2006 (8) TMI 277 - AT - Income Tax

Powers of Appellate Tribunal - condonation of delay of 310 days - misplacement of the documents - Deduction u/s 80HHC - inclusion of sales tax and excise duty in total turnover - difference of opinion between ld Members - Third Member Order - Whether there is sufficient cause on the part of the assessee for not filing the appeal within the period of limitation? - Learned Accountant Member - HELD THAT - We are of the opinion that an inordinate delay of 310 days cannot be condoned on the plea that the documents were misplaced. As the condonation in the present case would not be in accordance with the exposition emanating out of the Hon'ble Apex Court Hon'ble Jurisdictional High Court decisions cited supra. It will rather be grave prejudice to the revenue. As already expressed by the Apex Court in the case cited supra that the State is also a litigant and need not be given a step motherly treatment. In this context, the decision of Hon'ble Punjab Haryana High Court in the case of CIT v. Ram Mohan Kabra 1999 (1) TMI 4 - PUNJAB AND HARYANA HIGH COURT is relevant. Thus, we are of the opinion that in the present case, the cause of substantial justice would not be served by condoning the inordinate delay of 310 days for which no cogent reason has been given. In the result, the assessee's appeal is dismissed. Judicial Member - The power given to the Tribunal is not to legalise an injustice on technical ground but to do substantial justice by removing the injustice. The Parliament conferred power on this Tribunal with the intention that this Tribunal would deliver justice rather than legalise injustice on technicalities. Therefore, when this Tribunal was empowered and capable of removing injustice, in my opinion, the delay of 310 days has to be condoned and the appeal of the assessee has to be admitted and disposed of on merit. Thus, I condone the delay of 310 days in filing the appeal and admit the appeal. Third Member - The sufficient cause within the contemplation of the limitation provision must be a cause which is beyond the control of the party invoking the aid of the provisions. The Hon'ble Supreme Court in the case of Ramlal v. Rewa Coalfields Ltd. 1961 (5) TMI 54 - SUPREME COURT has held that the cause for the delay in filing the appeal which by due care and attention could have been avoided cannot be a sufficient cause within the meaning of the limitation provision. Where no negligence, nor inaction, or want of bona fides can be imputed to the appellant a liberal construction of the provisions has to be made in order to advance substantial justice. Seekers of justice must come with clean hands. In the present case I find that the assessee justified the delay only with reference to the affidavit of Shri M.L.S. Rao, Director of the company. In the said affidavit Mr. Rao stated that the Commissioner (Appeals)'s order was misplaced and forgotten. It was found while sorting out the unwanted papers. Thereafter steps were taken for the preparation of the appeal. Consequently the delay was caused. This clearly shows that the delay was due to the negligence and inaction on the part of the assessee. The assessee could have very well avoided the delay by the exercise of due care and attention. In my opinion there exists no sufficient and good reason for the delay of 310 days. I, therefore, concur with the reasonings adduced by the ld AM. The matter will now go before the regular Bench for deciding the appeal in accordance with the majority opinion. The Hon'ble Vice President, Third Member vide his order has concurred with the view of the Accountant Member. Therefore, in accordance with the majority view, the issue is decided against the assessee and the appeal of the assessee is dismissed.

Issues Involved:
1. Inclusion of excise duty and sales tax in the turnover for the purpose of deduction under section 80HHC.
2. Exclusion of 90% of miscellaneous receipts from profit for the purpose of deduction under section 80HHC.
3. Condonation of delay in filing the appeal by the assessee for 310 days.
4. Condonation of delay in filing the appeal by the revenue for 20 days.
5. Disallowance under section 43B in respect of PF and ESI.

Detailed Analysis:

1. Inclusion of Excise Duty and Sales Tax in Turnover for Section 80HHC Deduction:
The first issue raised was whether the Commissioner of Income-tax (Appeals) erred in confirming the addition of excise duty and sales tax to the turnover for the purpose of computation of deduction under section 80HHC. The judgment referred to the Hon'ble jurisdictional High Court decision in CIT v. Sundaram Fasteners Ltd [2005] 272 ITR 652 (Mad.), which held that excise duty and sales tax should be excluded from turnover for the purposes of section 80HHC. Respectfully following this precedent, the issue was decided in favor of the assessee and against the revenue.

2. Exclusion of 90% of Miscellaneous Receipts from Profit for Section 80HHC Deduction:
The next issue was whether the Commissioner of Income-tax (Appeals) erred in excluding 90% of the miscellaneous receipts from profit for the purpose of computing deduction under section 80HHC. It was found that this issue was neither raised before the learned Commissioner of Income-tax (Appeals) nor adjudicated by him. As such, the issue was not emanating out of the Commissioner of Income-tax (Appeals)'s order and was dismissed.

3. Condonation of Delay in Filing the Appeal by the Assessee for 310 Days:
The assessee's appeal for the assessment year 1995-96 was delayed by 310 days. The reason for the delay was attributed to the misplacement of the papers. The Hon'ble jurisdictional High Court in Sreenivas Charitable Trust v. Dy. CIT [2006] 280 ITR 357 (Mad.) emphasized a pragmatic approach to condonation of delay, focusing on substantial justice. However, the delay of 310 days was considered inordinate. The court found that the pragmatic approach to condonation of delay is advocated when the delay is short. The delay attributed to the misplacement of documents was not considered a sufficient cause, and the appeal was dismissed.

4. Condonation of Delay in Filing the Appeal by the Revenue for 20 Days:
The revenue's appeal was delayed by 20 days due to some administrative reasons. Given the circumstances and after hearing the counsels, the delay was condoned.

5. Disallowance under Section 43B in Respect of PF and ESI:
The issue raised in the revenue's appeal was whether the Commissioner of Income-tax (Appeals) erred in deleting the disallowance made under section 43B in respect of PF and ESI. The payments were made within the grace period allowed under the respective enactments. The Hon'ble Jurisdictional High Court decision in CIT v. Shri Ganapathy Mills Co. Ltd. [2000] 243 ITR 879 (Mad.) covered this issue in favor of the assessee. Hence, the revenue's appeal was dismissed.

Separate Judgment by Judicial Member:
The Judicial Member agreed with the reasoning and conclusions in respect of I.T.A. Nos. 1897(Mds.)/99 and 1916 (Mds.)/99 but disagreed on I.T.A. No. 1509(Mds.)/99. The Judicial Member argued for condoning the delay of 310 days, emphasizing substantial justice and referring to several precedents supporting a liberal approach to condonation when substantial justice is at stake. The Judicial Member highlighted that the issue on merit was covered in favor of the assessee by the jurisdictional High Court, advocating for condoning the delay to avoid legalizing an unconstitutional order.

Third Member's Decision:
The Third Member, Vice-President M.K. Chaturvedi, concurred with the Accountant Member's view, finding no sufficient cause for the delay of 310 days. The delay was attributed to negligence and inaction, which could have been avoided with due care. Consequently, the appeal of the assessee was dismissed.

Final Order:
In accordance with the majority view, the issue of condonation of delay for 310 days was decided against the assessee, and the appeal was dismissed. The revenue's appeal was dismissed, and the assessee's appeal was partly allowed and partly dismissed.

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