ACIT- CIRCLE-20(3), MUMBAI vs VASTUPAL LAHERCHAND JAIN, MUMBAI

Income Tax Appellate Tribunal, MUMBAI ‘I’ BENCH, MUMBAI

Before: SHRI PRAMOD KUMAR, HON’BLE&

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI ‘I’ BENCH, MUMBAI [BEFORE SHRI PRAMOD KUMAR, HON’BLE VICE PRESIDENT & MS. MADHUMITA ROY, HON’BLE JUDICIAL MEMBER] Assessment Year: 2010-11 Asst. Commissioner of Income Tax, Circle-20(3), Mumbai……...........…...…………..….Appellant 6th Floor, Piramal Chambers, Lalbaug, Mumbai – 400 012. Vs. Shri Vastupal Laherchand Jain……………….......…..…………………....………………..……..Respondent 41, 1st Floor, Mehta Chambers, 4th Lane, Kamathipura, Mumbai – 400 012. [PAN: AAEPJ 5465 G] Appearances by: Shri Sanatha Mullamudi, D/R, appeared on behalf of the Revenue Shri A.N. Shah, AR appeared on behalf of the Assessee. Date of concluding the hearing : January 06, 2020 Date of pronouncing the order : May 27, 2020 ORDER PER MS. MADHUMITA ROY, JM

The instant appeal filed by the Revenue is directed against the order dated 19.07.2018 passed by the Ld. CIT(A) – 32 Mumbai u/s 143(3) read with section 147 of the Income Tax Act, 1961 (herein after referred to as ‘the Act’) arising out of the order dated 26.02.2016 passed by the ACIT, Circle– 20(3), Mumbai for A.Y. 2010-11.

The assessee an individual engaged in the business of civil contractor filed its original return of income on 30.09.2010 declaring total income of Rs. 65,65,886/-. Under scrutiny, the assessment u/s 143(3) was finalised on 21.03.2013 determining taxable income of Rs. 91,10,260/-. Subsequently upon receiving information that the assessee, during the year under consideration indulged in the acceptance of bogus entries in respect of purchase to the tune of Rs. 1,57,03,048/-, upon invoking provision of section 147 of the Act, notice u/s 148 of the Act was served upon the assessee informing the assessee, the reasons to believe that the income chargeable to tax has escaped assessment for the A.Y.

Assessment Year: 2010-11 Shri Vastupal Laherchand Jain 2010-11. In response thereto thereto, the assessee by and under a letter dated , the assessee by and under a letter dated 06.01.2016 objected to such such reopening of the assessment. Subsequently, reopening of the assessment. Subsequently, the assessee submitted the ledger cop see submitted the ledger copies of the parties mention of the parties mentioned in the reasons for reopening including the copies of bills. including the copies of bills. The details of payment he details of payment which were made by the account payee cheques were also made by the account payee cheques were also brought to the brought to the notice of the Assessing Officer. the Assessing Officer. Further that by a subsequent reply dated reply dated 19.02.2016 the details of the parties from which 19.02.2016 the details of the parties from which the alleged bogus the alleged bogus purchases were made were also provided to the Ld. AO were also provided to the Ld. AO. However, t However, the said assessment was finalised upon making disallowance of Rs. said assessment was finalised upon making disallowance of Rs. said assessment was finalised upon making disallowance of Rs. 7,22,128/- i.e. 12.5% of the tot i.e. 12.5% of the total amount of Rs. 57,77,025/- in respect to in respect to the purchases made from purchases made from M/s. Prince Trading Company and added to the and added to the total income of the assessee which was, in turn, reduce total income of the assessee which was, in turn, reduced to Rs. 2 to Rs. 2,88,850/- by adopting 5% of the by adopting 5% of the such purchases of Rs. 57,77,025/- by the Ld. CIT(A). Hence the instant appeal before us by the Revenue. . Hence the instant appeal before us by the Revenue.

At the time of hear At the time of hearing of the matter the Ld. DR submitted before us matter the Ld. DR submitted before us that the purchasers claimed to have been made from the that the purchasers claimed to have been made from the that the purchasers claimed to have been made from the parties remained unverified. He ultimately remained unverified. He ultimately relied upon the order passed by the n the order passed by the Ld. AO.

The Learned Counsel ounsel appearing for the assessee submitted before for the assessee submitted before us that in response to the notice u/s 148 of the Act, the ledger copies of us that in response to the notice u/s 148 of the Act, the ledger copies of us that in response to the notice u/s 148 of the Act, the ledger copies of the parties; copies of bills; the details of payment w the parties; copies of bills; the details of payment were duly ere duly submitted before the Assessing Officer. Further that the parties from whom before the Assessing Officer. Further that the parties from whom before the Assessing Officer. Further that the parties from whom purchases were made which which were alleged to be bogus was considered for alleged to be bogus was considered for disallowance at 25% in the assessment proceedings u/s 143(3) of the disallowance at 25% in the assessment proceedings u/s 143(3) of the disallowance at 25% in the assessment proceedings u/s 143(3) of the Act. Such disallowance was subsequently re Act. Such disallowance was subsequently restricted by the Ld. CIT(A) to stricted by the Ld. CIT(A) to 12.5% on the purchases in respect of four parties except M purchases in respect of four parties except M purchases in respect of four parties except M/s. Prince Trading Company Therefore, ultim Trading Company Therefore, ultimately the Ld. AO disallowed 12. d. AO disallowed 12.5% of Assessment Year: 2010-11 Shri Vastupal Laherchand Jain the purchase of Rs. 57,77 77,025/- made from the said M/s. Prince Trading M/s. Prince Trading Company i.e. the quantum of profit element involved on account of quantum of profit element involved on account of quantum of profit element involved on account of inflation of purchases. Before the First Appellate Authority, the assessee inflation of purchases. Before the First Appellate Authority, the assessee inflation of purchases. Before the First Appellate Authority, the assessee submitted that the figures submitted that the figures specified by the Revenue are inclusive of VAT by the Revenue are inclusive of VAT amounting to Rs. 7,22,128/ 128/-; details whereof were duly enclosed. It was osed. It was pointed out by the Learned AR that the same has to excluded while pointed out by the Learned AR that the same has to excluded while pointed out by the Learned AR that the same has to excluded while arriving at the quantum of alleged purchases of Rs. 57 arriving at the quantum of alleged purchases of Rs. 57,77,025/ 025/-. Apart from that there was actual was actual delivery of goods by the suppliers which are delivery of goods by the suppliers which are evident from the invoices of the parties as also submitted by the Learned evident from the invoices of the parties as also submitted by the Learned evident from the invoices of the parties as also submitted by the Learned AR. The Learned AR further argued that the details of purchases AR. The Learned AR further argued that the details of purchases AR. The Learned AR further argued that the details of purchases including the copies of ledger of parties, the copies of invoices contain ledger of parties, the copies of invoices contain ledger of parties, the copies of invoices containing address, the TIN (sales tax address, the TIN (sales tax) Nos. etc. from specified suppliers, the bank etc. from specified suppliers, the bank statements showing payments showing payments by account payee cheques and credited to by account payee cheques and credited to their respective accounts were duly submitted by the assessee. It is a fact their respective accounts were duly submitted by the assessee. It is a fact their respective accounts were duly submitted by the assessee. It is a fact that the parties had partially di that the parties had partially discharged their liability to VAT but for scharged their liability to VAT but for someone’s misdeed or non misdeed or non-meeting the norms of Sales Tax Department, Sales Tax Department, the assessee cannot be penalised the assessee cannot be penalised particularly when the evidences show particularly when the evidences show otherwise. He, therefore, relies upon the orders passed by the First . He, therefore, relies upon the orders passed by the First . He, therefore, relies upon the orders passed by the First Appellate Authority whereby and where Authority whereby and whereunder the disallowance has been under the disallowance has been restricted to 5% of the alleged bogus purchases. restricted to 5% of the alleged bogus purchases.

We have heard the We have heard the respective parties and also perused the relevant parties and also perused the relevant materials available on record. It appears that the assessee purchased available on record. It appears that the assessee purchased available on record. It appears that the assessee purchased from these five parties which has actually been utilised in the contracts from these five parties which has actually been utilised in the contracts from these five parties which has actually been utilised in the contracts undertaken by him and it it has further received contracts payments from has further received contracts payments from BMC(Bombay Municipal Corporation) (Bombay Municipal Corporation). It is a case of the assessee that the assessee that only upon verification of the actual execution of work, the said Govt. only upon verification of the actual execution of work, the said Govt. only upon verification of the actual execution of work, the said Govt. authority has made contract payments to the assessee. In that view of the contract payments to the assessee. In that view of the contract payments to the assessee. In that view of the matter, the assessee claimed those purchases matter, the assessee claimed those purchases are genuine as in the genuine as in the Assessment Year: 2010-11 Shri Vastupal Laherchand Jain absence of purchases, no c absence of purchases, no contract work could not have been executed. On executed. On the other hand, such plea of the assessee has not been accepted by the the other hand, such plea of the assessee has not been accepted by the the other hand, such plea of the assessee has not been accepted by the Learned Assessing Officer for several reasons. Learned Assessing Officer for several reasons. He was of the opinion that He was of the opinion that the assessee did not produce the purchaser produce the purchasers so demanded by the so demanded by the Revenue, neither any evidence venue, neither any evidences were submitted showing genuin showing genuineness of such transactions.

We have carefully considered the order passed by the Ld. AO We have carefully considered the order passed by the Ld. AO We have carefully considered the order passed by the Ld. AO wherefrom it appears that wherefrom it appears that the Ld. AO did not doubt the sales made. When the Ld. AO did not doubt the sales made. When sales cannot be made without purcha cannot be made without purchase, the fact of purchase cannot be se, the fact of purchase cannot be doubted even though they were not made from the same partie doubted even though they were not made from the same partie doubted even though they were not made from the same parties as those debited in the books. Thus t Thus the AO has rightly sought to verify the claim of he AO has rightly sought to verify the claim of purchase made by the assessee purchase made by the assessee.

On the other hand, t On the other hand, the plea of the assessee that the purchases were he plea of the assessee that the purchases were made since through banking transactions by cheques those are genuine made since through banking transactions by cheques those are genuine made since through banking transactions by cheques those are genuine was neither accepted by the Ld. CIT(A) in its totality, was neither accepted by the Ld. CIT(A) in its totality, on the basis on the basis the finding of the Sales Tax Department that the supplier in the case finding of the Sales Tax Department that the supplier in the case finding of the Sales Tax Department that the supplier in the case of the assessee are bogus. The question of genuineness of such transaction assessee are bogus. The question of genuineness of such transaction assessee are bogus. The question of genuineness of such transaction, in the absence of valid document to that effect produced by the assessee, the absence of valid document to that effect produced by the assessee, the absence of valid document to that effect produced by the assessee, therefore, remained un therefore, remained undecided. However, we find from the order However, we find from the order impugned that time and again relying on sev impugned that time and again relying on several judgements including in including in the matter of Shri Madhukant B. Gandhi vs. ITO passed by the Coordinate the matter of Shri Madhukant B. Gandhi vs. ITO passed by the Coordinate the matter of Shri Madhukant B. Gandhi vs. ITO passed by the Coordinate Bench, the Ld. CIT(A) concluded concluded that the entire purchase cannot be that the entire purchase cannot be disallowed but only the profit embedded disallowed but only the profit embedded in the doubtful transaction has doubtful transaction has to be taxed. The judgement passed by the Hon'ble Gujarat High Court in judgement passed by the Hon'ble Gujarat High Court in judgement passed by the Hon'ble Gujarat High Court in the case of CIT vs. Bholanath Poly Fab Pvt. Ltd. reported in 355 ITR 290 the case of CIT vs. Bholanath Poly Fab Pvt. Ltd. reported in 355 ITR 290 the case of CIT vs. Bholanath Poly Fab Pvt. Ltd. reported in 355 ITR 290 (Guj) has also been taken care of by the Ld. CIT(A) where the facts are (Guj) has also been taken care of by the Ld. CIT(A) where the facts are (Guj) has also been taken care of by the Ld. CIT(A) where the facts are identical. Taking into consideration the entire facts of Taking into consideration the entire facts of the matter we find the matter we find

Assessment Year: 2010-11 Shri Vastupal Laherchand Jain that the Ld. CIT(A) further opined that that the Ld. CIT(A) further opined that assessee has made cash purchases assessee has made cash purchases from other parties though those though those were not recorded in the books of were not recorded in the books of accounts otherwise the sales made could not have taken place. The accounts otherwise the sales made could not have taken place. The accounts otherwise the sales made could not have taken place. The assessee took bills only from the five parties as accommodation to assessee took bills only from the five parties as accommodation to assessee took bills only from the five parties as accommodation to explain such purchases. explain such purchases. Having regard to the particular aspect Having regard to the particular aspect of the matter when the appellant has already recorded a pellant has already recorded a Gross Profit Gross Profit of 3.56% in his books and the sales has not been doubted, we find no ambiguity in in his books and the sales has not been doubted, we find no ambiguity in in his books and the sales has not been doubted, we find no ambiguity in restricting such disallowance to 5% restricting such disallowance to 5% of the alleged bogus purchases by the of the alleged bogus purchases by the Ld. CIT(A) so as to warrant interference. Hence we find Ld. CIT(A) so as to warrant interference. Hence we find no merit in the no merit in the appeal preferred by the Revenue appeal preferred by the Revenue. The order is, therefore, passed in the he order is, therefore, passed in the affirmative i.e. in favour of the assessee and against the Revenue. Hence in favour of the assessee and against the Revenue. Hence in favour of the assessee and against the Revenue. Hence Revenue’s appeal is dismissed. Revenue’s appeal is dismissed.

In the result, the appeal of the Revenue is dismissed. 5. In the result, the appeal of the

Before parting we would like to make certain observation relating Before parting we would like to make certain observation relating Before parting we would like to make certain observation relating to the issue cropped up under present scenario to the issue cropped up under present scenario of Covid-19 pandemic 19 pandemic as to whether when the hearing of the matter was concluded on 0 to whether when the hearing of the matter was concluded on 0 to whether when the hearing of the matter was concluded on 06.01.2020 the order can be pronounced today i.e. on 19.05.2020. The issue has pronounced today i.e. on 19.05.2020. The issue has pronounced today i.e. on 19.05.2020. The issue has already been discussed by the Co already been discussed by the Co-ordinate Bench in the case of DCIT vs. ordinate Bench in the case of DCIT vs. JSW Ltd. (ITA Nos. 6264 & 6103/Mum/2018) pronounced on 14.05.2020 JSW Ltd. (ITA Nos. 6264 & 6103/Mum/2018) pronounced on 14.05.2020 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 u in the light of which it is well within the time limit permitted u 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 34(5) of the Appellate Tribunal Rules, 1963 in view of the following 34(5) of the Appellate Tribunal Rules, 1963 in view of the following observations made therein: observations made therein:

“7. However, before we part with the matter, we must deal with one However, before we part with the matter, we must deal with one However, before we part with the matter, we must deal with one procedural issue as well. While hearing of these appeals was concluded procedural issue as well. While hearing of these appeals was concluded procedural issue as well. While hearing of these appeals was concluded on 8th January 2020, this order thereon is being pronounced today on uary 2020, this order thereon is being pronounced today on uary 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 the day of 14th May, 2020, much after the expiry of 90 days from the date 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 of conclusion of hearing. We are also alive to the fact that rule 34(5) of of conclusion of hearing. We are also alive to the fact that rule 34(5) of Assessment Year: 2010-11 Shri Vastupal Laherchand Jain the Income Tax Appellate Tribunal Rules 1963, wh the Income Tax Appellate Tribunal Rules 1963, which deals with ich deals with pronouncement of orders, provides as follows: pronouncement of orders, provides as follows:

(5) The pronouncement may be in any of the following manners : (5) The pronouncement may be in any of the following manners :— (a) The Bench may pronounce the order immediately upon the conclusion of (a) The Bench may pronounce the order immediately upon the conclusion of (a) The Bench may pronounce the order immediately upon the conclusion of the hearing. (b) In case where th (b) In case where the order is not pronounced immediately on the conclusion of e order is not pronounced immediately on the conclusion of the hearing, the Bench shall give a date for pronouncement. 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 (c) In a case where no date of pronouncement is given by the Bench, every (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 endeavour shall be made by the Bench to pronounce the order within 60 days from 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 the date on which the hearing of the case was concluded but, where it is not 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 to do on the ground of exceptional and extraordinary circumstances of 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 the case, the Bench shall fix a future day for pronouncement of the order, and such 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 date shall not ordinarily (emphasis supplied by us now) be a day beyond a further 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 nd due notice of the day so fixed shall be given on the notice nd due notice of the day so fixed shall be given on the notice board.

8. Quite clearly, “ordinarily” the order on an appeal should be Quite clearly, “ordinarily” the order on an appeal should be Quite clearly, “ordinarily” the order on an appeal should be pronounced by the bench within no more than 90 days from the date of pronounced by the bench within no more than 90 days from the date of pronounced by the bench within no more than 90 days from the date of concluding the hearing. It is, however, important to concluding the hearing. It is, however, important to note that the note that the expression “ordinarily” has been used in the said rule itself. This rule was expression “ordinarily” has been used in the said rule itself. This rule was 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 inserted as a result of directions of Hon’ble jurisdictional High Court in 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 the case of Shivsagar Veg Restaurant Vs ACIT [(2009) 317 ITR 433 the case of Shivsagar Veg Restaurant Vs ACIT [(2009) 317 ITR 433 (Bom)] wherein Their L (Bom)] wherein Their Lordships had, inter alia, directed that “We, ordships had, inter alia, directed that “We, therefore, direct the President of the Appellate Tribunal to frame and lay therefore, direct the President of the Appellate Tribunal to frame and lay 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 down the guidelines in the similar lines as are laid down by the Apex 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 Court in the case of Anil Rai (supra) and to issue appropriate Court in the case of Anil Rai (supra) and to issue appropriate administrative directions to all the Benches of the Tribunal in that behalf. inistrative directions to all the Benches of the Tribunal in that behalf. inistrative directions to all the Benches of the Tribunal in that behalf. We hope and trust that suitable guidelines shall be framed and issued by We hope and trust that suitable guidelines shall be framed and issued by We hope and trust that suitable guidelines shall be framed and issued by the President of the Appellate Tribunal within shortest reasonable time the President of the Appellate Tribunal within shortest reasonable time the President of the Appellate Tribunal within shortest reasonable time and followed strictly by all the Ben and followed strictly by all the Benches of the Tribunal. In the ches of the Tribunal. In the meanwhile(emphasis, by underlining, supplied by us now), all the meanwhile(emphasis, by underlining, supplied by us now), all the meanwhile(emphasis, by underlining, supplied by us now), all the revisional and appellate authorities under the Income revisional and appellate authorities under the Income-tax Act are tax Act are Assessment Year: 2010-11 Shri Vastupal Laherchand Jain directed to decide matters heard by them within a period of three months directed to decide matters heard by them within a period of three months 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 losed for judgment”. In the ruled so framed, as a losed for judgment”. In the ruled so framed, as a result of these directions, the expression “ordinarily” has been inserted in result of these directions, the expression “ordinarily” has been inserted in result of these directions, the expression “ordinarily” has been inserted in the requirement to pronounce the order within a period of 90 days. The the requirement to pronounce the order within a period of 90 days. The the requirement to pronounce the order within a period of 90 days. The question then arises whether the passing of this order, question then arises whether the passing of this order, beyond ninety beyond ninety days, was necessitated by any “extraordinary” circumstances. days, was necessitated by any “extraordinary” circumstances.

Let us in this light revert to the prevailing situation in the country. Let us in this light revert to the prevailing situation in the country. 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 On 24th March, 2020, Hon’ble Prime Minister of India took the bold step On 24th March, 2020, Hon’ble Prime Minister of India took the bold step of imposing a nationwide lockdo of imposing a nationwide lockdown, for 21 days, to prevent spread of wn, for 21 days, to prevent spread of Covid 19 epidemic, and this lockdown was extended from time to time. As Covid 19 epidemic, and this lockdown was extended from time to time. As Covid 19 epidemic, and this lockdown was extended from time to time. As a matter of fact, even before this formal nationwide lockdown, the a matter of fact, even before this formal nationwide lockdown, the a matter of fact, even before this formal nationwide lockdown, the functioning of the Income Tax Appellate Tribunal at Mumbai was functioning of the Income Tax Appellate Tribunal at Mumbai was functioning of the Income Tax Appellate Tribunal at Mumbai was severely restricted on account of lockdown by the Maharashtra ted on account of lockdown by the Maharashtra ted on account of lockdown by the Maharashtra Government, and on account of strict enforcement of health advisories Government, and on account of strict enforcement of health advisories Government, and on account of strict enforcement of health advisories with a view of checking spread of Covid 19. The epidemic situation in with a view of checking spread of Covid 19. The epidemic situation in 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 Mumbai being grave, there was not much of a relaxation in subsequent Mumbai being grave, there was not much of a relaxation in subsequent lockdowns also. In any case, there was unprecedented disruption of ockdowns also. In any case, there was unprecedented disruption of ockdowns 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 judicial wok all over the country. As a matter of fact, it has been such an 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 unprecedented situation, causing disruption in the functioning of judicial unprecedented situation, causing disruption in the functioning of judicial machinery, that Hon’ble Supreme Court o machinery, that Hon’ble Supreme Court of India, in an unprecedented f India, in an unprecedented order in the history of India and vide order dated 6.5.2020 read with order in the history of India and vide order dated 6.5.2020 read with 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 order dated 23.3.2020, extended the limitation to exclude not only this 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 period but also a few more days prior to, and after, the lockdown period but also a few more days prior to, and after, the lockdown by observing that “In case the limitation has expired after ng that “In case the limitation has expired after ng that “In case the limitation has expired after 15.03.2020 then the period from 15.03.2020 till the date on which the 15.03.2020 then the period from 15.03.2020 till the date on which the 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 lockdown is lifted in the jurisdictional area where the dispute lies or lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of action arises shall be extended for a period where the cause of action arises shall be extended for a period 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 after the lifting of lockdown”. Hon’ble Bombay High Court, in an order after the lifting of lockdown”. Hon’ble Bombay High Court, in an order

Assessment Year: 2010-11 Shri Vastupal Laherchand Jain dated 15th April 2020, has, besides extending the validity of all interim dated 15th April 2020, has, besides extending the validity of all interim dated 15th April 2020, has, besides extending the validity of all interim orders, has also observed that, “It is also clarified that while calculating orders, has also observed that, “It is also clarified that while calculating orders, has also observed that, “It is also clarified that while calculating time for disposal of matters made time ters made time-bound by this Court, the period bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be for which the order dated 26th March 2020 continues to operate shall be for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly”, and also observed that added and time shall stand extended accordingly”, and also observed that added and time shall stand extended accordingly”, and also observed that “arrangement continued by an order dated 26th March 2020 till 30 “arrangement continued by an order dated 26th March 2020 till 30 “arrangement continued by an order dated 26th March 2020 till 30th April 2020 shall continue further till 15th June 2020”. It has been an April 2020 shall continue further till 15th June 2020”. It has been an April 2020 shall continue further till 15th June 2020”. It has been an unprecedented situation not only in India but all over the world. unprecedented situation not only in India but all over the world. unprecedented situation not only in India but all over the world. Government of India has, vide notification dated 19th February 2020, Government of India has, vide notification dated 19th February 2020, Government of India has, vide notification dated 19th February 2020, taken the stand that, the corona virus “shoul taken the stand that, the corona virus “should be considered a case of d be considered a case of natural calamity and FMC (i.e. force majeure clause) may be invoked, natural calamity and FMC (i.e. force majeure clause) may be invoked, natural calamity and FMC (i.e. force majeure clause) may be invoked, wherever considered appropriate, following the due procedure…”. The wherever considered appropriate, following the due procedure…”. The wherever considered appropriate, following the due procedure…”. The term ‘force majeure’ has been defined in Black’s Law Dictionary, as ‘an term ‘force majeure’ has been defined in Black’s Law Dictionary, as ‘an 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 can be neither anticipated nor controlled’ When such can be neither anticipated nor controlled’ When such is the position, and it is officially so notified by the Government of India is the position, and it is officially so notified by the Government of India 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 19 epidemic has been notified as a disaster under the 19 epidemic has been notified as a disaster under the National Disaster Management Act, 2005, and also in the l National Disaster Management Act, 2005, and also in the l National Disaster Management Act, 2005, and also in the light of the discussions above, the period during which lockdown was in force can be discussions above, the period during which lockdown was in force can be discussions above, the period during which lockdown was in force can be anything but an “ordinary” period. anything but an “ordinary” period.

10.

In the light of the above discussions, we are of the considered view In the light of the above discussions, we are of the considered view In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requi that rather than taking a pedantic view of the rule requi that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact pronouncement of orders within 90 days, disregarding the important fact pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period that the entire country was in lockdown, we should compute the period 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 of 90 days by excluding at least the period during which the lockdown of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground rea was in force. We must factor ground realities in mind while interpreting lities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding the time limit for the pronouncement of the order. Law is not brooding 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 omnipotence in the sky. It is a pragmatic tool of the social order. The 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 tenets of law being enacted on the basis of pragmatism, and that is how tenets of law being enacted on the basis of pragmatism, and that is how

Assessment Year: 2010-11 Shri Vastupal Laherchand Jain the law is required to interpreted. The interpretation so assigned by us is is required to interpreted. The interpretation so assigned by us is 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 not only in consonance with the letter and spirit of rule 34(5) but is also a 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 pragmatic approach at a time when a disaster, notified under the Disaster pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unp Management Act 2005, is causing unprecedented disruption in the recedented disruption in the functioning of our justice delivery system. functioning of our justice delivery system. Undoubtedly, in the case Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon’ble Bombay High Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon’ble Bombay High 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 Court did not approve an order being passed by the Tribunal beyond a 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 but then in the present situation Hon’ble Bombay High but then in the present situation Hon’ble Bombay High Court Court itself itself has, has, vide vide judgment dated 15th judgment dated 15th April 2020, April 2020, held held that directed “while calculating the time for disposal of matters made “while calculating the time for disposal of matters made “while calculating the time for disposal of matters made time-bound by this Court, the period for which the order dated 26th bound by this Court, the period for which the order dated 26th bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand March 2020 continues to operate shall be added and time shall stand March 2020 continues to operate shall be added and time shall stand extended accordingly”. The extraordinary steps taken extended accordingly”. The extraordinary steps taken suo motu suo motu by Hon’ble jurisdictional High Court and Hon’ble Supreme Court also Hon’ble jurisdictional High Court and Hon’ble Supreme Court also Hon’ble jurisdictional High Court and Hon’ble Supreme Court also indicate that this period of lockdown cannot be treated as indicate that this period of lockdown cannot be treated as an ordinary an ordinary period during which the normal time limits are to remain in force. In our period during which the normal time limits are to remain in force. In our 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 considered view, even without the words “ordinarily”, in the light of the considered view, even without the words “ordinarily”, in the light of the above analysis of the legal position, the period during which lockout was above analysis of the legal position, the period during which lockout was 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) ed for the purpose of time limits set out in rule 34(5) ed for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90 of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90 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), limit for pronouncement of orders, inherent in rule 34(5)(c), limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the pronouncement of orders within ninet with respect to the pronouncement of orders within ninety days, clearly y days, clearly comes into play in the present case. Of course, there is no, and there comes into play in the present case. Of course, there is no, and there 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 refix the matters cannot be any, bar on the discretion of the benches to refix the matters cannot be any, bar on the discretion of the benches to refix the matters for clarifications because of considerable time lag between the point of for clarifications because of considerable time lag between the point of 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 s concluded and the point of time when the order s concluded and the point of time when the order thereon is being finalized, but then, in our considered view, no such thereon is being finalized, but then, in our considered view, no such thereon is being finalized, but then, in our considered view, no such exercise was required to be carried out on the facts of this case.” exercise was required to be carried out on the facts of this case.” exercise was required to be carried out on the facts of this case.”

Assessment Year: 2010-11 Shri Vastupal Laherchand Jain 7. On the basis of the observation made in the aforesaid judgment On the basis of the observation made in the aforesaid judgment On the basis of the observation made in the aforesaid judgment we exclude the period of lockdown while computing the limitation provided exclude the period of lockdown while computing the limitation provided exclude the period of lockdown while computing the limitation provided under Rule 34(5) of the Income Tax (Appellate Tribunal) Rule 1963. under Rule 34(5) of the Income Tax (Appellate Tribunal) Rule 1963. under Rule 34(5) of the Income Tax (Appellate Tribunal) Rule 1963. Order is, thus, pronounced under Rule 34(4) of the said Rule by placing Order is, thus, pronounced under Rule 34(4) of the said Rule by placing Order is, thus, pronounced under Rule 34(4) of the said Rule by placing the details on the Notice Board. the details on the Notice Board.

In the result, assessee’s appeal is allowed. the result, assessee’s appeal is allowed.

Order Pronounced in the Open Court on Order Pronounced in the Open Court on 27.05.2020 2020.

ACIT- CIRCLE-20(3), MUMBAI vs. VASTUPAL LAHERCHAND JAIN, MUMBAI