Bhagwati Colonizers Pvt. Ltd vs. ITO (ITAT Amritsar) (Third Member)

IN THE INCOME TAX APPELLATE TRIBUNAL
THIRD MEMBER CASE, : AMRITSAR
BEFORE SHRI B.R BASKARAN, ACCOUNTANT MEMBER
(THIRD MEMBER)
ITA No.169/Asr/2015
Assessment year : 2006-07
M/s Bhagwati Colonizers Pvt. Ltd.,
Sunni Gali, Gaushala Road,
Mansa.
PAN – AACCB 4831F
Vs. TheIncome-tax Officer,
Ward-1(4),
Mansa.
APPELLANT RESPONDENT
Appellant by : Shri P.N Arora (Adv.)
Respondent by : Shri Sandeep Chauhan, CIT (DR)
Date of hearing : 29.08.2019
Date of Order : 22.10.2019
O R D E R
Per B.R Baskaran,Accountant Member
On account of difference of opinion between Hon’ble Judicial
Member and the Hon’ble Accountant Member, the Hon’ble President
was pleased to nominate me as Third Member in the instant case
with a direction to resolve the issue.
2. The difference of opinion has arisen in the matter relating to
condoning the delay in filing of appeal by the assessee before the
Tribunal. The appeal filed by the assessee was barred by limitation
by 571 days. The averments made in the affidavit filed by the
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director named Shri Amba Parshad of the assessee company
explaining the reasons for delay are extracted below:-
“I take oath and solemnly depose as follows: –
1. That in this case the appeal was filed on 31.3.2015.
2. That there was delay in filing the appeal before the
Learned ITAT, Amritsar bench, Amritsar on account of the
following reasons:-
(i) That the order of worthy CIT(A) dated 14/6/2013
was not received by me or any authorized person
of the Company.
(ii) That we never knew the fact that the order has
been passed by the Learned CIT(A) on
14/6/2013. It was only in the penalty
proceedings it came to know that the appeal of the
assessee was decided and on receipt of the
information the appellant made a request before
the Ld CIT(A) on 05/03/2014 for supply of the
copy of order of Ld CIT(A).
(iii) That the copy of the order of worthy CIT(A) was
received on 04/03/2015 along-with a letter
stating that the copy of the order was received by
the counsel who appeared before the Ld CIT(A) but
the counsel never informed us about the disposal
of the appeal as well as about the order of the
worthy CIT(A).
(iv) That the delay took place in filing the appeal
before the Learned Bench and was reasonable
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and sufficient cause for filing the belated appeal.
As there such, it is prayed that the delay may
kindly be condoned under these circumstances.”
3. Before Ld CIT(A), the assessee was represented by an Advocate
named Shri J.K. Gupta. During the course of hearing, the Ld
Departmental Representative furnished a copy of prescribed Form
No.35 filed by the assessee before Ld CIT(A), wherein the address of
Shri J.K. Gupta was mentioned as the address to which the
notice/order to be served. As per the records of Ld CIT(A), the order
was served on Shri J.K.Gupta on 08/07/2013 itself and a copy of
acknowledgement of such service was also placed on record.
4. According to the assessee, the Counsel Shri J.K. Gupta did
not intimate or forward copy of appellate order passed by Ld CIT(A).
It came to know of order passed by Ld CIT(A) only when the penalty
proceedings were commenced by the AO and accordingly it filed an
application with the office of Ld CIT(A) on 05-03-2014 seeking a
copy of the appellate order passed by Ld CIT(A). The copy of the
order was supplied by the office of Ld CIT(A) on 04-03-2015 (after
expiry of about one year from the date of application filed by the
assessee). Immediately after the receipt of copy of the appellate
order on 04-03-2015, the assessee filed appeal before the Tribunal
on 31.03.2015.
5. With regard to the petition filed by the assessee praying for
condonation of delay, the Learned Accountant Member took the
view that the assessee has failed to show that it was prevented by
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sufficient cause in filing the appeal belatedly. Accordingly the Ld
Accountant member held that the delay cannot be condoned and
the appeal of the assessee is not liable to be admitted. The
Learned Judicial Member, however, took the view that the
explanations given by the assessee along with relevant documents
clearly demonstrated the bonafide and sufficient cause for nonfiling
of appeal within the time limit. Accordingly Learned Judicial
member took the view that the delay should be condoned.
6. There was difference of opinion between the members with
regard to the matter of framing questions relating to point of
difference also. With regard to the point of difference, the Ld.
Accountant Member has framed the following questions:-
1.(a) Whether sufficient cause, which is a question of
fact, to be considered 1áing the totality of the events that
have taken place in particular case as explained by the
Hon’ble jurisdictional High Court in Harish Kumar
Chhabra vs. CIT (in ITA No.38/2012, {O&M} dated
28.08.2012), be said to have been shown by the
assessee-appellant in the instant case or not?
b) Whether the assessee can, in the facts and
circumstances of the case, be said to have satisfied the
Court that it was prevented by sufficient cause from
preferring, the appeal under reference within the
prescribed time, which is the only criteria 1aid down by
the clear enunciation of sections 3 & 5 of the Limitation AI
963?
2. Whether the assessee’s conduct, vital in condoning the
delay, be regarded as bona fide or not in the given facts
and circumstances of the case?
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3. Whether the decision on merits, requiring delving into
the facts of the case, should influence the decision of the
Court in deciding the matter of limitation in-as-much as
jurisdiction to adjudicate on merits could only follow the
admission of the appeal, with it being otherwise trite law
that the Courts have no power to extend the limitation,
where otherwise not liable to be condoned; the decision
on merits being rendered only in view of the difference
between the members constituting the Bench? “
7. The Ld Judicial Member did not agree with the questions
framed by Ld Accountant Member and accordingly the Ld
Judicial Member has framed following questions:-
“(i) Whether communication of the order appealed
which is requires to be communicated to the assessee,
as reflects from the provisions of Sec 253(3) of the IT
Act, 1961 has been communicated in the instant case to
the assessee or not, or can it be dispensed with.
(ii) Whether once the Revenue Department failed to
establish on record the service of the order appealed
direct or otherwise to the Assessee as held in the
instant case, then the delay if any in filing the appeal is
condonable or not.
(iii) Whether in the instant case, the sufficient and
bonafide cause has been shown by the assessee and
delay has been properly explained by the assessee for
not filing the appeal within the prescribed period of
limitation.”
8. In view of the difference of opinion between the members in
framing questions on the point of difference also, I am constrained
to frame the question on the point of difference to bring out the
controversy appropriately and to render decision on those
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question(s). Upon considering the facts of the case, issue before me
and the questions proposed by both the members, I am of the view
that the following question may be taken up to bring out difference
of opinion expressed by the Members:-
“Whether, in the facts and circumstances of the case, the
explanations furnished by the assessee for not filing the
appeal within the prescribed period of limitation would
constitute sufficient cause or not and accordingly whether the
delay in filing the appeal should be condoned or not?”
9. The Ld A.R reiterated the submissions made in the petition
filed by the assessee requesting the bench to condone the delay. He
submitted that the assessee has shown sufficient cause for the
delay and further the delay is not intentional. He placed his reliance
on the following case laws and submitted that, in the interest of
natural justice, the delay should be condoned.
(a) Collector, Land Acquisition vs. Mst. Katiji&ors (167 ITR
471)(SC)
(b) CIT vs. West Bengal Infrastructure Development finance
Corp. Ltd ((2011)(334 ITR 269)(SC)
(c) Bhivchandra Shankar More vs. BaluGangaram More
(Civil Appeal No.4669 of 2019)(SC)
(d) Elnet Technologies Ltd vs. DCIT (99 taxmann.com
219)(Mad)
(e) Sivalogam Steels (P) Ltd vs. CESTAT (70 taxmann.com
301)(Mad)
(f) E-Governance Society vs. CIT (Exemption)(261 taxman
289)(HP)
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(g) M/s Lahoti Overseas Ltd vs. DCIT (ITA
No.3786/Mum/2012)
The Ld A.R submitted that the appellate order passed by Ld CIT(A)
was served upon the earlier Counsel and he has failed to
communicate/forward the same to the assessee. Hence the
assessee was not aware of the fact of passing of order by Ld CIT(A).
The assessee came to know about the appellate order only when the
assessing officer started penalty proceedings. Immediately the
assessee applied for a copy of the order, but the same was supplied
after one year from the date of application. Immediately after the
receipt of the order, the assessee has preferred the present appeal.
He submitted that the assessee should not be found fault with the
delay, since the non-communication of the order by the earlier
counsel and the delay in furnishing the copy of order by Ld CIT(A)
are beyond the control of the assessee. Accordingly he submitted
that there was sufficient cause for the assessee in preferring the
appeal belatedly. He further submitted that, if the time of limitation
is computed from the date of service of order to the earlier counsel,
the same would result in delay. However, if the time limit is
computed from the date of supply of the order to the assessee, the
same is within the time limit.
10. The Ld D.R, on the contrary, submitted that the assessee has
given the address of the earlier counsel in Form No.35 as the
address to which the notice/order to be served. The Ld D.R also
furnished a copy of Form No.35 filed before Ld CIT(A). Accordingly,
he submitted that the Ld CIT(A) has duly served the appellate order
to the address of the Counsel, who has been duly authorized by the
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assessee. He submitted that it is the duty of the assessee to followup
the matter with his counsel. He submitted that the assessee
has appointed the counsel and is also aware about the details of
hearing attended by the Counsel before Ld CIT(A). Hence, as a
prudent businessman, the assessee should have enquired about
the results of the appeal. However, the assessee has remained
silent, lethargic and has simply put the blame on the earlier
counsel, which is also not supported by any material. Accordingly
the Ld D.R submitted that there was no sufficient cause for the
delay and hence the delay should not be condoned.
11. In the rejoinder, the Ld A.R submitted that, since there was
lapse on the part of the earlier counsel in the form of noncommunication
order and in view of the strained relationship, there
was no co-operation from the earlier counsel and hence the
assessee could not get a confirmation letter him. Hence the
assessee was constrained to change the counsel. Accordingly he
submitted that the bonafides of the submissions made in the
affidavit should not be doubted with.
12. I heard the parties on this issue. Before proceeding further, I
prefer to extract below some of observations made/principles laid in
the matter of condonation of delay by Hon’ble Courts. In the
decision rendered by Hon’ble Supreme Court in the case of Esha
Bhattacharjee vs. Managing Committee of Raghunathpur Nafar
Academy & others (Civil Appeal Nos.8183 – 8184 of 2013), the
Hon’ble Supreme Court has referred to some of the decisions
rendered by Hon’ble Courts on the principles to be followed while
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adjudicating the issue of condonation of delay. For the sake of
convenience, I extract below some of them:-
“(a) In Collector, Land Acquisition, Anantnag and another v.
Mst. Katiji and others (supra), a two-Judge Bench observed
that the legislature has conferred power to condone delay by
enacting Section 5 of the Indian Limitation Act of 1963 in order
to enable the courts to do substantial justice to parties by
disposing of matters on merits. The expression “sufficient
cause” employed by the legislature is adequately elastic to
enable the courts to apply the law in a meaningful manner
which subserves the ends of justice, for that is the life-purpose
for the existence of the institution of courts. The learned
Judges emphasized on adoption of a liberal approach while
dealing with the applications for condonation of delay as
ordinarily a litigant does not stand to benefit by lodging an
appeal late and refusal to condone delay can result in a
meritorious matter being thrown out at the very threshold and
the cause of justice being defeated. It was stressed that there
should not be a pedantic approach but the doctrine that is to be
kept in mind is that the matter has to be dealt with in a
rational commonsense pragmatic manner and cause of
substantial justice deserves to be preferred over the technical
considerations. It was also ruled that there is no presumption
that delay is occasioned deliberately or on account of culpable
negligence and that the courts are not supposed to legalise
injustice on technical grounds as it is the duty of the court to
remove injustice. In the said case the Division Bench observed
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that the State which represents the collective cause of the
community does not deserve a litigant-non grata status and the
courts are required to be informed with the spirit and
philosophy of the provision in the course of interpretation of the
expression “sufficient cause”.
(b) In G. Ramegowda, Major and others v. Special Land
Acquisition Officer, Bangalore (1988)(2 SCC 142),
Venkatachaliah, J. (as his Lordship then was), speaking for the
Court, has opined thus:
“The contours of the area of discretion of the courts in the
matter of condonation of delays in filing appeals are set out
in a number of pronouncements of this Court. See : Ramlal,
Motilal and Chhotelal v. Rewa Coalfield Ltd.(1962)(2 SCR
762); Shakuntala Devi Jain v. Kuntal Kumari(1969)(1 SCR
1006); Concord of India Insurance Co. Ltd. V. Nirmala
Devi(1979)(3 SCR 694); Lala Mata Din v. A.
Narayanan(1970)(2 SCR 90); Collector, Land Acquisition v.
Katiji etc. There is, it is true, no general principle saving the
party from all mistakes of its counsel. If there is negligence,
deliberate or gross inaction or lack of bona fide on the part
of the party or its counsel there is no reason why the
opposite side should be exposed to a time-barred appeal.
Each case will have to be considered on the particularities
of its own special facts. However, the expression ‘sufficient
cause’ in Section 5 must receive a liberal construction so as
to advance substantial justice and generally delays in
preferring appeals are required to be condoned in the
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interest of justice where no gross negligence or deliberate
inaction or lack of bona fides is imputable to the party
seeking condonation of the delay.”….
(c) In this context, we may refer with profit to the authority
in Oriental Aroma Chemical Industries Limited v. Gujarat
Industrial Development Corporation and another (2010)(5
SCC 459), where a two-Judge Bench of this Court has
observed that the law of limitation is founded on public
policy. The legislature does not prescribe limitation with the
object of destroying the rights of the parties but to ensure
that they do not resort to dilatory tactics and seek remedy
without delay. The idea is that every legal remedy must be
kept alive for a period fixed by the legislature. To put it
differently, the law of limitation prescribes a period within
which legal remedy can be availed for redress of the legal
injury. At the same time, the courts are bestowed with the
power to condone the delay, if sufficient cause is shown for
not availing the remedy within the stipulated time.
Thereafter, the learned Judges proceeded to state that this
Court has justifiably advocated adoption of liberal approach
in condoning the delay of short duration and a stricter
approach where the delay is inordinate.
(d) In Improvement Trust, Ludhiana v. Ujagar Singh and
others(2010)(6 SCC 786), it has been held that while
considering an application for condonation of delay no
straitjacket formula is prescribed to come to the conclusion if
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sufficient and good grounds have been made out or not. It
has been further stated therein that each case has to be
weighed from its facts and the circumstances in which the
party acts and behaves.”
13. The principles that emanate from the above said decisions are
that, in the matter of condonation of delay in filing appeals beyond
the limitation period, the courts are empowered to condone the
delay, provided the litigant is able to demonstrate that there was
“sufficient cause” in preferring appeal beyond the limitation period.
The Courts have also held that the expression “sufficient cause”
should receive liberal construction so as to advance substantial
justice. Hence the question of condonation of delay is a factual
matter and the result would depend upon the facts of the case and
the cause shown by the assessee for the delay. It has also been
opined that generally delays in preferring appeals are required to be
condoned in the interest of justice, where no gross negligence or
deliberate inaction or lack of bona fides is imputable to the party
seeking condonation of the delay.
14. Now I shall turn to the facts of the present case. In the
affidavit, the main reason cited by the assessee for the delay is that
the copy of appellate order was received by the counsel who
appeared before the Ld CIT(A), but the counsel never informed the
assessee about the disposal of the appeal by Ld CIT(A). It is a fact
that the office of Ld CIT(A) served the appellate order to the counsel
of the assessee, as the address of the counsel was given in Form
No.35 as the address to which notice/order to be served. Once the
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order was served, it is the duty of the Counsel to inform the
assessee about the order received by him. According to the
assessee, the Counsel did not inform or forward the copy of
appellate order to it.
15. Since the assessee has put blame on the Counsel, it was
specifically asked by the bench as to whether the assessee could get
a letter from the Counsel in support of the averments made in the
affidavit. The Ld A.R submitted that it may not be possible to get a
letter from the counsel due to strained relationship between the
assessee and counsel, since there was lapse on the part of the
counsel.
16. An assessee usually engages a counsel to advise him and
also to deal with legal matters and hence, in the normal
circumstances, an assessee fully places his reliance on the counsel,
due to domain expertise possessed by the Counsel. In that
situation, generally the assessee should not be put in trouble for
the mistake, if any, committed by a counsel. The following
observations made Hon’ble Supreme Court in the case reported in
AIR 1971 Ker. 211 @ 215 supports the above said view:-
“The law is settled that mistake of counsel may in 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 bonafide or was merely a
device to cover an ulterior purpose such as laches on the part
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of the litigant or an attempt to save limitation in an
underhand way………”
Though the above said observations were made in the context of the
wrong advice given by the Counsel, I am of the view that the above
said proposition can also be conveniently extended to the lapse of
the counsel in not communicating the appellate to the assessee on
right time. When an assessee authorizes a counsel to appear on his
behalf, such authorization is given by placing faith on the legal
expertise of the Counsel and also with the hope that the counsel
shall take care of the interest of the assessee. Hence, when there is
a lapse on the part of the legal counsel, in my view, the assessee
should not be found fault with, unless it is shown that the blame
put on the counsel with malafide intentions in order to cover up
the mistake/lapse on the part of the assessee. In the instant case,
it is the contention of the Ld D.R that the explanation of the
assessee is not supported by any evidence. In my view, the
submission of the Ld A.R that the assessee could not collect a letter
from the Counsel in view of the strained relationship, is a
reasonable explanation when we take into account human conduct
and probabilities, since a professional counsel cannot be expected
to admit his lapses, lest it should affect his reputation. In any case,
no material was brought on record by the revenue to show that the
assessee was continuing to avail the services of very same counsel
even after noticing his lapse. Hence, I am of the view that the
reason given by the affidavit cannot be considered to be a malafide
one. It is well settled proposition that the mistake on the part of the
counsel constitutes sufficient cause in the matter relating to
condonation of delay.
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17. The assessee has also submitted that it had applied for a copy
of order by filing application with the office of Ld CIT(A) on 05-03-
2004 and the same was supplied to the assessee on 04-03-2015.
The delay that has occurred in supplying copy of order cannot be
attributed to the assessee, since it is beyond the control of the
assessee. I notice that the assessee has filed appeal before the
Tribunal on 31.3.2005, i.e., immediately after the receipt of copy of
order.
18. The issue before me can be looked from another angle. I
notice that the Hon’ble Accountant member, even though declined
to condone the delay, yet he has adjudicated the grounds urged on
merits. The Hon’ble Judicial Member has also agreed with the view
taken by Hon’ble Accountant Member on the grounds urged on
merits. Thus, in effect, the appeal has been disposed of on merits.
The Hon’ble Madras High Court considered an issue relating to
condonation of delay in the case of Vijayeswari Textiles Ltd vs. CIT
(2003)(131 Taxman 833) on identical circumstances, i.e., in the
case before Hon’ble Madras High Court also, the Tribunal had
refused to condone the delay, but disposed the appeal on merits
also. The Hon’ble Madras High Court observed as under:-
“7. Matters relating to condonation of delay are indeed
discretionary and are normally left to the Tribunal and this
court will not ordinarily interfere with the discretion. In this
case, as we have already pointed out, the Tribunal did not
stop with the order declining to condone the delay, but
considered the matter on merits and has practically treated
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the appeal as being properly before it and has answered the
question brought before it with reference to the material
placed on record. It is in the circumstances, we hold that the
Tribunal was in error in not condoning the delay. The
question regarding the correctness of the Tribunal’s holding
that the delay is not to be condoned is therefore answered in
favour of the assessee and against the Revenue….”
According to the ratio of the above said decision, if the appeal is
adjudicated on merits, then refusing to condone the delay is an
error.
19. In view of the foregoing, I am of the view that the assessee
has shown sufficient cause for the delay in filing appeal before the
Tribunal and accordingly I concur with the view taken by Hon’ble
Judicial Member.
20. The Registry of ITAT is directed to list these matters before the
Division Bench for passing of orders in accordance with the
majority view.
Sd/-
(B.R Baskaran)
Accountant Member
Bangalore,
Dated, 22nd October, 2019.
/ vms /