DEVI MARINE FOOD EXPORTS P LTD.,CHENNAI vs. ITO, 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)-1, Chennai in ITA No.149/07-08, Dt. 16.09.2015 for the assessment year 1993-94.

ITA No. 2167/Mds/2015. :- 2 -:

The assessee has raised grounds against the Commissioner 2.

of Income Tax (Appeals) erred in not condonoing the delay in filing the

appeal and also genuine reasons were overlooked and dismissed on

technical grounds.

business of export of sea foods. For the assessment year 1993-94 the

assessee filed return of income and claimed deduction u/s.80HHC of

the Act �60,52,478/-. While claiming deduction the assessee ignored

negative profits from the business and claimed deduction on 90% of

export incentive and the assessment was completed u/s.143(3) of the

Act on 27.03.2002, were the ld. Assessing Officer calculated deduction

u/s.80HHC as Nil fallowing three limbs of provisions. Aggrieved by the

order of the Assessing Officer, the assessee preferred an appeal before

the Commissioner of Income Tax (Appeals).

The Commissioner of Income Tax (Appeals) by order dated 4.

05.12.2002 observed that netting should not be done and confirmed

the exclusion of 90% additional sale consideration. Subsequently, the

Assessing Officer gave effect to the order of Commissioner of Income

Tax (Appeals) in consequential order dated 18.02.2003 and calculated

deduction u/s.80HHC of the Act at �24,97,935/-. Aggrieved by the

ITA No. 2167/Mds/2015. :- 3 -:

order of the Commissioner of Income Tax (Appeals) dated

05.12..2002 filed appeal to Tribunal.

The assessee on the issue of additional sale consideration 5.

preferred an appeal and was adjudicated by the Tribunal in ITA

Nos.352 to 356/2003, order dated 9.02.2004 and granted relief to the

assessee. The Assessing Officer passed consequential order dated

31.03.2004 to give relief as per ITAT order and allowed further

deduction u/sec.80HHC amounting to �35,54,543/- and total

aggregate deduction u/sec. 80HHC amounted to �60,52,478/-.

Similarly, the Department also filed an appeal before the 6.

Tribunal against the order of Commissioner of Income Tax (Appeals).

The Tribunal in ITA No.694 & 695/2003 dated 07.07.2006 held that

loss from one limb of the business should be set off against the profit

from other limb of the business. While giving effect to the ITAT order,

the Assessing Officer passed Revision order on 31.10.2006 with not

complying the directions of the Tribunal and restricted deduction

u/s.80HHC to the extent of �27,19,344/- only. The appeal in dispute is

of the order of the ld. AO dated 31.10.2006 giving effect to the

direction of Tribunal in ITA No.694 and 695/2003, dated 07.07.2006.

Aggrieved by the above order, the assessee preferred an appeal and

raised the grounds before the Commissioner of Income Tax (Appeals)

ITA No. 2167/Mds/2015. :- 4 -:

and also filed condonation petition for delay. The ld. AR stated that

order dated 31.10.2006 was received and due to reasons beyond the

control of the assessee, the appeal was filed on 10.10.2007 with the

delay of 309 days. The assessee has submitted the genuine reasons

for delay in filing the appeal before the Commissioner of Income Tax

(Appeals) as under:-

AFFIDAVIT. I, Abdul Razzak Ganj, son of Adam Bhai Ganj, residing at Plot No.145, Ist Street, Sandeep Avenue, Neelangarai, Chennai 600 041, aged about 62 years and residing at

Do hereby solemnly and sincerely affirm and state as follows:- I am one of the Directors of the Petitioner Company and am well acquainted with the facts of the case relating to the assessment year 1993-94, competent to swear to this affidavit. I state that the impugned order dated 30-10-2006 was received in our office and immediately it was sent to our legal/accounts department for taking professional consultation to decide the further course of action. I state that the impugned order was passed while giving effect to the order of the Income Tax Appellate Tribunal dated 7.7.2006. I state that while giving effect to the order of the Appellate Tribunal, the deduction u/s.80 HHC of the Act was allowed to the extent of ₹27,19,344/- as against ₹60,52,478/- inasmuch as the proportionate enhancement of the export incentives received consequent to the exports routed through Export House was not granted due to oversight and mistake by the Assessing Officer. I state that in fact while giving effect to the order of the Appellate Tribunal rendered while disposing off the appeal preferred by the department for the very same Assessment Year, the Assessing Officer on 31-3-2004 had granted the deduction u/s. 80 HHC of the Act to the extent of ₹60,52,478/-.

I state that the mistake in the impugned order being apparent from the record it was professionally advised to file a petition for

ITA No. 2167/Mds/2015. :- 5 -:

rectification in terms of Section 154 of the Act and accordingly. a petition was filed before the Assessing Officer pointing out the mistake committed on 23-3-2007. However, the Assessing Officer while considering the rectification petition had passed an order on 27-9-2007 received on 3-10-2007 and wherein it was held that the rectification as prayed for was not maintainable for the reasons stated therein. I state that immediately after taking professional advice the present appeal was filed against the impugned order belatedly by 309 days and further it is stated that the filing of the appeal against the impugned order dated 31-10-2006 was suggested professionally in view of the fact of the scope of the appeal against the rectification order dated 27-9-2007 was narrow and limited. In any event, I state that pursuing an alternate remedy envisaged in the act would constitute sufficient cause to consider the prayer for condonation In favour of the assessee. I state that the Petitioner Company under bonafide circumstances had approached the Assessing Officer by invoking the rectification proceedings in view of the mistake in the calculation of deduction u/s.80HHC of the Act was apparent from the record. I state that the decision of the Madras High Court reported in 153 ITR 596 would fortify and approve the stand of the Petitioner Company herein. Under these circumstances, it is prayed that the delay of 309 days in filing the above appeal relating to the Assessment Year 1993-94 may be condoned and the decision be rendered on the merits of the grounds of appeal forming part of the statutory Form No.35 in the interest of justice.

In the appellate proceedings, the Commissioner of Income Tax

(Appeals) after considering the facts and reasons for delay in filing the

appeal observed at para 4 of CIT order as under:-

I have carefully considered the facts in I issue, the view taken by the AO, the arguments advanced by the Appellant and material on record. The order appealed against is a giving effect order of the Hon'ble ITAT with regard to deduction u/s 80HHC by the AO. The appellant is an existing assessee engaged in the business of export of sea foods and has been claiming deductions u/s 80HHC hitherto. The appellant is also agitating issues

ITA No. 2167/Mds/2015. :- 6 -:

arising from the claim and on the method of computations of claims made by it u/s 80HHC in various forums including the Hon'ble High Court. It is no gain saying that the appellant is a established business house enjoying the employment and professional advice of competent professionals including accountants, legal advisors, tax consultants etc. The plea taken by the appellant that the delay was bonafide cannot be accepted. Every assessee is duty bound to know the provisions of law and to that extent ignorance of law is not a ground for condonation of delay as has been held by the Jurisdictional Court is CIT v. India Gospel Fellowship Trust (Mad) 331 ITR 283. Even in a case where ,there in inordinate delay the onus is on the part of the assessee to show reason for delay on the last day of limitation period and thereafter for each day of delay as has been held by the Hon'ble Apex Court in Rankak & Others v, Rewa Coal, Fields Ltd AIR 1962 SC 361, Madhu Dadha v. ACIT (Mad) 317 ITR 458. In this case the appellant has not discharged this onus either. To conclude the appellant also fails the test that made it obligatory on the appellant to have acted with reasonable diligence in the prosecuting of his appeal as has been held in Brij Inder Singh v. Kanshi Ram AIR 1917 PC 156 and M. Loganathan v. CIT (Mad) 302 ITR 139. On the basis of the foregoing I am of the considered view that this is not a fit case for condonation of delay of 309 days of the appeal. In the result, the appeal is dismissed. The ld. Commissioner of Income Tax (Appeals) relied on the judicial

decisions and dismissed the condonation petition.

ITA No. 2167/Mds/2015. :- 7 -:

Before us, the ld. Authorised Representative of the assessee 7.

reiterated his submissions made before the Assessing Officer and also

the submissions made before the ld. Commissioner of Income Tax

(Appeals) on the issue of delay in filing the appeal and on merits. The

ld. Authorised Representative submitted that Rectification 154 petition

filed by the assessee was dismissed by order dated 27.09.2007. On the

issue of submission 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 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

ITA No. 2167/Mds/2015. :- 8 -:

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

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

ITA No. 2167/Mds/2015. :- 9 -:

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 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."

ITA No. 2167/Mds/2015. :- 10 -:

We considering the factual aspects of the case, the delay in filing the

appeal was not a wonton act as sworn in the affidavit by the director

of the assessee company that they were under bonafide belief that

Sec.154 petition was filed and the assessee is praying remedy

u/sec154 with a hope that the matter will be solved but the

ld.Assessing Officer rejected petition for various reasons observed in

his order at page no.2.

“Subsequent to the revision order dated 31.10.2006 (giving effect to the order of ITAT dated 07.7.2006) raising a demand of �54,91,561/- the assessee paid a sum of �3,00,000/- on 13.02.2007. Subsequently on 23.03.2007, the assessee has filed a petition u/s.154 seeking to rectify the incorrect computation of deduction u/s.80HHC. In view of the fact, the computation of deduction u/s.80HHC in the revision order was on the lines of the computation made in the original assessment order (which was never contested in 2 stages of appeal) the computation seems to be in order. Further, in view of the reasoning as brought out above, your petition for revising the revision order dated 31.10.2006 is not maintainable and hence rejected.

of Supreme Court in the case of Mela Ram & Sons vs. CIT 29 ITR 607

and we found there is sufficient cause considering the factual

circumstances in the interest of justice, we direct the Commissioner of

Income Tax (Appeals) to condone the delay and admit the appeal and

ITA No. 2167/Mds/2015. :- 11 -:

adjudicate the grounds on merits after giving adequate opportunity of hearing to the assessee.

In the result, the appeal of the assessee is partly allowed for 9. statistical purpose.

Order pronounced on Thursday, the 25th day of February, 2016, at Chennai.

Sd/- Sd/- (चं� पूजार�) (जी. पवन कुमार) (G. PAVAN KUMAR) (CHANDRA POOJARI) �या�यक सद�य/JUDICIAL MEMBER लेखा सद�य /ACCOUNTANT MEMBER चे�नई/Chennai �दनांक/Dated:25.02.2016 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