M/S. Jetu Steels v. Deputy Commissioner Of Income Tax

HIGH COURT OF MADHYA PRADESH : BENCH AT INDORE D.B.: Hon'ble Shri Shantanu Kemkar &Hon'ble Shri S.C. Sharma, JJ. Income Tax Appeal No.06/2012 M/s. Jetu Steels Versus Deputy Commissioner of Income Tax * * * * * Shri Peyush Jain, learned counsel for the appellant.Shri R.L. Jain, learned Senior Counsel with Ms. Veena Mandlik, learned counsel for the respondent. * * * * * O R D E R (Passed on this 10[th] day of May, 2012) Per Shantanu Kemkar, J. Heard on the question of admission. 2.The appeal is admitted on following substantial question of law: - “Whether, the learned Income Tax Appellate Tribunal erred in holding that, the assessee has utterly failed to show any reasonable cause for condonation of delay, where the negligence is attributable to the erstwhile manager of the assessee firm?” 3.Copy of the memo of appeal is supplied to the learned counsel for the respondent. 4.With consent heard finally. 5.The appellant – a proprietorship firm, which was earlier a partnership firm, engaged in the business of manufacture of steel bars filed a return of income on 31.10.2006. The case was selected for scrutiny and after issuance of notices under Section ITA No.06/2012143 (2) and 142 (1) (ii) of the Income Tax Act, an assessment order was passed on 16.12.2008. The Assessing Officer assessed the total income of the assessee by making an addition of Rs.9,00,000/- under Section 68 of the Income Tax Act, on account of cash credit. The Assessing Officer also disallowed interest amounting to Rs.18,272/- by applying Section 14-A of the Income Tax Act read with Rule 8-D of the Rules made thereunder. Aggrieved, the appellant filed an Appeal IT No.302/2008-09 before the Commissioner of Income Tax (Appeals)-I, Indore. The said appeal was dismissed by the Commissioner of Income Tax (Appeal)-I on 16.12.2009. The appellant preferred a further appeal before the Income Tax Appellate Tribunal (for short, the Tribunal). Since the appeal was barred by limitation, an application seeking condonation of delay was filed by the appellant. The Tribunal vide order dated 16.12.2011 passed in ITA No.34/Ind/2011 dismissed the appeal holding it to be barred by limitation by observing that the assessee has utterly failed to show any reasonable cause for condonation of delay in filing the appeal. Aggrieved, the assessee has filed this appeal under Section 260-A of the Income Tax Act.6.Learned counsel for the appellant has drawn our attention to the application for condonation of delay which was filed before the Tribunal duly supported by affidavit of the appellant and contended that the detailed reasons were stated in the said application seeking condonation of delay but without going into the said reasons stating the sufficient cause and without considering the explanation offered by the appellant, the Tribunal has dismissed the appeal on the ground of limitation in a slipshod manner, causing great prejudice to the appellant. 7.Learned Senior Counsel appearing for the respondent, ITA No.06/2012 on the other hand, supported the impugned order passed by the Tribunal.Tribunal. 7.Learned Senior Counsel appearing for the respondent, ITA No.06/2012 on the other hand, supported the impugned order passed by the Tribunal.Tribunal. 8.Having considered the submissions made by the learned counsel for the parties, we are of the view that the substantial question of law requires to be answered in favour of the assessee and against the revenue. We find that in the application seeking condonation of delay, the appellant-assessee had clearly stated that the business of the appellant – a proprietorship firm was being run in the name and style of a partnership firm viz. M/s. Jetu Steels having two partners Dilip Birani and Anil Birani. The said firm was dissolved with effect from 28.11.2008. It has been further stated that the order of CIT (Appeal) was served on the appellant on 22.01.2010. However, the same was misplaced because of voluminous paper work involved pertaining to partnership period owning to dissolution of the firm and it could not be handed over to the counsel for filing the appeal on account of strain of the dissolution of the firm, joint family separation and constant heavy losses. In support of the reasons stated in the application, an affidavit of Dilip Birani, proprietor of the appellant-firm and affidavit of R.S. Pasari, Manager of the Firm were filed. The said averments were not controverted by the respondent by filing any counter affidavit. However, the Tribunal vide its order dated 16.12.2011 dismissed the appeal by holding that the appellant had failed to show any reasonable cause for condonation of delay. 9. On going through the order of the Tribunal, it is clear that the Tribunal has not gone into the reasons stated by the appellant and has dismissed the application in a slipshod manner. On due consideration of the said reasons, we are of the view that ITA No.06/2012 the reasons assigned in the application seeking condonation of delay are sufficient reasons and are forming a reasonable cause for condonation of delay. 10.In the circumstances, we hold that the Tribunal has erred in recording the finding that the assessee has utterly failed to show any reasonable cause for condonation of delay. On the other hand, as observed, the assessee had sufficiently explained the delay in filing the appeal before the Tribunal and had made out a case for condonation of delay in filing the appeal. As a result, we answer the question in favour of the assessee and condone the delay. 11.The Tribunal is directed to decide the appeal on merits, in accordance with law. No orders as to costs. (Shantanu Kemkar) Judge (S.C. Sharma) Judge Pithawe RC