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TMI Blog2024 (2) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... ase and then pass an assessment order on the issue. It is not that the ld. CIT in his order passed u/s 263 had categorically and specifically held that the arbitral award of Rs. 990 lakhs was taxable and be taxed by the AO in the impugned year. What he had held and directed was that the AO was to pass a fresh assessment order following the decision in the case of Gajapathy Naidu which, he noted, held that when the assessee had accrued the right to receive, it should be included or accounted for in that year. There is no factual finding by the CIT that the amount of arbitral award of Rs. 990 lakhs accrued as right to receive to the assessee in the impugned year. The entire order of the CIT does not contain any such finding. In fact, there is no possibility of such finding in the order of the CIT since he has noted in his order that the assessee did not file copy of the arbitral award before him. CIT(A) s direction to the AO was to subject it to tax in the impugned year, subject to finding the same to have accrued to the assessee in the impugned year in accordance with the decision in the case of CIT Vs. Gajapathy Naidu [ 1964 (4) TMI 6 - SUPREME COURT] In terms of this direction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2/- whereas Supreme Court awarding Rs. 26.34 lakhs only means that the appellant was not required to account income as per arbitral award on the mercantile basis. 3. Ld. CIT (A) erred in law and on facts confirming order giving effect without giving adequate opportunity to the appellant to present documentary evidence that no such income accrued to the appellant. 4. Levy of interest u/s 234B of the Act is not justified." 3. The appeal is stated to be barred by limitation by 2359 days. The ld. CIT(A)'s order, against which the present appeal has been filed before us, was passed on 09.08.2012. The assesse was required to file appeal before us within 60 days, i.e. by 08.10.2012. However, the present appeal has been filed before us on 26.03.2019, resulting in delay in filing of the appeal by 2359 days. 4. The ld. Counsel for the assessee has filed an application in writing seeking condonation of delay and has made oral submissions also before us regarding the same. 5. Beginning with pointing out the chronology of events leading to the filing of the present appeal before us, it was pointed out that initially the assessee had filed return of income declaring total income of Rs. (- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to include claim receivable of Rs. 9,90,00,052/- by the appellant company from Rajasthan Government as taxable income on mercantile basis. (3) That AO in order giving effect to the order u/s 263 of the Act made addition of Rs. 9,90,00,052/- being the amount of Arbitral Tribunal Award raised demand of Rs. 2,10,58,532/- payable by the appellant. (4) That the award of Arbitral Tribunal was set aside by Hon'ble Supreme Court & only an amount of Rs. 26.34 lakhs along with interest was confirmed to be payable to the appellant company. (5) Although amount of Rs. 26.34 lakhs has been confirmed to be payable by Rajasthan Government by the Supreme Court to the appellant, till date no payment is received by the appellant. The recovery suit is already filed in the district court at Jaipur. As such the matter is yet judicial. (6) That meanwhile appeal against order giving effect to order u/s 263 of the Act was dismissed by ld. CIT (A) - III, Baroda vide order dated 09.08.2012. (7) That the appellant filed application u/s 155(16) of the Act on 28/11/2018 before Dy. Commissioner of Income Tax, Central Circle - 1, Vadodara to amend the order giving effect to order u/s 263 of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oss negligence on the part of the assessee; (iii) there was no lack of bona fides of the assessee and (iv) the condonation of delay was sought on the ground of advancement of substantial justice. 9. The contention of the ld. Counsel for the assessee with respect to the above was that the award of the Arbitral Tribunal was contested by the Rajasthan Government and had not attained finality with the matter travelling to the Hon'ble High Court who had reduced the quantum of the award and thereafter travelling upto Hon'ble Supreme Court who had ultimately restored the determination of the award back to the Arbitral Tribunal. That the assessee had contended before the ld. CIT in proceedings u/s 263 of the Act that since the award had not attained finality and was in challenge, therefore the same was not offered to tax; and going ahead with this belief, the assessee had made an application to the Assessing Officer to reduce the quantum of addition in accordance with the provisions of Section 155(16) of the Act after the final award was made by the Arbitral Tribunal in 2015 against which the assessee had sought execution of the award from the Sessions Court and ultimately in 2017 the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessee contended that for the purpose of condonation of delay, equity and justice were juxtaposed against the appeal being barred by limitation and he contended that with the assessee not being negligent ,equity & justice should prevail and the delay be condoned. He referred to various decisions of Hon'ble Apex Court defining the expression "sufficient cause" for condoning delay in Section 5 of the Limitation Act as under:- "14. The contours of the area of discretion of the courts in the matter of condonation of delays in filing appeals are set out in a number of pronouncements of this Court. See Ramlal v. Rewa Coalfields Ltd. [AIR 1962 SC 361 : (1962) 2 SCR 762] , Shakuntala Devi Jain v. Kuntal Kumari [AIR 1969 SC 575 : (1969) 1 SCR 1006] , Concord of India Insurance Co. Ltd. v. Nirmala Devi [(1979) 4 SCC 365 : 1979 SCC (Cri) 996 : (1979) 3 SCR 694] , Mata Din v. A. Narayanan [(1969) 2 SCC 770 : (1970) 2 SCR 90] and Collector (LA) v. Katiji [(1987) 2 SCC 107 : 1989 SCC (Tax) 172] , etc. There is, it is true, no general principle saving the party from all mistakes of its counsel. If there is negligence, deliberate or gross inaction or lack of bona fides on the part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find it a fit case for condoning the delay of 2359 days in filing of the present appeal before us. The explanation of the assessee for the delay that it was pursuing an alternative remedy in law as per its bona fide belief appears to ring true to us. Undoubtedly, the ld. CIT in his order passed u/s 263 of the Act had found the amount of arbitral award granted to the assessee of Rs. 990 lakhs as taxable on the grant of award. The assessee had pleaded before him that since the award had been contested by the Government of Rajasthan, therefore, until it attained finality the assessee had no right to receive the same. Therefore, it had not offered to tax and also believed the same to be taxable only on the award attaining finality. Harbouring this belief, the facts reveal that the assessee went to the AO in 2018 seeking rectification in terms of provisions of Section 155(16) of the Act when the award finally attained finality in FY 2017- 18 on 17.08.2017. It was only when this application of the assessee u/s 155(16) was dismissed by the AO that the assessee finding itself remediless filed the present appeal before us. Besides, the assessee has filed copy of final award by the Arbitral ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." 16. Similarly, we would like to make reference to authoritative pronouncement of Hon'ble Supreme Court in the case of N. Balakrishnan Vs. M. Krishnamurthy (supra). It reads as under: "Rule of limitation are not meant to destroy the right of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. Law of limitation fixes a life-span for such legal remedy for the redress of the legal injury so suffered. Time is precious and the wasted time would never revisit. During efflux of time newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So a life span must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g its case, we condone the delay in filing the present appeal. 19. Having done so, we now have to adjudicate the correctness of the order of the ld. CIT(A) which is in challenge before us. Since it begins with the order u/s 263 of the Act passed by the ld. CIT who had given direction to the AO to tax the arbitral receipts of Rs. 990 lakhs, it is necessary to take note of the contents of his order and the directions given by him to the AO. As noted above, the ld. CIT found that the assessee had not returned to tax the award given to it by the Arbitral Tribunal of Rs. 990 lakhs on account of loss of toll collection in connection with the construction of Bharatpur bye pass road. In proceedings u/s 263 of the Act initiated by the ld. CIT noting that the AO had not considered this aspect while accepting the assessee's returned income, the assessee was asked to furnish copy of the Tribunal Award. Further, since the assessee had pleaded that the Government of Rajasthan had gone in appeal against the Tribunal Award, the assessee was also asked to furnish the copy of affidavit and application filed in appeal by the Rajasthan Govt. Since the assessee failed to furnish either of the aforemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by AO is to simply to give effect to these findings of the CIT and it amounts to the modification of the original assessment order passed by the AO by CIT. Under such circumstances, no appeal lies to this office against the order passed by the AO. The issue has to be decided in the appeal, if any, filed by the appellant against the order under section 263 by CIT before Income Tax Appellate Tribunal." 21. Therefore, we find that the ld. CIT(A) dismissed the assessee's appeal as non-maintainable for want of jurisdiction finding that no appeal lay against the order of the AO which simply gave effect to the findings of the ld. CIT. 22. We are not in agreement with the ld. CIT(A). The order of the AO is not a simple order giving effect to the order of the ld. CIT passed u/s 263 of the Act. The AO was required to apply his mind to the facts of the case and then pass an assessment order on the issue. It is not that the ld. CIT in his order passed u/s 263 of the Act had categorically and specifically held that the arbitral award of Rs. 990 lakhs was taxable and be taxed by the AO in the impugned year. What he had held and directed in paragraph No.5 of his order was that the AO was to pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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