GOLDQUEST INTERNATIONAL PVT. LTD.,CHENNAI vs. DCIT, CHENNAI

आदेश / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER:

The appeal filed by the assessee is directed against order of the Commissioner of Income-tax (Appeals)-6, Chennai in ITA No.160/CIT(A)-6/2014-15, Dt 26.11.2015 for the assessment year

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2009-2010 passed u/s.143(3) r.w.s.147 and 250 of the Income Tax

Act, 1961 (herein after referred to as ‘the Act’).

The assessee has raised only substantive ground that the 2.

Commissioner of Income Tax (Appeals) erred in not condoning the

delay of 52 days in filing of appeal and overlooking genuine reasons

and dismissed the appeal on technical grounds.

The Brief facts of the case that the assessee company is in 3.

the business of Multilevel marketing of numismatics and other

products, could not file return of income due to technical problems

within due date. The ld. Assessing Officer on verification found the

assessee has sales of �7,07,94,947/- for the financial year 2008-09 as

against �154,95,57,726/- as on 31.03.2008 for the financial year

2007-08. The Assessing Officer issued notice u/s.148 of the Act and in

compliance to notice, the return of income was filed with total income

of �24,25,460/- and was processed u/s.143(1) of the Act on

12.11.2013, the company filed adjournment letter stating details called

for are in the custody of Managing Director who is out of

headquarters and the Assessing Officer issued summons u/s.131 of the

Act on 19.03.2014 was returned unserved with endorsement of ‘’not

available at this address’’. The Assessing Officer observed Audit

report of the company referred at page 2 as under:-

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“Further as per the Auditor’s report, it has been stated that ‘’we do not express any opinion on whether the accounts give a true and fair view in conformity with the accounting principles generally accepted in India. As the re-assessment is getting time barred by 31.03.2014 and as the director of the company had not responded to any notices including summon issued, the assessment is completed after discussion with the Authorirsed Representative exparte’’

Based on the observations of the statutory Auditor and available

material, the Assessing Officer completed assessment by disallowing

expenses as no satisfactory explanations was furnished that expenses

are exclusively incurred for the purpose of business �47,65,485/-. On

perusal of the fixed assets of the company, the ld. Assessing Officer

found the assessee claimed depreciation �12,50,223/-on building at

Mumbai and company could not substantiate with credible evidence

of operations. The assessee company disclosed in financial statements

other income �29,53,756/- pertaining to dividend from shares and

mutual funds exempted u/s.10(34) and 10(35) of the Act and profit on

sale of investment of �52,24,352/-. The assessee has incurred certain

indirect expenses for making investments and ld. Assessing Officer

relied on the Delhi Tribunal decision of Escorts Ltd vs. ACIT 102 TTJ

522 and disallowed indirect expenses and management expenses

estimating at 1% of dividend income as in earlier year assessment

2007-08 in assessee’s own case. With these above disallowance the

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Assessing Officer passed assessment order u/s.143(3) r.ws. 147 on

25.03.2014 with assessed income of �84,70,705/-. Aggrieved by the

order, the assessee filed an appeal before the Commissioner of Income

Tax (Appeals).

In the appellate proceedings, the ld. Authorised 4.

Representative raised grounds on the genuiness of expenses were the

ld. Assessing Officer has overlooked the nature and commercial

expediency of business which was considered in earlier assessments.

The Commissioner of Income Tax (Appeals) found that the assessee

company has mentioned the receipt of the assessment order on

02.04.2014. As per the provisions of Sec.249 of the Act, the assessee

has to file an appeal within a period of 30 days from the date of

intimation of order. Whereas the appeal was filed on 25.06.2014 and

condonation petition was filed explaining the reasons and

circumstances referred at page 2 of CIT order as under:-

‘’1. The assessment order and demand notice for the assessment year 2009-10 were served on someone on 02.04.2014. On that basis, the appeal should have been filed on or before 03.05.2014.

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The Commissioner of Income Tax (Appeals) considered the findings of

the Assessing Officer and without going into merits as the assessee

could not explain circumstances and substantiate the delay of 52 days

in condonation petition and ignored the fact that the Managing

Director of the Company was under detention by Andhra Pradesh

Police for alleged violation of money circulation scheme from

16.02.2014 and released on 02.06.2014. The ld. Commissioner of

Income Tax (Appeals) observed that the assessee does not have

sufficient cause for delay and affidavit filed is not in order as per the

law and there is no due diligence of the provisions of the Act and

dismissed the appeal in limine without condoning 52 days delay.

Aggrieved by the order of Commissioner of Income Tax (Appeals), the

assessee assailed an appeal before Tribunal.

the assessee company in filing appeal as the original demand notice

was served on person not authorized therefore exact date of service

could not be obtained and further Managing Director of the Company

was under detention by Andhra Pradesh police from 16.02.2014. The

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Managing Director alone is authorized to sign the appeal papers and

there is no other Director was authorized in the absence of Board of

Directors and as per the assessment order, The Auditor do not express

any opinion on true and fair view of the accounts. The assessee

company passed through genuine hardship and have fair chances of

succeeding in appeal on merits and produced order copy of criminal

petition of detention of Managing Director.

Contra, the ld. Departmental Representative vehemently 6.

opposed for condoning the delay.

We heard the rival submissions and perused the material on 7.

record and judicial decisions cited. Before us, the ld. Authorised

Representative of the assessee reiterated submissions made before

the Assessing Officer and also on delay in filing the appeal in appellate

proceedings. Considering the submissions of Authorised

Representative on delay, we highlight the decision of the Hon'ble

Supreme Court in the case of N. Balakrishnan V. M. Krishnamurthy,

AIR 1998 SC 3222 observed as under:-

"11. Rules of limitation are not meant to destroy the right of parties. They are meant to see that parties do not resort 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. Law of limitation fixes a life span for such legal remedy for the redress of the legal injury so suffered. Time is precious and the wasted time would never revisit. During efflux of time newer causes would sprout up necessitating newer

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persons to seek legal remedy by approaching the courts. So a life span must be fixed for each remedy. Unending period for laundering the remedy may lead to unending uncertainty and consequential anarchy. Law of limitation is thus founded on public policy. It is enshrined in the maxim interest reipublicae up sit f inis litium ( it is for the general welfare that a period be put to litigation). Rules of limitation are not meant to destroy the right of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time. 12. A court knows that refusal to condone delay would result in foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is always deliberate. This Court has held that the words 'sufficient cause' under section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shakuntala Devi Jain V. Kuntal Kumari, AIR 1969 SC 575 and State of West Bengal V. the Administrator, Howah Municapacity, AIR 1972 SC 749."

Further, we refer the case of State of West Bengal vs. Administrator,

Howrah Municipality, AIR 1972 SC 749, the Supreme Court held that

expression "sufficient cause" should receive a liberal construction so as

to advance the purpose of justice particularly when there is no motive

behind delay. This necessarily implies that parties must act bonafidely,

expeditiously and with due care. A casual or a negligent litigant who

has acted with utter irresponsible attitude, cannot claim the

condonation of delay in law when the right has accrued to the other

side. The expression "sufficient cause" will always have relevancy to

reasonableness. The actions which can be condoned by the Court

should fall within the realm of normal human conduct or normal

conduct of a litigant. It is neither expected nor can it be a normal

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conduct of a public servant or a litigant that they would keep the files

unmoved, unprocessed for months together on their tables. How the

power of condonation of delay is to be exercised, has been explained

by the Apex Court in the case of Collector, Land Acquisition v Mst.

Katiji And Others- 167 ITR 471 (SC) as under:- ( Pages 472 ).

" 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 sub serves the ends of justice that being the life-purpose of the existence of the institution of courts. It is common knowledge that the 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 other courts in the hierarchy. And such a liberal approach is adopted on principle as it is realized that: 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 wouldbe decided on merits after hearing the parties. 1. " Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period." ( Page 473) 3. " Every day's delay must be explained" does not mean that 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 and pragmatic manner. 4. When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have

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vested right in injustice being done because of a nondeliberate delay. 5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of malafides. A litigant does not stand to benefit by resorting to delay. In f act, he runs serious risk. 6. It must be grasped that the 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."

We consider the factual aspects and merits of the case as the delay in

filing the appeal was not wanton as per condonation petition filed in

appellate proceedings. Further on perusal of record of the events

from the assessment proceedings to the Tribunal, the company seems

to be passing through serious business irregularities and also

Managing Director was detained. The submissions of ld. Authorised

Representative on genuine and sufficient reasons for delay can not be

ignored. The Managing of Director was detained by the Andhra

Pradesh Police and ld. Authorised Representative produced copy of order of Metropolitan Sessions Judge, Vijayawada dated 30th May,

2014 as supportive evidence of dentation. So, considering the reasons

and also detention of the Managing Director during the period of

assessment, we find there is sufficient cause in the factual

circumstances. We condone the delay and direct the ld.Commissioner

of Income Tax (Appeals) to adjudicate appeal on merit.

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Order pronounced on Wednesday, the 30th day of March, 2016, at Chennai.

Sd/- Sd/- (चं� पूजार�) (जी. पवन कुमार) (CHANDRA POOJARI) (G. PAVAN KUMAR) �या�यक सद�य/JUDICIAL MEMBER लेखा सद�य /ACCOUNTANT MEMBER

चे�नई/Chennai �दनांक/Dated: 30.03.2016 KV

आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 3. आयकर आयु�त (अपील)/CIT(A) 5. �वभागीय ��त�न�ध/DR 2. ��यथ�/Respondent 4. आयकर आयु�त/CIT 6. गाड� फाईल/GF