2012-VIL-961-ITAT-CHN

Income Tax Appellate Tribunal COCHIN

I.T.A No. 10/Coch/2012

Date: 27.07.2012

KAIKARA CONSTRUCTION COMPANY

Vs

J.C.I.T., CIR. 1, KOLLAM

For the Appellant : Shri A.S. Narayanamurthy
For the Respondent : Smt. S Vijayaprabha

BENCH

Shri N.R.S. Ganesan (JM) and Shri B.R. Baskaran (AM)

JUDGMENT

Per N.R.S. Ganesan (JM)

This appeal of the assessee is directed against the order of Commissioner of Income-tax(A), Trivandrum dated 16-12-2011 and pertains to assessment year 2007-08.

2. The only issue arises before this Tribunal is condonation of delay in filing the appeal before the Commissioner of Income-tax(A).

3. Shri A.S. Narayanamurthy, the ld. representative for the assessee submitted that the assessee is engaged in the business of civil construction. The assessment order dated 24-12-2009 was served on the assessee on 29-12-2009. Therefore, the assessee was expected to file the appeal on or before 30th January, 2010. However, the appeal before the Commissioner of Income-tax(A) was filed on 11-05-2010. Therefore, there was a delay of 100 days. According to the ld. representative, the reason for not filing the appeal before the Commissioner of Income-tax(A) is beyond the control of the assessee. From the year 2005-06 due to non honouring of the bills by the customers, the assessee was facing severe financial problem. The assessee obtained a loan of Rs. 7 crores from South Indian Bank Ltd. Due to financial crisis, the loan turned out to be a non performing asset and the bank initiated recovery proceedings before the Debt Recovery Tribunal and under the provisions of Securitisation and Reconstruction of Financial Asset and Enforcement of Security Interest (SARFAESI) Act. Moreover, there was arbitration proceedings against the Kerala State PWD in connection with the execution of National Highway. Huge amount was due from the state government. The assessee had to appear personally before the DRT and the Arbitrator.

4. The ld. representative further submitted that the assessee had also dispute with Public Work Department, Government of Pondicherry. The assessee had also filed an application for appoint of Arbitrator before the Madras High Court. Due to financial crisis and the multiple litigation and court proceedings the assessee could not concentrate on business; therefore, the assessee could not file the appeal within the prescribed time before the Commissioner of Income-tax(A). According to the ld. representative, the delay was beyond the control of the assessee.

5. On the contrary, Smt. Vijayaprabha, the ld. DR submitted that there was no reasonable cause on the part of the assessee for not filing the appeal before the Commissioner of Income-tax(A). According to the ld. DR, the court proceedings and other litigations were not sufficient cause for not filing the appeal in time.

6. We have considered the rival submissions on either side and also perused the material available on record. Admittedly, there was delay of 100 days in filing the appeal before the Commissioner of Income-tax(A). The assessee claims that it was prevented by sufficient cause from filing the appeal within the due date. It is not in dispute that the bills raised against the customers of the assessee were dishonoured and the loan obtained from South Indian Bank to the extent of Rs. 7 crores became non performing asset. The bank has also initiated proceedings before the Debt Recovery Tribunal. A similar litigation has also arisen with Kerala State PWD and Pondichery PWD. When a business man in financial crisis and facing multiple legal proceedings, he may not be in a position to concentrate on his business and prosecute the income-tax matters. This Tribunal is of the opinion that the financial crisis might have prevented the assessee from filing the appeal within the due date. When a business man is in acute financial problem the first attempt would be to restore the financial position in order to run the business smoothly. In those factual situations, this Tribunal is of the opinion that there was a reasonable cause in not filing the appeal before the Commissioner of Income-tax(A). When there is a conflict between technicalities and substantial justice, the substantial justice has to be preferred rather than technicalities. This view of this Tribunal is fortified by the judgment of the Apex Court in Collector, Land Acquisition v MST. Kattiji [1987] 167 ITR 471. By following the judgment of the Apex Court in MST Kattiji (supra) and for the reasons stated therein the delay of 100 days in filing the appeal before Commissioner of Income-tax(A) is condoned. Accordingly, the order of the Commissioner of Income-tax(A) is set aside and the appeal of the assessee stands restored on the file of the Commissioner of Income-tax(A). The Commissioner of Income-tax(A) shall dispose of the appeal on merit, after giving reasonable opportunity to the assessee.

7. In the result, the appeal of the assessee stands allowed.

 

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