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Income Tax Appellate Tribunal, MUMBAI BENCHES “B”, MUMBAI
Before: Shri Joginder Singh, & Shri Ashwani Taneja
आदेश / O R D E R
Per Joginder Singh (Judicial Member) The Revenue as well as the assessee are in cross appeal for Assessment Year 2006-07 on quantum addition u/s 80IB(10) of the Income Tax Act, 1961 (hereinafter the Act), whereas, for same Assessment Year the Revenue is in appeal
against direction to the Assessing Officer to restrict the penalty imposed u/s 221(1) of the Act, being 10% of the tax demand outstanding to Rs.4,38,383/-, whereas, the assessee is in cross objection claiming that since the profit and taxes for the year under consideration will be reduced to nil, thus, no penalty is leviable u/s 221(1) of the Act for non-payment of self assessment tax.
First, we shall take up the appeal of the Revenue ( 80IB(10), w.e.f. 01/04/2005 on the housing projects approved before 01/04/2004, as per sub-clause (i) to clause (a) to section 80IB(10) of the Act.
2.1. During hearing, the ld. DR, Shri Suman Kumar, defended the addition made by the ld. Assessing Officer by arguing that the project was sanctioned in the year 2003 vide commencement certificate dated 03/07/2003 and completion certificate was issued on 02/03/2006, thus, the amendment made by the Finance Act is not applicable to the projects approved before 01/04/2004. On the other hand, Shri Pradip Kapasi, ld. counsel for the assessee defended the impugned order by claiming that, identically, in the case of sister concern, the claim of the assessee was allowed and placed reliance upon the decision in the case of Sarkar Builders (375 ITR 392)(SC). This factual assertion of the assessee was not controverted by the Revenue.
2.2. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee is engaged in the business of construction. During the relevant period, the assessee constructed four projects namely Woods, Hermitage, Meadows, Iraisa. The assessee booked the profit of the project namely “Woods”, the assessee showed the profit at Rs.10,07,55,447/-, out of which the assessee claimed deduction u/s 80IB(10) only on the profit, amounting to Rs.8,76,68,359/-, arising from sale of flats and on the remaining profit arose from sale of shops, being commercial portion, no deduction was claimed u/s 80IB(10) of the Act. The ld. Assessing Officer disallowed the claim of the assessee on the ground that the assessee has not fulfilled the conditions provided u/s 80IB(10) of the Act as commercial area was also involved in the project, which is more than 5% of the total constructed area. The claimed deduction for the residential flats was also disallowed.
2.3. On appeal, before the Ld. Commissioner of Income Tax (Appeal), the First Appellate Authority following various decisions like M/s Saroj Sales Organisation (ITA No.4008/Mum/2007) dated 24/01/2008, Brahma Associates vs JCIT, order dated 06/04/2009, Bhumiraj Homes Ltd. (ITA No.2170/Mum/2009) order dated 25/03/2011 and Hiranandani Aakruti JV (ITA No.5416/Mum/2009) order dated 30/03/2010 for the residential unit, allowed the claimed deduction u/s 80IB(10) of the Act. For the profit derived from sale of commercial area, the relief was denied on the plea that the assessee has taken two approvals for construction of residential and commercial projects, which are two projects and occupancy certificates were also obtained separately by the assessee. This issue of allowability of deduction on commercial portion will be dealt with separately. The Revenue is aggrieved and is in appeal before this Tribunal.
2.4. If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel, if kept in juxtaposition and analyzed, so far as, claimed deduction u/s 80IB(10) of the Act on the residential portion is concerned, it is apparent from the record that the assessee constructed the residential flats as per approved plans of the competent authority and there is no finding that any violation was made by the assessee in construction plan. In a later decision, the Hon'ble Apex Court in the case of CIT vs M/s Sarkar Builders 375 ITR 392 (SC) has decided the issue, wherein, the decision from Hon'ble jurisdictional High Court in the case of Brahma Associates was also considered, wherein, Hon'ble Bombay High Court has held that clause (d) has prospective operation, viz., with effect from 01/04/2005, and this legal position is not disputed by the Revenue before us. What follows from the above is that prior to 01/04/2005, the developers/assessees who had got their projects sanctioned from the local authorities as 'housing projects', even with commercial user, though limited to the extent permitted under the DC Rules, were convinced that they would be getting the benefit of 100% deduction of their income from such projects under Section 80IB of the Act. Their projects were sanctioned much before 01/04/2005. As per the permissible commercial user on which the project was sanctioned, they started the projects and the date of commencing such projects is also before 01/04/2005. The assessee before us got the plan/project approved/sanctioned on 03/07/2003, which is much before 01/04/2005, therefore, the provision will be applicable on that particular time. Thus, the Revenue cannot deny the benefit of this section applying the principle of retroactivity even when the provision has no retrospectivity. Take for example, a case where under the extant DC Rules, for shops and commercial activity construction permitted was, say, 10% and the project was also sanctioned allowing a particular assessee to construct 10% of the area for commercial purposes. The said developer started with its project much prior to 01/04/2005 with the aforesaid permissible use and the construction was at a very advanced stage as on 01/04/2005. Can it be argued by that Revenue that he is to demolish the extra coverage meant for commercial purpose and bring the same within the limits prescribed by the new provision if he wanted to avail the benefit of deduction under Section 80IB(10) of the Act. The law prevailing as on that date would be applicable because the assessee will act as per the law prevailing prior to 01/04/2005 as the assessee acted and acquired vested right thereby which cannot be taken away. It is ludicrous on the part of the Revenue authorities to expect the assessee to do something which is almost impossible 2.5. In M/s. Reliance Jute and Industries Ltd. v. C.I.T., West Bengal, Calcutta, (1980) 1 SCC 139, this Court had, no doubt, pointed out the cardinal principle of tax law that the law to be applied has to be the law in force in the assessment year. However, this is qualified by the exception when it is provided otherwise expressly or by necessary implication, as is clear from the following observations:
“6. The assessee claims a vested right under Section 24(2)(iii), as it stood before its amendment in 1957, to have the unabsorbed loss of 1950-51 carried forward from year to year until the loss is completely absorbed. The claim is based on a misconception of the fundamental basis underlying every income tax assessment. It is a cardinal principle of the tax law that the law to be applied is that in force in the assessment year unless otherwise provided expressly or by necessary implication...” In the same paragraph, the Court also remarked that 'a right claimed by an assessee under the law in force in a particular assessment year is ordinarily available only in relation to a proceeding pertaining to that year'. Thus, it clearly follows that though normally the law which is in force in the assessment year would prevail, but this is not an absolute principle as the Court itself carved out exceptions thereto by making it clear that such exception can be either express or implied by necessary implication. Even the principle which is mentioned is qualified with the words 'ordinarily available'.
2.6. On examining the scheme of sub-section (1) of Section 80IB of the Act, its historical turn around by amendments from time to time and keeping in view of the real purpose behind such a provision, we are of the view that in the peculiar scenario as projected in this provision, the aforesaid cardinal principle of tax law is not to be applied as, by necessary implication, application thereof stands excluded. For the purpose of discussing this particular issue, it is required to be noted that with effect from 01/04/2001, Section 80IB(10) stipulated that any housing project approved by the local authority before 31/03/2001 was entitled to a deduction of 100 per cent of the profits derived in any previous year relevant to any assessment year from such housing project, provided – (i) the construction/development of the said housing project commenced on or after 1/10/1998 and was completed before 31/03/2003; (ii) the housing project was on a size of a plot of land which had a minimum area of one acre; and (iii) each individual residential unit had a maximum built-up area of 1000 sq.ft., where such housing project was situated within the cities of Delhi or Mumbai or within 25 kms. from the municipal limits of these cities, and a maximum built-up area of 1500 sq.ft. at any other place.
Therefore, for the first time, a stipulation was added with reference to the date of approval, namely, that approval had to be accorded to the housing project by the local authority before 31/03/2001. Before this amendment there was no date prescribed for the approval being granted by the local authority to the housing project. Prior to this amendment, as long as the development/construction commenced on or after 1/10/1998 and was completed before 31/03/2001, the assessee was entitled to the deduction. Also by this amendment, the date of completion was changed from 31/03/2001 to 31/03/2003. Everything else remained untouched. Thereafter, by Finance Act, 2003, further amendments were made to Section 80IB(10), which read as under:
“(10) The amount of profits in case of an undertaking developing and, building housing projects approved before the 31st day of March 2005 by a local authority, shall be hundred per cent of the profits derived in any previous year relevant to any assessment year from such housing project if -
(a) such undertaking has commenced or commences development and construction of the housing project on or after the 1st day of October 1998;
(b) the project is on the size of a plot of land which has a minimum area of one acre; and (c) the residential unit has a maximum built-up area of one thousand square feet where such residential unit is situated within the cities of Delhi or Mumbai or within twenty-five kilometres from the municipal limits of these cities and one thousand and five hundred square feet at any other place.” 2.7. As can be seen from the aforesaid provision, now the only changes that were brought about were that with effect from 01/04/2002:
(i) the housing project had to be approved before 31/03/2005; and (ii) there was no time limit prescribed for completion of the said project. Though these changes were brought about by the Finance Act, 2003, the Legislature thought it fit that these changes be deemed to have been brought into effect from 01/04/2002. All the remaining provisions of Section 80IB(10) remained unchanged.
2.8. Thereafter, significant amendment, with which we are directly concerned, was carried out by Finance (No.2) Act, 2004 with effect from 01/04/2005. The Legislature made substantial changes in sub-section (10). Several new conditions were incorporated for the first time, including the condition mentioned in clause (d). This condition/restriction was not on the statute book earlier when all these projects were sanctioned. Another important amendment was made by this Act to sub-section (14) of Section 80IB with effect from 01/04/2005 and for the first time under clause (a) thereof the words 'built-up area' were defined. Section 80IB(14)(a) reads as under:
“(14) For the purposes of this section - (a) “built-up area” means the inner measurements of the residential unit at the floor level, including the projections and balconies, as increased by the thickness of the walls but does not include the common areas shared with other residential units;” Prior to insertion of Section 80IB(14)(a), in many of the rules and regulations of the local authority approving the housing project “built-up area” did not include projections and balconies. Probably, taking advantage of this fact, builders provided large balconies and projections making the residential units far bigger than as stipulated in Section 80IB(10), and yet claimed the deduction under the said provision. To plug this lacuna, clause (a) was inserted in Section 80IB(14) defining the words “built-up area” to mean the inner measurements of the residential unit at the floor level, including the projections and balconies, as increased by the thickness of the walls, but did not include the common areas shared with other residential units.
2.9. Can it be said that in order to avail the benefit in the assessment years after 1.4.2005, balconies should be removed though these were permitted earlier? Holding so would lead to absurd results as one cannot expect an assessee to comply with a condition that was not a part of the statute when the housing project was approved. We, thus, find that the only way to resolve the issue would be to hold that clause (d) is to be treated as inextricably linked with the approval and construction of the housing project and an assessee cannot be called upon to comply with the said condition when it was not in contemplation either of the assessee or even the Legislature, when the housing project was accorded approval by the local authorities.
2.10. The provisions of Section 80IB(10) mention not only a particular date before which such a housing project is to be approved by the local authority, even a date by which the housing project is to be completed, is fixed. These dates have a specific purpose which gives time to the developers to arrange their affairs in such a manner that the housing project is started and finished within those stipulated dates. The basic objective behind Section 80IB(10) is to encourage developers to undertake housing projects for weaker section of the society, inasmuch as to qualify for deduction under this provision, it is an essential condition that the residential unit be constructed on a maximum built up area of 1000 sq.ft. where such residential unit is situated within the cities of Delhi and Mumbai or within 25 kms. from the municipal limits of these cities and 1500 sq.ft. at any other place. It is the cardinal principle of interpretation that a construction resulting in unreasonably harsh and absurd results must be avoided. Clause (f) and (d) makes it clear that a housing project includes shops and commercial establishments also. But from the day the said provision was inserted, they wanted to limit the built up area of shops and establishments to 5% of the aggregate built up area or 2000 sq.ft., whichever is less. However, the Legislature itself felt that this much commercial space would not meet the requirements of the residents. Therefore, in the year 2010, the Parliament has further amended this provision by providing that it should not exceed 3% of the aggregate built up area of the housing project or 5000 sq.ft., whichever is higher. This is a significant modification making complete departure from the earlier yardstick. On the one hand, the permissible built up area of the shops and other commercial shops is increased from 2000 sq.ft. to 5000 sq.ft. On the other hand, though the aggregate built up area for such shops and establishment is reduced from 5% to 3%, what is significant is that it permits the builders to have 5000 sq.ft. or 3% of the aggregate built up area, 'whichever is higher'. In contrast, the provision earlier was 5% or 2000 sq.ft., 'whichever is less'. Therefore, it is clear that the housing project contemplated under sub-section (10) of Section 80IB includes commercial establishments or shops also. Now, by way of an amendment in the form of Clause (d), an attempt is made to restrict the size of the said shops and/or commercial establishments. Therefore, by necessary implication, the said provision has to be read prospectively and not retrospectively. As is clear from the amendment, this provision came into effect only from the day the provision was substituted. Therefore, it cannot be applied to those projects which were sanctioned and commenced prior to 01.04.2005 and completed by the stipulated date, though such stipulated date is after 01.04.2005.
2.11. These aspects are dealt with by various High Courts elaborately and convincingly in their judgments. It is not necessary to go into the detailed reasoning given by these High Courts. However, we would like to extract the following discussion from the judgment dated 25.07.2014 of the Bombay High Court in and 308 of 2012, where this very aspect is answered in the following manner:
“36. There is yet another reason for coming to the aforesaid conclusion. Take a scenario where an Assessee, following the project completion method of accounting, has completed the housing project approved by the local authority complying with all the conditions as set out in section 80-IB(10) as it stood prior to 1st April, 2005. If we were to accept the argument of the Revenue, then in that event, despite having completed the entire construction prior to 1st April, 2005 and complying with all the conditions of section 80-IB(10) as it stood then, the Assessee would be disentitled to the entire deduction claimed in respect of such housing project merely because he offered his profits to tax in the A.Y. 2005-06. In contrast, if the same Assessee had followed the work-in- progress method of accounting, he would have been entitled to the deduction under section 80-IB(10) upto the A.Y. 2004-05, and denied the same from A.Y. 2005-06 and thereafter. It could never have been the intention of the Legislature that the deduction under section 80-IB(10) available to a particular Assessee would be determined on the basis of the accounting method followed. This, to our mind and as rightly submitted by Mr. Mistry, would lead to startling results. We therefore have no hesitation in holding that section 80-IB(10) is prospective in nature and can have no application to a housing project that is approved before 31st March, 2005. As the deduction sought to be claimed under section 80-IB(10) is inseparably linked with the date of approval of the housing project, it would make no difference if the construction of the said project was completed on or after 1st April, 2005 or that the profits were offered to tax after 1st April, 005 i.e. in A.Y. 2005-06 or thereafter. We therefore find no substance in the argument of the Revenue that notwithstanding the fact that the housing project was approved prior to 31st March 2005, if the construction was completed on or after 1st April, 2005 or if the profits are brought to tax in the A.Y. 2005-06 or thereafter, the said housing project would have to comply with the provisions of clause (d of section 80- IB(10). To our mind, we do not think that the condition/restriction laid down in clause (d) of section 80- IB(10) has to be revisited and/or looked at and complied with in the assessment year in which the profits are offered to tax by the Assessee. When the Assessee claims a deduction under section 80-IB(10), the Assessee is required to comply with such a condition only if it is on the statute-book on the date of the approval of the housing project and it has nothing to do with the year in which the profits are brought to tax by the Assessee. We have come to this conclusion only because we find that clause (d) of section 80-IB(10) is inextricably linked to the date of the approval of the housing project and the subsequent development/construction of the same, and has nothing to do with the profits derived therefrom. We may hasten to add that if a particular condition is not inseparably linked to the date of approval of the housing project, different considerations would arise. However, we are not called upon to decide any such condition and hence we are not laying down any general proposition of law, save and except that clause (d) of section 80-IB(10), being a condition linked to the date of the approval of the housing project, would not apply to any housing project that was approved prior to 31st March, 2005 irrespective of the fact that the profits of the said housing project are brought to tax after the said provision was brought into force.” Considering the factual matrix and since the project was sanctioned on 03/07/2003, prior to enactment/amendment, therefore, respectfully following the decision from Hon'ble Apex Court in Sarkar Builders and Hon'ble jurisdictional High Court in Brahma Associates (supra), we find no infirmity in the conclusion of the Ld. Commissioner of Income Tax (Appeal) and more so the Department in the case of sister concern of the assessee i.e. Bhumiraj Homes Ltd. (ITA No.2170/Mum/2009) order dated 25/03/2011, the Department allowed the claim of the assessee. It is worth mentioning that the project was approved as a composite project (residential + commercial) page-5 of the paper book and completion certificate was also issued for a composite project, thus, we affirm the stand taken by the Ld. Commissioner of Income Tax (Appeal) with respect to allowability of claimed deduction for residential units of the project.
Now, we shall take up the appeal of the assessee (ITA No.8750/Mum/2011), wherein, partial denial of claim of deduction amounting to Rs.1,30,87,088/-, u/s 80IB(10) of the Act, being part of the profit derived from housing project has been challenged. The stand of the assessee is that the assessee voluntarily offered the profit derived from commercial portion/shops, on the basis of decision of the Tribunal from the Calcutta Benches. It was explained that before the Ld. Commissioner of Income Tax (Appeal), the assessee moved additional claim, however, which was denied by the First Appellate Authority. Our attention was invited to the finding of the Ld. Commissioner of Income Tax (Appeal). It was explained that the project of the assessee was approved as a single project, which includes residential as well as commercial and there is wrong finding by the Ld. Commissioner of Income Tax (Appeal) that the project was approved by way of separate sanction plans. The crux of the argument is that there are decisions in favour of the assessee on the sale of commercial area also, therefore, the deduction u/s 80IB(10) of the Act has to be allowed in full. On the other hand, the ld. DR, defended the denial of claimed deduction by claiming that there is a confusion in the area mentioned in the sanction plan, completion certificate and the order of the Ld. Assessing Officer by inviting our attention to the relevant pages.
3.1. We have considered the rival submissions and perused the material available on record. Without going into much deliberation we find that the competent authority approved the sanction plan vide letter dated 03/07/2003 (pages 5 & 6 of the paper book), wherein, there is a mention of commercial as well as residential area. The commencement certificate (page-7 and 8 of the paper book) also mentions residential as well as commercial, meaning thereby, no separate plans were approved rather the sanction plan/commencement certificate as well as occupancy certificate speaks of one composite plan, therefore, so far as the contention of the First Appellate Authority that two separate plans are there is factually incorrect. However, we find that there is a confusion in the area as in the commencement certificate dated 03/07/2003 (page-7 of the paper book), the residential area mentioned is 10491.137 mts. and the commercial area is 459.911 mts., thus, the total area comes to 10951.048 mts. At the same time, in the occupancy certificate, the residential area mentioned is 10636.203 sq.mts. and the commercial area mentioned is 536.779 sq. mts. thus, the total area comes to 11172.982 sq. mts., thus, there is a confusion in the area. Considering the totality of facts, we direct the assessee to file the necessary details before the ld. Assessing Officer and clear the factual matrix. The ld. Assessing Officer is directed to examine the claim of the assessee in accordance with law, considering the decision from Hon'ble jurisdictional High Court in Brahma Associates 333 ITR 289 (Bom.) and CIT vs Veena Developers (2015) (277 CTR 297) (SC) order dated 30/04/2015. Needless to mention here that the assessee be provided due opportunity of being heard. The assessee is at liberty to furnish necessary evidence, if any, in support of its claim, thus, this appeal of the assessee, as agreed from both sides, is allowed for statistical purposes only.
Now, we shall take up appeal of the Revenue (ITA No.1445/Mum/2012), wherein, restricting the penalty of Rs.43,25,013/-, imposed u/s 221(1) of the Act, being 10% of the tax demand outstanding, to Rs.4,38,383/- of the undisputed demand, which was not paid by the assessee has been challenged. The ld. counsel invited our attention to section 221(2) of the Act by explaining that the Assessing Officer levied penalty with respect to the assessed tax, which includes interest also, was reduced substantially. It was contended that the penalty is not leviable. On the other hand, the ld. DR, defended the penalty order.
4.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the claimed relief u/s 80IB(10) of the Act and the assessment was made by the ld. Assessing Officer at an income of Rs.10,07,55,450/-, against the declared income of Rs.1,30,87,087/-, thus, addition of Rs.8,76.68,359/- was made, while denying the claimed deduction u/s 80IB(10) of the Act. The appeal of the assessee was dismissed by the Ld. Commissioner of Income Tax (Appeal) on technical ground as the due tax was not paid. The assessee carried the matter in appeal before the Tribunal, where, the matter was restored to the Ld. Commissioner of Income Tax (Appeal). Meanwhile, the ld. Assessing Officer pressed for demand. The Assessing Officer treated the assessee in default u/s 221(1) of the Act for outstanding tax to the tune of Rs.4,32,50,133/- and accordingly levied the penalty at the rate of 10% which comes to Rs.43,25,013/-. It is noted that the major dispute was on account of allowability of deduction u/s 80IB(10). As mentioned earlier, the Ld. Commissioner of Income Tax (Appeal) as well as this Tribunal (in preceding para of this order) has allowed the claimed deduction u/s 80IB(10) on residential unit and on commercial portion restored the issue to the file of the Assessing Officer, being confusion on the area mentioned differently in different documents, thus, in our view, at least, the assessee, so far as penalty is concerned, cannot be said to be assessee in default. Section 221(2) of the Act says “where as a result of any final order the amount of tax, with respect to default in the payment of which the penalty was levied, has been wholly reduced the penalty levied shall be canceled and the amount of penalty paid shall be refunded.” In the present appeal, the substantial portion of deduction u/s 80IB(10) has been decided in favour of the assessee and the commercial portion/shops, due to confusion of the area has been sent to the file of the ld. Assessing Officer, therefore, the basis on which penalty was imposed, no more remains in existence, therefore, we find merit in the contention of the assessee, consequently, the conclusion drawn in the impugned order is partially correct.
Now, we shall take up the cross objection of the assessee (C.O. No.60/Mum/2013), wherein, there is delay of 9 days. The assessee has moved application for condonation of delay, supported by an affidavit, stating the reasons of delay in filing the cross objection before this Tribunal. On the other hand, the ld. DR, contended that there is no bona-fide reason for the delay, therefore, delay many not be condoned.
5.1. We have considered the rival submissions and perused the material available on record. In view of the assertions made by the ld. respective counsel, so far as, condonation of delay is concerned no doubt filing of an appeal/cross objection is a right granted under the statute to the assessee and is not an automatic privilege, therefore, the assessee is expected to be vigilant in adhering to the manner and mode in which the appeals/cross objections are to be filed in terms of the relevant provisions of the Act. Nevertheless, a liberal approach has to be adopted by the appellate authorities, where delay has occurred for bona-fide reasons on the part of the assessee or the Revenue in filing the appeals. In matters concerning the filing of appeals, in exercise of the statutory right, a refusal to condoned the delay can result in a meritorious matter being thrown out at the threshold, which may lead to miscarriage of justice. The judiciary is respected not on account of its power to legalize in justice on technical grounds but because it is capable of removing injustice and is expected to do so.
5.2. The Hon’ble Apex Court in a celebrated decision in Collector, Land Acquisition vs Mst. Katiji & Ors. 167 ITR 471 opined that when technical consideration and substantial justice are pitted against each other, the courts are expected to further the cause of substantial justice. This is for the reason that an opposing party, in a dispute, cannot have a vested right in injustice being done because of a non- deliberate delay. Therefore, it follows that while considering matters relating to the condonation of delay, judicious and liberal approach is to be adopted. If sufficient cause is found to exist, which is bona-fide one, and not due to negligence of the assessee, the delay needs to condoned in such cases. The expression ‘sufficient cause’ is adequately elastic to enable the courts to apply law in a meaningful manner, which sub-serves the end of justice- that being the life purpose of the existence of the institution of the courts. When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred. The Hon’ble Apex Court in Vedabhai vs Santaram 253 ITR 798 observed that inordinate delay calls of cautious approach. This means that there should be no malafide or dilatory tactics. Sufficient cause should receive liberal construction to advance substantial justice. The Hon’ble Apex Court in 167 ITR 471 observed as under:-
“3. The legislature has conferred the power to condone delay by enacting section 51 of the Limitation Act of 1963 in order to enable the courts to do substantial justice to parties by disposing of matters on de merits. The expression “sufficient cause” employed by the legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice that being the life-purpose of the existence of the institution of courts. It is common knowledge that this court has been making a justifiably liberal approach in matters instituted in this court. But the message does not appear to have percolated down to all the others courts in the hierarchy.”
5.3. Furthermore, the Hon'ble Supreme Court in the case of Vedabai Alia Vaijayanatabai Baburao Patil vs. Shantaram Baburao Patil 253 ITR 798 held that the court has to exercise the discretion on the facts of each case keeping in mind that in construing the expression ‘sufficient cause’, the principle of advancing substantial justice is of prime importance. The court held that the expression “sufficient cause” should receive liberal construction.
5.4. The decision of the Tribunal in People Infocom Private Ltd. v/s CIT (ITA No.210/Mum/2013) order dated 19/05/2016, M/s Neutron Services Centre Pvt. Ltd vs ITO (ITA No.1180/Mum/2012) order dated 18/02/2016, Shri Saidatta Coop-. Credit Society Ltd. v/s ITO (ITA No.2379/Mum/2015) order dated 15/01/2016 and Mr. Nikunj Barot (Prop. Enigma) vs ITO (ITA No.4887/Mum/2015) order dated 06/01/2016, wherein, substantial delay was condoned, supports the case of the present assessee. Having made the aforesaid observation and various decisions discussed hereinabove, including from Hon’ble Apex Court, the circumstances narrated by the assessee, wherein, he has stated the reasons which caused the delay, therefore, the delay is condoned.
5.5. So far as, merits of the cross objection is concerned, since the assessee has challenged partial confirmation of penalty through C.O. No.60/Mum/2013) (arising out of and we have held that penalty does not survive, therefore, the cross objection of the assessee deserves to be allowed, because the basis for imposing penalty, now, no more remain in existence, consequently, we direct the ld. Assessing Officer to delete the full penalty imposed u/s 221(1) of the Act, thus, the appeal of the Revenue is dismissed and the cross objection of the assessee is allowed. b. is allowed for statistical purposes. c. ITA No.1445/Mum/2012 is dismissed. d. C.O. No.60/Mum/2013 is allowed. This Order was pronounced in the open court in the presence of ld. representatives from both sides at the conclusion of the hearing on 19/12/2016.