B.G.JAIN INVESTMENT PVT.LTD.,,SURAT vs. INCOME TAX OFFICER WARD 1(1)(2), SURAT

At the outset, Learned Counsel for the assessee, informs the Bench that appeal filed by the assessee in case of M/s B. G. Jain Investment Pvt. Ltd, in ITA No.44/SRT/2019, for assessment year 2012-13, is barred by limitation by two hundred thirty seven (237) days. The Ld. Counsel for the assessee submitted before the Bench, a petition for condonation of delay. The contents of the petition are reproduced below: “(1) The appeal is delayed by 237 days as per the particulars given below: Date of communication of order of the learned CIT(A) 9-4-2018 Appeal ought to have been filed 8-6-2018 Appeal filed on 31-1-2019 Delay in days 237 days (2) Primarily, delay occurred because the key director viz. Mr. Babulal G. Jain who was looking after tax matters and overall affairs, was under the judicial custody along with his elder son Devendra B. Jain in respect of operations by the Central Bureau of Investigation (CBI) in the matter of bank loan default by Nakoda Limited. Copy of arrest memo and the bail order in case of Babulal G. Jain and his son Devendra B. Jain are attached at Annexure A. Name of the person Date of arrest by the CBI Date of bail order Babulal Jain 23-4-2017 24-7-2018 Devendra B. Jain 23-4-2017 1-11-2018 (3) Post release, naturally, Mr. Babulal Jain was totally engrossed only in one-point agenda to get his son Devendra B. Jain released from the custody and spent almost his entire time in Mumbai. (4) After release of his son Devendra B. Jain, they started looking into the tax appeal matters where after realizing, they filed appeal before the Tribunal on 31-1-2019. (5) The cause given above is a bona fide one. The assessee is interested in pursuing the appeal, hence the appeal before the Tribunal was filed as soon as Mr. Babulal Jain were settled to an extent. (6) The appellant relies on following authorities for condonation of delay.

On the other hand, ld DR for the Revenue opposed the plea taken by the assessee and argued that such huge delay should not be condoned.

We have heard both the parties on this preliminary issue. We note that delay occurred because the key director viz. Mr. Babulal G. Jain who was looking after tax matters and overall affairs, was under the judicial custody (Jail) along with his elder son Mr. Devendra B. Jain in respect of operations by the Central Bureau of Investigation (CBI) in the matter of bank loan default by Nakoda Limited. The ld Counsel submitted before the Bench the copy of arrest memo and the bail order in case of Mr. Babulal G. Jain and his son Mr. Devendra B. Jain. Post release, Mr. Babulal Jain was totally engrossed only in one-point agenda to get his son Mr. Devendra B. Jain released from the custody and spent almost his entire time in Mumbai. After release of his son, Mr. Devendra B. Jain, they started looking into the tax appeal matters where after realizing, they filed appeal before the Tribunal on 31- 01-2019. Based on factual position as narrated above, we note that assessee has explained the sufficient cause.

The words "sufficient cause", as appearing in section 5 of Limitation Act, should receive a liberal construction when the delay is not on account of any dilatory tactics, want of bona fides, deliberate inaction or negligence on the part of the applicant. The words "sufficient cause” for not making the application within the period of limitation" should be understood and applied in a reasonable, pragmatic, practical and liberal manner, depending upon the facts and circumstances of the case. The decisive factor in condonation of delay is not the length of delay but sufficiency of a satisfactory explanation. We note that director of the assessee- company, who used to look taxation matters, was in jail, therefore appeal could not be filed on time and this is a sufficient cause as narrated by the assessee in his petition for condonation

The Grounds of appeals raised by the assessee in the lead case (in ITA No.582/SRT/2019) are as follows: “(I) Addition of Rs.35,00,00,000/- (1) The learned CIT(A) erred in confirming the above addition when the appellant had already furnished confirmations, Balance-sheets, PAN, Income Tax acknowledgments and bank statements etc. of all the company applicants and therefore, once their identities, creditworthiness and genuineness was established, the CIT(A) was not justified in confirming the addition. (2) The appellant further submits that the learned CIT(A) has not appreciated the difference between the nature of evidence required in case of normal deposit/loan and share application as has been made out by the various judgments cited and not considered. (3) On the facts and circumstances of the case and as per law, the addition of Rs.35,00,00,000/- is required to be deleted. (4) Without prejudice to the above, with learned CIT(A)’s observation in clause c of para 7.3 that it is only the Nakoda Ltd. (Source of financing available) who funded the money through layering to the appellant, no case gets built for sustaining the addition. (II) Miscellaneous: The appellant craves leave to add, alter or vary any for the grounds of appeal.” 9. Additional ground raised by the assessee in ITA No. 582/SRT/2019 for AY.2012-13 are as follows: “Validity of the assessment: (1) With the appellant not having been provided statements and information collected behind the bank including report of the Deputy Director of Income Tax (Inv.), Mumbai and the report of the inspector and with no opportunity given to cross examination, the addition made in defiance of natural justice, more particularly in view of the decision of Andaman Timber Industries (281-CTR-241); hence, the addition is required to be deleted. (2) Alternatively, the appellant deserves one opportunity to be heard before the AO, with the provision of copies of statements, Report and other material uses, which remain under the wraps. 10. First, we shall adjudicate additional ground raised by the assessee, as it goes to the root of the matter. The Ld. Counsel for the assessee, at the outset, submits that additional ground raised by the assessee is a technical ground dealing with the denial of opportunity and thereby defying natural justice which is the corner stone of each Page | 5

On the other hand, Learned Departmental Representative (Ld. DR) for the Revenue opposed the plea taken by the Ld. Counsel and stated that such additional ground may not be admitted.

We have heard both the parties and noted that during the appellate proceedings, the assessee has not been provided statements and information collected behind the back of the assessee, including report of the Deputy Director of Income Tax (Investigation Wing), Mumbai and the report of the inspector. We note that no opportunity to cross examine has been provided to the assessee. For that, reliance is placed on the judgment of Andaman Timber Industries, 281 CTR 241 (SC). The Learned Counsel also contended that during the appellate proceedings, the assessee submitted a lot of case law, favoring to the assessee, however, ld CIT(A) did not take into consideration these case law (precedent) while adjudicating the assessee`s appeal.

We note that rules of natural justice are rooted in all legal systems and are not any new theology. They are manifested in the twin principles of nemo judex in parte sua (no person shall be a judge in his own case) and audi alterem partem (the right to be heard). It has been pointed out that the aim of natural justice is to secure justice. Thus, we note that additional ground raised by the assessee, is purely a legal issue and all facts are already on record which goes to the root of the matter and no further enquiry is required for deciding the same as all facts are already on record. Therefore, in the light of the ratio laid down by the Hon'ble Supreme Court in the case of National Thermal Power Company Ltd. vs CIT, (1998) 229 ITR 382 (SC), we admit additional ground raised by the assessee for adjudication.

Learned Counsel argued on the additional ground raised by the assessee, stating that the assessee has not been provided statements and information collected

The ld. DR for the Revenue debarred from objecting the stand of the ld. Counsel. The Ld. DR did not have objection if the matter is remitted back to the file of Ld. CIT(A) for fresh adjudication.

We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. Considering the above facts, we note that assessee has not been given sufficient opportunity of being heard and could not plead his case successfully before the ld. CIT(A). The material evidences relied on by ld. CIT(A) hs not been provided to the assessee for rebuttal. We note that it is settled law that principles of natural justice and fair play require that the affected party is granted sufficient opportunity of being heard to contest his case. Therefore, we deem it fit and proper to set aside the order of the ld. CIT(A) and remit the matter back to the file of the ld. CIT(A) to adjudicate the issue afresh on merits. The ld CIT(A) is directed to provide statements and information collected behind the back of the assessee, including report of the Deputy Director of Income Tax (Investigation), and after providing opportunity to cross examine and hearing, adjudicate the issue in accordance with law. The assessee is also directed to furnish documents and

In the result, appeal filed by the assessee (in ITA No.582/SRT/2019) is allowed for statistical purposes.

Similar facts and grounds are involved in ITA No.44/SRT/2019 for A.Y.2012- 13, therefore, our observations made in ITA No. 582/SRT/2019, for AY. 2012-13, shall apply mutatis mutandis to the aforesaid other appeal of assessee (B. G. Jain Investment Pvt. Ltd), namely, ITA No.44/SRT/2019.

Before parting, we make it clear that since we have remitted back both the appeals of these assessees` to the file of ld CIT(A) for fresh adjudication, therefore arguments made by ld Counsel on merits and all other issues on merits of the additions, in the impugned assessment proceedings, are rendered academic and infructuous and therefore we do not adjudicate them.

In combined result, both appeals filed by assessees (in ITA No. 582/SRT/2019 and ITA No.44/SRT/2019) are allowed for statistical purposes.