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TMI Blog2005 (9) TMI 276X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee on 12-3-1998 and 18-3-1998 for the assessment years 1995-96 and 1996-97, respectively. The assessee preferred appeals before the CIT (Appeals) against the orders of the Assessing Officer on 28-3-2002 resulting in delay of 1,447 and 1,454 days for the assessment years 1995-96 and 1996-97, respectively. 3. The Assessing Officer while framing the assessments disallowed the replacement expenditure as capital in nature. Before the CIT (Appeals), the assessee filed condonation application and explained that it has been advised wrongly by its Senior Manager (Finance & Accounts), who happened to be a C.A. It was advised by the Senior Manager (Finance & Accounts) that in view of massive expansion programme by the assessee in all aggregating to Rs. 55 crores, there was a large depreciation base and interest expenses requiring set off against future profits and, accordingly, disallowance of expenditure on account of replacement is only going to be beneficial to the assessee-company since it is going to get absorbed into the increased asset base, stretching the depreciation benefit thereon, exponentially for future years. The assessee-company acted on the advice as at that point of ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. It is requested that in view of the factual and legal circumstances, it is prayed that the delay in filing the appeal be condoned and the appeal be taken on record to be disposed on merits." To support these reasons, the assessee has produced the affidavit of the Senior Manager (Finance & Accounts) who happened to be the C.A. The same reasons were adduced for the assessment year 1996-97. The relevant portion of affidavit which has been reproduced by the CIT (Appeals) in his order, is again being extracted for clarity: "The assessments for the aforesaid assessment years 1995-96 and 1996-97 was finalised under section 143(3) by the ACIT, Co. Cir. II(1), Coimbatore, who, vide orders dated 27-2-1998 and 17-3-1998 respectively, disallowed the above replacements as capital expenditure. The assessment orders aforesaid were served on the company for assessment year 1995-96 on 12-3-1998 and for assessment year 1996-97 on 18-3-1998. At the time of finalisation of assessment proceedings aforesaid, the assessee-company had gone on a massive expansion programme aggregating to Rs. 55 crores, and there was a large depreciation base and interest expenses requiring set off against future prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal in his appellate order, is not justified in reading something therein which was not available for interpretation. Further, it was pleaded that the CIT (Appeals) is not justified in refusing to deal with the merits of the appeal after having adumbrated on case laws dealing with rejection of technicalities and espousal of causes for rendering of justice. 7. The facts are not disputed that there is a delay of for more than four years. The delay is on account of advice by the assessee's Senior Manager (Finance & Accounts) who happened to be a C.A. and he advised that at the time of finalisation of assessment proceedings, the assessee-company had gone a massive expansion programme aggregating to Rs. 55 crores and there was availability of large depreciation and interest expenses as required for set off against future profits. Accordingly, it was advised by him that the disallowance of revenue expenditure on replacement is only going to be beneficial to the assessee-company since it is going to increase its asset base and the depreciation will be available for future years. On this advice, the assessee-company has taken a conscious and deliberate decision, not to contest the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal Benches are taking a consistent view that the replacement of machinery is revenue expenditure. Now, the question arises as to whether the assessee really wanted to prosecute the appeals from the very beginning on the receipt of assessment orders with due care and diligence. By going through the facts of the case and background as discussed above, it is seen that the assessee has taken a conscious and deliberate decision not to contest the assessment orders as it was felt that exponent of the orders would not go against the interest of the company as the company had gone on a massive expansion programme and it was likely to claim a large depreciation and interest expenses to be set off against the future profits. 8. As per the provisions of section 249(3) of the Act, there should be sufficient cause for the assessee for not presenting the appeal within the time allowed. The relevant provision reads as under: "249. Form of appeal and limitation.-(1) and (2) (3) The [....][Commissioner (Appeals)] may admit an appeal after the expiration of the said period if he is satisfied that the appellant had sufficient cause for not presenting it within that period." Under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvantage of for filing an appeal with a petition to excuse the delay in filing the appeal. The judicial precedents of the recent past show that the Courts have adopted liberal approach in entertaining the application for condonation of delay and the old theory that every day's delay must be explained has been diluted to some extent. However, while deciding the prayer for condonation of delay, the Court cannot ignore or give a go-by to the basic principle that the burden to prove the existence of sufficient cause is always on the assessee and there is no presumption that the delay occasioned in the filing of the appeal, is always bona fide and the condonation of delay is not the matter of course. The law of limitation is prescribed by the Income-tax Act under the provisions of section 249(3) of the Act which envisages that there should have been a sufficient cause for not presenting the appeal within that period as prescribed. Where the applicant has failed to show sufficient cause for condonation of delay, the application for condonation of delay is liable to be rejected. In the present case in hand, the assessee was not availing any alternative before any of the forum and it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 has held as under: "The burden is on the party claiming condonation of delay to place before the Court, in clear and explicit terms, all facts on which the party relies, so that the Court can come to the conclusion that it is not a case of want of diligence or inaction on the part of the applicant. In the instant case, the applicant has failed to place on record all these facts. Inaction or want of diligence on the part of the applicant would not entitle the applicant to the benefit of the provisions of section 5 of the Limitation Act. In our opinion, therefore, the applicant has failed to make out a case that there was sufficient cause for delay in filing the application under section 27(3) of the Act. The application for condonation of delay is, accordingly, rejected. As the application under section 27(3) of the Act is barred by limitation, it deserves to be rejected on this ground alone." Further, the Hon'ble Delhi High Court in the case of MS. Nulson India Ltd. v. CIT [1996] 219 ITR 736 has held that: "Admittedly, the application under section 264 of the Act was filed beyond one year and there was a delay of 11/2 months in filing the application. It was stated in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is inordinate delay then the consideration of prejudice to the other side will be a relevant factor, so the case calls for a more cautious approach but in a latter case where the delay is of a few days then no such consideration may arise and such a case deserves liberal approach. Finally, the Hon'ble Apex Court held as under: "In exercising discretion under section 5 of the Limitation Act the Courts should adopt a pragmatic approach. A distinction must be made between a case where the delay is inordinate and a case where the delay is of a few days. Whereas in the former case the consideration of prejudice to the other side will be a relevant factor so the case calls for a more cautious approach but in the latter case no such consideration may arise and such a case deserves a liberal approach. No hard and fast rule can be laid down in this regard. 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. In our view in this case, the approach of the learned Civil Judge is wholly erroneous and his order is unsustainabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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