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Income Tax Appellate Tribunal, “G” Bench, Mumbai
PER RAVISH SOOD, JM
The present appeal filed by the assessee is directed against the order passed by the CIT(A)-1, Mumbai, dated 16.09.2019 which in turn arises from the order passed by the A.O under Sec.143(3) of the Income Tax Act, 1961 (for short ‗Act‘), dated 28.12.2016 for A.Y. 2014-15. The assessee has assailed the impugned order on the following grounds of appeal before us: ―1. On the facts and in the circumstances of the case, the Appellant submits that the Honb1e Commissioner of Income Tax Appeals - 1, Thane erred in upholding the Learned 2 M/s Span Realtors Vs. The Income Tax Officer 2(2)
Assessing Officer's view of treating the donation of Rs. 1,00,00,000/- paid to School of Human Genetics and Population Health as an alleged accommodation entry and bogus merely based on the statement given by the Secretary and Treasurer pursuant to survey u/s I 33A of The Income Tax Act, 1961 carried out on the institute, donee without making any further inquiry. It is also submitted that the Learned Assessing Officer did not have any specific evidence against the - Appellant to prove that the Appellant has received any cash against the donation paid to the institute, the donee. The Appellant submits that the donation of Rs. 1,00,00,000/- be treated as genuine.
On the facts and in the circumstances of the case, the Appellant submits that the Hon'ble Commissioner of Income Tax Appeals - Thane erred in upholding the denial of deduction of Rs. 1,75,00,000/- made by the Learned Assessing Officer in respect of the donation made to the institute and eligible for deduction u/s 35 (1) (ii) of The Income Tax Act, 1961 with valid registration on the ground that the same exemption granted to the institute withdrawn subsequently. The Appellant submits that the exemption of Rs, 1,75,00,000/- claimed u/s 35 (1) (ii) of The Income Tax Act, 1961 be allowed.
Each Ground of Appeal
hereinabove is independent and without prejudice to each other.
4. The Appellant craves leave to reserve to itself the right to add, after, amend or annul any of the grounds of appeal at or before the time of hearing and to produce such further evidences, documents and papers as may be necessary.‖
2. Briefly stated, the assessee firm which is engaged in the business of real estate had e- filed its return of income for A.Y. 2014-15 on 26.09.2014, declaring its total income at Rs.1,15,36,050/-. The return of income filed by the assessee was processed as such under Sec. 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec. 143(2) of the Act. During the course of the assessment proceedings it was inter alia observed by the A.O that the assessee had in its computation of income claimed deduction of Rs. 1.75 crore under Sec. 35(1)(ii) of the Act. On a perusal of the records, it was noticed by him that the assessee had paid a donation of Rs.1 crore to a Kolkata based institution, viz. ―School of Human Genetics and Population Health‖ (for short ‗SHG&PH‘) and had claimed deduction under Sec. 35(1)(ii) of the Act @ 175% on Rs.1 crore which worked out to Rs.1.75 crore. On being called upon to substantiate the basis for claim of such deduction the assessee furnished supporting documentary evidence, viz. (i) receipts of donation depicting name, address, registration no., income tax exemption no. u/s.80G(5)(vi), 10(23C) and 35(1)(ii) of the Act; (ii) copy of the request letter for the aforesaid donation from SHG&PH, dated 21.01.2014; (iii) notification of CBDT approving SHG&PH for the purpose of clause (ii) of sub- section (1) of Sec.35 of the Act r.w. Rule 5C and Rule 5E of the Income Tax Rules, 1962, alongwith other related documents; (iv) copy of PAN Card of SHG&PH; (vi) renewal of recognition from Government of India, Ministry of science and technology, Department of 3 M/s Span Realtors Vs. The Income Tax Officer 2(2)
Science and Industrial Research and Technologies, dated 01.04.2013 renewing the recognition upto 31.03.2016; (vi) copy of the advisory letter from DDIT(E), Kolkata stating that production of certificate/copies would be enough for a prospective donor to avail the benefit; (vii) documents revealing that SHG&PH concentrated on activities related to the awareness generation, vocational training and services in the field of Human Genetics Research and Development; (viii) copy of the bank account of SHG&PH i.e current account number 018705009395 (IFSC code No. ICIC0000187) with ICICI Bank, Branch : Chowringhee ; and (ix) copy of the Resolution No. SOH/RES/004/12-13, dated 23.05.2012 issued by the governing body authorising Dr. Samadrita Mukherjee Sardar, the then secretary and Ms. Moumita Raghvan, treasurer, as the authorized persons. However, the A.O was not persuaded to subscribe to the genuineness of the aforesaid claim of deduction raised by the assessee. It was observed by the A.O that a survey operation conducted under Sec. 133A of the Act on 27.01.2015 in the case of SHG&PH, had revealed, that the said research institution had indulged into providing accommodation entries of bogus donations to the donors through a network of brokers. It was gathered by the A.O that Smt. Samadrita Mukherjee Sardar, Secretary, had admitted in her statement that was recorded in the course of the survey proceedings on 27.01.2015 under Sec. 131(1) of the Act, that the aforesaid institution i.e SHG&PH in lieu of commission was providing accommodation entries of bogus donations through a network of market brokers. Also, it was noticed by the A.O that Shri Pinaki Pal, accountant of SHG&PH in the course of the survey proceedings was found to be in possession of a number of messages from the brokers regarding bogus donations and bogus billing. Apart from that, it was also observed by him that Shri Pinaki Pal, had admitted, that sometimes they would in lieu of the excess bogus billing receive back the surplus amount in cash from the bogus suppliers. After referring to the statements of the aforementioned persons the A.O called upon the assessee to ‗show cause‘ as to why its claim for deduction of Rs. 1.75 crore under Sec. 35(1)(ii) of the Act may not be withdrawn and subjected to tax. As the reply filed by the assessee did not find favour with the A.O, the latter held a conviction that the aforesaid claim of deduction under Sec. 35(1)(ii) could not be corroborated by the assessee. It was further observed by the A.O, that as per the information shared by the DDIT(Inv.),Kolkata, the aforesaid institution viz. SHG&PH had filed a petition before the Settlement Commission, Kolkata bench, wherein it had admitted that in consideration of service charges they had indulged in providing of accommodation entries of 4 M/s Span Realtors Vs. The Income Tax Officer 2(2) bogus donations. As such, it was observed by the A.O that SHG&PH in its aforesaid petition had admitted of having earned service charges for providing accommodation entries of bogus donations to the donors. Also, it was gathered by the A.O, that the aforesaid application of the assessee before the Settlement Commission had thereafter been decided, vide its order dated 01.04.2015. On the basis of the aforesaid facts, it was observed by the A.O that SHG&PH had admitted before the Settlement Commission of its earning of additional income by providing of accommodation entries of bogus donations during the years 2011-12, 2012-13 and 2013-14. It was also noticed by the A.O that the CBDT vide its letter dated F. No. 203/09/2015/ITA (ii), dated 25.09.2016 had withdrawn the notification granting approval under Sec.35(1)(ii) of the Act to SHG&PH. Further, it was observed by him that the Ministry of Finance, vide its notification No. 82/2016 of F.No. 203/64/2009/ITA (ii) dated 15.09.2016 had also withdrawn its earlier notification no. 4/2010, dated 28.01.2010. On the basis of the aforesaid facts, the A.O was of the view that the assessee in connivance with SHG&PH had misused the provision of Sec. 35(1)(ii) of the Act, and as a beneficiary had obtained accommodation entries in the guise of donation. It was noticed by the A.O, that due to extensive efforts of the investigation wing the modalities of the transactions carried out by the aforesaid institution were completely exposed. Also, it was noticed by him that before the Settlement Commission, Kolkata the aforesaid institution viz. SHG&PH had admitted that they had indulged in providing accommodation entries in the guise of bogus donations and had also elaborated upon the modus operandi that was adopted by them. On the basis of his aforesaid observations, the A.O held a conviction that the sole intention and object of the institution was not to promote any scientific activity by pegging the donation at a realistic level, but to bring in the amount of unaccounted funds in the guise of bogus donations. In the backdrop of his aforesaid observations, the A.O disallowed the assesse‘s claim of weighted deduction under Sec. 35(1)(ii) of Rs. 1.75 crore.
3. Aggrieved, the assessee carried the matter in appeal before the CIT(A). It was observed by the CIT(A) that the then secretary and treasurer of SHG&PH in their respective statements recorded during the course of the survey proceedings, had admitted, that they had provided accommodation entries to the donors. Also, it was observed by the CIT(A), that SHG&PH had accepted before the Settlement Commission that it had indulged in providing accommodation entries in form of bogus donations. On the basis of the aforesaid facts, the 5 M/s Span Realtors Vs. The Income Tax Officer 2(2)
CIT(A) was of the view that the A.O had rightly concluded that the assessee was not entitled for claim of deduction under Sec. 35(1)(ii) of the Act.
The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The ld. Authorized Representative (for short ‗A.R‘) for the assessee, submitted, that at the time when the assessee had given the donation to the aforesaid institution viz. SHG&PH, the latter had a valid registration certificate granted under the Act. Accordingly, it was the claim of the ld. A.R that the subsequent cancellation of the registration certificate with retrospective effect would not invalidate the assesse‘s claim for deduction under Sec. 35(1)(ii) of the Act. In order to drive home his aforesaid claim, it was submitted by the ld. A.R that from a perusal of the ‗Explanation‘ to Sec. 35(1)(ii) of the Act, it can safely be gathered that a benefit taken under the said section could not be denied on account of a subsequent withdrawal of approval granted to the institution. In support of his aforesaid contention the ld. A.R had placed reliance on the judgment of the Hon‘ble Supreme Court in the case of CIT Vs. Chotatingrai Tea (2003) 126 taxman 399 (SC). Apart from that, it was submitted by him, that the issue pertaining to donations made to the same institution viz. SHG&PH, involving identical facts had been held as allowable for deduction under Sec. 35(1)(ii) of the Act in a host of judicial pronouncements by the co-ordinate benches of the Tribunal, as under:
1. 1. ACIT, Mumbai Vs. Shirish Lakhamshi Keniya ITA 5385/Mum/2018, A.Y. 2013-14, ITAT Mumbai, dated 29.01.2020.
2. M/s Pooja Hardware Pvt. Ltd Vs. Assistant Commissioner of Income, Mumbai, ITA 3712/Mum/2018, A.Y. 2012-13, dated 28.10.2019.
3. Mahesh C Thakkar Vs. ACIT, Mumbai ITA 5121 5122/Mum/2018, A.Y.2012-13 and 2014-15, dated 21.08.2019.
4. Borsad Tobacco Co. Pvt. ltd. Vs. DCIT Cen Circle 8(1), Mumbai ITA 2040/Mum/2018, A.Y. 2014-15, dated 17.06.2019.
5. Urnish Jewellers Vs. Asst. CIT, Mumbai, ITA 1583/Mum/2019, A.Y. 2012-13, dated 22.05.2019.
6. M/s Motilal Dahyabhai Jhaveri & Sons vs. Asst. CIT, Mumbai ITA 3453/Mum/2018 and 1584/Mum/2019, AY.2013-14 and 2014-15, dated 24.04.2019 7. Kitchen Essential Vs. ACIT, Thane, ITA 6672 & 6673/Mum/2013, A.Y. 2013-14 and 2014-15, dated 15.01.2019.
8. M/s Avis Life Care Pvt. ltd .Vs. DCIT, Jaipur, ITA 989/JP/2018, AY 2014-15, dated 20.06.2019.
9. Narbheram Vishram Vs. DCIT Central Circle, Kolkata, ITA 42 & 43/Kol/2018, AY. 2013-14 and 2014-15, dated 27.07.2018 10. DCIT, Kolkata Vs. M/s Maco Corporation (India) Pvt. Ltd. ITA 16/Kol/2017, AY.2013- 14, dated 14.03.2018.
11. Rajda Ploymers Vs. DCIT Kolkata, ITA 333/Kol/2017, AY. 2013-14, dated 08.11.2017 6 M/s Span Realtors Vs. The Income Tax Officer 2(2)
Accordingly, it was averred by the ld. A.R, that as the issue involved in the present appeal was squarely covered by the aforesaid orders of the co-ordinate benches of the Tribunal, therefore, the lower authorities were in error in dislodging the assesses claim for deduction under Sec. 35(1)(ii) of the Act.
Per contra, the ld. Departmental Representative (for short ‗D.R‘) relied on the orders of the lower authorities. It was submitted by the ld. D.R that since the institution viz. SHG&PH to which donation was given by the assessee was found to be a bogus institution, which was not doing any research activity but was in fact laundering ill-gotten money of the donor, therefore, the A.O/CIT(A) had rightly declined the assesses claim for deduction under Sec. 35(1)(ii) of the Act. Also, it was submitted by the ld. D.R that subsequently the approval granted to the said institution was also withdrawn by the CBDT with retrospective effect. In order to fortify his aforesaid claim that the assessee was not entitled for deduction under Sec. 35(1)(ii) of the Act, the ld. D.R took us through the statements of the secretary/treasurer of SHG&PH, as were reproduced in the body of the assessment order.
We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as the judicial pronouncements relied upon by them. Admittedly, the assessee during the year under consideration had donated an amount of Rs.1 crore to SHG&PH. On the basis of the aforesaid donation, the assessee had in its return of income claimed a weighted deduction of Rs.1.75 crore i.e an amount equal to one and three fourth times of the amount of donation of Rs.1 crore in terms of Sec. 35(1)(ii) of the Act. As is discernible from the records, it is an admitted fact that at the time of making of such donation SHG&PH was having a valid approval granted under the Act by the CBDT. In the backdrop of the aforesaid facts, we have to examine as to whether or not the subsequent cancellation of registration to SHG&PH, vide CBDT order dated 15.09.2016, with retrospective effect, can invalidate the assesses claim of deduction under Sec. 35(1)(ii) of the Act. For a fair appreciation of the issue under consideration we would herein cull out the ‗Explanation‘ to Sec. 35(1)(ii) of the Act, which will have a strong bearing on the adjudication of the issue, and reads as under:
7 M/s Span Realtors Vs. The Income Tax Officer 2(2)
―Explanation.—The deduction, to which the assessee is entitled in respect of any sum paid to a research association, university, college or other institution to which clause (ii) or clause (iii) applies, shall not be denied merely on the ground that, subsequent to the payment of such sum by the assessee, the approval granted to the association, university, college or other institution referred to in clause (ii) or clause (iii) has been withdrawn;‖ Now, in the case before us, we find that the aforesaid research institution i.e SHG&PH, as on the date of giving of donation by the assessee was having a valid approval granted under the Act. On a perusal of the aforesaid ‗Explanation‘ to Sec. 35(1)(ii) of the Act, it can safely be gathered that a subsequent withdrawal of such approval cannot form a reason to deny deduction claimed by the donor. By way of an analogy, we may herein observe that the Hon’ble Supreme Court in the case of CIT Vs. Chotatingrai Tea (2003) 126 taxman 399 (SC), while dealing with Sec. 35CCA of the Act, had concluded, that a retrospective withdrawal of an approval granted by a prescribed authority would not lead to invalidation of the assesses claim of deduction. On a similar footing, we find, that the Hon’ble High Court of Bombay in the case of National Leather Cloth Mfg. Co. Vs. Indian Council of Agricultural Research (2000) 100 Taxman 511 (Bom), while dealing with an identical issue of denial of deduction under Sec.35(1)(ii) of the Act due to a subsequent withdrawal of approval with retrospective effect, had observed, that such retrospective cancellation of registration will have no effect upon the deduction claimed by the donor since such donation was given acting upon the registration when it was valid and operative. On a perusal of the aforesaid statutory provision i.e Sec. 35(1)(ii) of the Act, as well as the ratio laid down in the aforesaid judicial pronouncements, it can safely be concluded that if the assessee acting upon a valid registration/approval granted to an institution had donated the amount for which deduction is claimed, such deduction cannot be disallowed if at a later point of time such registration is cancelled with retrospective effect. We have perused the aforesaid judicial pronouncements relied upon by the ld. A.R, and are persuaded to subscribe to his claim that the issue involved in the present appeal is squarely covered by the view taken by the co-ordinate benches of the Tribunal in the abovementioned cases. Recently, a co-ordinate bench of Tribunal i.e ITAT Mumbai Bench “C”, Mumbai in the case of M/s Pooja Hardware Pvt. Ltd. Vs. The Assistant Commissioner of Income Tax- 13(1)(1), Mumbai [ITA No. 3712/Mum/2018 dated 28.10.2019] had after relying on the earlier orders of the co-ordinate benches of the Tribunal on the issue pertaining to the allowability of deduction under Sec. 35(1)(ii) of the Act in respect of a donation given to SHG&PH by the 8 M/s Span Realtors Vs. The Income Tax Officer 2(2) assessee before them had vacated the disallowance of the assesses claim for deduction under Sec.35(1)(ii) of the Act, observing as under: ―6. We have heard the rival submissions of the parties and gone through the material on record including the cases relied upon by the parties. In the case of Mahesh C. Thakker vs. ACIT (supra), the coordinate Bench has decided the identical issue in favour of the assesse holding as under:- ―6. In view of the above submissions, it was claimed that exactly on identical issues the co-ordinate Bench of this Tribunal ‗B‘ Bench Kolkata in the case of DCIT vs. Maco Corporation (India) Pvt. Ltd. in vide order dated 14.03.2018 for AY 2013-14 has considered the issue in regard to very same trust i.e. SGHPH and holds that prior to the date of donation under cancellation of registration has happened and there is absolutely no provision of withdrawal of recognition under section 35(1)(ii) of the Act. Hence, allowed the claim of the assessee by observing in Para 8.1 and 8.5 as under: - ―8.1. The brief fact pertaining to SGHPH are as under: - a) SGHPH was recognized vide Gazette Notification dated 28.1.2009 issued by the Central Board of Direct Taxes (CBDT in short), Ministry of Finance (Department of Revenue), Government of India, u/s 35(1)(ii) of the Act. b) SGHPH was also recognized as a scientific industrial research organization (SIRO) by Ministry of Science & Technology, Government of India. The renewal of recognition as SIRO by the Department of Scientific and Industrial Research under the Scheme on Recognition of Scientific and Industrial Research Organisation , 1988 was made for the period from 1.4.2010 to 31.3.2013 vide communication in F.No. 14/473/2007-TU-V dated 17.6.2010. 8.2. At the outset, we find that the Taxation Laws (Amendment) Act, 2006 with retrospective effect from 1.4.2006 had introduced an Explanation in Section 35 of the Act which reads as under:- Section 35(1)(ii) – Explanation The deduction, to which the assessee is entitled in respect of any sum paid to a research association, university, college or other institution to which clause (ii) or clause (iii) applies, shall not be denied merely on the ground that, subsequent to the payment of such sum by the assessee, the approval granted to the association, university, college or other institution referred to in clause (ii) or clause (iii) has been withdrawn. Hence the aforesaid provisions of the Act are very clear that the payer (the assessee herein) would not get affected if the recognition granted to the payee had been withdrawn subsequent to the date of contribution by the assessee. Hence no disallowance u/s 35(1)(ii) of the Act could be made in the instant case.‖ 7. Similarly, the another co-ordinate Bench of this Tribunal, Jaipur Bench, in the case of P.R. Rolling Mills Pvt. Ltd. vs. DCIT in ITA No. 529/JP/2019 vide order dated 05.07.2018 for AY 2014-15 has considered the same Trust/ institute i.e. SHG&PG and allowed the claim of the assessee. The facts and circumstances are exactly identical in the present case also, respectfully following the decision of co-ordinate Bench, we allow the claim of deduction under section 35(1)(ii) of the Act.
Similar, are the facts 9 M/s Span Realtors Vs. The Income Tax Officer 2(2) in AY 2014-15, hence taking a consistent view we allow the claim of assessee in this year also.‖ 7. The issue involved in the present case is identical to the issue involved in the case of Mahesh C. Thakker vs. ACIT. Since, this issue has been decided by the coordinate Bench in favour of the assessee in the aforesaid case, we do not find any reason to take a different view from the view already taken by the coordinate Bench. Hence, respectfully following the decision of the coordinate Bench rendered in the case of Mahesh C. Thakker vs. ACIT (supra), we allow ground No 6 & 7 of the assessee‘s appeal and direct the AO to allow the claim of the assessee.‖ In the backdrop of our aforesaid deliberations and the fact that the issue involved in the present appeal is squarely covered by the aforesaid orders of the co-ordinate benches of the Tribunal, we finding no justifiable reason to take a different view, respectfully follow the same. Accordingly, we set aside the order of the CIT(A) and vacate the disallowance of the assesse‘s claim for deduction under Sec.35(1)(ii) of Rs.1,75,00,000/-. The Ground of appeal
No. 1 and 2 are allowed in terms of our aforesaid observations.
7. The Grounds of appeal No.3 and 4 being general are dismissed as not pressed.
8. Before parting, we may herein deal with a procedural issue that though the hearing of the captioned appeal was concluded on 02.03.2020, 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 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. (b) In case where the order is not pronounced immediately on the conclusion of the hearing, the Bench shall give a date for 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 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 10 M/s Span Realtors Vs. The Income Tax Officer 2(2) 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) 317 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 rule 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 or not the passing of this order, beyond a period of ninety days in the case before us 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 14/05/2020, wherein it was observed as under:
―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. The epidemic situation 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 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 11 M/s Span Realtors Vs. The Income Tax Officer 2(2) 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 the Hon‘ble 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.‖ 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 lockout 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.
10. Resultantly, the appeal filed by the assessee is allowed in terms of our aforesaid observations.
Order pronounced under rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1962, by placing the details on the notice board.