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TMI Blog2017 (7) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 143(3) of the Act. He submitted that assessee's representative did not appear before the AO in the reopened proceedings and hence the assessment was completed by the AO to the best of his judgement u/s 144 r.w.s. 147 of the Act. The assessee could filed appeal before Ld CIT(A) after a delay of 141 days. Though the assessee showed sufficient cause in filing the appeal belatedly, the Ld CIT(A) was not convinced with the reasons furnished by the assessee for the delay and hence he has refused to condone the delay. 4. The Ld A.R submitted that though the assessee's Head office is located in Mumbai, all the operations are being carried on from Vadodara. Hence the assessment order served at the Head office was forwarded by the ministerial staff to the then Executive Director Shri Anil Kumar Tayal, who was looking after day to day management of the company. Shri Anil Kumar Tayal had submitted his resignation letter dated 30.11.2010 and he was relieved from duty on 31.12.2010. Since the assessment order was kept by him in his custody and since he did not bring the same to the notice of management, the management was not aware of the assessment order passed by the AO till it received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hattacharjee Vs. Managing Committee of Raghunathpur Nafar Academy and others (Civil appeal Nos.8183 - 8184 of 2013 dated 13-09-2013), has extracted in paragraph 13 of its order, the following observation made in the case of Maniben Devraj Shah Vs. Municipal corporation of Brihan Mumbai:- "13...... "24. What colour the expression "sufficient cause" would get in the factual matrix of a given case would largely depend on bona fide nature of explanation. If the court finds that there has been no negligence on the part of the applicant and the cause shown for the delay does not lack bona fides, then it may condone the delay. If, on the other hand, the explanation given by the applicant is found to be concocted or he is thoroughly negligent in prosecuting his cause, then it would be a legitimate exercise of discretion not to condone the delay". Eventually, the Bench upon perusal of the application for condonation of delay and the affidavit on record came to hold that certain necessary facts were conspicuously silent and, accordingly, reversed the decision of the High Court which had condoned the delay of more than seven years." The Ld D.R further submitted that the Hon'ble Supreme Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce, default or inaction of that party. Justice must be done to both parties equally. Then alone the ends of justice can be achieved. If a party has been thoroughly negligent in implementing its rights and remedies, it will be equally unfair to deprive the other party of a valuable right that has accrued to it in law as a result of acting vigilantly." He further submitted that the Hon'ble Supreme Court has taken note of observation made in the case of Maniben Devraj Shah (supra) that a distinction must be made between a case where the delay is inordinate and a case where the delay is of few days and where as in the former case the consideration of prejudice to the other side will be a relevant factor, in the latter case no such consideration arises. 9. The Ld A.R further submitted that the reasons furnished by the assessee for the delay in filing appeal before ld CIT(A) are real facts, which were not be concocted. He further submitted that the delay was 141 days and not running into several years. He further submitted that various principles summarized by the Hon'ble Supreme Court ultimately prescribe the manner of examining "sufficient cause". He submitted that the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utive Director has submitted resignation letter at that point of time. Hence it is quite possible that the said Executive Director could not have passed on the assessment order to the management. Since the AO has passed the assessment order to the best of his judgement, it is possible that the management could not have also visualized the passing of assessment order. Only when the assessee received the penalty notice u/s 271(1)(c) of the Act, the assessee got alerted and it has taken steps to file the appeal through another Chartered Accountant. In this process, a delay of 141 days has occurred. Hence we are of the view that there was sufficient cause for the assessee in not filing the appeal in time before the Ld CIT(A). Accordingly we are of the view that the Ld CIT(A) was not justified in condoning the delay. Accordingly we set aside the order passed by Ld CIT(A) on this limitation issue. 13. The action of the Ld CIT(A) in not condoning the delay may be set aside on one more reason. We have noticed that the Ld CIT(A) has disposed of the grounds urged on validity of reopening of assessment and also on merits. Normally the necessity of disposing of the grounds relating to legal i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year only if there is failure on the part of the assessee to disclose fully and truly all material facts relating to computation of income. He submitted that the assessee was constrained to change the method of valuation of stock after the revised Accounting Standard-2 became mandatory. The semi finished goods were hither to valued at cost and the said fact was reported in the Annual report relating to AY 2002-03. The change in the valuation was also duly disclosed in the Annual report relating to AY 2003-04. The Ld A.R further submitted that the details of change were also communicated to the AO through a letter dated 02-01- 2006 filed in the original assessment proceedings before the AO. Copy of the letter filed before the AO is placed on record at page 46-47 of the paper book. The AO has completed the original assessment accepting the explanations of the assessee without making any addition. Accordingly Ld A.R submitted that the assessee has disclosed all the facts material to computation of income fully and truly. He submitted that the AO did not state in the reasons for reopening that there was failure on the part of the assessee. Hence the AO has reopened the assessment on me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings. 19. We notice that the assessing officer has reopened the assessment after the expiry of four years from the end of the assessment year. We have noticed that the original assessment was completed by the AO u/s 143(3) of the Act. The reasons for reopening has been extracted in the assessment order passed u/s 143(3) r.w.s. 148 of the Act. In the reasons, the AO recognizes the fact that the assessee has changed the method of valuation of stock in terms of revised Accounting Standard-2. He also recognizes the fact that the change in the method of valuation has resulted in reduction of profit by Rs. 2871.55 lakhs. We have noticed that all these details were already available before the AO in the course of original assessment proceedings. Further, the AO, no where states that there was failure on the part of the assessee to disclose fully and truly all the facts material to the computation of income, which is a primary condition to be satisfied for reopening of assessment after expiry of four years from the end of the assessment year, if the original assessment has been completed u/s 143(3) of the Act. This is so stated in the first proviso to sec. 147 of the Act. 20. The Ld D.R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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