Inderchand D. Kochar v. The Assistant Commissioner Of Income Taxcentral Circle - Ii(2)Chennai

IN THE HIGH COURT OF JUDICATURE AT MADRASDated: 03/08/2016 The Honourable Mr.Justice S.ManikumarandThe Honourable Mr.Justice D.Krishnakumar Tax Case Appeal Nos.522, 523, 507, 508 and 509 of 2016andC.M.P.Nos.10444, 10445, 10118 and 10119 of 2016 Inderchand D. Kochar ... Appellant in T.C.A.No.522/2016/AppellantSmt.Anita Kochar ... Appellant in T.C.A.No.523/2016/AppellantRamesh Kumar Kochar ... Appellant in T.C.A.No.507/2016/AppellantSmt.Sarala Kanwar ... Appellant in T.C.A.No.508/2016/AppellantSuresh Kumar Kochar ... Appellant in T.C.A.No.509/2016/Appellant Vs The Assistant Commissioner of Income TaxCentral Circle - II(2)Chennai... Respondent in all TCAs/Respondent Prayer:Tax Case Appeals filed under Section 260A of IncomeTax Act, 1961 against the orders of the Income Tax AppellateTribunal, Madras 'C' Bench dated 23/09/2015 in ITANos.1976/Mds/2014, 1978/Mds/2014, 1974/Mds/2014, 1975/Mds/2014and 1977/Mds/2014 against the order dated 3/10/2011 made inITA.No.215/09-10, ITA 214/09-10, ITA 210/09-10, ITA 213/09-10,ITA 211/09-10, on the file of the Commissioner of Income Tax(Appeals)-II, Chennai-34, against the order dated 29/12/2009 forPAN.No.AAAP17872E, PAN.No.AAEPA 4522H, PAN No.AA1PK7125Q,PAN.No.AAVPK8611,J, PAN.No. , on the file of theAssistant Commissioner of Income Tax, Central Circle II(2)Chennai-34. COMMON JUDGMENT (Judgment of the Court was made by S.Manikumar,J) Instant Appeals, have been filed against the orders of theIncome Tax Appellate Tribunal, 'C' Bench, Madras, dated23/09/2015. Common substantial question of law raised in allappeals by the appellant is that : "whether the Appellate Tribunal is correct in lawin not admitting the appeal without properlyconsidering the reasons shown for the said belatedfiling of the appeal before them, proving perversityin their findings even though the belated filing ofthe appeal before them was in consequence to thechange of auditor and further due to the time taken inpursuing the alternate remedy available under thestatute while overlooking the decision of this Hon'bleCourt reported in 153 ITR 596?" 2. Facts deduced from the material record are thatassessment orders were passed on 26.12.2009 against theappellants, for the Assessment Year 2006-2007. Assessees aredifferent. Being aggrieved by the same, separate appeals beforethe Commissioner of Income Tax (Appeals)-II, Chennai, have beenfiled. After considering the contentions of the parties, theCommissioner of Income Tax (Appeals)-II, vide order dated03.10.2011 dismissed the appeals. Thereafter, the appellantsseemed to have presented individual rectification petitions,under Section 154 of the Income Tax Act, 1961. Contending interalia that subsequently, the appellants were advised by their newcounsel to file regular appeals before the Income Tax AppellateTribunal, Chennai under Section 253 of the Income Tax Act,appeals have been filed, before the Tribunal with a delay of 962days in filing appeals. 3. Appellants have admitted that the time limit to fileappeal before the Tribunal is 60 days from the date of receiptof the order of the appellate authority, namely Commissioner ofIncome Tax (Appeals). But, according to them, due to the wrongadvice given by the erstwhile Chartered Accountants of theappellants, rectification petitions under Section 154 of the Actwere filed before the First Appellate Authority. They werebonafidely pursuing the alternative remedy, which resulted inthe delay of 962 days, in filing the appeals, before theTribunal, and for the abovesaid reasons prayed the Tribunal, tocondone the delay. 4. While adverting to the above submissions and taking noteof the period of limitation of 60 days, provided, in Income TaxAct, 1961 for filing an appeal under section 253 of the Act, the https://hcservices.ecourts.gov.in/hcservices/ 4. While adverting to the above submissions and taking noteof the period of limitation of 60 days, provided, in Income TaxAct, 1961 for filing an appeal under section 253 of the Act, the https://hcservices.ecourts.gov.in/hcservices/ Tribunal, at paragraph No.3 of the order dated 23.09.2015, ineach of the appeals, ordered as hereunder: "3. The delay cannot be condoned simplybecause the assessee's case is hard and calls forsympathy or merely out of benevolence to the partyseeking relief. In granting the indulgence andcondoning the delay it must be proved beyond theshadow of doubt that the assessee was diligent andwas not guilty of negligence whatsoever. Thesufficient cause within the contemplation of thelimitation provision must be a cause which isbeyond the control of the party invoking the aidof the provisions. The Supreme Court in the caseof Ramial v. Rewa Coalfield Ltd., AIR 1962 SC 361has held that the cause for the delay in filingthe appeal which by due care and attention couldhave been avoided cannot be a sufficient causewithin the meaning of the limitation provision.Where no negligence, nor inaction, or want of bonafides can be imputed to the assessee a liberalconstruction of the provisions has to be made inorder to advance substantial justice. Seekers ofjustice must come with clean hands. In ouropinion, the delay was due to negligence andinaction on the part of the assessees. Theassessees would have avoided the delay by theexercise of due care and attention and thereexists no sufficient and good reason for the delayof 962 days in filing these appeals. Accordingly,all the appeals are dismissed as unadmitted." Thus the appeals preferred by the Tribunal under Section 253 ofthe Act, have been dismissed. 5. Inviting attention of this court to a decision of thiscourt in Commissioner of Income Tax vs. K.S.P.Shanmugavel Nadar& Ors. reported in (1985) 153 ITR 0596, Mr.S.Sridhar, learnedcounsel for the appellants, submitted that when the assesseeshave duly prosecuted their rectification petitions, filed underSection 154 of the Income Tax Act, 1961, their bona fide action,would not attract laches, and therefore, the appeals filedbefore the Tribunal, ought not to have been rejected on thegrounds of laches, negligence or lack of bona fides. Accordingto him, the assessees had only acted on the advice given bytheir Chartered Accountants. 6. It is also his submission that the assessees have filedrectification petitions under Section 154 of the Income Tax Act,1961, before the Commissioner of Income Tax (Appeals)-II, within60 days from the date of receipt of the order of the https://hcservices.ecourts.gov.in/hcservices/ Commissioner of Income Tax (Appeals), and that they wereawaiting, notice on the above said applications. He alsosubmitted that as per the procedure followed, rectificationpetitions filed under Section 154 of the Income Tax Act, 1961would be tagged along with the order passed by the Commissionerof Income Tax (Appeals). As the miscellaneous petitions filed bythe appellants, were not taken on record, a reminder was sent on28.05.2014 to the Commissioner of Income Tax (Appeals). Thus inthe above said process, delay in filing the appeals, before theTribunal, under Section 253 of the Act, occurred. Contendinginter alia, that there was bonafide/and it is not negligence, onthe part of the assessees, he submitted that the Tribunal hasnot properly adverted to the above reasons and thus prayed toset aside the order of the Tribunal impugned in the instant TaxAppeals. 7. Per contra, Mr.T.R.Senthilkumar, learned Senior Standingcounsel for Income Tax department, submitted that rectificationpetitions stated to have been filed by the appellants, were notpursued, diligently with due care, by the appellant, and thusthere is lack of bona fide and negligence. He also submittedthat the affidavit filed in support of the delay excusepetitions filed before the Tribunal in each case, is bereft ofdetails, both on sufficiency of the cause and bonafides, duecare and attention, negligence. He also added that the wellconsidered orders of the Tribunal, impugned before us, do notrequire any interference. 8. Heard the learned counsel for the parties and perusedthe materials on record. 9. On 03.10.2011, the Commissioner of Income Tax (Appeals),Chennai has passed orders in the appeals filed by the assessees.As per Section 253 of the Income Tax Act, 1961, appeals have tobe filed before the Tribunal, within 60 days from the date ofreceipt of a copy of the order of Commissioner of Income Tax(Appeals). Perusal of the orders impugned before us, shows thatpetitions under Section 154 of the Act, for rectification, havebeen filed on 18.07.2012 or 19.07.2012 respectively, as the casemay be, after a lapse of eight months. 10. Further perusal of the rectification Petitions showsthat except one, all other applications have been filed in theOffice of the Deputy Commissioner of Income Tax, Central CircleIII, Chennai - 34, who is not the appellate authority.Indisputably, Commissioner of Income Tax (Appeals), Range II,Chennai, is the competent authority, to entertain, anyapplication filed under Section 154 of the Act. Details of therectification Petitions filed, the authority, before whom, suchpetitions, have been filed are detailed hereunder: Thus except in Serial No.1, all the other petitions, have beenfiled under Section 154 of the Act, have been before theauthority, not competent to entertain, and mandated to exercisethe powers under Section 154 by the Income Tax Act, 1961. 11. Material on record further discloses that after filingthe rectification Petitions in 2012, after nearly two years, in2014, the appellants/assessees have sent a letter dated28.05.2014 to the Commissioner of Income Tax (Appeals), Range-II, enclosing a copy of the miscellaneous application filed withTapal Section before the Deputy Commissioner of Income Tax on18.07.2012 and 19.07.2012 respectively, admitted the fact, thatinstead of filing in the office of the Commissioner of IncomeTax (Appeals), Range II, who had disposed of the appeals, theyhave submitted the rectification petitions, to an authority, notcompetent, to entertain the applicantsions. Details of theletters, are extracted hereunder: Sl.Appellant/AssesseITA NumberContents of the LetterNo.e Name1Anita Kochar214/09-10I am enclosing with a copyof miscellaneous applicationwhich was filed with TAPALSECTIONbeforeDeputyCommissioner of Income Taxon 18.07.2012 instead ofCommissioner of Income TaxAppeals Range-II.I therefore request you totakeonrecordmyapplication and dispose ofin accordance with law.2RameshKumar210/09-10-do-Kochar3Sarla Kanwar213/09-10-do-4SureshKumar211/09-10-do-Kochar Sl.Appellant/AssesseITA NumberContents of the LetterNo.e Name1Anita Kochar214/09-10I am enclosing with a copyof miscellaneous applicationwhich was filed with TAPALSECTIONbeforeDeputyCommissioner of Income Taxon 18.07.2012 instead ofCommissioner of Income TaxAppeals Range-II.I therefore request you totakeonrecordmyapplication and dispose ofin accordance with law.2RameshKumar210/09-10-do-Kochar3Sarla Kanwar213/09-10-do-4SureshKumar211/09-10-do-Kochar Though Mr.S.Sridhar, learned counsel for the appellants stronglyrelied on the decisions of Commissioner of Income Tax vs.K.S.P.Shanmugavel Nadar & Ors. reported in (1985) 153 ITR 0596,and Sachindra Nath Mondal & Anr. vs. Shakuntola Malhotra & Ors.decided on 14.03.2016, and contended that availing a wrongremedy, and diligently pursuing the same, would not hold theappellants guilty of laches and that therefore, this court, inthe interest of justice, can condone the delay, even by imposingcost, this court is not inclined to accept the said contentions,for the reason that there is absolutely, no material on recordto substantiate due diligence and proper care exercised by theappellants. They have not taken prompt steps to rectify theirmistake. Steps have been taken nearly after a delay of two years. 12. In prosecuting a remedy before the wrong forum, we areof the considered view that the appellant must show that he waspursuing the same remedy, in a bona fide manner, and with duediligence. 13. Due diligence and caution, are the essentialrequirements. Due diligence cannot be measured by any absolutestandard and it depends on relative facts of a particular case.Due diligence is a measure of prudence by the litigant, who isexpected to be reasonable and prudent, under the particularcircumstances. 14. As tabulated in paragraph 10, only one appellant viz.Mr.Inderchand D.Kochar, has filed the Miscellaneous petition,dated 19.12.2012, under Section 154 of the Income Tax Act, 1961,before the Commissioner of Income Tax Act, who had disposed ofthe appeal in I.T.A.No.210 of 2010. All other Miscellaneouspetitions have been filed before the Deputy Commissioner ofIncome Tax, who is not the competent authority to entertain anyapplication under Section 154 of the Income Tax Act, 1961. WhenMiscellaneous petitions have been filed, in a wrong forum, it isour considered view that it is the duty of the appellant topursue the same and seek for adjudication, by the competentauthority. 15. Absolutely, there are no materials to indicate, as towhat steps the appellants had taken between the date of filingof the miscellaneous petitions, i.e. 18.07.2012 or 19.07.2012,and the date on which the supporting affidavits for condonation,have been filed, except, sending a reminder on 28.05.2014. Theappellants have not stated the date, as to when, the change ofbrief was given and also the date as to when opinion was givenby the learned counsel to prefer appeals, before the Tribunal.No details are given in the affidavit filed by the assessees, asto why, they have not, prosecuted the applications filed underSection 154 of the Income Tax Act, 1961, for nearly two years. 16. In the supporting affidavit to the petitions filed forcondoning the delay of 962 days, in filing the appeals, beforethe Tribunal, the assessees have not given the dates, as to whenthey had handed over the papers to the erstwhile CharteredAccountants for action. The statement of the assessees that dueto misunderstanding with the erstwhile Chartered Accountant, theappellants were constrained to appoint a counsel, in the monthof June 2014, and on review of all the Income Tax matters, thefact of non-filing of appeals against the appellate orders, wasnoticed and thus, the appeals were filed on 11.07.2014 beforethe Commissioner of Income Tax (Appeals), is not supported withany material document. Mere averments, do not stand the test ofproof. 16. In the supporting affidavit to the petitions filed forcondoning the delay of 962 days, in filing the appeals, beforethe Tribunal, the assessees have not given the dates, as to whenthey had handed over the papers to the erstwhile CharteredAccountants for action. The statement of the assessees that dueto misunderstanding with the erstwhile Chartered Accountant, theappellants were constrained to appoint a counsel, in the monthof June 2014, and on review of all the Income Tax matters, thefact of non-filing of appeals against the appellate orders, wasnoticed and thus, the appeals were filed on 11.07.2014 beforethe Commissioner of Income Tax (Appeals), is not supported withany material document. Mere averments, do not stand the test ofproof. 17. Though, Mr.S.Sridhar, learned counsel for theassessees/appellants submitted that it is the duty of the officeof the Commissioner of Income Tax (Appeals) to have sent thenotices for hearing of the rectification petitions, filed bythe appellants/assessees and thus the assessees were waiting,for a considerable period, and thus attributed the cause fordelay, this court is not inclined to accept the same, for thereason that as observed earlier that rectification petitionshave been filed before an incompetent appellate authority. Eventaking for granted that they were filed in the office of theDeputy Commissioner of Income Tax, we are of the considered viewthat it is for the appellants/assessees to have processed the same. Blaming an authority is always easy. Conduct of theappellants substantiates lethargy and lack of bonafides. On thefacts and circumstances of the case, we are also of theconsidered view, that the appellants, have not pursued theremedy, promptly, with diligence and due care, when they filedsuch applications. Inaction, is apparent on the face of record.In the light of the above, it cannot be contended that theappellants were wrongly pursuing a remedy, with diligence, careand caution and hence the delay in filing the appeals before theTribunal should be condoned. 18. Further in H.Dohil Constructions Company PrivateLimited V. Nahar Exports Limited and Another, reported in 2015(1) Supreme Court Cases 680, the Hon'ble Supreme Court, afterconsidering the Hon'ble Division Bench judgment of this Court inTamilnadu Mercantile Bank Ltd., Vs. Appellate Authority,reported in (1990) 1 LLN 457 and decision of the Supreme Courtin Esha Bhattacharjee v. Raghunathpur Nafar Academy, reported in(2013) 12 SCC 649 at paragraph Nos.23 and 24, held as follows:“23. We may also usefully refer to the recentdecision of this Court in Esha Bhattacharjee [EshaBhattacharjee v. Raghunathpur Nafar Academy, reportedin (2013) 12 SCC 649], where several principles wereculled out to be kept in Principles (iv), (v), (viii),(ix) and (x) of para 21 can be usefully referred to,which read as under: (SCCpp.658-59)“21.4(iv) No presumption can be attached todeliberate causation of delay but, gross negligence onthe part of the counsel or litigant is to be taken noteof.21.5. (v) Lack of bona fides imputable to a partyseeking condonation of delay is a significant andrelevant fact.21.8. (viii) There is a distinction betweeninordinate delay and a delay of short duration or fewdays, for to the former doctrine of prejudice isattracted whereas to the latter it may not beattracted. That apart, the first one warrants strictapproach whereas the second calls for a liberaldelineation. 21.9 (ix) The conduct, behaviour and attitude of aparty relating to its inaction or negligence arerelevant factors to be taken into consideration. It isso as the fundamental principle is that the courts arerequired to weight the scale of balance of justice inrespect of both parties and the said principle cannotbe given a total go-by in the name of liberal approach.21.10. (x) If the explanation offered is concoctedor the grounds urged in the application are fanciful,the courts should be vigilant not to expose the otherside unnecessarily to face such a litigation. 24. When we apply those principles to the case onhand, it has to be stated that the failure of theRespondents in not showing due diligence in filing ofthe appeals and the enormous time taken in the refilingcan only be construed, in the absence of any validexplanation, as gross negligence and lacks in bonafidesas displayed on the part of the Respondents. Further,when the Respondents have not come forward with properdetails as regards the date when the papers werereturned for refiling, the non-furnishing ofsatisfactory reasons for not refiling of papers in timeand the failure to pay the Court fee at the time of thefiling of appeal papers on 06.09.2007, the reasonswhich prevented the Respondents from not paying theCourt fee along with the appeal papers and the failureto furnish the details as to who was their counsel whowas previously entrusted with the filing of the appealscumulatively considered, disclose that there was totallack of bonafides in its approach. It also requires tobe stated that in the case on hand, not refiling theappeal papers within the time prescribed and byallowing the delay to the extent of nearly 1727 days,definitely calls for a stringent scrutiny and cannot beaccepted as having been explained without properreasons. As has been laid down by this Court, Courtsare required to weigh the scale of balance of justicein respect of both parties and the same principlecannot be given a go-by under the guise of liberalapproach even if it pertains to refiling. The filing ofan application for condoning the delay of 1727 days inthe matter of refiling without disclosing reasons, muchless satisfactory reasons only results in theRespondents not deserving any indulgence by the Courtin the matter of condonation of delay. The Respondentshad filed the suit for specific performance and whenthe trial Court found that the claim for specificperformance based on the agreement was correct butexercised its discretion not to grant the relief forspecific performance but grant only a payment ofdamages and the Respondents were really keen to get thedecree for specific performance by filing the appeals,they should have shown utmost diligence and comeforward with justifiable reasons when an enormous delayof five years was involved in getting its appealsregistered.”23. It is also worthwhile to extract paragraph Nos.14 to 17of the judgment in Tamilnadu Mercantile Bank's case. “14. We are unable to agree with the reasoning ofthe learned Judge that no litigant ordinarily stands tobenefit by instituting a proceeding beyond time. It iscommon knowledge that by delaying a matter, evidence https://hcservices.ecourts.gov.in/hcservices/ https://hcservices.ecourts.gov.in/hcservices/ relating to the matter in dispute may disappear andvery often the party concerned may think thatpreserving the relevant records would be unnecessary inview of the fact that there was no further proceeding.If a litigant chooses to approach the Court long afterthe time prescribed under the relevant provisions ofthe law, he cannot say that no prejudice would becaused to the other side by the delay being condoned.The other side would have in all probability destroyedthe records thinking that the records would not berelevant as there was no further proceeding in thematter. Hence to view a matter of condonation of delaywith a presupposition that no prejudice will be causedby the condonation of delay to the respondent in thatapplication will be fallacious. In our view, each casehas to be decided on the facts and circumstances of thecase. Length of the delay is a relevant matter to betaken into account while considering whether the delayshould be condoned or not. It is not open to anylitigant to fix his own period of limitation forinstituting proceedings for which law has prescribedperiod of limitation. 17.... Once it is held that a party has lost hisright to have the matter considered on merits becauseof his own inaction for a long time, it cannot bepresumed to be non-deliberate delay, and in suchcircumstances of the case, he cannot be heard to pleadthat substantial justice deserved to be preferred asagainst technical considerations. We are of the viewthat the question of limitation is not merely atechnical consideration. Rules of limitation are basedon principles of sound public policy and principles ofequity. It is a litigant liable to have a Damocles'sword hanging over his head indefinitely for a periodto be determined at the whims and fancies of theopponent?” 19. In the light of our discussion, and principles of lawlaid down by the Hon'ble Supreme Court in H.Dohil ConstructionsCompany Private Limited V. Nahar Exports Limited and Another,reported in 2015 (1) Supreme Court Cases 680, we are notinclined to entertain the appeals. Substantial question of lawraised by the appellants, is answered against theappellants/assessees and in favour of the respondent. In the result, all the tax case appeals are dismissed.Consequently, the connected civil miscellaneous petitions areclosed. However, there shall be no order as to cost. -s/d- Assistant Registrar True Copy Sub-Assistant Registrar To1.The Commissioner of Income Tax,Appeals II, Chennai-34 2.The Assistant Commssioner of Income Tax,Central circle II(2) Chennai-34+5 ccs to Mr.S.Sridhar Advocate sr 4434744344 44346, 44343,44345Tax Case Appeal Nos.522, 523 and 507 to 509 of 2016aa01/09/2016