M/S.SAKTHIMATHA CASHEW COMPANY vs. THE INCOME TAX OFFICER, KOLLAM

WP(C)/151/2009HC KeralaKLHC01041737200914 March 2012Author: HONOURABLE MR.JUSTICE ANTONY DOMINIC6 pages

AI SummaryPartly Allowed

What did the High Court hold?

The High Court held that the Tribunal ought to have accepted the explanation offered by the assessee for the delay and condoned it. The Court noted that the reasons provided by the assessee included ignorance of the right to file a cross-objection under Section 253(4), financial difficulties leading to a lack of manpower to deal with tax matters, and involvement in several other litigations. While acknowledging that ignorance of the law does not generally justify delay, the Court found no reason to doubt the genuineness of these contentions in the given factual context. The Court found that the Tribunal's approach in rejecting the condonation of delay was not justified. Consequently, the High Court quashed Ext.P6 to the extent it dismissed the application for condonation of delay and the cross-objection. The Court ordered that the delay in filing the cross-objection be condoned and directed the Tribunal to consider the cross-objection on its merits after issuing notice to the parties and in accordance with law, with priority given to the matter due to the assessment year involved.

What were the facts?

The petitioner, M/s. Sakthimatha Cashew Company, is an assessee under the Income Tax Act. For the assessment year 2002-2003, an assessment order was passed in March 2006, raising a demand of Rs. 48,44,436/- including interest, due to additions made despite the assessee returning a loss. The assessee's appeal to the Commissioner of Income Tax (Appeals) was partially allowed. The Revenue filed an appeal before the Income Tax Appellate Tribunal (ITAT), numbered ITA No.189/COCH/07. The assessee received notice in April 2007. Although the statutory period for filing a cross-objection under Section 253(4) of the Act is 30 days, the assessee filed a cross-objection in June 2008, along with an application to condone a delay of 347 days. The ITAT, by order dated 21/11/2008 (Ext.P6), rejected both the Department's petition and the assessee's cross-objection, declining to condone the delay.

What were the issues?

1. Whether the Tribunal was justified in rejecting the assessee's application for condonation of delay in filing the cross-objection, thereby dismissing the cross-objection itself, under Section 253(4) of the Income Tax Act, 1961? Assessee's Contention: The assessee argued that the reasons stated in the application for condonation of delay (Ext.P4(a)) were convincing and satisfactorily explained the delay. The Tribunal wrongly rejected this application despite the explanation provided. The assessee relied on the principle that courts and tribunals should adopt a liberal approach in matters of condonation of delay to ensure adjudication on merits. Revenue's Contention: The Revenue contended that the reasons provided by the assessee for the delay were vague and did not constitute a satisfactory explanation. Therefore, the Tribunal's order (Ext.P6) did not warrant any interference.

Which sections of the Income-tax Act were involved?

Section 253(4)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, COCHIN BENCH,M IST FLOOR, (BLOCK C-1 & C-II

DTD.15/01/2007 PASSED BY THE 1ST RESPONDENT. EXT.P4 :

COPY OF THE MEMORANDUM OF CROSS OBJECTION SUBMITTED BY THE PETITIONER BEFORE THE 3RD RESPONDENT. EXT. P4(a) :

COPY OF THE AFFIDAVIT AND PETITION FOR CONDONATION OF DELAY FILED ALONG WITH C.O. BEFORE THE 3RD RESPONDENT. EXT.P5 :

COPY OF TRADING AND PROFIT AND LOSS ACCOUNT AND BALANCE SHEET FOR THE YEAR ENDED 31/3/2002 OF THE FIRM. EXT. P5(a) :

COPY OF EXPLANATION SUBMITTED BY THE PETITIONER BEFORE THE FIRST RESPONDENT. EXT. P5(b) :

COPY OF THE CHART SHOWING THE DATES AND EVENTS AS PER THE ASST.ORDER EXT.P6 :

COPY OF THE ORDER IN ITA No.189/Coch/07 DTD.21/11/2008 PASSED BY THE 3RD RESPONDENT. EXT.P7 :

COPY OF THE STATEMENT SHOWING THE PARTICULARS OF ARREARS FOR THE YEAR 1995-96 TO 2002-03 BY THE PETITIONER. EXT.P8 :

COPY OF THE NOTICE IN FORM NO.16 DTD.24/8/2005 ISSUED BY THE TAHSILDAR (RR), KOLLAM. EXT.P9 :

COPY OF THE RELEVANT PORTION OF O.A.No.OF 2005 FILED BY THE FEDERAL BANK BEFORE THE HONOURABLE DEBTS RECOVERY TRIBUNAL, ERNAKULAM. EXT.P10 : COPY OF THE NOTICE NO.KR/16586/RECOVERY/TVM/2004/2006 DTD.20/05/2004 ALONG WITH ORDER NO.KR/16586/Enf.II(5)/ 2006/3797 dtd.21/08/2006 ISSUED BY THE RECOVERY OFFICER, EMPLOYEES PROVIDENT FUND, TRIVANDRUM ISSUED BY THE RECOVERY OFFICER, EMPLOYEES PROVIDENT FUND, TRIVANDRUM.

Appendix — schedule of exhibits

RESPONDENT'S EXHIBITS: NIL. //TRUE COPY// P.A. TO JUDGE skj ANTONY DOMINIC,J ------------------------------------------ W.P.(C)No.151 of 2009 ------------------------------------- Dated this the 14th day of March, 2012 JUDGMENT Petitioner is an assessee under the Income Tax Act. In respect of the assessment year 2002-2003, assessment was completed in March, 2006. On account of various additions that were made in spite of returning loss for the year, a demand for Rs.48,44,436/- was raised, which included interest. 2. Appeal filed by the petitioner to the Appellate Commissioner was partially allowed and reduction was granted. Petitioner did not file any further appeal to the Tribunal. However, department filed appeal before the Tribunal, which was numbered as ITA No.189/COCH/07. Notice of the appeal was served on the petitioner during April 2007. In terms of the provisions contained in Section 253(4) of the Act, cross objection if any, should have been filed within 30 days. However, the petitioner filed cross objection. Ext.P4 cross objection in June 2008 together with Ext.P4(a) application to condone delay of 347 days in filing the cross-objection. W.P.(C)No.151 of 2009 2 3. By Ext.P6 order, the petition filed by the Department was rejected and the cross objection filed by the petitioner was also rejected, declining to condone delay as sought for by the petitioner. The reasons stated by the Tribunal for rejecting the cross objection reads thus: “However, we are unable to accept the plea of the learned counsel for the assessee for the condonation of the delay. The delay is also very inordinate and it is time barred by 347 are not sufficient enough to be condoned. Under the above circumstances, we see no justification in allowing the cross objection. At it is a cross objection which is time barred by 347 days, we dismiss the Cross Objection filed by the assessee.” 4. It is challenging Ext.P6 to the extent the cross objection rejected, the writ petition is filed. 5. I heard the counsel appearing for the petitioner and also the learned standing counsel appearing for the respondents. 6. According to the learned counsel for the petitioner, in Ext.P4(a), convincing reasons have been stated by the petitioner satisfactorily explaining the delay in filing the cross objection and that in spite of it, the Tribunal wrongly rejected the application. W.P.(C)No.151 of 2009 3 On the other hand, according to the standing counsel, the reasons stated are vague and do not amount to a satisfactory explanation of the delay. Therefore, he argued that Ext.P6 does not call for any interference. 7. It has been laid down by the Apex Court that in the matter of condonation of delay, the approach to be adopted by the courts and Tribunal should be liberal or else, parties will be deprived of an opportunity to get the disputes adjudicated on merits. Reading of Ext.P4(a) order of application filed by the petitioner for condonation of delay shows that mainly three reasons are stated. First reason stated is that they were unaware of the right under Section 253(4) to file cross objection. It is true that this ignorance of the petitioner does not justify the delay caused. It is stated by the petitioner, that their firm was in loss and financial difficulties and that they did not have the manpower to deal with tax matters. It is also stated that they were involved in several litigations before various forums and that such disputes also contributed to the delay. There is nothing on record to doubt the genuineness of these contentions. In W.P.(C)No.151 of 2009 4 such a factual situation, I feel that the Tribunal ought to have accepted the explanation offered by the petitioner and condone the delay. 8. For these reasons, I cannot uphold Ext.P6 to the extent delay in filing cross objection(C.O.No.42/COCH/08) is declined to be condoned. Therefore, writ petition will stand disposed of quashing Ext.P6 to the extent, Ext.P4 (a) application for condonation of delay and C.O.No.42/COCH/08 is dismissed. 9. It is ordered that the delay in filing the cross-objection will stand condoned and the Tribunal shall consider the cross- objection (CO No.42/COCH/08) on merits after issuing notice to the parties and accordance with law. Needless to say that having regard to the fact that the issue pertains to the assessment year 2002-2003, the Tribunal shall consider the matter with the priority that it deserves. Writ petition is disposed of as above. ANTONY DOMINIC, JUDGE ln

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