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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Per CHANDRA POOJARI, AM:
This appeal by the assessee is directed against the order of the CIT(A)-IV, Kochi
dated 31/03/2016 and pertain to the assessment year 2008-09. The assessee has
also filed Stay Petition in S.P. No.23/Coch/2019 seeking stay of recovery of
outstanding demand of Rs.16,48,792/-.
The assessee has raised the following grounds of appeal:
The order of the Commissioner of Income Tax (Appeals) - IV, Kochi, in ITA No.346/CIT(A)-IV/2015-16 dated 31.03.2016 for the Assessment Year 2008-09, is opposed to law, facts and circumstances of the case.
The CIT(A) went wrong in confirming the additions of Rs.93,56,364/- for the Assessment Year 2008-09.
The appellant respectfully submits that the enhancement of the sales turnover from Rs.2,00,49,352/- to Rs.6,68,31,173/-, is also arbitrary. The above estimate is purely on a mechanical basis by multiplying the declared turnover applying a formula of 100/30, which has resulted in estimation of suppressed turnover of Rs.4,67,81,821/-. Absolutely, no material is brought on record or referred to, in order to apply the formula of 100/30 pertaining to the appellant's business, which is different and separate from other business concerns, whose turnover and profits are referred to.
It is respectfully submitted that the estimate of profit at 20% of the suppressed turnover is also arbitrary and illegal. Absolutely, no material or evidence is relied on for estimating profit at 20% of the turnover, which is presumably shown as a concession as against 22% taken in the original Assessment Order dated 3112.2009.
In this connection, it is also respectfully submitted that the reference to the trading results of various other firms at Kottayam, Kollam and Kottarakkara, and a comparison sought to be made to the trading results of those business firms
I.T.A. No. 258/Coch/2019 & S.P. No.23/Coch/2019 with the trade results of the appellant's proprietary business at Thiruvananthapuram, is also misconceived.
The appellant also respectfully submits that reference to the purchase of immovable properties by the appellant and her husband in the impugned Assessment Order for 2008-09/ prior years, is also misconceived. In as much as in the assessment of Shri. Sunny Jacob, the appellant's husband, in the appeals for the Assessment Years 2006-07 & 2007-08, the alleged estimates were set aside by the Hon'ble ITAT, Cochin Bench, as per separate orders in the appeals I.T.A. Nos.320 and 321/C/2016, which are disposed of by order dated 10.10.2018 justified in deleting the additions for the Assessment Year 2006-07 and for the Assessment Year 2007-08.
In this connection, the appellant respectfully submits that a perusal of the impugned Assessment Order would show that there were no valid reasons for discrediting the books of accounts for the Assessment Year 2008-09 or for making addition as above. It is also respectfully submitted that there is no reference to any unaccounted income, asset or investment found at the time of search in the appellant's business premises on 21.08.2007.
9 Without prejudice, it is also respectfully submitted that in the case of Shri. Sunny Jacob, the appellant's husband, for the business of M/s Sunny Jacob 916 Jewellery, for the Assessment Year 2008-09, the profit estimated is 16%, instead of 22% in the original Assessment Order,
The appellant humbly prays that the grounds of appeal before the lower Appellate Authority may kindly be considered as part of these grounds.
The appellant craves leave to file additional grounds at the time of hearing. For these and other grounds that may be urged at the time of hearing, the appellant humbly prays that the Hon'ble Income Tax Appellate Tribunal, Cochin Bench, may kindly be pleased to set aside the addition of Rs. 93,56,364/- made by the Assessing Officer and sustained by the CIT(A), allow the appeal and render justice.
There was a delay of 1038 days in filing the appeal before this Tribunal. The
assessee has explained the reasons for the delay by way of affidavit as follows:
I am the proprietrix of the petitioner firm in the above appeal. I am acquainted with the facts of the case. I am authorized and competent to swear to this affidavit.
I.T.A. No. 258/Coch/2019 & S.P. No.23/Coch/2019 2. The petitioner herein is the appellant in the accompanying appeal and petitioner in the petition for condonation of delay, for the Assessment tear 2008-09. The appeal is filed against the common order dated 31.03.2016 in I.T.A. No.346/M/CIT(A)-lV/Kochi/2015-16 and connected appeal passed by the ClT(A)-lV, Kochi.
The appeal filed by the petitioner before the Commissioner of Income Tax(Appeals)-lV, Kochi, vide I.T.A. No.346/ClT(A)-lV/Kochi/2015-16, was disposed of by order dated 31.03.2016. The appeal was heard on 28.03.2016 and represented by the petitioner's Chartered Accountant Shri. Gopalakrishnan. There were three appeals relating to the Assessment Years 2006-07 to 2008-09, all of which were disposed of by common order dated 31.03.2016. The appeals filed before the CIT(A) related to the Assessment Years 2006-07 to 2008-09, of which the appeals for the first two Assessment Years was allowed in favour of the petitioner and the appeal for the Assessment Year 2008-09 was dismissed.
In this connection, it is respectfully submitted that the search and seizure operation was carried out on 21.08.2007 in the business and residential premises of the appellant at Kottayam and in the business premises of M/s Sunny Jacob Group of Jewellers at Kottayam, Kollam and Thiruvananthapuram, simultaneously. Thereafter, the assessment proceedings were initiated u/s 153A for six years prior to the search and for the year of search as well. In all, there were more than 24 assessments, all of which were simultaneously being contested before the statutory Authorities, including in the Appellate Tribunal. The appeals were filed before the first Appellate Authority two times, as a result of the setting aside of the orders of the first Appellate Authority, in the first round of litigation, in the appeals before the Income Tax Appellate Tribunal. At that stage, the petitioner herein also was the appellant before the Hon'ble Tribunal to the aforesaid years. In the second round, CIT(A), additions made omission was unnoticed as a result of several appeals having been filed and come up for hearing simultaneously. On identical facts and against identical additions, the firms had taken up the matter before the ITAT, Cochin Bench and contested the issue. Similar relief was granted by the CIT(A) to the assessee, but the Revenue filed second appeal before the Appellate Tribunal.
In the second round of appeals, the Appellate Tribunal dismissed the appeal for 2008-09 adverting to the background of the case and the decisions rendered by the lower Appellate Authority as well as the Appellate Tribunal and further proceedings before the higher forums. The appellant noticed the omission to file the second appeal for 2008-09 only when the appeal was filed and interim orders obtained from the Hon'ble High Court for the Assessment Year 2006-07. As such, the petitioner is advised to file this second appeal, though belatedly, so as to contest the appeal before the Appellate Tribunal and to bring consistency. Accordingly, this second appeal is filed. Compared to the date of service of the Appellate order, now impugned in this 4
I.T.A. No. 258/Coch/2019 & S.P. No.23/Coch/2019 appeal, there is a delay of ……. days, which has occurred unintentionally and without the knowledge of the petitioner. There is no willful omission or neglect on the part of the petitioner.
The delay is not intentional or willful, but due to reasons beyond control. The petitioner would suffer great hardship, prejudice and monetary loss, if the delay is not condoned and the appeal decided on merits. The petitioner has raised very valid grounds in the Memorandum of Appeal and there is reasonable chance of success in the appeal. The petitioner is unable to pay the unbearable demand. In such circumstances, if coercive action is taken, it would cause serious hardship, prejudice and mental agony to the petitioner.
In the above facts and circumstances of the case, the petitioner humbly prays that the Appellate Tribunal, Cochin Bench, Cochin, may be pleased to condone the delay of 1040 days in filing the appeal in time and accept the same on file and render justice.
A separate petition praying the above relief is filed herewith and the same may be considered.
All the facts stated above are true and correct to the best of my knowledge, information and belief.“
3.1 Thus, the Ld. AR pleaded to condone the delay and to decide the appeal on
merits.
3.2 The Ld. DR strongly objected to the condonation of delay and submitted that
there was an inordinate delay of 1038 days which was due to negligence of the
assessee and it shall not be condoned.
We have gone carefully gone through the condonation petition accompanied by
an affidavit and the facts narrated by the assessee. We find that the reasons
advanced by the assessee in filing the appeal belatedly before this Tribunal is
I.T.A. No. 258/Coch/2019 & S.P. No.23/Coch/2019 genuine and bona fide. It was submitted by the Ld. AR that the assessee noticed
the omission to file the second appeal for 2008-09 only when the appeal was filed
and interim orders obtained from the Hon'ble High Court for the Assessment Year
2006-07. As such, the assessee was advised to file this second appeal, though
belatedly, so as to contest the appeal before the Tribunal and to bring consistency.
Hence, there was delay of 1038 days in filing the appeal before the Tribunal.
Therefore, we have to consider whether the assessee’s failure is sufficient cause for
condoning the delay. The Madras High Court considered an identical issue in the
case of Sreenivas Charitable Trust v. Dy. CIT (280 ITR 357) and held that mixing up
of papers with other papers are sufficient cause for not filing the appeal in time. The
Madras High Court further observed that the expression "sufficient cause" should be
interpreted to advance substantial justice. Therefore, advancement of substantial
justice is the prime factor while considering the reasons for condoning the delay.
While considering a similar issue the Apex Court in the case of Collector, Land
Acquisition v. Mst. Katiji and Ors. (167 ITR 471) laid down six principles. For the
purpose of convenience, the principles laid down by the Apex Court are reproduced
hereunder:
(1) Ordinarily, a litigant does not stand to benefit by lodging an appeal late
(2) Refusing to condone delay can result in a meritorious matter being thrown 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 merits after hearing the parties.
(3) 'Every day's delay must be explained' does not 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, commonsense and pragmatic manner. 6
I.T.A. No. 258/Coch/2019 & S.P. No.23/Coch/2019
(4) When substantial justice and technical consideration are pitted against each other, the cause 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 deliberate delay.
(5) There is no presumption that delay is occasioned 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 serious risk.
(6) It must be grasped that the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
4.1 When substantial justice and technical consideration are pitted against each
other, the cause of substantial justice deserves to be preferred, for the other side
cannot claim to have vested right for injustice being done because of non deliberate
delay. No counter-affidavit was filed by the Revenue denying the submission made
by the assessee. It is not the case of the Revenue that the appeal was not filed
deliberately. Therefore, we have to prefer substantial justice rather than technicality
in deciding the issue. As observed by Apex Court, if the application of the assessee
for condoning the delay is rejected, it would amount to legalise injustice on
technical ground when the Tribunal is capable of removing injustice and to do
justice. Therefore, this Tribunal is bound to remove the injustice by condoning the
delay on technicalities. If the delay is not condoned, it would amount to legalising
an illegal order which would result in unjust enrichment on the part of the State by
retaining the tax relatable thereto. Under the scheme of Constitution, the
Government cannot retain even a single pie of the individual citizen as tax, when it
I.T.A. No. 258/Coch/2019 & S.P. No.23/Coch/2019 is not authorised by an authority of law. Therefore, if we refuse to condone the
delay, that would amount to legalise an illegal and unconstitutional order passed by
the lower authority. Therefore, in our opinion, by preferring the substantial justice,
the delay of 1038 days has to be condoned.
4.2 The next question may arise whether 1038 days was excessive or inordinate.
There is no question of any excessive or inordinate when the reason stated by the
assessee was a reasonable cause for not filing the appeal. We have to see the
cause for the delay. When there was a reasonable cause, the period of delay may
not be relevant factor. In fact, the Madras High Court in the case of CIT v. K.S.P.
Shanmugavel Nadai and Ors. (153 ITR 596) considered the delay of condonation
and held that there was sufficient and reasonable cause on the part of the assessee
for not filing the appeal within the period of limitation. Accordingly, the Madras High
Court condoned nearly 21 years of delay in filing the appeal. When compared to 21
years, 1038 days cannot be considered to be inordinate or excessive. Furthermore,
the Chennai Tribunal by majority opinion in the case of People Education and
Economic Development Society (PEEDS) v. ITO (100 ITD 87) (Chennai) (TM )
condoned more than six hundred days delay. It is pertinent to mention herein that
the view taken by the present author in that case was overruled by the Third
Member.
4.3 The Madras High Court in the case of Sreenivas Charitable Trust (supra) held
that no hard and fast rule can be laid down in the matter of condonation of delay 8
I.T.A. No. 258/Coch/2019 & S.P. No.23/Coch/2019 and the Court should adopt a pragmatic approach and the Court should exercise
their discretion on the facts of each case keeping in mind that in construing the
expression "sufficient cause" the principle of advancing substantial justice is of
prime importance and the expression "sufficient cause" should receive a liberal
construction. Therefore, this Judgment of the Madras High Court (supra) clearly
says that in order to advance substantial justice which is of prime importance, the
expression "sufficient cause" should receive a liberal construction. Therefore, for
the purpose of advancing substantial justice which is of prime importance in the
administration of justice, the expression "sufficient cause" should receive a liberal
construction. In our opinion, this Judgment of the Madras High Court is also
squarely applicable to the facts of this case. A similar view was taken by the Madras
High Court in the case of Venkatadri Traders Ltd. v. CIT (2001) 168 CTR (Mad) 81 :
(2001) 118 Taxman 622 (Mad).
4.4 The Mumbai Bench of this Tribunal in the case of Bajaj Hindusthan Ltd. v. Jt.
CIT (AT) (277 ITR 1) has condoned the delay of 180 days when the appeal was
filed after the pronouncement of the Judgment of the Apex Court. Furthermore, the
Revenue has not filed any counter-affidavit opposing the application of the assessee
for condonation of delay. The Apex Court in the case of Mrs. Sandhya Rani Sarkar
vs. Smt. Sudha Rani Debi (AIR 1978 SC 537) held that non-filing of affidavit in
opposition to an application for condonation of delay may be a sufficient cause for
condonation of delay. In this case, the Revenue has not filed any counter-affidavit
opposing the application of the assessee, therefore, as held by the Apex Court, 9
I.T.A. No. 258/Coch/2019 & S.P. No.23/Coch/2019 there is sufficient cause for condonation of delay. The Supreme Court observed that
when the delay was of short duration, a liberal view should be taken. "It does not
mean that when the delay was for longer period, the delay should not be condoned
even though there was sufficient cause. The Apex Court did not say that longer
period of delay should not be condoned. Condonation of delay is the discretion of
the Court/Tribunal. Therefore, it would depend upon the facts of each case. In our
opinion, when there is sufficient cause for not filing the appeal within the period of
limitation, the delay has to be condoned irrespective of the duration/period. In this
case, the non-filing of an affidavit by the Revenue for opposing the condonation of
delay itself is sufficient for condoning the delay of 1038 days.
4.5 In case the delay was not condoned, it would amount to legalise an illegal and
unconstitutional order. The power given to the Tribunal is not to legalise an injustice
on technical ground but to do substantial justice by removing the injustice. The
Parliament conferred power on this Tribunal with the intention that this Tribunal
would deliver justice rather than legalise injustice on technicalities. Therefore, when
this Tribunal was empowered and capable of removing injustice, in our opinion, the
delay of 1038 days has to be condoned and the appeal of the assessee has to be
admitted and disposed of on merit.
4.6 In view of the above, we condone the delay of 1038 days in filing the appeal
and admit the appeal for adjudication.
I.T.A. No. 258/Coch/2019 & S.P. No.23/Coch/2019 5. Coming to the merit of the issue of addition of Rs.93,56,364/- on account of
estimation of G.P., it is pertinent to mention herein that a similar issue came up for
consideration before this Tribunal in the Sunny Jacob Jewellers Group cases in ITA
Nos. 314 to 319/Coch/2016, 341 to 344/Coch/2016, 320-321/Coch/2016,
324/Coch/2016 and 371 & 372/Coch/2016 wherein the Tribunal vide order dated
10/10/2018 decided the issue against the assessee. In our opinion, there is no error
in the estimation of income of the assessee on the basis of the seized records. The
estimation of income by the Assessing Officer is based on the documents found
during the search and statement recorded during the course of search. Being so,
the Assessing Officer is completely justified in adopting those figures for the whole
year and for the next year. For this proposition, reliance is placed on the judgment
of the Jurisdictional High Court in the case of Travancore Diagnostics P. Ltd. vs.
ACIT (390 ITR 167) wherein it was held that when suppression had been found
from the documents and the statement on record, the Assessing Officer was
completely justified in adopting those figures for the whole year and for the next
year which was based on sound rationale, since from the statement on behalf of
the assessee, the suppression was found to be continued. In view of the
uncontroverted and admitted statement given on behalf of the assessee u/s. 133A
and the documents impounded during the survey, which were also virtually
admitted by the assessee, there was no error in the order of the Tribunal in
accepting the materials on record in order to arrive at an assessment. Reliance is
also placed on the judgment of the Jurisdictional High Court in the case of CIT vs.
Hotel Meriya (332 ITR 537) wherein it was held as under: 11
I.T.A. No. 258/Coch/2019 & S.P. No.23/Coch/2019
“(ii) That the partner of the assessee had in unambiguous terms stated that 20 per cent of the sales outturn was suppressed and only 80 per cent was recorded in the account books and it was the practice from the very beginning. So, it was just and appropriate to presume that there was uniform concealment of income in all the assessment years during the block period. Hence the assessee was liable to be assessed during the block period at a uniform rate.”
5.1 In view of the above judgments of the Jurisdictional High Court, we are
inclined to dismiss this ground of the assessee. The appeal of the assessee is
dismissed.
The assessee has filed Stay Petition seeking stay of recovery of outstanding
demand of Rs. Rs.16,48,792/-.
Since we have decided the appeal against the assessee, the Stay Petition filed
by assessee has become infructuous and is dismissed as same.
In the result, both the appeal and the Stay Petition filed by the assessee are
dismissed. Order pronounced in the open court on 20th September, 2019.
sd/- sd/- (GEORGE GEORGE K.) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER
Place: Kochi Dated: 20th September, 2019 GJ Copy to: 12
I.T.A. No. 258/Coch/2019 & S.P. No.23/Coch/2019 1. Smt. Maggy Sunny, Proprietrix, M/s. Sunny Jacob Jewellers 916 Kerala Showroom, Pazhavangadi, Trivandrum-695 002. 2. The ITO, Corp. Ward-3, Kottayam. 3. The Commissioner of Income-tax(Appeals)-IV, Kochi. 4. The Pr. Commissioner of Income-tax, Kottayam. 5. D.R., I.T.A.T., Cochin Bench, Cochin. 6. Guard File. By Order
(ASSISTANT REGISTRAR) I.T.A.T., Cochin