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Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD
Before: SHRI WASEEM AHMED&
The instant appeal filed by the Revenue is directed against the order dated 12.09.2017 passed by the Commissioner of Income Tax (Appeals) – 10, Ahmedabad arising out of the order dated 23.12.2016 passed by the ITO, Ward-1(3)(2), Ahmedabad under section 143(3) of the Income Tax Act, 1961 (hereinafter referred as to ‘the Act’) for Assessment Year 2014- 15 with the following grounds:-
“(1) That the ld.CIT(A) has erred in law and/or on facts in deleting the disallowance made by the AO on account of expenses claimed by the assessee of Rs. 1,96,59,188/-.
ITO vs. Shri Hajiabdulgani T Memon Asst.Year –2014-15 - 2 - (2) That the ld.CIT(A) has erred in law and/or on facts in deleting the addition made by the AO u/s. 68 of the Act of Rs. 10,00,000/-.”
Ground No. 1:- 2. It relates to deleting the disallowance made by the Ld. AO on account of expenses claimed by the assessee of Rs. 1,96,59,188/-. None appeared on behalf of the assessee before us. However, at the time of hearing Ld. DR appearing for the Revenue submitted that the matter is covered in assessee’s own case for the A.Y. 2012-13.
We have heard the Ld. DR and perused the relevant materials available on record.
During the course of assessment proceeding it was found that the assessee has claimed aggregate expenses of Rs. 12,50,94,367/-. Out of which upon verification of the ledger account it was found that expenses of Auto Parts and Diesel have been paid by cheque. Other expenses mainly lorry rent expenses, however, was paid in cash. Further that the gross receipt of the proprietary ship concern has been shown at Rs. 13,06,46,335/- against which expenses to the tune of Rs. 13,00,76,516/- was claimed and, therefore, net profit was of only Rs. 5,69,819/-. Though the assessee furnished the ledger account of the expenses but supporting evidences like bills/vouchers were not submitted before the Ld. AO and, therefore, in the absence of corroborative evidences the 20% of the aggregate expenses except expenses incurred in Auto Part and Diesel which was worked out to Rs. 2,08,72,059/- is allowed out of the total claimed of expenses of Rs. 10,43,60,296/-. In appeal the same was deleted by the Ld. CIT(A). While dealing with the appeal preferred by the assessee the Ld. CIT(A) took into
ITO vs. Shri Hajiabdulgani T Memon Asst.Year –2014-15 - 3 - consideration the additions made by the authorities for A.Ys. 2011-12 and 2013-14 against which no appeal has been preferred by the assessee. The said order passed by the Ld. CIT(A) has been upheld by the ITAT in for the A.Y. 2012-13 in the appeals preferred by Revenue copy whereof has been submitted before us. We have also considered the said judgment passed by the Co-ordinate Bench. In the instant case the payment towards lorry rent expenses and some other expenses relating to tyre tube expenses/diesel expenses was made in cash. Ultimately the Ld. CIT(A) taking into consideration the entire aspect of the matter disallowed 1% of the lorry rent expenses of Rs. 9,31,01,400/- i.e. the addition was made of Rs. 9,31,014/-. Four per cent of auto parts, diesel expenses, loading expenses and tyre and tube expenses of the total amount of Rs. 2,78,40,505/- was disallowed by the Ld. CIT(A). The total addition was of Rs. 20,44,634/- which is kind of similar to that of the addition made by the Ld. CIT(A) for A.Y. 2012-13 on the similar set of facts. Thus, according to us, the order impugned is without any ambiguity so as to warrant interference and hence the order is passed in affirmative i.e. in favour of the assessee and against the Revenue.
Ground No.2:- 4. The second ground relates to addition of Rs. 10,00,000/- deposited by in cash by the appellant, which was considered to be unexplained in the absence of any satisfactory explanation given by the assessee. Taking into consideration the identical issue as decided by the Ld. CIT(A) for A.Y. 2012-13 in assessee’s own case, as it appears from the records, the Ld. CIT(A) deleted such amount, which is according to us just and proper and ITO vs. Shri Hajiabdulgani T Memon Asst.Year –2014-15 - 4 - without any ambiguity. Hence, the same is hereby confirmed. This ground of appeal by the Revenue is thus, found to be devoid of any merit and hence dismissed.
In the result, Revenue’s appeal is dismissed.
Before parting we would like to make certain observation relating to the issue cropped up under present scenario of Covid-19 pandemic as to whether when the hearing of the matter was concluded on 03.03.2020 the order can be pronounced today i.e. on 30.06.2020. The issue has already been discussed by the Co-ordinate Bench in the case of DCIT vs. JSW Ltd. (ITA Nos. 6264 & 6103/Mum/2018) pronounced on 14.05.2020 in the light of which it is well within the time limit permitted under Rule 34(5) of the Appellate Tribunal Rules, 1963 in view of the following observations made therein:
“7. However, before we part with the matter, we must deal with one procedural issue as well. While hearing of these appeals was concluded on 8th January 2020, this order thereon is being pronounced today on the day of 14th May, 2020, much after the expiry of 90 days from the date of conclusion of hearing. We are also alive to the fact that rule 34(5) of the Income Tax Appellate Tribunal Rules 1963, which deals with pronouncement of 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 the hearing.
ITO vs. Shri Hajiabdulgani T Memon Asst.Year –2014-15 - 5 - (b) In case where the order is not pronounced immediately on the conclusion of the hearing, the Bench shall give a date for pronouncement. (c) 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 for pronouncement of the order, and such date shall not ordinarily (emphasis supplied by us now) 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.
Quite clearly, “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 jurisdictional High Court in the case of Shivsagar Veg Restaurant Vs ACIT [(2009) 317 ITR 433 (Bom)] wherein Their Lordships had, inter alia, directed that “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 ITO vs. Shri Hajiabdulgani T Memon Asst.Year –2014-15 - 6 - question then arises whether the passing of this order, beyond ninety days, was necessitated by any “extraordinary” circumstances.
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 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 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 15days 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
ITO vs. Shri Hajiabdulgani T Memon Asst.Year –2014-15 - 7 - 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 corona virus “should be considered a case of natural calamity and FMC (i.e. force majeure clause) may be 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 ITO vs. Shri Hajiabdulgani T Memon Asst.Year –2014-15 - 8 - 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 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. Of course, there is no, and there cannot be any, bar on the discretion of the benches to re-fix the matters for clarifications because of considerable time lag between the point of time when the hearing is concluded and the point of time when the order thereon is being finalized, but then, in our
ITO vs. Shri Hajiabdulgani T Memon Asst.Year –2014-15 - 9 - considered view, no such exercise was required to be carried out on the facts of this case.”
On the basis of the observation made in the aforesaid judgment we exclude the period of lockdown while computing the limitation provided under Rule 34(5) of the Income Tax (Appellate Tribunal) Rule 1963. Order is, thus, pronounced in the open court.