FIRST INCOME TAX OFFICER Vs. A N MAFATLAL HUF
INCOME TAX APPELLATE TRIBUNAL
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V. Balasubramanian, Vice President -
(1.) FOR the assessment year 1974-75 the assessment was completed in this case on 27-3-1975. The assessee had returned income of Rs. 3,67,187 as long-term capital gains relating to an immovable property. The ITO accepted this figure as returned and this formed part of the assessed income for the year. The assessment order and demand notice relating to the above assessment was served on the assessee on 18-8-1975 and apparently, the assessee accepted the assessment order and there was no appeal filed. On 3-10-1980 the assessee filed an appeal before the Commissioner (Appeals) with a request for condonation of the delay in filing the appeal and claiming to exclude the long-term capital gains originally included in the assessment. The request to condone the delay in filing the appeal was based, according to the assessee, on a news item in the Economic Times dated 19-3-1980 which reported a decision of the Bombay High Court decided on a writ petition in the case of Manutbhai A. Sheth v. N.D. Nirgudkar, Second ITO  128 ITR 87 that capital gains arising on the sale of agricultural land used for agricultural purposes was not liable to tax. The assessee sought to explain before the Commissioner (Appeals) that mistakenly he had returned the income at the original stage, but after the decision of the Bombay High Court which came to his notice, he knew that the above income was not liable to tax. After the news item appeared in the Economic Times, he waited to collect the actual judgment laying down the above proposition and immediately after his legal advisers looked into the matter and without any further delay filed an appeal. The Commissioner (Appeals) found that there were two periods of delay to be condoned, the one up to the publication of the judgment in the Economic Times and another thereafter. He was satisfied that for both these periods the assessee had sufficient cause for not filing the appeal on time. He, therefore, allowed the assessee's appeal condoning the delay and relying on the decision of the Bombay High Court on merits. The departmental appeal is directed against this order of the Commissioner (Appeals).
(2.) The learned counsel for the department has challenged the order of the Commissioner (Appeals) primarily on the three grounds, viz., condonation of delay, admission of fresh evidence by the Commissioner (Appeals) without satisfying the conditions of Rule 46A and the decision on merits as to the liability itself. Further, an additional ground is put in stating that the very appeal to the Commissioner (Appeals) was incompetent insofar as the ITO having accepted the return filed by the assessee, the assessee was in no way aggrieved so as to resort to the appeal provisions of the Income-tax Act, 1961 ('the Act').
On this additional ground the learned counsel for the assessee has challenged it, claiming that the ground not having been taken before the Commissioner (Appeals), it was not open to the department to take it for the first time before the Tribunal. The position of the admission of the additional ground is not only peculiar, but it is particularly singular. Here is a case where the assessee filed a return which was accepted and did not even file an appeal for as long as 5 years but comes up with an appeal which was admitted by the Commissioner (Appeals) condoing the delay, apparently raising a ground. Delay in filing an appeal, etc., is so basic to this flow of events that we fail to see how the learned counsel for the assessee can even raise an objection about the department not having raised this ground before the Commissioner (Appeals) where he seeks admission himself. The additional ground has to be admitted.
(3.) THE real issue before us relates to the condonation of delay in filing the appeal by the Commissioner (Appeals). That the assessee returned this income and it was assessed without demand is not disputed. THE learned counsel has pointed out that when the ITO had simply accepted the return filed before him, the assessee could not have any grievance. Assuming it to be so for the argument sake, according to the learned counsel, the delay in filing the appeal was so long that it can never be condoned. THE assessee, relying on a decision of the Bombay High Court in some other case, could not have taken the time in coming to know of such a judgment as time to be not accounted for limitation purposes for filing an appeal (sic). THEre are several decisions published from day-to-day and several judgments delivered by the High Courts and the Supreme Court and if all settled matters were to be disturbed with delivery of every such judgment, according to the learned counsel, there would be no settled law in the country at all. Everything will be unsettled and finality would be unknown. It is also pointed out that apart from generally giving an explanation for the delay in filing of an appeal, the assessee has to explain every day of the default. This he can do neither with reference to the period up to the time the decision was noted in the Economic Times nor the period thereafter up to the date of filing the appeal. A mere general statement of the assessee that until he saw the item in the newspaper he was not aggrieved and that immediately thereafter he consulted his lawyer and filed the appeal would not be sufficient to condone the long delay in filing the appeal.;
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