M D INDUSTRIES PVT LTD,SURAT vs. DCIT, CIRCLE -1, SURAT

M.D.Industries P. Ltd. Vs. DCIT, Cir-1, Surat/ITA No.497-503 & 527/SRT/2019 /A.Y. 1999-00 to 05-06 & 2000-01 Page 1 of 12

आयकरअपील�यअ�धकरण, सुरत �यायपीठ, सुरत IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER आ.अ.सं./I.T.A No’s.497 to 503 & 527/SRT/2019 �नधा�रण वष�/Assessment Years: 1999-2000 to 2005-06 & 2000-01 M/s.M.D.Industries Pvt. Ltd., V Deputy Commissioner of B-5, Rangnagar Society, s Income Tax, Circle-1, Surat. Lambe Hanuman Road, Surat. . [PAN: AABCM 6026 G] अपीलाथ� / Appellant ��यथ�/Respondent �नधा�रतीक�ओरसे /Assessee by Shri Vijay Mehta – CA, and Mrs. Sneha M.Padhiar – CA राज�वक�ओरसे /Revenue by Shri O.P.Singh – CIT-DR सुनवाईकीतारीख/ Date of hearing: 04.12.2019 उ�घोषणाक�तार�ख/Pronouncement on: 06.12.2019 आदेश /O R D E R PER SANDEEP GOSAIN, JM: 1. This Eight appeals by the Assessee are directed against the separate orders of Ld.Commissioner of Income Tax(Appeals)-1, Surat dated 06.09.2007 and 28.10.2009 for the assessment years 1999- 2000 to 2005-06 and 2000-01 respectively.

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from the appeal in the case of M.D.Industries Pvt. Ltd., in ITA

No.497/SRT/2019 for A.Y. 1999-2000.

Condonation of Delay:

appeal about 4378 days. The assessee has filed an application for

seeking condonation of delay. He also filed an affidavit dated

15.10.2019 and application as below:

Application contents as under:

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Settlement Commission with regards to whether appeal before Hon'ble ITAT is to be filed against the order of CIT(A). Mr. Hemant Jadia had opined that since the matter is pending before Hon'ble Settlement Commission, there is no need to file any further appeal to Hon'ble ITAT as filing second appeal would result in to avoidable multiplicity of the proceedings as well as cost. We enclose herewith his affidavit confirming the said facts for Your Honours' ready perusal and record. 8. 20-02-2008: The Hon'ble settlement commission admitted the settlement petition filed for all the Assessment Years i.e., from A.Y. 1999-00 to 2005-06 vide their order passed u/s. 245HA of the Act. 9. 31-03-2008: All the admitted petitions of the Group including that of the appellant, were abated oriJU-0^2008jdue to the amendment brought in by Finance Act 2007 in section 245D(4) of the Act wherein it was provided that if the settlement proceedings were not concluded by 31-03-2008, such proceedings would be abated. Accordingly, the petition of appellant for A.Y. 1999-00 was also abated. 10. 28-04-2008: All the 20 members of our Group, thereafter filed writ petitions before the Hon'ble Bombay High Court challenging the abatement orders passed u/s. 245HA of the Act as amended vide Finance Act, 2007, w.e.f. 01- 06- 2007 was challenged. The appellant filed writ petition for A.Y. 1999-00 to A.Y. 2005-06 before Hon'ble Bombay High Court. 11. 07-08-2009: Hon'ble Bombay High Court disposed of the writ petitions in nine cases of the Group, including the case of the appellant, and restored the settlement applications back to the ITSC. 12. 20-09-2019: The members of the Bench were of the view that the petition filed by you deserves to be dismissed/abated" as the group has not been able to proceed with writ petition filed before Hon'ble Bombay High Court by Shri Mohan D Patel, inspite of repeated assurance given by the appellant to the settlement commission. The Bench also pointed out that appellant has taken adjournments on several earlier occasions on this very ground. Since, the settlement petition in the main case, Shri Mohan D Patel, is no more pending before Settlement Commission, the Bench is of the firm view that no decision can be taken in this case until the petition is tagged with the settlement petition of Shri Mohan D. Patel. 13. 15-10-2019: Based on current circumstances, hearing held on 20-09-2019 and after consulting the council representing before Hon'ble Bombay High Court, M/s. Bhuta Shah & Co LLP, the representative advised that appeal should be filed for all the admitted years as Hon'ble Commission is more likely than not would be abating the settlement petition if settlement petition of Shri Mohan D Patel is not disposed by Hon'ble Bombay High Court shortly. We are enclosing herewith copy of the said letter. 14. From the above chronology, the Hon'ble Members would observe that proper steps were taken by us to agitate the order passed by the Assessing Officer. However, to the misfortune of the appellant, appeal as mandated by the statute was not filed before this Hon'ble Tribunal in view of the circumstances explained hereinabove. As could be observed, the appellant was always vigilant about the remedial measures and took necessary steps in the present case. Assessing Officer has made a cumulative addition of Rs. 124.67 crores for A.Y. 1999-00 to A.Y. 2005-06 and therefore it could not be assumed that the appellant would not have intended to challenge the additions. The delay is due to the unexpected events like amendment in section 2465D,

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subsequent annulment thereof by the Hon'ble High Court, abatement orders passed etc. and not due to any inaction on the part of the appellant. 15. In this connection, the appellant places reliance upon the following decisions: (i) Collector, Land Acquisition v. Mst. Katiji & Ors. [167 ITR 471 (SC)]: (ii) N. Balakrishnan v. M. Ramamurthy [(1998) 7 SCC 123]: (iii) Sonerao Sadashivrao Patil & Anr. v. Godawaribai [1999 (2) Mh. L.J. 273]: (iv) Venkatadri Traders Ltd. v. CIT [248ITR 681 (Mad)]: (v) Saurashtra Cement and Chemical Industries Ltd. v. CIT [115 ITR 27 (Guj)] (vi) Nicco Corporation Ltd. v. CIT [251 ITR 791, 798-799 (Cal)] (vii) J.M. Bhansali and Ors v. The State of Madras (21 STC 411) (viii) Cheminor Drugs Ltd. v. DCIT [105 ITD 613 (Hyd)] 16. We further pray before Your Honours that the reasons in delay of filing of this appeal is similar to those decided by the Hon'ble ITAT in earlier appeals of the group cases vide its following orders: (i) Older dated 01-06-2017 in case of Arvindbhai Mohanbhai Patel, bearing ITA No. 1635/Ahd/2016, & Others wherein delay was ranging between 847 days to 1011 days has been condoned in cases of 5 entities. (ii) Order dated 23-03-2018 in case of Lakhani Impex, bearing ITA No. 1647,1648 & 1649/Ahd/2016/SRT, & Others wherein delay was ranging between 1007 days to 2831 days has been condoned in cases of 11 entities. (iii) Order dated 29-05-2018 in case of Kirit Mohanbhai Patel, bearing ITA No. 1639,1821 & 1822/Ahd/2016/SRT & 678/Ahd/2015/SRT, & Others wherein delay was ranging between 1007 days to 3157 days has been condoned in cases of 17 entities. (iv) Order dated 29-05-2018 in case of Mohanbhai D. Patel (HUF), bearing ITA No. 1450/Ahd/2015/SRT, & Others wherein delay was ranging between 2810 days to 2831 days has been condoned in cases of 3 entities. Therefore, we humbly submit before Your Honours that issue of condonation of issue is a covered issue.” 17. In view of the facts and circumstances explained above and the ratio laid down in the aforesaid decisions, it is humbly prayed that the delay of about 4378 days occurred in filing the captioned appeal may kindly be condoned in the interests of justice and equity, and it may be decided on merits and in accordance with law. It is submitted that by acceding to this humble request, the revenue is not going to be prejudiced but, on the other hand, the appellant would be put to grave harm and injury. 18. And for this act of kindness, the appellant shall ever remain grateful to Your Honours.”

identical set of facts in the case of group concern the delay has already

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been condoned by the Co-ordinate Bench of ITAT in ITA No.1635 to

1638 & 1655/Ahd/2016 for the A.Y. 2003-04 and 2001-02 wherein it

was held as under:

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cases fixed. Both the parties argued over the issue. The members however, declined to exercise their inherent power available u/s. 245E of the Act to revive the abated years. 13. 07-06-2016: Based on current circumstances and hearing held on 03-06-2016, M/s. Bhuta Shah & Co LLP, the representative advised that appeal should be filed for all abated years as Hon'ble members of Settlement Commission had declined to revive all abated years. We are enclosing herewith copy of the said letter. 14. From the above chronology, the Hon'ble Members would observe that proper steps were taken by us to agitate the order passed by the Assessing Officer. However, to the misfortune of the appellant, appeal as mandated by the statute was not filed before this Hon'ble Tribunal in view of the circumstances explained hereinabove. Considering the complexity of the subject-matter, it is humbly prayed that the delay caused in lodging the captioned appeal may kindly be condoned. 15.In this connection, the appellant places reliance upon the following decisions with the relevant findings therefrom: Collector. Land Acquisition v. Mst. Katiji & Ors. [167 ITR 471 (SOI: "The Legislature has conferred power to condone delay by enacting section 5 of the Limitation Act, 1963, in order to enable the courts to substantial justice to parties by disposing of matters on merits. The expression 'sufficient cause' in section 5 is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice-that being the life-purpose of the existence of the institution of courts. A justifiably liberal approach has to be adopted on principle. 'Every day's delay must be explained' does not imply a pedantic approach. The doctrine must be applied in a rational, common sense and pragmatic manner. 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 a vested right in injustice being done be *cause of a non-deliberate delay." (ii) N. Balakrishnan v. M. Ramamurthy [(1998) 7 SCC 1231: "12. A court knows that refusal to condone delay would result in foreclosing a suitor form putting forth his cause. There is no presumption that delay in approaching the court is always deliberate. This Court has held that the words 'sufficient cause' under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shankutala Devi Jain v. Kuntal Kumari (AIR 1969 SC 575) and State of W.B. v. Administrator, Howrah Municipality (AIR 1972 SC 949)". (iii) Sonerao Sadashivrao Patil & Anr. v. Godawaribai F1999 (2) Mh. LJ. 2731: " The primary function of a court to is to adjudicate the disputes between the contesting parties and to advance substantial justice. The rules of limitation are not made to harm the valuable rights of the parties. The discretion is given to the Court to condone delay and admit the appeal in order that judicial power and discretion in that behalf should be Exercised to advance substantial justice ................................................................................ The requirement of explanation of every day's delay does not mean that a pedantic approach should be taken. The courts are required to take pragmatic approach while interpreting the concept of sufficient cause. Too much rigour of the law is not justice but the denial of it. It is to be borne in mind the maxim 'Summum Jus, Summa Injuria'. Extreme law is extreme injury. In the matter of condonation of delay, the duration of delay is insignificant. The Court has to take into account whether there is acceptable explanation or pardonable explanation."

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(iv) Venkatadri Traders Ltd, v. CIT F248 ITR 681 (Mad)]: "The discretion so vested is required to be exercised in a manner which would protect and promote the just interest of the assessee. The position of the assessee vis-a-vis the revenue is not strictly adversarial, although more often than not, that is the manner in which the two parties perceive their role. The revenue is not to be regarded as interested in scoring points against the assessee, but only in the just enforcement of the provisions of the Act. The discretion of the authority, therefore, on the facts of this case, was required to be exercised by bearing the aforementioned considerations in mind. " v) Saurashtra Cement and Chemical Industries Ltd, v. CIT [115 ITR 27 In AY 1965-66, the assessee had paid a sum of x 3,00,600/- to Gujarat State Electricity Board for laying electric power line to its factory, which was capitalized and depreciation thereon was claimed @10%. This claim was allowed by the ITO in the order passed for that year. Similar claim for the subsequent year, however, was disallowed by the ITO on the ground that the assessee was not the owner of the power line and such finding was sustained in first appeal. During the course of the hearing before the ITAT, the assessee realized the difficulty in getting depreciation and, accordingly, requested the Tribunal to allow it to withdraw the appeal which was granted. Subsequent to receipt of the order of the Tribunal on 07.12.1972, the assessee filed a revision application on 26.12.1972 praying that it should be allowed to treat the amount of x 3,00,600/- as revenue expenditure for A.Y. 1965-66 along with an application for condonation of delay. That was, however, rejected for delay. In the writ petition filed, the Hon'ble High Court held as under:

"In the instant case, the Commissioner recognized that it would have been a sufficient cause if the petitioner-company had approached the Commissioner immediately after the order of the Income-tax Officer with reference to assessment year 1966-67, but declined to condone the delay just because the petitioner-company took the matter in appeal first before the Appellate Assistant Commissioner and thereafter before the Appellate Tribunal. That approach could not be said to be in exercise of sound judicial discretion and the decision becomes illogical once the two conclusions reached by him are examined closely. Merely because the matter was taken in appeal, it does not change the complexion and it would be impossible to come to the conclusion that because of that there was no sufficient cause. Under the circumstances, it must be held that the discretion vested in him was not exercised in a judicial manner and the result was that a substantial injury was 'caused to the petitioner- company so far as the consideration of the question regarding the revenue " expenditure of Rs.3,00,600 was concerned." 6. The ld.counsel for the assessee took us through the application as well as opinion of Shri Hemant Jadia dated 7.6.2016. Copy of the letter written by Shri Hemant Jadia to Kirit M. Patel has been placed on record. He also took us through writ petition filed by the respective assessees before the Hon’ble Bombay High Court and also interim order passed by the Hon’ble High Court. Apart from decisions referred in the application for condonation of delay, he made reference to a large number of Tribunal’s orders which are placed in the paper book. On the strength of these pleadings, he contended that there was no deliberate attempt at the end of the assessee for not filing the appeal within time limit. According to the ld.counsel for the assessee, they were not properly advised by their tax consultant, and on account of that the appeals become time barred. 7. On the other hand, the ld.DR contended that there is no explanation at the end of the assessees. He pointed out that letter from Shri Hemant Jadia is dated 7.6.2016 whereas the appeals ought to have been filed in 2013. They have not taken any steps before the Hon’ble Settlement Commission after the order of the Hon’ble High Court till the application under section 245E of the Income Tax Act was considered against abatement order was filed on 14.3.2015. Whereas, the ld.CIT(A) has decided the appeal for want of jurisdiction on 23.12.2013. There is no explanation for this delay. Hon’ble Settlement Commission has also rejected their application under section 245E on 3.6.2016 Thereafter, they have filed

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application on 17.6.2016. According to the ld.DR, there is no plausible explanation at the end of the assessee. 8. We have considered rival contentions and gone through the record carefully. Sub- section 5 of Section 253 contemplates that the Tribunal may admit an appeal or permit filing of memorandum of cross-objections after expiry of relevant period, if it is satisfied that there was a sufficient cause for not presenting it within that period. This expression “sufficient cause” employed in the section has also been used identically in sub-section 3 of section 249 of Income Tax Act, which provides powers to the ld.Commissioner to condone the delay in filing the appeal before the Commissioner. Similarly, it has been used in section 5 of Indian Limitation Act, 1963. Whenever interpretation and construction of this expression has fallen for consideration before Hon’ble High Court as well as before the Hon’ble Supreme Court, then, Hon’ble Court were unanimous in their conclusion that this expression is to be used liberally. We may make reference to the following observations of the Hon’ble Supreme court from the decision in the case of Collector Land Acquisition Vs. Mst. Katiji & Others, 1987 AIR 1353: “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 out 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 common sense pragmatic manner.

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A court knows that refusal to condone delay would result foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is always deliberate. This Court has held that the words "sufficient cause" under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shakuntala Devi lain Vs. Kuntal Kumari [AIR 1969 SC 575] and State of West Bengal Vs. The Administrator, Howrah Municipality [AIR 1972 SC 749]. It must be remembered that in every case of delay there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy the court must show utmost consideration to the suitor. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time then the court should lean against acceptance of the explanation. While condoning delay the Could should not forget the opposite party altogether. It must be borne in mind that he is a looser and he too would have incurred quiet a large litigation expenses. It would be a salutary guideline that when courts condone the delay due to laches on the part of the applicant the court shall compensate the opposite party for his loss. 10. We do not deem it necessary to re-cite or recapitulate the proposition laid down in other decisions. It is suffice to say that the Hon’ble Courts are unanimous in their approach to propound that whenever the reasons assigned by an applicant for explaining the condonation of delay, then such reasons are to be construed with a justice oriented approach. In the light of the above, let us consider explanation of the assessee. A perusal of the application for condonation of delay would indicate that on 29.3.2006 settlement petitions were filed before the Income Tax Settlement Commission in the Asstt.Year 1999-2000 to 2005-06. On 22.2.008, Settlement Commission has dismissed applications except for the Asstt.Year 2000-01 and 2004-05 in the case of Mohanbhai D. Patel. Similarly in other cases, applications were admitted either for one year or two years viz. in the case of Arvind Patel application for the Asstt.Year 2004-05 was admitted for consideration and application for Asstt.Year 1999-2000 to 2003-04 and 2005-2006 were abated on the grounds of non- pendency of the proceedings. Thereafter, amendments were brought in Finance Act, 2007 in Section 245D(4) of the Income Tax Act wherein it was provided that if settlement proceedings were not concluded on 31.3.2008, then such proceedings would abate. Accordingly, the petitions of the assessees for the years admitted by the Settlement commission for consideration have also been dismissed. Appellants have challenged the order of Settlement Commission dated 31.3.2008 vide which their petitions have been abated by operation of provisions of Income tax Act before the Hon’ble High Court. Ultimately, Hon’ble Court allowed their petitions and remitted that matter back to the file of Settlement Commission for adjudication. Question before us is how the assessees have harboured a belief that they should not file appeals before the Tribunal. According to them, they were expecting that their cases will be taken up by the Settlement Commission in all assessment years. According to the assessee, they have harboured this belief on the advice of their counsel Shri Hemant Jadia, whose opinion is available on the paper book. 11. We have considered this opinion. The ld.counsel for the assessee also took us through letter of Pr. Commissioner of Income Tax, Surat dated 26.5.2016 written to the CIT(DR), Settlement Commission. This letter was rebuttal to reply to Rule 9 report made in the M.D. Group of cases. While giving reply to the cases of Shreya Traders, one of the concerns of group, even the Department has supported the application of the assessee moved under section 245E of the Income Tax Act for taking up petition relevant to the Asstt.Year 2004-05 for consideration. It is pertinent to observe that when the Settlement Commission has dismissed the application of the appellants on 20.2.008, main reason was that no proceedings were pending before the Income Tax Authorities. After this order, proceedings have been initiated under section 147 of the Act. In other words, the assessments have been reopened on 31.12.2008, but before any assessment could be passed petitions for other years admitted by the Settlement Commission were also abated on 31.3.2008 because of the amendment made in the Income Tax Act by way of Finance Act, 2007. Thus, a very vexed situation developed. On one hand, the assessee has filed writ petition before the Hon’ble High Court challenging order of the Settlement Commission dated 31.3.2008 vide which, their applications admitted for consideration for some of the years,

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were treated as abated by operation of law. On the other hand, the AO has initiated reassessment proceedings in some of the years giving a belief to the assessee that now the proceedings are pending in other years. They can also be taken into Settlement Commission. The important fact which weigh with us for accepting bonafide of the assessee is that even in 2013, the ld.CIT(A) has haboured a belief that proceedings are pending before the Settlement Commission, and therefore, the ld.CIT(A) has no jurisdiction to entertain the issue agitated by the assessee on merit. This findings of the ld.CIT(A) supports bona fide of the assessee in believing that their applications under section 245E would be entertained by the Settlement Commission and there is no need to challenge the order of the CIT(A). It is also important to note that there is no adjudication on merit on the issues involved in these appeals by the ld.CIT(A). The appeals were dismissed for the reason that they are not maintainable. Considering this aspect and in the interest of justice, we deem it appropriate to condone the delay in filing of the appeal. We proceed to decide the appeal on merit.” 5. On the other hand, the ld.Departmental Representative (DR) opposed the application and submitted that there is an inordinate delay and there is no sufficient cause for condoning the delay, therefore, the same may be dismissed.

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judicial consistency and judicial discipline, we also deem it appropriate to condone the delay in filing of appeals, accordingly, we proceed to decide the appeal on merits.

Sd/- Sd/- (O.P.MEENA) (SANDEEP GOSAIN) (लेखा सद�यतथा/ACCOUNTANT MEMBER) (�याियक सद�यकेसम� /JUDICIAL MEMBER) सुरत/ Surat, �दनांक Dated: 6th December, 2019/S.Gangadhara Rao, Sr.PS Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order / / TRUE COPY / / Assistant Registrar, Surat