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Income Tax Appellate Tribunal, MUMBAI BENCHES “J”, MUMBAI
Before: SHRI G.S. PANNU (AM) & SHRI RAM LAL NEGI (JM)
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES “J”, MUMBAI BEFORE SHRI G.S. PANNU (AM) AND SHRI RAM LAL NEGI (JM) ITA No. 6595/MUM/2016 Assessment Year: 2008-09 M/s Sumitomo Chemical India The Deputy Commissioner of Pvt. Ltd., Income Tax- 1(3)(1), 6th Floor, Moti Mahal, 195, Aaykar Bhavan, M.K. Road, J Tata Road, Churchgate, Vs. Churchgate, Mumbai - 400020 Mumbai - 400020 PAN: AAECS3750L (Appellant) (Respondent)
Assessee by : Shri Paras Savla & Shri Pratik Poddar (AR) Revenue by : Shri Saurabh Deshpande (Sr. DR CIT) Date of Hearing: 16/04/2018 Date of Pronouncement: 27/04/2018
O R D E R PER RAM LAL NEGI, JM This appeal has been filed by the assessee against the order dated 30.08.2016 passed by the Ld. Commissioner of Income Tax (Appeals)-3, Mumbai, ‘CIT (A)’ for the assessment year 2008-09, whereby the Ld. CIT (A) has dismissed the appeal filed by the assessee in limine holding that the appeal is barred by law of limitation and the assessee has failed to establish the sufficient cause for not presenting the appeal within the time specified in section 249 (2) of the Income Tax Act, 1961 (for short ‘the Act’). The assessee had filed the said appeal against the assessment order passed by the AO u/s 143 (3) read with section 263 for the A.Y. 2008-09.
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Brief facts of the case are that the assessee company engaged in the business of trading and manufacturing of chemical/insecticides, filed its return of income for the assessment year under consideration declaring the total income of Rs. 54,80,768/-. The Assessing Officer (AO) accordingly passed assessment order u/s 143(3) determining the total income of the assessee at Rs. 11,04,65,510/-. Subsequently, the Commissioner of Income Tax-3, Mumbai passed order u/s 263 and set aside the assessment order and directed the AO to pass the assessment order afresh after proper verification. In terms of the said order, the AO issued notice to the assessee u/s 143 (2) and 142 (1). In response thereof the authorized representative of the assessee attended the proceedings and also submitted the details called for by the AO. It was seen that the assessee had debited Rs. 1,82,76,000/- the P&L account towards discount and rebate under the head ‘operation and other expenses’ which included an amount of Rs. 1,05,94,855/- being the provision made for discount on products sold during the year. The AO holding that the expenditure actually incurred or accrued is allowable and no provision made for expenditure is allowable for deduction, issued show cause notice to the assessee as to why the provisions towards discount and rebate should not be disallowed. The AO rejecting the explanation given by the assessee added back the said amount to the income of the assessee. It was further seen that provision for leave encashment of Rs. 18,81,377/- was made during the F.Y. 2007-08 and not paid before the due date of filing of return for the A.Y. 2008- 09. The AO issued show cause as to why the provision should not be disallowed for the period. Since, the payment was made after the due date of filing return the said amount was added back to the total income of the assessee. Accordingly, the AO determined the total income of the assessee at Rs. 12,29,41,740/-.
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Aggrieved by the assessment order passed by the AO, the assessee challenged the same before the Ld. CIT (A). Since, there was a delay of 261 days in filing appeal before, the Ld. CIT (A) relying on the various decisions of the Hon’ble Supreme Court, Hon’ble High Courts and the ITAT dismissed the appeal of the assessee in limine without hearing the assessee on merits. The assessee has challenged the action of the Ld. CIT (A) by filing the present appeal by raising the following grounds:
“That on the facts and circumstances of the case and in law, the Hon’ble CIT (A) erred in refusing to condone the delay in filing the appeal, without appreciating the sufficient cause for such delay and consequently, dismissing the appeal in limine.
1.1 That on the facts and circumstances of the case and in law, the Hon’ble CIT (A) erred in dismissing the appeal on technical grounds merely on conjectures and surmises and not adjudicating the adjustments made by Assessing Officer (‘AO’) on merits by way of a speaking order.
Without prejudice the above grounds
That on the facts and circumstances of the case, the Hon’ble CIT () ought to have deleted the disallowance made by the AO in relation to provision for discount amounting to Rs. 1,05,94,855.
Without prejudice to Ground No. 2 above, the Hon’ble CIT (A) ought to have directed the AO to allow the discount amounting to Rs. 1,05,94,855, in the year(s) the credit notes were actually issued by the Appellant. 4. That on the facts and circumstances of the case, the Hon’ble CIT (A) ought to have deleted the disallowance made by the AO in relation to provision for unpaid leave encashment amounting to Rs. 18,81,337.
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Without prejudice to Ground No. 4 above, the Hon’ble CIT (A) ought to have directed the AO to exclude the unpaid leave encashment amounting to Rs. 18,81,337 from the income of the immediately subsequent assessment year, wherein it was reversed and offered to tax.”
At the outset, the Ld. counsel for the assessee submitted that the Ld. CIT (A) has erred in dismissing the application for condonation of delay in filing the appeal without appreciating the sufficient cause for such delay and consequently dismissing the appeal in limine. The Ld. counsel further submitted that since the Ld. CIT (A) dismissed the appeal of the assessee in limine grave in justice has been caused to the assessee. The delay was not caused due to negligence or inaction on the part of the assessee but it happened due to the circumstances beyond control of the assessee. Since, the assessee had reasonable cause for not filing the appeal within the limitation period, the Ld. CIT (A) ought to have allowed the application for condonation of delay moved by the assessee. The Ld. counsel relied on the following judgments/decisions in order to substantiate its contention.
i) Collector, Land Acquisition vs. Mst. Katiji & Ors (1987) 167 ITR 471 (SC) ii) M/s Lahoti Overseas Ltd. vs DCIT, ITA No. 3786/Mum/2012, Order dt. 18- 03-2016 (ITAT). iii) Kewalkumar Jain vs ACIT (2013) 144 ITD 672 (Pune) (ITAT) iv) Mr. Kunal S. Surana vs. ITO, ITA No. 1522 of 2013 (Bom HC) order dt. 16- 06-2015 v) Anant B. Shinde (HUF) vs. ITO, ITA (Lodg) 1732 of 2013 (Bom HC) order dt. 04-12-2013 vi)Vijay Vishin Vibhag vs DCIT, ITA No. 498 of 2015, (Bom HC) order dt. 19-09- 2017
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vi) Sakar Patel Vibhag Jungle Kamdard Sahakari Mandli Ltd. vs ITO (1991) 39 TTJ 54 (Ahmedabad) (ITAT) viii) International Society for Krishna Consciousness vs DDIT (2008) 15 DTR 633 (Bang) (ITAT) 5. Since, the Ld. counsel for the assessee raised the preliminary issue regarding condonation of delay, the Ld. Departmental Representative (DR) relying on the findings of the Ld. CIT (A) submitted that the delay is inordinate and since the reason mentioned by the assessee was not sufficient in order to condone the delay, the Ld. CIT (A) rightly dismissed the appeal of the assessee in limine. The Ld. DR further submitted that the contention of the assessee is devoid of any merit and therefore the same is liable to be rejected.
We have heard the rival submissions and perused the material on record including the cases relied upon by the Ld. CIT(A) in its order and the cases relied upon by the Ld. counsel. The assessee had moved the application for condonation of delay and the contents thereof read as under:
“Reasons for bona fide delay 11. During the course of the Tribunal hearing against the order passed u/s 263 of the Act one of the member has enquired about filing an appeal before CIT (A) against the order passed u/s 143 (3) read with section 263 of the Act by the learned AO, as the appellant had not filed an appeal against the same, the Tribunal suggested that the appellant should have filed an appeal before the CIT (A) against the order passed by the learned AO u/s 143 (3) r.w.s. 263 of the Act. 12. In the light of the above suggestion, the appellant humbly accept the inadvertence on its part and accordingly preferred an appeal u/s 264 (1) (a) of the Act against the order passed u/s 143 (3) read with section 263 of the Act for AY 2008-09 before the appropriate authority i.e. your Honours.
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The appellant wishes to submit that the delay in filing the appeal is neither deliberate nor intentional but due to bona fide mistake and reasonable cause. 14. The affidavit evidencing the above mention facts has been enclosed as annexure-I 15. In this regard, the appellant wishes to draw you kind attention to the provisions of section 249 (3) of the Act, in relation to the discretionary powers vested with your Honours for admitting an appeal filed after the prescribed time limit on satisfaction that there was sufficient cause for the same. 16. Further, the Supreme Court in the case of Collector, Land Acquisition vs Mst. Katiji (163 ITR 471) has also held that pragmatic, liberal and justice oriented approach has to be taken into account while deciding the matter of condonation and cause of substantial justice has to be preferred to technically. Our Prayers In view of the above, the appellant humbly request your Honours to exercise the power vested under section 249 (3) of the Act and thereby kindly condone the delay and admit the appeal for reasons stated in the above mentioned paragraphs. We request you to take the above submission on record and kindly condone the delay. In case, Your Honours is inclined to take an adverse view, we request your Honours to present us an opportunity to explain the case in person. Should you have any questions please do let us know”.
Sub-section 5 of section 253 of the Income Tax Act provides that the Tribunal may admit appeal or permit filing of memorandum of cross- objection of respondent after expiry of relevant period of limitation referred to in sub- section 3 and 4 section 253, if it is satisfied that there was sufficient cause for not presenting it within that period. Expression “sufficient cause” employed in this section has also been used in section 5 of Indian Limitation Act, 1961. This expression has fallen for consideration before the Hon’ble High Courts as well as before the Hon’ble Supreme Court, and the Hon’ble Courts have held
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that the expression “sufficient cause” has to be considered with justice oriented approach. In N.Balakrishnan Vs. M. Krishnamurthy, (1998) 7 SCC 123, the Hon’ble Supreme Court has observed that the rules of limitation are not meant to destroy the right of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury.
In the case of Collector Land Acquisition Vs. Mst. Katiji & Others, 1987 AIR 1353, the Hon’ble Supreme Court laid down the following principles on the law governing condonation of delay:
“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. 4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. 5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk. 6. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.”
In our considered view, the contents of the application moved before the Ld. CIT(A) do not suggest that the delay in filing appeal before the Ld. CIT(A)
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has caused due to negligence or inaction on the part of the assessee. We do not see any mala fide in filing of appeal after the expiry of limitation period. Hence, in the light of the principles of law laid down by the Hon’ble Supreme Court and the High Courts relied upon by the Ld. Counsel, we allow this ground of appeal of the assessee in the interest of justice and set aside the impugned order and send the appeal back to the Ld. CIT(A) for deciding the appeal afresh on merits after hearing the assessee.
In the result, appeal filed by the assessee for assessment year 2008- 2009 allowed for statistical purposes.
Order pronounced in the open court on 27th April, 2018.
Sd/- Sd/- (G.S. PANNU) (RAM LAL NEGI) ACCOUNTANT MEMBER JUDICIAL MEMBER म ुंबई Mumbai; दिन ुंक Dated: 27/04/2018 Alindra, PS आदेश प्रतितिति अग्रेतिि/Copy of the Order forwarded to : अपील र्थी / The Appellant 1. 2. प्रत्यर्थी / The Respondent. 3. आयकर आय क्त(अपील) / The CIT(A)- 4. आयकर आय क्त / CIT 5. दिभ गीय प्रदिदनदि, आयकर अपीलीय अदिकरण, म ुंबई / DR, ITAT, Mumbai 6. ग र्ड फ ईल / Guard file. आदेशानुसार/ BY ORDER, सत्य दपि प्रदि //True Copy// उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीिीय अतिकरण, म ुंबई / ITAT, Mumbai