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TMI Blog2013 (5) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... opment potential in the surrounding areas and held that sale of lands was adventure in the nature of trade. 4. On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in ignoring the ratio laid down by the Apex Court in the case of G. Venkatswamy Naidu & Co. v. CIT [35 ITR 594] (1959) and applied by the Hon'ble Mumbai High Court in the case of DCIT v. Gopal Ramnarayan Kasat reported in [328 ITR 556] (2011). 5. Any other ground which may be preferred at the time of hearing. AO has also filed an application for condoning the delay of 620 days in filing the appeal before the Tribunal. 2. Assessee, an individual had filed his return of income on 26-03-2008 declaring total income of Rs. 34.17 Lakhs and Agricultural income of Rs. 1.09 Lakhs. Assessment was finalised by the AO u/s. 143(3) of the Income Tax Act, 1961 (Act) on 24-12-2009 determining the total income at Rs.1.42 Crores. Initially the return was processed on 27 -01-2009 u/s. 143(1) of the Act. Later on the case was selected for scrutiny. In the course of assessment proceedings, AO held that assessee was regularly trading in land, that he was showing the sale proceeds of plots of land as exempt inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so assessee by the AO. He held that the undisputed fact and evidence on record was that the assessee had transferred agricultural land located at Dongargaon, that the 7/12 extracts in respect of the agricultural lands were submitted before the AO and also before him which clearly depicted that transferred assets were agricultural land, that extract in Form No. 7/12 in respect of the agricultural land sold proved that agricultural operation were being carried out on aforesaid agricultural land by the assessee, that the said extract of purchaser of these agricultural land submitted in the course of appellate proceedings made clear that the agricultural land was used for agricultural purposes by the purchaser in subsequent AYs. Also i.e. during the FY 2007-08 and FY 2008-09, that the plots of lands were not put to any other use other than agriculture subsequently, that the pieces of lands in-question were not converted to non-agricultural lands and were not under any Town Planning Scheme, that these facts were not controverted by the AO, that there was no development activity surrounding the lands and the lands were located beyond 8 KMs away from Nagpur Municipal Corporation limits. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the assessee. (ix) it was also not disputed that there is no developmental activity in land around the surrounding the lands. The surrounding lands were claimed to be agricultural lands only. (x) these two agricultural lands sold are assessed to land revenue as agricultural land. (xi) the agricultural lands on Kh. No. 43/2 and 22/1 of Mouza: Dongargaon were beyond 8 KMs. away from Nagpur Municipal Corporation limits or for that matter from any Municipal Corporation limit. (xii) there was no basis and facts, in the finds of the AO, as to how the assessee is regularly trading in land. There was no evidence on record to suggest so. The assessee's past record also does not suggest that the appellant is regularly trading in land. 3.2 With regard to the decision of the AO to treat the transaction-in-question as an adventure in nature of trade, FAA held that the observation of the AO that assessee was regularly trading in land was contrary to evidence on record, that during the previous year under consideration the assessee had sold three pieces of land and income from the same was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat in Aug. 2010,while deciding the question of filing an appeal to the Tribunal, CIT did not have benefit of the decision of Gopal Ramnarayan Kasat (supra),that CIT-I, Nagpur had authorised him to file condonation applications. In his support, he referred to the decisions of Collector, Land Acquisition v. MST. Katiji [1987] 167 ITR 471(SC) and CIT v. Sothia Mining & Mfg. Corpn. Ltd. [1990] 186 ITR 182 delivered by the Hon'ble Apex Court and Calcutta High Court respectively. 4.1 Before us Departmental Representative (DR) submitted that delay in filing appeal should be condoned considering the facts narrated in the appeal filed by the AO, that decision in the case Mst. Katiji (supra) should be considered in deciding the appeal. With regard to the merits of the case, he relied upon the order of the AO. Authorised Representative (AR) objected to condonation of delay in filing the appeal. He submitted that there was delay of 602 days in filing the appeal, that Addl. CIT had not recommended filing of appeal against the order dt.24-05-2010 of the FAA, that at paragraph No.6 of the note-sheet of the office of the CIT-I, Nagpur clear satisfaction was recorded by the CIT that on the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considering the decision of the jurisdictional High Court delivered in the case of Gopal Ramnarayan Kasat (supra) it was decided that appeal should be filed before the Tribunal. If the submissions of the AO are accepted even for the sake of arguments only there is no explanation for the period from Nov.2011 and May, 2012 when the decision was published and appeal before the Tribunal was filed respectively. AO has nowhere explained the reasons for delay of this period. AO is also silent about the confidential letter of the CCIT, Nagpur which had triggered the chain of events which took place after the said letter was received by the CIT-I Nagpur. We find that vide his confidential letter dt. 11-01-2012 (F. No. CCIT/ Jud/ITAT Appeals/2011-12) CCIT, Nagpur had sent a communication to the office of the CIT for 'filing of appeal in the ITAT against the order of the CIT(A) in the case of Shri Bhopinder Singh Ratansingh Arneja, Nagpur for the AY 2007-08.' We have also noted that in the same note-sheet, it is further observed "pl. check whether an affidavit is required also. If yes, affidavit can be drafted.....................". 5.1 From the copy of the note-sheet submitted by the AO, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the expiry of the relevant period referred to in sub-section (3) or sub-section (4), if it is satisfied that there was sufficient cause for not presenting it within that period." Over the decades, principles of condoning the delay have evolved. It is said that the law of limitation is enshrined in the maxim interest reipublicae ut sit finis litium (it is for the general welfare that a period be put to litigation). Rules of limitation are not meant to destroy the rights of the parties, rather the idea is that every legal remedy must be kept alive for a legislatively fixed period of time. But, said rules are meant to see that the parties do not resort to dilatory tactics and seek their remedy promptly. The law of limitation fixes a life span for such legal remedy for the redressal of the legal injury so suffered. The condonation of delay is the discretion of the court and is governed by section 5 of the Limitation Act, 1963. Courts are of the view that the words "sufficient cause" under section 5 of the Limitation Act, 1963, should receive a liberal construction so as to advance substantial justice. Once the court accepts the explanation as sufficient, it is the result of positiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the delay and admit the appeal. This discretion has been conferred on the Pos, so that judicial power and discretion is exercised to advance substantial justice. (b) The expression 'sufficient cause' is not defined, but it means a cause which is beyond the control of the party. For invoking the aid of the section any cause which prevents a person approaching the POs within time is considered sufficient cause. In doing so, it is the test of reasonable man in normal circumstances which has to be applied. The test whether or not a cause is sufficient is to see whether it could have been avoided by the party by the exercise of due care and attention. In other words, whether it is bona fide cause, inasmuch as nothing shall be deemed to be done bona fide or in good faith which is not done with due care and attention. What may be sufficient cause in one case may be otherwise in another. What is of essence is whether it was an act of prudent or reasonable man. (c) In every case of delay, there is some lapse on the part of the concerned litigant. If there are no mala fides and it is not put forth as part of a dilatory strategy, the POs s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the basis for praying for condonation of delay. In other words taxation authorities cannot expect some kind of privilege while filing belated appeals. Like the assessees they also have to prove that for delay there was a reasonable cause. (i) Just because there is merit in the appeal filed by the litigant, any amount of delay, however, negligently caused, cannot be condoned. In other words a very strong case on merits is not relevant for condonation of delay in filing the appeals. (j) Requirement of sufficient cause for delay cannot be ignored and it becomes very important and significant when the delay is inordinate and abnormal. (k) In the matter of J.B. Advani & Co. (P.) Ltd. (72 ITR 395) Hon'ble Supreme Court had held that explanation of delay for the entire period is necessary. In other words what is expected of the appellant in such matters is to show that delay was occasioned due to some sufficient cause. The cause pleaded should not only be a probable one but it should be real and sufficiently reasonable. It would not be any sort of assertion that would amount to sufficient cause and would justi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er a subsequent ruling ....... which he considers as being favourable to him. Nor can the advice of his counsel that his case is not a fit one for appeal, which advice may turn out to be a mistaken one in the light of a subsequent ruling of the Supreme Court or the High Court, be regarded as a sufficient ground for condoning such delay." 5.4 We also find that AO has not filed any affidavit along with the condonation-application, though the note sheet talks of filing of an affidavit if necessary, as stated at paragraph No.5 of our order. Generally application filed for condonation of delay are accompanied by an affidavit, as it throws lights on the though process of the applicant for submitting the petition. For deciding the issue of reasonableness or sufficiency of cause affidavits play a vital role. But, in the matter consideration same is missing. In these circumstances, the condonation application filed by the AO is not sustainable. In our opinion sufficiency/reasonableness of cause is totally missing in the case under consideration. If the entire chain of events of the present matter is deliberated upon one can safely conclude that there was no cause at all for challenging the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed them to remain un-utilised. The appellant sold these lands to the company managed by it in two lots in September and November, 1947, for a total consideration of Rs. 52,600.Considerring the above facts Tribunal held that the plots were purchased by the appellant wholly and solely with the idea of selling them at a profit to the company, that the amount was not a capital accretion but was a gain made in an adventure in the nature of business and was therefore, taxable. On a reference, the High Court held that the transaction was an adventure in the nature of trade and that the Department was justified in taxing the amount. Hon'ble Apex Court confirmed the order of the High Court and dismissed the appeal filed by the assessee. Following was the final decision of the Hon'ble Supreme Court: "Appellate Tribunal was right in inferring that the appellant knew that it would be able to sell the lands to the managed company whenever it thought it profitable so to do; that the appellant purchased the four plots of land with the sole intention of selling them to the mills at a profit which intention raised a strong presumption in favour of the view taken by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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