated 24.10.2016 dismissed the appeal in limine for non-prosecution. 7. Being aggrieved by the order of this Tribunal a miscellaneous application was filed before this Tribunal in MA No. 64/Coch/2019 seeking recall of the order in the circumstances mentioned therein. The said MA came to be disposed off vide order dated 23.08.2019 on the grounds of delay. 8. Being aggrieved, the appellant approached the Hon'ble High Court of Kerala invoking the Writ jurisdiction, which came to be dismissed by the learned Single Judge vide order dated 08.02.2024 in WC 9100 of 2020. 9. Being aggrieved, the appellant filed Writ Appeal before the Division Bench. The Hon'ble High Court, wide Writ Appeal No. 4 ITA No. 375/Coch/2016 Cool Minds Technologies Pvt. Ltd. 717 of 2024 dated 04.06.2024 restored the matter to this Tribunal for disposal on merits after affording reasonable opportunity of hearing to the appellant. That is how the matter arose before us. 10. At the outset we find that there is a delay in filing the appeal before this Tribunal of 580 days. The appellant filed a petition seeking condonation of delay for the reasons stated therein. The reasons set out in the affidavit are as under: - “4. The assessee was represented by a Chartered Accountant at the assessment stage and also before the CIT(A). The assessee had initially decided to file an appeal before the ITAT and had paid the appeal fees on 2-2-15.However, thereafter based on certain miscommunication with the Chartered Accountant who was handling the matter, the appeal could not be filed within the due date. 5. Subsequently, the assessee has changed the AR and the matter is now being handled by another firm. The delay in filing the documents was due to the delay in obtaining original copies of some of the documents and as soon as all the papers were obtained, the appeal is being filed. Since the delay in filing the appeal of 580 days was due to the lack of knowledge and for reasons beyond the control of the assessee, it is humbly prayed that the Hn'ble Bench may kindly condone the delay. It is also submitted that the assessee is facing tremendous financial hardship and hence the outcome of the appeal would have substantial bearing on the future of the business of the assessee. Hence, it is humbly submitted that the delay may kindly be condoned and the appeal may be heard by the Hon'ble bench on merits.” 11. From a perusal of the averments made in the petition seeking condonation of delay it is evident that the appellant is trying to 5 ITA No. 375/Coch/2016 Cool Minds Technologies Pvt. Ltd. blame the Chartered Accountant for the delay. The petition is bereft of details such as name of the Chartered Account, who appeared before the AO. Furthermore, the petition does not contain details as to when the matter was handed over to the new Chartered Accountant. The explanation that the delay has occurred on account of delay in obtaining original copies of documents cannot be believed for the reason that the appellant took 580 days to take possession of the original documents from the former Chartered Accountant who was handling the matters. Thus, the appellant had failed to explain the reasons for the inordinate delay of 580 days in filing the appeal before us. Recently the Hon'ble Delhi High Court in the case of Rahul Mavi in WP(C) 17704/2024 dated 18.12.2024 has deprecated the practice of shifting, to the shoulders of the Counsel, the negligence in approaching the court. The relevant observation made by the Hon'ble High Court is as under: - “4. We also disapprove the unwholesome practice of seeking to explain away inordinate delay and laches on approaching the Court on the mere ground that the Counsel who had been dealing with, or entrusted, the matter, was tardy, negligent, or indolent. At times, this assertion is sought to be supported by an assertion that the litigant has approached the Bar Council concerned against the counsel. 5. We emphatically disapprove of this practice of shifting, to the shoulders of the Counsel, the negligence in approaching the Court. It is easy, in such circumstances, to file a complaint before the Bar Council and seek to explain away the delay. We deprecate this. A litigant does not abandon all responsibility to keep track of a matter, once it is entrusted to Counsel. 6 ITA No. 375/Coch/2016 Cool Minds Technologies Pvt. Ltd. 6. That said, if, in fact, the Counsel has been negligent, the litigant would have to place, on record, material to indicate that she, or he, has been in touch with the Counsel during the entire period of delay, and that the Counsel has been misleading her, or him. This material must be acceptable, and convincing. The Court has to be satisfied that, in fact, the Counsel has been misleading the client, and that this explains the entire period of delay in approaching the Court. Of course, if the Court is so satisfied, and an innocent litigant has been led up the garden path by an unscrupulous Counsel, the court would not allow injustice to be done, and would, in an appropriate case, condone the delay.” 12. Thus, we are of the considered opinion that we are not convinced that the appellant had explained the entire delay of 580 days in presenting the appeal before this Tribunal. Accordingly the appeal is dismissed on the ground of delay and latches. Recently the Hon'ble Supreme Court in H. Guruswamy & Ors v. A. Krishnaiah Civil Appeal No. 317 of 2025 dated 8th January, 2025 observed as under: - 13. We are at our wits end to understand why the High Court overlooked all the aforesaid aspects. What was the good reason for the High Court to ignore all this? Time and again, the Supreme Court has reminded the District judiciary as well the High courts that the concepts such as “liberal approach”, “Justice oriented approach”, “substantial justice” should not be employed to frustrate or jettison the substantial law of limitation. 14. We are constrained to observe that the High Court has exhibited complete absence of judicial conscience and restraints, which a judge is expected to maintain while adjudicating a lis between the parties. 15. The rules of limitation are not meant to destroy the rights of parties. They are meant to see that the parties do not resort to dilatory tactics but seek their remedy promptly. 7 ITA No. 375/Coch/2016 Cool Minds Technologies Pvt. Ltd. 16. The length of the delay is definitely a relevant matter which the court must take into consideration while considering whether the delay should be condoned or not. From the tenor of the approach of the respondents herein, it appears that they want to fix their own period of limitation for the purpose of instituting the proceedings for which law has prescribed a period of limitation. Once it is held that a party has lost his right to have the matter considered on merits because of his own inaction for a long, it cannot be presumed to be non- deliberate delay and in such circumstances of the case, he cannot be heard to plead that the substantial justice deserves to be preferred as against the technical considerations. While considering the plea for condonation of delay, the court must not start with the merits of the main matter. The court owes a duty to first ascertain the bona fides of the explanation offered by the party seeking condonation. It is only if the sufficient cause assigned by the litigant and the opposition of the other side is equally balanced that the court may bring into aid the merits of the matter for the purpose of condoning the delay. 17. We are of the view that the question of limitation is not merely a technical consideration. The rules of limitation are based on the principles of sound public policy and principles of equity. No court should keep the ‘Sword of Damocles’ hanging over the head of a litigant for an indefinite period of time.” 13. In view of the principles enunciated by the Hon'ble Supreme Court, we are of the considered opinion that it is not a fit case to condone the delay of 580 days as the appellant failed to offer any bona fide explanation for the delay. 14. The contention of the learned A.R. that this Tribunal in the present proceedings cannot adjudicate on the issue of delay in view of the direction of the Hon'ble High Court to decide the issue on 8 ITA No. 375/Coch/2016 Cool Minds Technologies Pvt. Ltd. merits, cannot be accepted for the reason that the order of the Hon'ble High Court cannot be construed in such a manner the dictum laid down by the Hon'ble High Court is that the entire appeal should be decided on merits, since in the earlier round of proceedings before this Tribunal, the Tribunal without entering into the merits merely dismissed the appeal for non-appearance. 15. In the result, the appeal is dismissed on the ground of delay and latches. Order pronounced in the open court on 18th March, 2025. Sd/- Sd/- (KESHAV DUBEY) JUDICIAL MEMBER (INTURI RAMA RAO) ACCOUNTANT MEMBER Cochin, Dated: 18th March, 2025 n.p. Copy to: 1. The Appellant 2. The Respondent 3. The Pr. CIT concerned 4. The Sr. DR, ITAT, Cochin 5. Guard File By Order Assistant Registrar ITAT, Cochin "