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TMI Blog2021 (4) TMI 605X X X X Extracts X X X X X X X X Extracts X X X X ..... der XLI Rule 22 of CPC as interpreted by the Hon'ble Supreme Court in S. Nazeer Ahmed [ 2007 (1) TMI 549 - SUPREME COURT] we think that the ITAT should not have precluded the assessees from raising the issue in the appeals instituted by the Revenue, even without the necessity of filing any cross18 objections. Accordingly, the additional substantial question of law is required to be answered in favor of the Appellants/assessees and against the Revenue. Condonation of delay of 248 days in filing cross-objections - Even otherwise in the context of the substantial question of law No.4, we think that sufficient cause was made out by the Appellants to seek condonation of delay of 248 days in filing cross-objections. The application for condonation of delay was accompanied by an affidavit and there was no necessity of filing an affidavit of a legal advisor or Chartered Accountant to the effect that they had tendered some incorrect advice to the assessees. Besides, if the impugned judgment and order made by the ITAT is perused, then, it is apparent that the ITAT has not focused on the issue of whether there was sufficient cause for explaining 248 days delay in instituting cross-ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AX APPEAL NOS.19, 21, 22, 23, 24 AND 25 OF 2017 WITH TAX APPEAL NOS.20, 26, 27, 28, 29 & 30 OF 2017 - - - Dated:- 5-4-2021 - M. S. SONAK SMT. M. S. JAWALKAR, JJ. Mr. P. Pardiwala, Senior Advocate with Mr. J. Sanghavi, and Mr. H. D. Naik, Advocates for the Appellants-Assessees. Ms. S. Linhares, Standing Counsel for the Respondents-Revenue. JUDGMENT (Per M. S. Sonak, J) Heard Mr. Pardiwala, learned Senior Advocate along with Mr. J. Sanghavi and Mr. H. D.Naik, learned counsel for the Appellants in each of these appeals. 2. Heard Ms. S. Linhares, learned Standing Counsel for the Income Tax Department in each of these appeals. 3. The learned counsel for the parties agree that these Tax Appeals can be disposed of by a common judgment and order since the issues involved therein are virtually identical. 4. These appeals were admitted by order dated 15th June 2017 on the following substantial questions of law : 1. Whether in the facts and in the circumstances of the case and in law, the Appellate Ld Tribunal was right in invoking the provision of Section 2(22)(e) of the Act and making an addition of deemed dividend in the hands of the Appellant? 2. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, and development. 8. On 31.01.2012, a search was held in terms of Section 132 of the Income Tax Act, 1961 (IT Act) on the said firm and the said company. Pursuant to such search notices were issued on 30.07.2012 to Peter Vaz and Edgar Afonso calling upon them to file returns of income for the Assessment Years 2006-2007 to 2011-2012. For these Assessment Years, the original assessment had already been completed under Section 143(1) of the IT Act. 9. Both Peter Vaz and Edgar Afonso responded to the notices under Section 153C of the IT Act submitting inter alia the returns originally filed by them under Section 139(1) of the IT Act may be treated as returns in response to the notices under Section 153C of the IT Act. 10. In the course of assessment proceedings, Peter Vaz and Edgar Afonso were required to show cause as to why the loans given by the said company to the said firm should not be treated as 'deemed dividend' in the hands of Peter Vaz and Edgar Afonso in terms of Section 2(22)(e) of the IT Act. Both of them filed detailed responses submitting how according to them, the provisions of Section 2(22)(e) of the IT Act were not at all attracted in the facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year 2013 and thereafter compared the same with the provisions of Section 153C as amended from time to time between the years 2013 and 2020. He submitted that the provisions of Section 153C of the IT Act have undergone significant changes between the years 2013 and 2020. He pointed out that in terms of the provisions of Section 153C as amended till 2013, the jurisdiction to proceed under Section 153C was entirely dependent on the satisfaction that any money, bullion, jewelry, or other valuable article or thing or books of account or documents seized or requisitioned 'belongs or belong to a person' other than the person referred to in Section 153A of the IT Act. Thereafter, the provisions of Section 153A were amended and proceedings under Section 153C could be initiated even where the Assessing Officer was satisfied that any books of account or documents, seized or requisitioned, 'pertains or pertain to', or any information contained therein relates to a person other than the person referred to in Section 153A of the IT Act. 17. Mr. Pardiwala submitted that since these matters concern the Assessment Years 2006-2007 to 2011-2012, the provisions of Section 153C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the ITAT to urge the issue of failure to comply with jurisdictional preconditions before invoking the provisions of Section 153C of the IT Act. 19. Mr. Pardiwala finally submitted that more than sufficient cause was shown by the assessees for condoning the delay of 248 days in filing the cross-objections. He submits that refusal to condone the delay was contrary to several decisions requiring a liberal approach in the matters of condonation of delay. He submitted that irrelevant considerations have been taken into account by ITAT to refuse the condonation of delay and to that extent, there is perversity involved. He relied on Indian Bank Vs Manilal Govindji Khona 2015(3) SCC 712, Collector Vs Mst. Katiji and others 1987(2) SCC 107 and Rathna Stores P. Ltd Vs Commissioner of Income Tax 2020(120) Taxmann. com 260 (Mad) and some other decisions in support of his contentions. 20. Ms. S. Linhares, learned Standing Counsel for the Revenue defended the impugned orders made by the ITAT based upon the reasoning reflected therein. She submitted that in this case, it was necessary to file cross-objections and since no sufficient cause was shown by the assessees, the application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional issue by filing cross-objections. 25. At this stage, therefore we are not concerned with the issue as to whether the jurisdictional parameters for invoking the provisions of Section 153C of the IT Act were fulfilled or not. However, at this stage, we are concerned with the issue as to whether the ITAT was right and justified in preventing the Appellants/assessees from raising this jurisdictional issue either for want of cross-objections or because the delay in filing the cross-objections was not sufficiently accounted for. 26. To begin with therefore we propose to consider the issue as to whether there was any necessity for the Appellants/assessees to file cross-objections before the ITAT to raise the jurisdictional issue of compliance with jurisdictional parameters before any proceedings could be initiated under Section 153C of the IT Act. 27. In this case, admittedly, the CIT (Appeals) had decided the matters in favor of the assessees and even set aside the orders made by the Assessing Officers. Therefore, the assessees did not have to institute any further appeals to the ITAT. The Revenue in this case had appealed to the ITAT against the orders made by the CIT (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppealed against the order. 30. Rule 27 of the Appellate Tribunal Rules, 1963 reads as follows:- Respondent may support order on grounds decided against him. 27. The respondent, though he may not have appealed, may support the order appealed against on any of the grounds decided against him. 31. In this case, the assessees merely wanted to support the order made by the CIT (Appeals), which was entirely in their favor. The assessees wished to raise an issue, that was at least prima facie going to the root of jurisdiction to initiate proceedings under Section 153C of the IT Act. Having regard to the provisions of Rule 27 referred to above, the ITAT in our opinion should have permitted the assessees who were Respondents before it, to support the orders of CIT (Appeals) on this ground, even without the necessity of filing any cross-objections. 32. In Dahod Sahakari Kharid Vechan Sangh Ltd. (supra), the Division Bench of Gujarat High Court was deciding whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee needed to file cross-objections despite fully succeeding in appeal and therefore, being unable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would render Rule 27 of the Appellate Tribunal Rules, 1963 redundant and nugatory. The High Court held that it is not possible to interpret the provision in such a manner. Any interpretation placed on a provision has to be in harmony with the other provisions under the Act or the connected Rules and interpretation which makes other connected provisions otiose has to be avoided. Rule 27 of the Appellate Tribunal Rules is clear and unambiguous. The right granted to the respondent by the said Rule cannot be taken away by the Tribunal by referring to the provisions of Section 253(4) of the IT Act. The ITAT was, therefore, in error in holding that the finding recorded by the CIT (Appeals) remained unchallenged since the assessee had not filed cross-objections. 37. The reference in this regard can also be made to the provisions of Section 260A(7) of the IT Act which provides that save as otherwise provided in this Act, the provisions of the Code of Civil Procedure, 1908, relating to appeals to the High Court shall, as far as may apply in the case of appeals under this Section. Now in the context of the provisions of Order XLI Rule 22 of the CPC dealing with the cross-objections, the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that they had tendered some incorrect advice to the assessees. Besides, if the impugned judgment and order made by the ITAT is perused, then, it is apparent that the ITAT has not focused on the issue of whether there was sufficient cause for explaining 248 days delay in instituting cross-objections, but rather the ITAT has faulted the assessees for not raising the issue of non-compliance with jurisdictional parameters, either soon after they received notices under Section 153C of the IT Act or before the Assessing Officer in the first instance. According to us, these were not relevant considerations at the stage of deciding whether sufficient cause was shown to explain 248 days delay in instituting cross-objections. 40. In N. Balakrishnan Vs M. Krishnamurthy (1998) 7 SCC 123 the Hon'ble Supreme Court has held that as long as the conduct of the applicant does not, on the whole, warrant to castigate him as an irresponsible litigant, generally, the delay can be condoned. The Hon'ble Supreme Court has observed that during these days when everybody is fully occupied with his avocation of life an omission to adopt such extra vigilance need not be used as a ground to depi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... risdiction in the Assessing Officer over any area, limits of an area, etc. Section 124(2) provides that where a question arises under this Section as to whether the Assessing Officer has jurisdiction to assess any person, the question will have to be determined by the authorities specified which will include, in a given case the Board. Section 124(3) then provides that no person shall be entitled to call in question the jurisdiction of an Assessing Officer, where an action has been taken under Section 132 or 132A after the expiry of one month from the date on which he was served with a notice under Section 153C or after the completion of the assessment, whichever is earlier. Now, this provision refers to mainly the territorial jurisdiction of the Assessing Officer. This provision cannot be interpreted to mean that an assessee is left without a remedy where the Assessing Officer invokes the provisions of Section 153C of the IT Act without fulfillment of the jurisdictional parameters prescribed therein. 45. In Vijaybhai N. Chandrani (supra), the Hon'ble Supreme Court held that the High Court must not ordinarily entertain the writ petitions against notices under Section 153 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(appeals) that was entirely in favor of the assesses. 49. Mr. Pardiwala then submitted that this Court should go into the issue of fulfillment or otherwise of the jurisdictional parameters under Section 153C of the IT Act and if the same is found to be wanting, to quash the proceedings under Section 153C of the IT Act. Ms. Linhares, however, contended that this may not be the appropriate course of action to adopt because before the ITAT the departmental representative had expressly retained liberty to produce the material to satisfy the Tribunal that the jurisdictional parameters of Section 153C had in fact been fulfilled should the tribunal consider admitting the cross-objections. She submits that the Revenue should, therefore, not be deprived of this opportunity. 50. In paragraph 27 of the impugned judgment and order made by the ITAT, there is a reference to the ITAT specifically inquiring with the departmental representative to produce the satisfaction note recorded by the Assessing Officer of the person searched. The order records that the departmental representative submitted that the assessment files are not immediately available, but in the event, the Tribunal was p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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