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Income Tax Appellate Tribunal, CUTTACK BENCH, CUTTACK
Before: SHRI CHANDRA MOHAN GARG & LAXMI PRASAD SAHU
O R D E R Per C.M.Garg,JM This is an appeal filed by the assessee against the order of the CIT(A),1, Bhubaneswar dated 10.2.2016 for the assessment year 2010-11 in the matter of assessment u/s.143(3) of the Act.
The appeal filed by the assessee is time barred by 1239 days. The assessee has filed condonation petition supported by affidavit for condoning the delay in filing the appeal. In the petition, it is stated as under:
“ 1. The appeal against the Assessment Order passed U/s 143(3) of The I.T.Act,1961 dated 04.03.2013 was filed by the appellant on 25.02.2014 before The Commissioner of Income Tax (Appeal)-l, Bhubaneswar.
2. During the course of hearing of the subject appeal, the Ld. Assessing Officer had issued Notice U/s 148 of The I.T. Act for impugned assessment year to reassess the income of the appellant. The matter was brought to the notice of the Ld. CIT(A)-1 and the appellant was advised that the P a g e 1 | 9 36/CTK/201 9 Assessm ent Y ear : 20 10- 201 1
grounds of appeal raised in the subject appeal against the order U/s 143(3) dated 04.03.2013 be raised in the appeal against the order to be passed U/s 147 of The I.T.Act,1961 and treated the appeal as infructuous and dismissed the same vide order dated 10.02.2016.
3. As the appeal was treated as infructuous and accordingly dismissed by Ld. Commissioner of Income Tax (Appeals)-l, the appellant did not file appeal against the subject appellate order before The Income Tax Appellate Tribunal, Cuttack Bench with a bonafide belief that the issues raised in the appeal shall be taken up in the appeal to be filed against the order to be passed U/s 147/143(3) of The I.T.Act,1961.
The Assessment Order U/s 143(3)/147 pursuant to Notice issued U/s 148 was passed on 30.03.2016 which was received by the appellant on 31.03.2016 and the appellant filed the appeal against such order on 19.04.2016 before the Commissioner of Income Tax (Appeals)-l, Bhubaneswar raising the grounds of appeals as were raised in the appeal against order dated 04.03.2013 as well as grounds of appeal arising out of order U/s 143(3)/147 dated 30.03.2016.
5. The appellate order against the Order U/s 143(3)/147 was passed on 28.08.2019 by The Commissioner of Income Tax(Appeals)-l which was received by the Appellant on 02.09.2019. However, The Ld. CIT(A)-1 has considered the issues raised in the Assessment order passed U/s 143(3)/147 observing that the initial assessment order U/s 143(3) dated 04.03.2013 ceases to be operative. (Copy of Appellate Order enclosed)
The Honorable Bench in it's Order dated 03.01.2018 in has dismissed the appeals of M/s Rajdhani Systems & Estates (P) Ltd., a sister concern of the appellant without adjudicating the grounds of appeals observing that the grounds raised by the appellant are not arising out of the Assessment Order Passed U/s 143*(3)/147 dated 28.8.2014 being not maintainable.
7. Now being advised, the appellant is filling the appeal against the appellate order dtd 10.2.2016 arising out of assessment order u/s.143(3) dated 4.3.2013.
8. An affidavit duly notarized by the director of the appellant for condonation of delay is enclosed.’
3. At the time of hearing, ld A.R. of the assessee reiterated the submissions made in the condonation petition and prayed for condoning the delay, which was opposed by ld D.R.
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4. After considering the rival submissions, we are satisfied that the assessee was prevented by sufficient cause in filing the appeal delay before the Tribunal.
The Hon’ble Supreme Court in the case of Collector, Land Acquisition vs Mst. Katiji (1987) 167 ITR 471 has held that there can be no presumption of deliberateness or negligence or mala fides in case of delay, because litigants run a serious risk without any benefit by the delay. The judiciary is respected not for legalizing injustice on technical grounds but for removing injustice. In this case, the delay was occurred due to the fact that the assessee was running before the Income Tax Department in the matter of assessment u/s.143(3) as well as order passed against 143(3)/147 of the Act. Hence, the assessee was not getting any benefit for the delay caused by it. In view of above and following the decision of Hon’ble Supreme Court in the case of Collector, Land Acquisition(supra), we condone the delay of Rs.1239 days and admit the appeal for adjudication.
The assessee has raised the following grounds of appeal:
“ 1. Because that the order of the AO is arbitrary, unjust, excessive and contrary to the provisions of the Act and for that assessment order is liable to be quashed and/or annulled.
2. Because that the ld CIT(A) erred in law as well as in facts treating the appeal infructuous without deciding the issues raised in the appeal on merits.
Because that the ld AO erred in law as well as in fact by disallowing the interest expenses of Rs.2,43,671/- u/s.40(a)(ia) for interest paid to TATA Capital since the payment is made through post dated cheques.
4. Because that the AO erred in law as well as in fact by disallowing project expenses of Rs. 37,61,699/- U/s 40(a)(ia) without appreciating the nature , circumstances and necessity of incurring such expenses which is based on presumptions & surmises and same is liable to be allowed.
5. Because that the learned Assessing Officer erred in law as well in fact by making addition of Rs. 142110/- U/s 37 of The Act in respect of land brokerage and commission without appreciating the necessity of incurring
P a g e 3 | 9 36/CTK/201 9 Assessm ent Y ear : 20 10- 201 1 such expenses is based on presumption & surmises and same is liable to be allowed.
6. Because that the learned Assessing Officer erred in law as well as in fact by disallowing Rs.18,17,451/- U/s 40A(3) for payment of ? 3,00,000/- paid against dishonour of cheque and the balance towards transportation expenses without appreciating the necessity, circumstances of incurring such expenses in cash.
7. Because that the learned Assessing Officer erred in law as well in fact by disallowing project expenses of Rs.25,54,005/- U/s 40(a)(ia) without appreciating the nature , circumstances and necessity of incurring such expenses which is based on presumption & surmises and same is liable to be allowed.
8. Because that the learned Assessing Officer erred in law as well in fact by making addition of Rs. 9,04,640/- U/s 37 of The on adhoc basis in respect of land development & Scheme promotion expenses without appreciating the necessity of incurring such expenses which is based on presumption & surmises and same is liable to be allowed .
9. Because that the learned Assessing Officer erred in law as well as in fact by making addition of Rs. 1,72,983/-U/s 37 in respect of loss on sale of vehicles which has already been added in arriving at the revised total income of t 71,88,380/- and the same is liable to be allowed.
10. Because that the learned Assessing Officer erred in law as well as in fact by disallowing ^78,70,484/- U/s 40A(3) for payment made to sellers of agricultural land in cash who are unknown to the appellant and the same falls under exceptional circumstances specified in Rule 6DD of The of The I.T. Rules , 1962.
11. Because that the Learned Assessing Officer erred in law as well as in fact by not including the disallowances made U/s 37, 40(a)(ia) and 40A(3) of the I.T. Act, 1961 in the income from business for allowing deduction U/s 80IB(10) of The I.T. Act , 1961 as the same are part of income from business as computed by the Ld. Assessing Officer.”
6. Ld A.R. of the assessee submitted that originally the assessment was framed u/s.143(3) of the Income Tax Act, 1961 (in short ‘ the Act’) on 4.3.2013 against which the assessee preferred appeal before the CIT(A)-1, Bhubaneswar and same was dismissed by order dated 10.2.2016 when it was brought to his notice that the AO has reopened the assessment u/.s.147 of the Act on 16.1.2015
P a g e 4 | 9 36/CTK/201 9 Assessm ent Y ear : 20 10- 201 1 and has issued notice u/s.148 of the Act. Therefore, the appeal against assessment order framed u/s.143(3) of the Act has become infructuous as the earlier assessment order has ceased to exist. Ld A.R. further drew our attention towards copy of order of ld CIT(A)-1, Bhubaneswar dated 28.8.2019, wherein, the ld CIT(A) decided the appeal of the assessee against reassessment order u/s.143(3)/147 of the Act dated 30.3.2016 and submitted that in this appeal, the assessee raised 13 grounds including ground raised by the assessee in earlier appeal i.e. I.T. Appeal No.0239/15-16 against the original assessment order but ld CIT(A) only decided Ground No.11 pertaining to disallowance of deduction u/s.80IB(10) of the Act and remaining grounds were not adjudicated. Ld A.R. also drew our attention towards original assessment order dated 4.3.2013 and submitted that the AO has computed the total taxable income at Rs.2,50,78,880/-, which includes nine additions made by the AO during original assessment proceedings. Ld A.R. also drew our attention towards reassessment order u/s.143(3)/147 of the Act dated 30.3.2016 and submitted that the AO only made addition of Rs.1,35,02,491/- u/s. 80IB(10) of the Act which was deleted by the ld CIT(A) while passing order dated 28.8.2019 and only decided Ground No.11 of the assessee leaving aside other grounds of the assessee unadjudicated.
Ld A.R. submitted that the assessee was under impression that after initiation of reassessment proceedings, the earlier original assessment order has become non-existent and, therefore, his appeal has become infructuous and resultantly the ld CIT(A) dismissed the appeal as infructuous. Ld A.R. lastly submitted that keeping in view above facts and circumstances, it is clearly discernible that the grievance of the assessee contained in Ground Nos.1 to 10 and P a g e 5 | 9 36/CTK/201 9 Assessm ent Y ear : 20 10- 201 1 Ground Nos.12 & 13 have not been adjudicated neither during the original first appellate proceedings u/s.143(3) of the Act and also nor during first appellate proceedings u/s.143(3)/147 of the Act by the ld CIT(A), therefore, same may be restored to the file of the ld CIT(A) for fresh adjudication after hearing the assessee.
Ld D.R., in all fairness, submitted that the department has no serious objection if the grievance of the assessee in Ground No.1 to 10 and Grounds No.12 & 13 are restored to the file of the ld CIT(A) for fresh adjudication as the same were not adjudicated during both the first appellate proceedings and total income calculated by the AO includes addition pertaining to these grounds.
In view of above, we set aside the orders of the lower authorities and remit the appeal to the file of the ld CIT(A) to re-adjudicate Ground Nos.1 to 10 and Ground Nos.112 & 13 after affording reasonable opportunity of hearing to the assessee.
10. Before parting, we may herein deal with a procedural issue that though the hearing of the captioned appeal was concluded on 7.2.2020, however, this order is being pronounced much after the expiry of 90 days from the date of conclusion of hearing. We find that Rule 34(5) of the Income tax Appellate Tribunal Rules, 1962, which envisages the procedure for pronouncement orders, provides as follows: (5) The pronouncement may be in any of the following manners: -(a) The Bench may pronounce the order immediately upon the conclusion of hearing (b) in case where the order is not pronounced immediately on the conclusion of the hearing, the Bench shall give a date of pronouncement. In a case where no date of pronouncement is given by the Bench, every endeavour shall be made by the Bench to pronounce the order within 60 days from the date on which the hearing of the case was concluded but, where 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
P a g e 6 | 9 36/CTK/201 9 Assessm ent Y ear : 20 10- 201 1 for pronouncement of the order, and such date shall not ordinarily be a day beyond a further period of 30 days and due notice of the day so fixed shall be given on the notice board. As such, “ordinarily”, the order on an appeal 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 High Court in the case of Shivsagar Veg Restaurant vs ACIT (2009) 319 ITR 433 (Bom), wherein, it was, inter alia, observed as under:
“ We, therefore, direct the President of the Appellate Tribunal to frame and lay down the guidelines in the 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 suitable guidelines shall be framed and issued by the President of the Appellate Tribunal within shortest reasonable time and followed strictly by all the Benches of the Tribunal. In the meanwhile (emphasis, by underlining, supplied by us now), all the revisional and appellate authorities under the Income-tax Act are directed to decide matters heard by them within a period of three months from the date case is closed for judgment”. In the ruled so framed, as a result of these directions, the expression “ordinarily” has been inserted in the requirement to pronounce the order within a period of 90 days. The question then arises whether the passing of this order, beyond ninety days, was necessitated by any “extraordinary” circumstances.
We find that the aforesaid issue after exhaustive deliberations had been answered by a coordinate Bench of the Tribunal viz; ITAT, Mumbai ‘F’ Bench in DCIT, Central Circle- 3(2), Mumbai vs JSW Limited & ors (ITA No.6264/Mum/18 dated 14.5.2020, wherein, it was observed as under:
“ 9. Let us in this light revert to the prevailing situation in the country. On 24th March, 2020, Hon’ble 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, even before this formal nationwide lockdown, the functioning 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 P a g e 7 | 9 36/CTK/201 9 Assessm ent Y ear : 20 10- 201 1 country. As a matter of fact, it has been such an unprecedented situation, causing disruption in the functioning of judicial machinery, that Hon’ble Supreme Court of India, in an unprecedented order in the history of India and vide order dated 6.5.2020 read with order dated 23.3.2020, extended the limitation to exclude not only this lockdown period but also a few more days prior to, and after, the lockdown by observing that “In case the limitation has expired after 15.03.2020 then the period from 15.03.2020 till the date on which the lockdown is lifted in the jurisdictional 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”. Hon’ble Bombay High Court, in an order dated 15th April 2020, has, besides extending the validity of all interim orders, has also observed that, “It is also clarified that while calculating time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly”, and also observed that “arrangement continued by an order dated 26th March 2020 till 30th April 2020 shall continue further till 15th June 2020”. It has been an unprecedented situation not only in India but all over the world. Government of India has, vide notification dated 19th 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 the 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 Disaster 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” period.
In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire 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 pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned 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 disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon’ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon’ble Bombay High Court itself has, vide judgment dated 15th 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 shall be added and time shall stand extended accordingly”. The extraordinary steps taken suo motu by Hon’ble jurisdictional High Court and Hon’ble Supreme Court also indicate that this period of lockdown cannot be P a g e 8 | 9 36/CTK/201 9 Assessm ent Y ear : 20 10- 201 1
treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words “ordinarily”, in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for 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 of 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. “ 12. We have given a thoughtful consideration to the aforesaid observations of the Tribunal and finding ourselves to be in agreement with the same, therein respectfully follow the same. As such, we are of the considered view that the period during which the lockdown was in force shall stand excluded for the purpose of working out the time limit for pronouncement of orders, as envisaged in Rule 34(5) of the Appellate Tribunal Rules, 1963.”
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced on 5 /06/2020.