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Income Tax Appellate Tribunal, “C” BENCH: BENGALURU
Before: SHRI N.V. VASUDEVAN & SHRI D.S. SUNDER SINGH
adjudicate the consequential order giving effect to the order of ld. CIT and accordingly dismissed the appeal of the assessee. Against which the assessee filed appeal before this Tribunal with delay of 1872 days.
The ld. Authorised Representative(AR) submitted that the ld. Counsel for the assessee advised that the order of the ld. CIT cannot agitated before the ITAT in the light to the fact that there was no error committed by the AO in following the directions of ld. CIT in making the disallowance. Therefore, with a bonafide impression that the order of the ld. CIT was final the assessee did not prefer the appeal before the ITAT.
Ld.AR submitted that the assessee got relief from the Hon’ble High court of Karnataka for the earlier appeals. The ld. AR further submitted that before the Hon’ble High Court of Karnataka the assessee had mentioned the issue with regard to the pendency of this appeal before and the Hon’ble High Court has directed the ITAT to dispose the pending appeal in accordance with law. The AR placed the copy of the Hon’ble High Court order before us. The Ld.AR submitted that the delay was purely due to the misguidance of the counsel and not intentional. Hence, requested to condone the delay and admit the appeal. The ld. AR also relied on the decision of Hon’ble Supreme Court in the case of Ram Nath Sao Alisa Ram Nath Sahu and others vs. Gobardhan Sao and Others in (2002) 3 Supreme court cases 195 in civil appeal No.1704 of 2992 dated 27th February 2002 and submitted that the Hon’ble Apex Court while deciding the issue with regard to the sufficient cause for delay held as under:
“12. Thus it becomes plain that the expression "sufficient cause" within the meaning of Section 5 of the Act or Order 22 Rule 9 of the Code or any other similar provision should receive a liberal construction so as to advance substantial justice when no negligence or inaction or want of bona fide is imputable to a party. In a particular case whether explanation furnished would constitute "sufficient cause" or not will be dependant upon facts of each case. There cannot be a straitjacket formula for accepting or rejecting explanation furnished for the delay caused in taking steps. But one thing is clear that the courts should not proceed with the tendency of finding fault with the cause shown and reject the petition by a slipshod order in over jubilation of disposal drive. Acceptance of explanation furnished should be the rule and refusal an exception more so when no negligence or inaction or want of bona fide can be imputed to the defaulting party. On the other hand, while considering the matter the courts should not lose sight of the fact that by not taking steps within the time prescribed a valuable right has accrued to the other party which should not be lightly defeated by condoning delay in a routine like manner. However, by taking a pedantic and hyper technical view of the matter the explanation furnished should not be rejected when stakes are high and/or arguable points of facts and law are involved in the case, causing enormous loss and irreparable injury to the party against whom the lis terminates either by default or inaction and defeating valuable right of such a party to have the decision on merit. While considering the matter, courts have to strike a balance between resultant effect of the order it is going to pass upon the parties either way.”
4. The ld. AR argued that the issue is high demand case and the stakes involved are high and if the delay is not condoned, the same would cause financial injury to the assessee therefore, requested to condone the delay and admit the appeal. On the other hand, the ld. DR vehemently opposed for condoning the delay.
We heard the rival contentions and perused the material placed on record. We are of the considered view that in the facts and circumstances of the case it is a fit case for condoning the delay, since, the Hon’ble Jurisdictional High Court held that the disallowance u/s. 40(a)(ia) of the Act not was examined by the AO with regard to it;s retrospective nature.
Therefore, in the interest of justice,we condone the delay and admit the appeal.
We heard the rival submissions and perused the material placed on record. In the instance case, the ld. AR submitted that the issue involved in this case is the disallowance u/s. 40(a)(ia) of the Act. The assessee made the payment of Rs. 2,73,06,000/- towards sub-contract payments without deduction of tax at source as required u/s. 194C of the Act, which attracts the disallowance u/s. 40(a)(ia) of the Act. The assessee submitted before the AO that recipients have admitted the income in their hands and paid the taxes thereon, thus contended that as per second proviso to s. 40(a)(ia) of the Act inserted by Finance Act, 2012, no addition is warranted. According to the ld. AR, the amendment made to second proviso to section 40(a)(ia) of the Act is held to be declaratory, curative and has retrospective effect from 1st April, 2005 by various Hon’ble High Courts including the Hon’ble Jurisdictional High Court in the assessee’s own case. The issue in the impugned appeal is also identical. The Hon’ble Jurisdictional High Court in assessee’s appeal No.200001/2016 dated 23/09/2019 directed the ITAT to pass the appropriate orders in pending appeal. In the instant case, the AO did not accept the contention of the assessee that the amendment was retrospective. The Hon’ble High Court in its order stated to be held that amendment has retrospective effect. For the sake of clarity and convenience, we extract paral No.3 & 4 of the order of the Hon’ble Jurisdictional High Court in the order cited, supra, dated 23.08.2019, which reads as under:
“3. Appeal No.724/Bng/2016 filed by the assessee is pending before the ITAT against the order giving effect to, the order passed under section 263 of the Act by the Commissioner of Income Tax.
In view of the second proviso to s. 40(a)(ia) of the Act is held to be declaratory and curative and has retrospective effect from 1st April, 2005 by various Hon’ble High Court including the jurisdictional High Court in disposed of today, the order giving effect to, the order of CIT under section 263 of the Act requires to be considered in the pending appeal before the ITAT being uninfluenced by any of the observations made in the said order i.e., order passed under section 263(1) as well as the order in ITA No.503(BH)/2009 dated 30.09.2009 by ITAT. Hence, the Hon’ble IAT shall dispose of the pending appeal No.724/Bng/2016 in accordance with law relating to the assessment year 2005-06 as aforesaid.”
Since, the issue involved in this appeal is the addition made u/s. 40(a)(ia) of the Act for non deduction of tax at source, in the light of the judgement of Hon’ble jurisdictional High court we consider it appropriate to remit he matter back to the file of AO to examine whether the assessee has deducted the tax at source and remitted to the Government account or whether the recipient have admitted the income and paid the taxes as provided in the amendment made to Finance Act and decide the issue afresh on merits. The ld. AR is directed to place the copy of relevant orders of Hon’ble High Court before the AO for consideration. Accordingly, we set aside the order of ld. CIT(A) and allow the appeal of the assessee for statistical purpose.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 29th November, 2019.