TMI Blog2006 (8) TMI 277X X X X Extracts X X X X X X X X Extracts X X X X ..... y treatment. In this context, the decision of Hon'ble Punjab Haryana High Court in the case of CIT v. Ram Mohan Kabra [ 1999 (1) TMI 4 - PUNJAB AND HARYANA HIGH COURT] is relevant. Thus, we are of the opinion that in the present case, the cause of substantial justice would not be served by condoning the inordinate delay of 310 days for which no cogent reason has been given. In the result, the assessee's appeal is dismissed. Judicial Member - The power given to the Tribunal is not to legalise an injustice on technical ground but to do substantial justice by removing the injustice. The Parliament conferred power on this Tribunal with the intention that this Tribunal would deliver justice rather than legalise injustice on technicalities. Therefore, when this Tribunal was empowered and capable of removing injustice, in my opinion, the delay of 310 days has to be condoned and the appeal of the assessee has to be admitted and disposed of on merit. Thus, I condone the delay of 310 days in filing the appeal and admit the appeal. Third Member - The sufficient cause within the contemplation of the limitation provision must be a cause which is beyond the control of the party invoking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excise duty and sales tax to the turnover for the purpose of computation of deduction under section 80HHC. 3. It transpires that this issue is covered in favour of the assessee by the Hon'ble jurisdictional High Court decision in CIT v. Sundaram Fasteners Ltd [2005] 272 ITR 652 (Mad.). In this case, it was held that excise duty and sales tax have to be excluded from turnover for the purposes of section 80HHC. Respectfully following the precedent, we decide the issue in favour of the assessee and against the revenue. 4. The next issue raised is that the Commissioner of Income-tax (Appeals) erred in exclusion of 90 per cent of the Miscellaneous Receipts from profit for the purpose of computation of deduction under section 80HHC. 5. We find that the aforesaid issue was neither raised before the learned Commissioner of Income-tax (Appeals) nor adjudicated by him. As such, the issue is not emanating out of the Commissioner of Income-tax (Appeals)'s order. Hence, the same is dismissed. 6. In the result, assessee's appeal is partly allowed. 7. Assessees appeal: I.T.A. No. 1509/Mds./99 A.Y. 1995-96 At the threshold of the proceedings before us, it was observed that there was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arise and such a case deserves a liberal approach. No hard and fast rule can be laid down in this regard. The court has to exercise the discretion on the facts of each case keeping in mind that in construing the expression 'sufficient cause', the principle of advancing substantial justice is of prime importance. [Emphasis supplied] 10. In the above case, the Apex Court was considering a case where the application for condonation was for a delay of 7 days in filing the appeal against the order of the trial court. In the same case, the Hon'ble Jurisdictional High Court also cited recent decision of Hon'ble Allahabad High Court in Ganga Sahai Ram Swarup v. ITAT [2004] 271 ITR 512. In this case, it was held that it was not in dispute that there was only a delay of 12 days in filing the appeal. A liberal view ought to have been taken by the authority as the delay was only for a very short period and the appellant was not going to gain anything from it. [Emphasis supplied] 11. It is also to be noted here that in the land mark decision on the issue of condonation by the Apex Court in the case of Collector Land Acquisition v. Mst. Katigi [1987] 167 ITR 471 wherein the Hon& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment. In this context, the decision of Hon'ble Punjab Haryana High Court in the case of CIT v. Ram Mohan Kabra [2002] 257 ITR 773 is relevant, which reads as under:- The provisions relating to prescription of limitation in every statute must not be construed so liberally that it would have the effect of taking away the benefit accruing to the other party in a mechanical manner. Where the Legislature spells out a period of limitation and provides for power to condone the delay as well, then such delay can be condoned only for sufficient and good reasons supported by cogent and proper evidence. Now, it is a settled principle of law that the provisions relating to specified period of limitation must be applied with their rigour and effective consequences. 17. In view of the aforesaid discussion and exposition, we are of the opinion that in the present case, the cause of substantial justice would not be served by condoning the inordinate delay of 310 days for which no cogent reason has been given. 18. In the result, the assessee's appeal is dismissed. 19. Revenue's appeal: ITA. No. 1897/Mds./99 A.Y. 1996-97: In this appeal by the revenue, there was a delay of 20 days in fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g deduction under section 80HHC. Admittedly, the Madras High Court in the case of Sundaram Fasteners Ltd, and in the case of CIT v. Wheels India Ltd. [2005] 275 ITR 319 (Mad.) has considered an identical issue and held that excise duty and sales tax should not be included in the total turnover for the purpose of computing deduction under section 80HHC. Therefore, the issue raised by the assessee on merit stands squarely covered by the above judgments of the jurisdictional High Court in favour of the assessee. 3. Therefore, on merit the issue is in favour of the assessee. But there is a technical defect in the appeal since the appeal was not filed within the period of limitation. The assessee filed an affidavit saying that the CIT(A) order was misplaced and the same was mixed with some other papers. The revenue has not filed any counter-affidavit to deny the allegation made by the assessee. While considering a similar issue the Apex Court in the case of Mst. Katiji laid down six principles. For the purpose of convenience, the principles laid down by the Apex Court are reproduced hereunder:- (1) Ordinarily, a litigant does not stand to benefit by lodging an appeal late. (2) Refusing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retaining the tax relatable thereto. Under the scheme of Constitution, the Government cannot retain even a single pie of the individual citizen as tax, when it is not authorised by an authority of law. In this case, the Income-tax Act enacted by Parliament as interpreted by the jurisdictional High Court in categorical term says that the excise duty and sales tax cannot form part of total turnover for the purpose of deduction under section 80HHC. Therefore, if we refuse to condone the delay, that would amount to legalise an illegal and unconstitutional order passed by the lower authority. Therefore, in my opinion, by preferring the substantial justice, the delay of 310 days has to be condoned. 5. The next question may arise whether 310 days was excessive or inordinate. There is no question of any excessive or inordinate when the reason stated by the assessee was a reasonable cause for not filing the appeal. We have to see the cause for the delay. When there was a reasonable cause, the period of delay may not be relevant factor. In fact, the Madras High Court in the case of CIT v. K.S.P. Shanmugavel Nadar [1985] 153 ITR 596 considered the delay of condonation and held that there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Apex Court in a reported case in Mrs. Sandhya Rani Sarkar v. Smt. Sudha Rani Debi AIR 1978 SC 537 held that non-filing of affidavit in opposition to an application for condonation of delay may be a sufficient cause for condonation of delay. In this case, the revenue has not filed any counter-affidavit opposing the application of the assessee, therefore, as held by the Apex Court, there is sufficient cause for condonation of delay. The Supreme Court observed that when the delay was short duration, a liberal view should be taken. It does not mean that when the delay was longer period, the delay should not be condoned even though there was sufficient cause. The Apex Court did not say that longer period of delay should not be condoned. Condonation of delay is the discretion of the Court/Tribunal. Therefore, it would depend upon the facts of each case. In my opinion, when there is sufficient cause for not filing the appeal within the period of limitation, the delay has to be condoned irrespective of the duration/period. In this case, the non-filing of an affidavit by the revenue for opposing the condonation of delay itself is sufficient for condoning the delay of 310 days. 8. In c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. However, there will be no order as to costs. ORDER UNDER SECTION 255(4) OF THE INCOME-TAX ACT Since there is a difference of opinion, the following questions of difference are referred to the Hon'ble President for nominating Third Member to resolve the issue: 1. Whether in the facts and circumstances of the case there is sufficient cause on the part of the assessee for not filing the appeal within the period of limitation? 2. Whether in the facts and circumstances of the case the delay of 310 days requires to be condoned in order to advance the substantial cause of justice since the issue on merit is admittedly, covered in favour of the assessee? We direct the registry to place the files before the Hon'ble President for nominating the Third Member. ORDER UNDER SECTION 255(4) OF THE INCOME-TAX ACT Since there is a difference of opinion, the following question of difference is referred to Hon'ble President for nominating Third Member to resolve the issue: Whether in the facts and circumstances of the case there is sufficient cause on the part of the assessee for not filing the appeal within the period of limitation? 2. The Registry is directed to place the files befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... state that the delay is neither wilful nor deliberate but due to the reasons explained above. 6. It is hereby prayed that the delay of 310 days in filing the above appeal may be condoned and the appeal may be taken on record and decision may be rendered on merits of the case and thus render justice. The aforesaid delay of 310 days as per the affidavit was attributed to the misplacement of the Commissioner (Appeals)'s order. 3. There is nothing on record to indicate as to what functions were assigned to Mr. M.L.S. Rao and whether he dealt with the tax matters. As per the letter of authorization filed before the Revenue authorities, copy of which was filed before the Tribunal, Shri A. Sivasailam, Managing Director of the company, appointed five employees of the company, namely, Mr. P.B. Sampath, Mr. T.V.V. Narayanan, Mr. V. Srinivasan, Mr. V.V. Ganesan and Mr. S. Rajagopalan as the authorized representatives in tax matters. 4. The learned counsel for the assessee vehemently relied on the decision of the Apex Court rendered in the case of Mst. Katiji, wherein it was held that when substantial justice and technical considerations are pitted against each other, the cause of substant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 5 of the Limitation Act the courts should adopt a pragmatic approach. A distinction must be made between a case where the delay is inordinate and a case where the delay is of a few days. Whereas in the former case the consideration of prejudice to the other side will be a relevant factor so the case calls for a more cautious approach but in the latter case no such consideration may arise and such a case deserves a liberal approach. No hard and fast rule can be laid down in this regard. The court has to exercise the discretion on the facts of each case keeping in mind that in considering the expression 'sufficient cause', the principle of advancing substantial justice is of prime importance. 6. It is pertinent to note that in the case of Mst. Katiji the delay was only four days. In the case of Vedabai alias Vaijayanatabai Baburao Patil there was a delay of seven days in filing the appeal. In this case the Apex Court clearly laid down that a distinction must be made between a case where the delay is inordinate and a case where the delay is of a few days. The law assists those who are vigilant, not those who sleep over their rights. This principle is embodied in the dictum: ..... X X X X Extracts X X X X X X X X Extracts X X X X
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