2006-VIL-354-ITAT-MUM

Equivalent Citation: [2006] 10 SOT 139 (MUM.)

Income Tax Appellate Tribunal MUMBAI

IT APPEAL NO. 311 (MUM.) OF 2004

Date: 07.04.2006

ANGELA J. KAZI

Vs

INCOME-TAX OFFICER, WARD 27(3) PIRAMAL CHAMBERS, LALBAUG, MUMBAI

BENCH

G.E. VEERABHADRAPPA AND RAJPAL YADAV, JJ.

JUDGMENT

Rajpal Yadav, Judicial Member. - The assessee is in appeal before us against the order of ld. CIT(A)XI, Mumbai dated 21-3-1996 passed for assessment year 1993-94. The grievance of assessee relates to denial of benefit of section 54 of the Income-tax Act.

2. The Registry has pointed out that appeal is time-barred by 7 years and 192 days. In order to explain the delay assessee has filed a detailed affidavit and explained the circumstances. According to the assessee she has purchased a flat in December 1978. It was sold on 27-10-1992 and she booked Flat No. 702 in Depali Apartments with one M/s. Bemisal builders on 2-4-1993. She submitted a computation of capital gain on the sale of the flat and claimed exemption under section 54 of the Act also. The ld. Assessing Officer differed with the valuation adopted by the assessee as on 1-4-1981 and also denied the benefit admissible under section 54 to the Act. In this way ld. Assessing Officer has assessed the income of assessee at Rs. 27,56,690 as against Rs. 44,390. This order was framed under section 143(3) on 30-11-1995.

3. Dissatisfied with the determination of total income at Rs. 27,56,690 assessee carried the matter in appeal before ld. CIT(A) and raised two issues. At the first count assessee impugned the finding of Assessing Officer with regard to denial of benefit admissible under section 54 and in the second count she disputed the determination of value of the flat sold as on 1-4-1981, as adopted by the Assessing Officer.

4. The ld. CIT(A) vide his order dated 21-3-1996 has rejected the first claim of assessee on the ground that assessee could only produce the booking of the flat and she could not produce the sale agreement if any executed with the builder, therefore, she does not fulfil the requisite condition formulated in section 54 of the Act.

5. With regard to the second issue ld. CIT(A) set aside the dispute to the Assessing Officer for fresh determination.

6. It emerges out from the record that Assessing Officer re-determined the valuation of the original flat as on 1-4-1981 vide his order dated 27-9-1996. The matter travelled to the CIT(A) in second round of litigation and ld. CIT(A) upheld the order of the Assessing Officer vide his order dated 21-1-1997.

7. Dissatisfied with this order of the ld. CIT(A) assessee carried the matter in appeal before the Tribunal in ITA No. 2651/M/97.

8. During the pendancy of the dispute in the second round one more event had developed with regard to the purchase of new flat. Since the builder was not executing the sale agreement with the assessee she approached the Maharashtra State Consumer Dispute Redressal Commission at Bombay vide complaint No. 97 of 1995. The builder filed the reply to the complaint and ultimately the Commission had decided the complaint of assessee vide order dated 16-5-1996. In its order the Commission directed the builder to execute agreement within a period of eight weeks from the date of order. Consequent thereupon the builder has executed the agreement on 22-5-1996. The copies of all these documents are placed in the paper book at pages 21 to 68.

9. On the strength of these documents again the second order of ld. CIT(A) assessee raised two grounds of appeal in the Tribunal and contended that she is entitled for relief under section 54 of the Act with regard to her investment made in purchase of new flat and in the second ground she disputed the valuation of the old flat as on 1-4-1981.

10. The Tribunal vide its order dated 8-10-2003 held that as far as that dispute raised with regard to the relief admissible under section 54 is concerned no such dispute emerges out from the record particularly against the second order of ld. CIT(A), hence assessee cannot be permitted to raise this ground and the Tribunal rejected the ground of appeal being not maintainable. As far as the other issue is concerned that is not relevant for the purpose of deciding present appeal, therefore, we refrain ourselves for taking cognizance of the facts relating to valuation of the old flat as has been settled in the earlier round of litigation up to the Tribunal.

11. In the above background ld. counsel for the assessee pointed out that assessee is an individual lady, whose married life also run in rough weather and admittedly divorce had taken place. She shifted herself from Bombay to Goa. She could not file the appeal against the first order of the CIT(A) before the ITAT primarily because of two reasons, firstly she remained under the impression that unless sale agreement is executed with the builder she will not get the benefit under section 54 as held by the Assessing Officer and CIT(A) in the first round of their orders. Under this impression she approached the Dispute Redressal Commission and consequently got the sale agreement executed. She remained under the impression that the moment she will get sale agreement benefit under section 54 would be given to her. Only after the adjudication of the dispute by the Tribunal in the second round of appeal assessee could understand that she has approached a wrong Forum and she should have challenged the original order of the ld. CIT(A) also before the Tribunal. She contended that there is no mala fide intention on the part of the assessee for not filing the appeal before the Tribunal. Because of the litigation at various stages i.e., Consumer Court, Family Court for diverse and shifting of her residence from Bombay to Goa this delay has occurred. Ld. counsel for the assessee prayed that considering the totality of the circumstances the delay in filing the appeal may please be condoned and decide the issue on merit.

12. On the other hand, while opposing the contention of assessee ld. D.R submitted that when assessee filed the appeal in 1997 before the Tribunal against the order of the ld. CIT(A) she could have filed this appeal also, hence the reasons narrated by the assessee in the affidavit are not sufficient to condone the delay of almost more than 7½ years.

13. We have duly considered the rival contentions. The Courts and the quasi-judicial bodies are empowered to condone the delay if a litigant satisfied the Court that there were sufficient reasons for availing the remedy after expiry of the limitation. Such reasoning should be to the satisfaction of the Court. The expression "sufficient cause or reason" as provided in sub-section (5) of section 253 of the IT Act is used in identical position in the Limitation Act and the CPC. Such expression has also been used in other sections of the IT Act such as sections 274, 273, etc. The expression "sufficient cause" within the meaning of section 5 of the Limitation Act as well as similar other provisions, the ambit of exercise of powers thereunder have been subject-matter of consideration before the Hon’ble Supreme Court on various occasions. In the case of State of West Bengal v. Administrator, Howrah Municipality AIR 1972 SC 749 the Hon’ble Supreme Court while considering the scope of expression "sufficient cause" for condonation of delay has held that the said expression should receive a liberal construction so as to advance the substantial justice when no negligence or inaction or want of bona fide is imputable to party.

14. In the case of N. Balakrishnan v. M. Krishnamurthy AIR 1998 SC 3222, there was a delay of 883 days in filing an application for setting aside the ex parte decree for which application for condonation of delay was filed. The trial Court having found that sufficient cause was made out for condonation of delay condoned the delay. However, the Hon’ble High Court reversed the order of the trial Court. The Hon’ble Supreme Court while restoring the order of the trial Court has observed in paras 8, 9 and 10 as under :—

"8. The appellant’s conduct does not on the whole warrant to castigate him as an irresponsible litigant. What he did in defending the suit was not very much far from what a litigant would broadly do. Of course, it may be said that he should have been more vigilant by visiting his advocate at short intervals to check up the progress of the litigation. But during these days when everybody is fully occupied with his own avocation of life an omission to adopt such extra vigilance need not be used as ground to depict him as a litigant not aware of his responsibilities, and to visit him with drastic consequences.

9. It is axiomatic that condonation of delay is a matter of discretion of the Court. Section 5 of the Limitation Act does not say that such discretion can be exercised only if the delay is within a certain limit. Length of delay is no matter, acceptability of the explanation is the only criterion. Sometimes delay of the shortest range may be uncondonable due to a want of acceptable explanation, whereas in certain other cases, delay of a very long range can be condoned as the explanation thereof is satisfactory. Once the Court accepts the explanation as sufficient, it is the result of positive exercise of discretion and normally the superior Court should not disturb such finding, much less in revisional jurisdiction, unless the exercise of discretion was on wholly untenable grounds or arbitrary or perverse. But it is a different matter when the first Court refuses to condone the delay. In such cases, the superior Court would be free to consider the cause shown for the delay afresh and in its own finding even untrammelled by the conclusion of the lower Court.

10. ******

The primary function of a Court is to adjudicate the dispute between the parties and to advance substantial justice. The time-limit fixed for approaching the Court in different situations is not because on the expiry of such time a bad cause would transform into a good cause." [Emphasis supplied]

The Hon’ble Supreme Court further observed that rules of limitation are not meant to destroy the rights of the parties. They are meant to see that parties do not resort to dilatory tactics, but seek the remedy promptly. The Hon’ble Court further observed that refusal to condone the delay would result in foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the Court is always deliberate. The Hon’ble Supreme Court in SLP [Civil No. 12980 of 1986, decided on 19th Feb., 1987, in the case of Collector, Land Acquisition v. Mst. Katiji (1987) 62 CTR (Syn) 23 (SC)] has laid down the following guidelines :

1. Ordinarly a litigant does not stand to benefit by lodging an appeal late.

2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest then can happen is that a cause would be decided on merits after hearing the parties.

3. "Every day’s delay must be explained" does not mean that a pedantic approach should be made, why not every hour’s delay, every second’s delay. The doctrine must be applied on a rational commonsense pragmatic manner.

4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay.

5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of 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 so.

Making a justice-oriented approach from this perspective; there was sufficient cause for condoning the delay in the institution of the appeal. The fact that it was the "State" which was seeking condonation and not a private party was altogether irrelevant."

15. Keeping in mind the above authoritative pronouncements of the Hon’ble Supreme Court if we advert to the facts of the present case then it revealed that explanation of the assessee does not smack mala fide or does not put forth as a dilatory strategy. It must be remembered that in every case of delay there can be some lapse on the part of the litigant concerned but that alone is not enough to turn down the plea and to shut the doors against him. As observed by the Hon’ble Supreme Court in the case of N. Balakrishnan (supra) the length of delay is immaterial. It is the acceptability of the explanation, that is the only criteria for condoning the delay. Though there is a delay of more than 7½ years and some negligence can be attributed to the assessee but it appears to us that she became victim of circumstances only. Such circumstance had also been developed because of procedural delay and long pendancy of litigation at different level. Against the second order of the ld. CIT(A) assessee has filed the appeal in 1997 and the Tribunal took six years to adjudicate that appeal. In this appeal she has taken the ground regarding admissibility of relief under section 54 and after the decision of this appeal she could understand that she has wrongly taken up this ground against the second order of the ld. CIT(A), apropos to it she should have challenged the first order of the ld. CIT(A) i.e., impugned herein. In this situation had the Tribunal not taken six years in disposing of the appeal of assessee she could have not supposed to explain at least these six years of the delay. In the case of Nand Kishore v. State of Punjab 1995 (6) SCC 614 the Hon’ble Supreme Court has condoned the delay of 31 years almost under the similar circumstances. There the petitioner has joined service in the erstwhile Patiala State in May 1941. On the formation of Pepsu State he was taken as an assistant w.e.f. 1-9-1956. Subsequently Pepsu state was merged with State of Punjab. He was integrated as assistant in the Punjab Civil Secretariat at Chandigarh in the Food Distribution Branch. He completed 10 years qualifying service. However, he was compulsorily retired on 6-1-1961. He challenged this order of retirement by way of writ petition in the Punjab & Haryana High Court. The writ petition was dismissed on 2-2-1962. In the writ petition the petitioner had not challenged validity of rule 5.32 of the Punjab Civil Service Rule Vol. II. Subsequently this rule was challenged by some other employees and the Hon’ble Supreme Court has taken the view that it was not permissible for a State while reserving to itself the power of compulsory retirement by framing rules prescribing a proper age of superannuation to form another one giving it the power to compulsorily retire a Government servant at the end of 10 years’ service. According to the Hon’ble Supreme Court that rule cannot fall outside article 311(2) of the Constitution. After this decision the petitioner Nand Kishore filed a civil suit which travelled up to the Hon’ble Supreme Court and while hearing the appeal the Hon’ble Court had advised the petitioner to challenge the order of the High Court passed on the writ petition in 1962. Taking into consideration the injustice to the employee the Hon’ble Court has condoned the long delay of 31 years and decided the appeal on merit. Taking into consideration the over all circumstances and judgment of Hon’ble Supreme Court in the larger interest of justice we condone the delay in filing the appeal and proceed to decide the issue on merit.

16. On merit we find that in order to demonstrate that assessee has purchased the new flat out of the sale proceeds of the old flat she placed on record the letter of booking dated 2-4-1993 (page 9 P.B.), Bank Statement reflecting the debit entry of the amounts paid for the purchase of new flat, copy of the cheque paid to the Builder (Page 19, P.B.), petition filed before the State Redressal Commission, copy of the order of the State Redressal Commission (Page 34, P.B.) and the ultimate sale agreement dated 22-5-1996, which is in pursuance of booking of the flat. On the strength of all these documents ld. counsel for the assessee claimed that relief under section 54 be granted to the assessee. On the other hand, ld. D.R. relied upon the order of ld. CIT(A) and contended that Assessing Officer has never occasion to go through these documents, therefore, this issue be set aside to the file of Assessing Officer.

17. We have duly considered the rival contention. From the documents placed before us we are satisfied that assessee had made investment in the purchase of new flat i.e., in May, 1993 itself which indicate that such investment has been made within one year of the sale of old flat. The documents i.e., the order of State Redressal Commissioner coupled with the sale agreement duly reflect that new flat was purchased by the assessee well within the time. Such sale agreement has been executed in pursuance of the State Redressal Commissioner’s order, therefore, its authenticity cannot be doubted. The dispute relates to assessment year 1993-94 assessee has already undertaken two rounds of litigation up to the Tribunal as well as in different forums. Therefore, taking into consideration all these circumstances we do not see any good reason to set aside this issue to the file of Assessing Officer. We allow this ground of appeal of assessee and direct the Assessing Officer to grant relief under section 54 of the Act to the assessee. However, we remit the computation of relief admissible under section 54 to the Assessing Officer. He shall compute the relief taking into consideration the payments made by the assessee within the time limit and he shall carry out such exercise after affording due opportunity of hearing to the assessee.

18. In the result, the appeal of the assessee is allowed.

 

DISCLAIMER: Though all efforts have been made to reproduce the order accurately and correctly however the access, usage and circulation is subject to the condition that VATinfoline Multimedia is not responsible/liable for any loss or damage caused to anyone due to any mistake/error/omissions.