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TMI Blog2017 (7) TMI 360X X X X Extracts X X X X X X X X Extracts X X X X ..... . Patel (HUF). 3. Brief facts of the case are that a survey under section 133A of the Income Tax Act, 1961 was conducted in the case of Shri Pankaj Danawala (CA) by the DDIT(Inv)-II, Surat. During the course of survey, it was found that Shri Pankaj Danawala was creating bogus capital in the case of his various clients. He used to increase opening capital balance fraudulently without taking into account closing balance of the immediately preceding year, which ought to have been opening balance of the concerned year. He would show fictitious gifts/income through Will, agriculture income and fictitious interest on loan etc. In the survey, it was found that Shri Mohanbhai Dhanjibhai Patel, group Managing Director was one of the major beneficiaries of bogus capital created by Shri Pankaj Danawala. During the course of survey, statement of Shri Kirit M. Patel, son of Shri Mohanbhai Dhanjibhai Patel was recorded and he was confronted with evidences found regarding creation of bogus capital by Shri Pankaj Danawala for the benefit of Shri Mohanbhai Dhanjibhai Patel Group. It is pertinent to point out that the assessee Shri Mohanbhai Dhanjibhai Patel (HUF) had given advance of Rs. 8,000/- t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 21-02-2014. The appeal before your honours is however being filed now, for which there is delay of 847 days. 2. There are genuine reasons for the delay which are being narrated before your honours for your sympathetic consideration and for the condonation of the delay, so that the appeal may kindly be admitted and the justice due to the appellant is rendered. The chronology of the events in the given case is stated below. 3. Subsequent to survey action carried out on 11-03-2006, all twenty members of the Group filed settlement petition for various assessment years ranging from 09-03-2006 to 05-04-2007. All the twenty cases were covered by single survey. All these cases are connected and have common issues. All the members belonging to Group were wholly controlled and managed by Shri M. D. Patel. A common cash flow has been prepared in case of settlement petition of Shri M.D. Patel wherein transactions of all the twenty group members have been incorporated. The net income of the said cash flow has been offered as additional income of Shri M. D. Patel in his settlement petition. 4. 29-03-2006: The appellant filed its settlement petition for AY 1999-00 to 2005-06 before the Hon& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was sought from the representative, Advocate Hemant Jadia who was handling the case in Settlement Commission as well as in Hon'ble Bombay High Court with regards to whether appeal before Hon'ble IT AT is to be filed against the order of CIT(A). Mr. Hemant Jadia had opined that since the matter is pending before Hon'ble Bombay High Court and thereafter will positively be heard by Hon'ble Settlement Commission, there is no need to file any further appeal to Hon'ble IT AT. He was also of the opinion that in case of any abated years or in any year which will not be restored by Hon'ble Bombay High Court, the Hon'ble Settlement Commission would take up those years exercising their power u/.s 245E of the Act. Since all the years and member of the Group are connected, he opined that in all likelihood all matters would be heard together by the Settlement Commission. 12. 03-06-2016: During the course of hearing before Hon'ble Settlement Commission, the issue of reviving the abated years was discussed in length in the given cases fixed. Both the parties argued over the issue. The members however, declined to exercise their inherent power available u/s. 245E of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tial justice vide Shankutala Devi Jain v. Kuntal Kumari (AIR 1969 SC 575) and State of W.B. v. Administrator, Howrah Municipality (AIR 1972 SC 949)". (iii) Sonerao Sadashivrao Patil & Anr. v. Godawaribai F1999 (2) Mh. LJ. 2731: " The primary function of a court to is to adjudicate the disputes between the contesting parties and to advance substantial justice. The rules of limitation are not made to harm the valuable rights of the parties. The discretion is given to the Court to condone delay and admit the appeal in order that judicial power and discretion in that behalf should be exercised to advance substantial justice ................................................................................ The requirement of explanation of every day's delay does not mean that a pedantic approach should be taken. The courts are required to take pragmatic approach while interpreting the concept of sufficient cause. Too much rigour of the law is not justice but the denial of it. It is to be borne in mind the maxim 'Summum Jus, Summa Injuria'. Extreme law isextreme injury. In the matter of condonation of delay, the duration of delay is insignificant. The Court has to take into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scretion and the decision becomes illogical once the two conclusions reached by him are examined closely. Merely because the matter was taken in appeal, it does not change the complexion and it would be impossible to come to the conclusion that because of that there was no sufficient cause. Under the circumstances, it must be held that the discretion vested in him was not exercised in a judicial manner and the result was that a substantial injury was 'caused to the petitioner-company so far as the consideration of the question regarding the revenue " expenditure of Rs. 3,00,600 was concerned." 6. The ld.counsel for the assessee took us through the application as well as opinion of Shri Hemant Jadia dated 7.6.2016. Copy of the letter written by Shri Hemant Jadia to Kirit M. Patel has been placed on record. He also took us through writ petition filed by the respective assessees before the Hon'ble Bombay High Court and also interim order passed by the Hon'ble High Court. Apart from decisions referred in the application for condonation of delay, he made reference to a large number of Tribunal's orders which are placed in the paper book. On the strength of these pleadings, he conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties. 3. "Every day's delay must be explained" does not mean that a 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 pragmatic manner. 4. When substantial justice and technical considerations are pitted against each other, 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 non-deliberate delay. 5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk. 6. It must be grasped that 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." 9. Similarly, we would like to make reference to authoritative pronouncement of Hon'ble Supreme Court in the case of N.Balakri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld have incurred quiet a large litigation expenses. It would be a salutary guideline that when courts condone the delay due to laches on the part of the applicant the court shall compensate the opposite party for his loss. 10. We do not deem it necessary to re-cite or recapitulate the proposition laid down in other decisions. It is suffice to say that the Hon'ble Courts are unanimous in their approach to propound that whenever the reasons assigned by an applicant for explaining the condonation of delay, then such reasons are to be construed with a justice oriented approach. In the light of the above, let us consider explanation of the assessee. A perusal of the application for condonation of delay would indicate that on 29.3.2006 settlement petitions were filed before the Income Tax Settlement Commission in the Asstt.Year 1999-2000 to 2005-06. On 22.2.008, Settlement Commission has dismissed applications except for the Asstt.Year 2000- 01 and 2004-05 in the case of Mohanbhai D. Patel. Similarly in other cases, applications were admitted either for one year or two years viz. in the case of Arvind Patel application for the Asstt.Year 2004-05 was admitted for consideration and applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee has filed writ petition before the Hon'ble High Court challenging order of the Settlement Commission dated 31.3.2008 vide which, their applications admitted for consideration for some of the years, were treated as abated by operation of law. On the other hand, the AO has initiated reassessment proceedings in some of the years giving a belief to the assessee that now the proceedings are pending in other years. They can also be taken into Settlement Commission. The important fact which weigh with us for accepting bonafide of the assessee is that even in 2013, the ld.CIT(A) has haboured a belief that proceedings are pending before the Settlement Commission, and therefore, the ld.CIT(A) has no jurisdiction to entertain the issue agitated by the assessee on merit. This findings of the ld.CIT(A) supports bona fide of the assessee in believing that their applications under section 245E would be entertained by the Settlement Commission and there is no need to challenge the order of the CIT(A). It is also important to note that there is no adjudication on merit on the issues involved in these appeals by the ld.CIT(A). The appeals were dismissed for the reason that they are not maint ..... X X X X Extracts X X X X X X X X Extracts X X X X
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