TMI Blog2008 (10) TMI 586X X X X Extracts X X X X X X X X Extracts X X X X ..... er a bona fide belief that it was not liable to deduct tax at source from salaries paid to its expatriate employees was not correct. However, he granted certain relief in working out the amount of tax deductible at source. In the condonation application, it is mentioned that the assessee moved a rectification application before the learned Commissioner of Income-tax (Appeals) under section 154 of the Act on February 19, 1996 for not disposing of ground No. 1, which reads that "The learned Assessing Officer erred in treating the assessee as an assessee in default under section 201 both on facts and on law" (unquote). This application was heard on a number of occasions, but it has not been disposed of by him. The assessee had filed appeal against similar order passed for the assessment year 198889, which was disposed of by the "C" Bench of the Delhi Tribunal in favour of the assessee. This order was served on the assessee on June 25, 2007. On the disposal of that appeal and in the absence of any order by the learned Commissioner of Income-tax (Appeals) on the rectification application of the assessee, it was decided to file an appeal against the appellate order before the Tribunal. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellate order may be rectified in the light of the decision of the hon'ble Allahabad High Court. However, this application remains undisposed of in spite of the fact that a number of hearings were conducted periodically by the learned Commissioner of Income-tax (Appeals). The chronology of events also mentions about the decision of the hon'ble Supreme Court in the case of Sedco Forex International Drill Inc. v. CIT [2005] 279 ITR 310 and the hon'ble Uttrakhand High Court in the case of the assessee regarding taxation of on/off periods salaries. These judgments were delivered on November 17, 2005 and November 30, 2005 respectively. The Tribunal also passed an order in the case of the assessee for the assessment year 1988-89 on June 25, 2007, in which the case of the assessee was accepted. From the order of the Tribunal, it is clear that this appeal was filed against the order of the Commissioner of Income-tax (Appeals) dated February 21, 2003. It was his contention that in the circumstances of the case, even the long delay of 13 years, one month and 10 days ought to be condoned. In order to support the aforesaid contention, reliance was placed on the decision of the hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble the courts to apply the law in a meaningful manner which subserves the ends of justice. Reliance was also placed on the decision of the hon'ble Supreme Court in the case of Ram Nath Sao v. Gobardhan Sao, AIR 2002 SC 1201, in which it was, inter alia, pointed out that the rules of limitation are not meant to destroy the rights of the parties. They are meant to see that the parties do not resort to dilatory tactics for seeking their remedy promptly. It was further pointed out that there is no presumption that the delay in approaching the court is always deliberate. It was also pointed out that in the case of a delay, there will be some lapse on the part of the applicant. That alone is not sufficient to turn down his plea provided that it is not mala fide or it is not put forth as a part of a dilatory strategy. Reliance was also placed on the decision of the hon'ble Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji [1987] 167 ITR 471, in which the decision was more or less on the same lines, as in the case of State of Karnataka v. Kuppuswamy Gownder, AIR 1987 SC 1353 because in this case also the State was the applicant. Reliance was also placed on the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal by seeking condonation of delay. Further, reliance was placed on the decision of the hon'ble Punjab and Haryana High Court in the case of CIT v. Ram Mohan Kabra [2002] 257 ITR 773. In that case, the Tribunal had not granted the condonation of delay. The hon'ble court pointed out that three reasons were given for doing so-(i) affidavit of person who was dealing with the file, was not filed ; (ii) the relevant records were not produced before the authorities concerned, and (iii) affidavit filed on behalf of the appellant was based on hearsay and the facts were not true to the knowledge of the person who filed the affidavit in support of the application for condonation of delay. The question before the court was one of fact and not of law. Merely because another view was possible or permissible on the same facts, would not make such a controversy a question of law. In view thereof, the court refused to issue direction to the Tribunal to state the question of law before the court. She also relied on the decision of the hon'ble Gujarat High Court in the case of Vinay Extraction P. Ltd. v. Vijay Khanna [2004] 271 ITR 450. The facts of the case were that the claim of the assessee f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dge to decide the appeal on the merits. In the rejoinder, learned counsel for the assessee referred to the decision reported at [2003] 264 ITR 506, which we find is in the case of CIT v. Investment Trust of India Ltd. (Mad.) dealing with investment allowance and expenditure on advertisement. This case has no bearing on condonation of delay in filing the appeal. We have considered the facts of the case and rival submissions. The facts are that the Assessing Officer passed orders for both the years on September 30, 1991. Before him, one of the pleas taken was that the expatriate employees from France, whose period of stay in India did not exceed 183 days, were not liable to be taxed under article 14 of the Agreement for Avoidance of Double Taxation between India and France ("DTAA" for short) for the reason that the income of the assessee was assessable as fee for technical services and, therefore, no deduction was claimed for the expenditure in computing the income under the Income-tax Act, 1961. However, the claim was withdrawn as the basis for making the assessment got changed, under which the profits were assessed as business profits. The assessee filed the details of salaries p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taking a view prejudiced by the conduct of the assessee in the assessment proceedings, more particularly when the doctrine of estoppel has no application in law. It was further stated in the application that the Tribunal had come to the conclusion in the earlier years that the employees, whose stay did not exceed 183 days, were not liable to be taxed in India and the reference of the Revenue in this behalf had been rejected by the jurisdictional High Court. This application remained pending for a long time. In fact, the application is pending even now although a number of hearings have been conducted. Therefore, non-disposal of the application is sufficient ground for admission of long belated appeals, as held by the Tribunal in the case of Autoser P. Ltd. [1998] 101 Taxman 70. The contention of the learned Departmental representative was that ground No. 1 of the appeal of the assessee had been decided by the learned Commissioner of Income-tax (Appeals) in paragraph 4 of his order on the merits after considering the fact that the assessments were made under section 44BB of the Act. This section starts with a non obstante clause "Notwithstanding anything the contrary contained in se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of counsel also. Therefore, the ratio of that case is not applicable on the facts of this case. The second plea was that the assessee came to know of the judgment of the hon'ble Allahabad High Court in the case of Soulier Jean Louis [1996] 220 ITR 220 on or about January 19, 1996 whereupon it filed an application to the learned Commissioner of Income-tax (Appeals) under section 154 of the Act. The case of the learned Departmental representative was that the issues are contentious and it is not clear whether they get covered by the aforesaid decision. The assessee took a conscious decision to apply for rectification of the order rather than approach the Tribunal. She was also of the view that since the application is pending, the assessee is not entitled to move a belated appeal before the Tribunal as the assessee can pursue its remedy before the Commissioner of Income-tax (Appeals). We have considered these matters also. We find that the hon'ble High Court pointed out that the Tribunal has not recorded a clear finding and, therefore, it cannot be said that the case is covered under section 10(6)(vi) of the Act. However, in regard to the second ground, the Tribunal had accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , AIR 1969 SC 575, the hon'ble Supreme Court held that liberal construction should be placed on the words "sufficient cause" provided that no negligence, inaction or lack of bona fide is imputable to the assessee. In this case, negligence is apparent when after taking the relevant plea before the lower authorities, the assessee chose not to file appeal before the Tribunal after filing appeal for the assessment year 1998-99. In the case of O. P. Kathpalia v. Lakhmir Singh, AIR 1984 SC 1744, the facts were quite different as there were interpolations in the order sought to be appealed against, which required correction or clarification. In the case of State of Karnataka v. Kappuswamy Gownder, AIR 1987 SC 1353, the hon'ble court held that a liberal approach should be adopted and a pedantic approach should not be applied in examination of everyday's delay. In the case of Ram Nath Sao, AIR 2002 SC 1201, the hon'ble court held that there will be a lapse whenever there is a delay, but that alone is not enough to turn down the plea unless the explanation smacks of mala fide or it is not put forth as a part of dilatory strategy. The facts of this case are that the assessment was made under ..... 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