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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI D.T. GARASIA
Per D.T. Garasia, Judicial Member:
The present appeal has been preferred by the assessee against the order dated 29.04.16 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2006-07.
The short facts of the case are as under: The assessee is a firm. During the relevant year under consideration the assessee engaged in business of hiring of audio- visual equipments. The assessment order u/s 143(3) of the Act was passed. The revision order was under section 263 of the Act. Under section 263 of the Act, the Assessing Officer (hereinafter referred to as the AO) was directed to examine the claim of depreciation
2 M/s. Skylark Video Vision allowable to the assessee on LCD computerized multimedia projects. The assessee had claimed depreciation on the same @ 60% while the Ld. CIT(A) was of a view that correct rate of depreciation should be 15%. The assessee did not agitate under section 263. In consequence to section 263, the depreciation was allowed @ 15% and assessee did not appeal before the Commissioner. The assessee filed the appeal on 26.03.14 which was delayed nearly 25 months. Therefore, Commissioner did not accept the appeal of the assessee and delay was not condoned. Therefore, assessee is in appeal before me.
During the course of hearing, the Ld. A.R. relied upon the jurisdictional High Court in the case of Vijay Vishin Meghani & ors. in & 508 of 2015 wherein the High Court has condoned the delay on the ground that while condoning the delay it is permissible for court in his discretion to impose the cost eventually the right and equity balances. To render substantial justice and not to enrich the Revenue that cost has been imposed. It is not therefore, a case where a stay has to be allowed to retain any benefit or has been benefitted by any such direction. Therefore, the court has condoned the delay by imposing the cost of Rs.25 lakhs in both the appeals. Therefore, the appeal may be allowed. In this appeal there is delay of 25 months. Therefore, reasonable cost may be imposed.
On the other hand, the Ld. D.R. objected to it.
3 M/s. Skylark Video Vision 5. Having heard both the parties and looking to the facts and circumstances of the case, we, following the jurisdictional decision of High Court in the case of Vijay Vishin Meghani & ors. in ITA No.493 & 508 of 2015 has held as under: “20. In Nirmala Devi (Supra), the Hon’ble Supreme Court held as under:
“5. The Accident Claims Tribunal pronounced its award on September, 15, 1976, after making the necessary computations and deductions. The appeal had to be filed on or before January 19, 1977 but was actually filed 30 days later. Counsel for the petitioner is stated to have made the mistake in the calculation of the period of limitation. He had intimated the parties accordingly with the result that the petitioner was misled into instituting appeal late. The High Court took the view that the lawyers ignorance about the law was no ground for condonation of delay. Reliance was placed on some decisions of the Punjab High Court and there was reference also to a ruling of the Supreme Court in AIR 1972 SC 749. The conclusion was couched in these words:
"The Assistant Divisional Manager of the Company- appellant is not an illiterate or so ignorant person who could not calculate the period of limitation. Such like appeals are filed by such companies daily. The facts of this case clearly show, as observed earlier, that the mistake is not bona fide and the appellant has failed to show sufficient cause to condone the delay."
We are not able to agree with this reasoning. A company relies on its Legal Adviser and the Manager's expertise is in company management and not in law. There is no particular reason why when a company or other person retains a lawyer to advise it or him on legal affairs reliance should not be placed on such counsel. Of course, if there is gross delay too patent even for layman or if there is incomprehensible indifference the shield of legal opinion may still be vulnerable. The correct legal position has been explained with reference to the Supreme Court decision in a judgment of one of its in AIR 1971 Ker. 211 (at P. 215):
“The law is settled that mistake of counsel may in 4 M/s. Skylark Video Vision certain circumstances be taken into account in condoning delay although there is no general proposition that mistake of counsel by itself is always a sufficient ground. It is always a question whether the mistake was bona fide or was merely a device to cover an ulterior purpose such as laches on the part of the litigant or an attempt to save limitation in an underhand way. The High Court unfortunately never considered the matter from this angle. If it had, it would have seen quite clearly that there was no attempt to avoid the Limitation Act but rather to follow it albeit on a wrong reading of the situation.”
“The High Court took the view that Mr. Raizada being an Advocate of 34 years' standing could not possibly make the mistake in view of the clear provisions on the subject of appeals existing under Section 39(1) of the Punjab Courts Act and therefore, his advice to file the appeal before the District Court would not come to the rescue of the appellant under Sec. 5 of the Limitation Act. The Supreme Court upset this approach."
"I am of the view that legal advice given by the members of the legal profession may sometimes be wrong even as pronouncement on questions of law by courts are some times wrong. An amount of latitude is expected in such cases for, to err is human and lay men, as litigants are, may legitimately lean on expert counsel in legal as in other departments, without probing the professional competence of the advice. The court must of course, see whether, in such cases there is any taint of mala fides or element of recklessness or ruse. If neither is present, legal advice honestly sought and actually given, must be treated as sufficient cause when an application under Section 5 of the Limitation Act is being considered. The State has not acted improperly in relying on its legal advisers."
We have clarified the legal position regarding the propriety and reasonableness of companies and other persons relying upon legal opinion in the matter of computation of limitation since it is a problem which may arise frequently. If Legal Adviser's opinions are to be subjected by company managers to further legal scrutiny of their own, an impossible situation may arise. Indeed Government, a large litigant in this country, may find
The above sums up the approach of a Court rendering justice according to law.
We find from paragraph 13 of the order, but for this relevant factors and tests, everything else has been brought into the adjudication by the Tribunal. The Tribunal though aware of these principles but possibly carried away by the fact that the delay of 2984 days is incapable of condonation. That is not how a matter of this nature should be approached. In the process the Tribunal went about blaming the assessee and the professionals and equally the Department. To our mind, therefore, the Tribunals order does not meet the requirement set out in law. The Tribunal has completely misdirected itself and has taken into account factors, tests and considerations which have no bearing or nexus with the issue at hand. The Tribunal, therefore, has erred in law and on facts in refusing to condone the delay. The explanation placed on affidavit was not contested nor we find that from such explanation can we arrive at the conclusion that the assessee was at fault, he intentionally and deliberately delayed the matter and has no bona fide or reasonable explanation for the delay in filing the proceedings. The position is quite otherwise.
In the light of the above discussion, we allow both the appeals. We condone the delay of 2984 days in filing the appeals but on the condition of payment of costs, quantified totally at Rs.50,000/-. Meaning thereby, Rs.25,000/- plus Rs.25,000/- in both appeals. The costs to be paid in one set to the respondents within a period of eight weeks from today. On proof of payment of costs, the Tribunal shall restore the appeals of the assessee to its file for adjudication and disposal on merits. We clarify that all contentions as far as merits of the claim are kept open. We have not expressed any opinion on the same.”
6. Respectfully following the decision, I direct the assessee to deposit of Rs.5000/- in Prime Minister’s Relief Fund. On depositing this amount, I condone the delay.
6 M/s. Skylark Video Vision 7. As assessee has already paid the cost, I restore this matter back to the file of the Ld. CIT(A) and the Ld. CIT(A) is directed to decide the appeal on merit.
In the result, appeal is allowed.
Order pronounced in the open court on 30.01.2018.