ABDUL RAZACK, J.M. : -
(1.) WHETHER the order/decision of the Tribunal can constitute a reasonable cause for condonation of delay in filing the cross-objections is the issue to be decided at the first instance before we admit and entertain and decide the cross-objections, filed by the assessee, on merits.
(2.) Being aggrieved against the orders passed by the Assessing Officer relating to asst. yrs. 1984-85 and 1985-86, the assessee preferred appeals before the first appellate authority which were disposed of on 8th August, 1988. The Department not being satisfied with the order passed by the CIT(A) preferred appeals before the Tribunal on 15th November, 1988 being ITA Nos. 2868 & 2869/Ahd/1988. The assessee received copies of the appeal papers from the Tribunal on 17th November, 1990 and according to the provisions of sub-s. (4) of S. 253 of the IT Act, 1961, the assessee was entitled to file memorandum of the cross-objections within 30 days from the date of receipt of the appeal papers from the Tribunal. However, the cross-objections were filed on 18th May, 1992. Thus, there is a delay of 518 days in filing the cross-objections. The cross-objections mainly dispute the disallowance under S. 37(3B) in respect of expenditure on running and maintenance of motor car and expenditure on diwali cards posters considered as sales promotion expenses for the purpose of disallowance under S. 37(3A) of the Act. The appeals filed by the Revenue as well as the cross-objections filed by the assessee were fixed for hearing on 23rd August, 1993. While the appeals filed by the Revenue were heard and disposed of, the cross-abjections being barred by time were not heard on merits and the counsel appearing on behalf of the assessee was directed to advance arguments regarding the causes for the delay in filing the cross-objections. The assessees counsel Shri S. N. Soparkar submitted that the assessee came to know from the order of the Tribunal, Ahmedabad Bench in ITA No. 1410/Ahd/1988 for asst. yr. 1984-85 reported in Ahmedabad C.A. Journal 1991 at page 510 that the account for the purpose of computing disallowance under S. 37(3A) r/w S. 37(3B) of the IT Act. It was further contended that the assessee-company after having come to know of the aforesaid order of the Ahmedabad Bench of the Tribunal consulted its legal advisor, who advised it to file cross-objections though it was late. Later, on 24th August, 1993 the assessee-company also filed an application for condonation of the delay mentioning therein the above mentioned submissions made by the assessees counsel. According to the assessees counsel, this constituted a reasonable cause and, therefore, the Tribunal should condone the delay of 518 days in filing the cross-objections and admit, hear and dispose of the cross-objections on merits and in accordance with law. To support the submissions, the assessees counsel relied on the judgment of Supreme Court as well as various High Courts, the citations of which are given as under : (i) Karamchand Premchand Pvt. Ltd. vs. CIT (1975) 101 ITR 46 (Guj); (ii) State of Andhra Pradesh vs. Venkataramana Chuduva & Muramura Merchant & Anr. (1986) 159 ITR 59 (AP); (iii) CIT vs. Sothia Mining & Manufacturing Corpn. Ltd. (1990) 186 ITR 182 (Cal); (iv) Collector, Land Acquisition vs. Mst. Katiji & Ors. (1987) 167 ITR 471 (SC).
The Departmental Representative appearing for the Revenue vehemently opposed the submissions made by the assessees counsel and submitted that the assessee has not come out with reasonable causes requiring any condonation by us and, therefore, the cross-objections filed belatedly by 518 days should be dismissed.
(3.) THE arguments of the contesting parties were heard. THE cases relied upon by the assessees counsel were also examined and studied in detail by us. We have also on our own looked into the decided case laws on the subject to arrive at a fair conclusion. THE decisions relied upon by the assessees counsel, in our view, cannot come to its rescue for condoning the delay. We have carefully examined the facts of the cases relied upon by the assessees counsel. In the case of Karamchand Premchand Pvt. Ltd. vs. CIT (supra), which was before the Honble Gujarat High Court, a revision petition was filed before the CIT after decision of the Supreme Court touching upon the grievance affecting the assessee. THE revision petition was belatedly filed and the CIT declined to condone the delay and dismissed the revision petition. Being aggrieved, the assessee-company filed a writ petition before the Honble Gujarat High Court averring that the assessee became aware of the true legal position in respect of its grievance only after the pronouncement of judgment by the Supreme Court and since the decision of the Supreme Court amounted to declaration of law as per Art. 141 of the Constitution of India and such declaration having retrospective effect in law, the assessee was entitled to get its grievance redressed through revision proceedings under S. 264 of the IT Act, before the CIT and the CIT ought to have condoned the delay on this ground. THE Hobble Gujarat High Court after considering the facts and the merits of the case held as under : "THE decision of the Supreme Court amounted to a declaration of law as contemplated by Art. 141 of the Constitution of India. This declaration of law had retrospective effect and rendered the assessment of the expenditure in connection with the debentures illegal, because that assessment was passed on a wrong view that the expenditure in question was capital expenditure. This apparent illegality crept into the assessment and became quite apparent only because of the decision of the Supreme Court. It was, therefore, only after the decision of the Supreme Court that the petitioner had reason to move the CIT in revision. It was obviously because the real legal position appeared to be settled that the petitioner did not keep the question alive. THErefore, for the purpose of decision whether the petitioner had sufficient cause for not preferring the revision application in time, the fact that it did not keep the question alive by preferring appeals, which were likely to prove infructuous, did not make any difference." 4.1 In the case of State of Andhra Pradesh vs. Venkataramana Chuduva & Muramura Merchant & Anr. (supra), which was before the Andhra Pradesh High Court, the first appellate authority declined to admit and entertain the appeal of the assessee which was belatedly filed after decision of the Supreme Court. In that case also, their Lordships of the Andhra Pradesh High Court held as under : "That one of the remedies open to the assessee was to prefer on appeal or revision, as the case may be, along with the petition for condoning the delay, on the ground that in view of the position of law obtaining on the date of receipt of the impugned order, they decided not to file an appeal, but that since the subsequent decision of the Supreme Court established that assumption to be incorrect and further that the tax had been illegally collected from them, they were subsequently preferring the appeal and that that should constitute sufficient cause for delay within the meaning of the proviso to sub-s. (1) of S. 19 , or sub-s. (2) of S. 21 or the proviso to sub-s. (1) of S. 22 of the Act, as the case may be. Further, in view of Art. 265 of the Constitution, a subsequent decision of the High Court or the Supreme Court which changed the position, the interpretation or the understanding of law, constituted sufficient cause for condoning the delay in filing the appeal or revision, as the case may be, where it was established that on the date of receipt of the impugned order, the filing of an appeal or revision would be an empty formality, having regard to the position of law then obtaining. That would be so, whether the assessee raised the dispute before the authority, or paid the tax under a mutual mistake. THErefore, the Tribunal was right in holding that the assessee had sufficient cause for not filing the appeals within the time prescribed, and in holding that the delay ought to have been condoned." 4.2 Similar view was taken by the Calcutta High Court in the case of CIT vs. Sothia Mining & Manufacturing Corpn. Ltd. (supra) that after decision of the Supreme Court if an appeal is preferred, then the delay has to be condoned for this reason. THE Supreme Court while deciding the case of Collector, Land Acquisition vs. Mst. Katiji & Ors. (supra) has laid down as under : "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. THE doctrine of equality before law demands that all litigants, including the State as a litigant, are accorded the same treatment and the law is administered in an even-handed manner. THEre is no warrant for according a step-motherly treatment when the State is the applicant praying for condonation of delay. In fact, experience shows that on account of an impersonal machinery (no one in charge of the matter is directly hit or hurt by the judgment sought to be subjected to appeal) and the inherited bureaucratic methodology imbued with the note making, file-pushing, and pasing-on-the-buck ethos, delay on its part is less difficult to understand though more difficult to approve. In any event, the State which represents the collective cause of the community, does not deserve a litigant non grata status.";