Txa/27/2014 Of M/S Goodluck Kinetic Rep. Here By Its v. The Commissioner Of Income Tax And Anr

IN THE HIGH COURT OF BOMBAY AT GOA INCOME TAX APPEAL NO.27 OF 2014… M/s.Goodluck Kinetic ...Appellant v/s.The Commissioner of Income-tax ...Respondent … Mr.H.D.Naik for the appellant.Ms.Asha Desai for the respondent. ... CORAM:MOHIT S. SHAH, C.J. & S.B.SHUKRE, J.DATE :6 March 2014 ORAL ORDER:(Per Chief Justice) Admit. With consent of parties taken up for final hearing. 2.In this appeal filed by the assessee the following questions have been raised as substantial questions of law:- a)Whether the impugned order passed by the Tribunal rejecting the application for condonation of delay of the appellant in filing the appeal against the order dated 30 March 2012 passed by the Commissioner of Income-tax (Appeals) is illegal, arbitrary and unreasonable inasmuch as there was no mala fide intention on the part of the appellant in delaying the matter nor is it the case of the respondents that the appellant mala fidely delayed the filing of the appeal? b)Whether the law in respect of condonation of delay have been well-settled, and it is the cause of delay which is important for the purpose of considering the application for condonation of delay; and not the length of the delay? txa-27-14 c)Whether the Appellate Tribunal committed error of law in rejecting the application filed by the appellant for condonation of delay? 3.Substantial question of law is re-framed as under:- “Whether the Tribunal fell in substantial error of law in rejecting the application for condonation of delay? 4.The appeal is directed against the order dated 25 July 2013 of the Income Tax Appellate Tribunal (ITAT), Panaji Bench dismissing the appellant's application for condonation of 253 days delay in filing an appeal against the order of CIT(Appeals). 5.The Assessing Officer passed an order dated 29 December 2008 under Section 143(3) r.w. Section 144 of the Income Tax Act, 1961 and determined the income of the appellant as Rs.23,18,959/- and raised demand for Rs.11,87,547/-. 6.Aggrieved by the above order, the appellant-assessee filed an appeal before the Commissioner of Income Tax (CIT) (Appeals), who dismissed the appeal by his order dated 30 March 2012. The CIT (Appeals) held that the genuineness of the transaction and the existence of the outstanding liabilities in seven cases as on 31 March 2006 were not established by the assessee and that the assessee had failed to produce any material/evidence to show that the liabilities were paid during the subsequent period. kambli txa-27-14 7.The appellant received the order of the CIT (Appeals) on 12 April 2012 and filed an appeal before the ITAT on 20 February 2013 against the aforesaid order of the CIT (Appeals), with an application for condonation of delay of 253 days. By the impugned order dated 25 July 2013, the Tribunal dismissed the application for condonation of delay and refused to condone the delay. Hence, this appeal under Section 260-A of the Income Tax Act, 1961. 8.In the application dated 20 February 2013 for condonation of delay filed by Mr.Mustaq Shaikh, one of the partners of the firm, the main reason given by the appellant-firm was that the appellant-firm sought legal opinion from the counsel, which took a long time and caused delay and therefore same may be condoned. kambli txa-27-14 7.The appellant received the order of the CIT (Appeals) on 12 April 2012 and filed an appeal before the ITAT on 20 February 2013 against the aforesaid order of the CIT (Appeals), with an application for condonation of delay of 253 days. By the impugned order dated 25 July 2013, the Tribunal dismissed the application for condonation of delay and refused to condone the delay. Hence, this appeal under Section 260-A of the Income Tax Act, 1961. 8.In the application dated 20 February 2013 for condonation of delay filed by Mr.Mustaq Shaikh, one of the partners of the firm, the main reason given by the appellant-firm was that the appellant-firm sought legal opinion from the counsel, which took a long time and caused delay and therefore same may be condoned. 9.At the hearing before the Tribunal, however, it was pointed on behalf of the appellant-firm that Shaikh Ahmad, managing partner of the appellant-firm died on 15 November 2011 and therefore due to disturbing situation the other partners could not apply their mind even though order of CIT (Appeals) was received on 12 April 2012. This fact was placed before the Tribunal by way of “addendum to appeal memo and application for condonation of delay” dated 19 June 2013. It was stated that Shaikh Ahmad was the senior and managing partner of the firm, that the continuing partners were not aware of the detailed business transactions as also the record maintained by late Shaikh Ahmad. The business had been closed due to the circumstances beyond the control of the partners, who were inexperienced and had no knowledge in maintaining records and conducting business the way late Shaikh Ahmad had managed it. It was further pointed out that both the continuing partners were young and inexperienced and there was delay in seeking legal opinion in respect of provisions of Section 44AF and Section 43B involved in the appeal. kambli 10. The Tribunal observed that this fact was placed before the Tribunal by way of letter and not on affidavit. The Tribunal further observed that the appellant-assessee had not given particulars as to whose opinion was sought, when that legal opinion was sought and when legal opinion was given by the counsel to the assessee for filing an appeal. 11.At the hearing of this appeal yesterday, in view of the observations made by the Tribunal that the letter dated 19 June 2013 was not on affidavit, we called upon the learned counsel for the appellant-assessee to place before us the appeal memo filed before the CIT (Appeals) to find out as to who had filed the appeal before the CIT (Appeals). It was necessary to ascertain this fact as Mr.Mustaq Shaikh, one of the continuing partners had stated in the addendum to the appeal memo and the application for condonation of delay that accounts and income-tax matters were being handled by Shaikh Ahmad, who was the senior and managing partner of the firm. 12.Today, learned counsel for the appellant has placed before us a copy of the letter dated 27 January 2009. It was signed by Shaikh Ahmad on behalf of the appellant-firm and also a copy of the appeal memo filed before the CIT (Appeals) on 27 January 2009, which was also signed by Shaikh Ahmad. 13.It is thus clear that Shaikh Ahmad, who was the senior partner of the firm was looking after the accounts and income-tax matters of the appellant-firm and therefore the explanation offered by the appellant-firm that on account of the death of Shaikh Ahmad, senior partner on 15 November 2011, the continuing partners, who are young and inexperienced, could not apply their mind immediately for kambli taking legal opinion and for giving suitable instructions for filing an appeal. It is also to be noted that the appellant's case is that the appellant-firm has been making loss and the appellant was required to take legal opinion on the question arising from Under Section 44AF and Section 43 B of the Act. 13.It is thus clear that Shaikh Ahmad, who was the senior partner of the firm was looking after the accounts and income-tax matters of the appellant-firm and therefore the explanation offered by the appellant-firm that on account of the death of Shaikh Ahmad, senior partner on 15 November 2011, the continuing partners, who are young and inexperienced, could not apply their mind immediately for kambli taking legal opinion and for giving suitable instructions for filing an appeal. It is also to be noted that the appellant's case is that the appellant-firm has been making loss and the appellant was required to take legal opinion on the question arising from Under Section 44AF and Section 43 B of the Act. 14.It is true that the delay is not of few days , but at the same time the delay is not inordinate and there is nothing to doubt the bonafides of the continuing partners of the appellant-firm for the delay in filing an appeal by applying the test for interpretation on expression “sufficient cause” as laid down by the Supreme Court in various decisions. The Supreme Court in Esha Bhattacharjee v/s. Managing Committee of Raghunathpur Nafar Academy and ors, 2013(11) SCALE 418 has observed that there has to be a liberal, pragmatic, justice-oriented, non-pedantic approach while dealing with an application for condonation of delay. No presumption can be attached to deliberate causation of delay. Lack of bona fides imputable to a party seeking condonation of delay is a significant and relevant fact. The conduct, behavior and attitude of a party relating to its inaction or negligence are relevant factors to be taken into consideration. 15.Applying the well-settled principles for condonation of delay, we find that the appellant has shown sufficient cause for condonation of 253 days in filing an appeal. The Tribunal did not apply the correct legal test and did not even consider the explanation offered by the appellant that the senior managing partner of the appellant-firm had died a few months before the CIT (Appeals) passed the order adverse to the appellant-firm. According to the appellant, it had suffered net loss of Rs.5,58 lakh as per its books of account. The Assessing Officer, as confirmed by the CIT(Appeals) determined the kambli 6 txa-27-14 income of the appellant as Rs.23.19 lakh. The question of applicability of Section 44AF and Section 43B was involved and the young inexperienced partners of the firm including the sons of the deceased Shaikh Ahmad did take some time in seeking legal opinion. 16.In view of the above discussion, we are of the view that the Tribunal committed substantial error of law in not considering the material on record. If the Tribunal had any doubt about the stand adopted in the addendum dated 19 June 2013, the same should not have been brushed aside only on the ground that there was no affidavit filed in support of the said addendum. As pointed out, hereinabove, we called for the papers of the appeal memo and we have found that it was Shaikh Ahmad, the deceased partner of the firm, who was looking after the income-tax affairs of the appellant-firm. 17.In view of the above discussion, the appeal is allowed. The impugned order dated 25 July 2013 of the Income Tax Appellate Tribunal is set aside. The Tribunal shall hear and decide the appellant's appeal for the assessment year 2006-07 on merits. CHIEF JUSTICE (S.B.SHUKRE, J.)