TMI Blog2019 (8) TMI 1407X X X X Extracts X X X X X X X X Extracts X X X X ..... n an addition of ₹ 27 crores amplified with the penalty of ₹ 9 crores, is in our understanding a quite disproportionate to the negligence of the assessee. If we weigh scale keeping in mind both these facts, then to our mind scale would tilt in favour of the assessee because by condoning the delay nothing is being taken away on merit from the department. It will be a just an opportunity to the assessee to explain its case. If something has been done illegally against it, then that illegality should not be regularized on account of technicalities. The other side could be compensated with some cost for lingering the litigation. Therefore, evaluating all these aspects, we are of the view that delay in filing the appeals before the CIT (A) deserves to be condoned subject to payment of cost of ₹ 50,000/- (Rupees fifteen thousand only). We accordingly condone the delay in filing the appeals before the CIT(A) and set aside the impugned orders. CIT(A) is a first appellate authority, it has not applied its mind on facts on the merit of the issues, therefore, we remit both the issues to the file of the CIT(A) for fresh adjudication on merit. It is needless to say th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase are that the assessee-company at the relevant time was manufacturing copper tubes. It has filed its return of income on 1.12.2007 declaring total income at ₹ 93,90,600/-. This return was processed under section 143(1) of the Act. The AO has observed that DDIT(Investigation), Unit- 2(2), Ahmedabad vide letter dated 25.3.2014 intimated that office of Director General of Central Excise Intelligence, Ahmedabad had carried out search and investigation in the case of the assessee. During the course of investigation, it came to the notice of the Exercise Department that the assessee has removed illegally copper mother tubes having value of ₹ 6.08 crores during the period 24.8.2006 to 10.10.2006. Such copper tubes were manufactured out of books and were removed without payment of excise duty. On the basis of same information, the AO sought to reopen the assessment order and he issued a notice under section 148 on 29.3.2014. 5. It emerges out from the record that against this notice, the assessee wrote a letter on 5.5.2014 objecting to the proceedings under section 148 on the ground that the notice was invalid because it was served beyond th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,38,280/-and Net Profit before Tax is of ₹ 90,33,664/-. 6. The return of income for Asst. Year 2007-08 was e-filed on 01/12/2007 declaring total income of ₹ 93,90,600/-. The same was processed u/s. 143(1) of the Act. (However, the copy of the Intimation u/s. 143(1) of the Act is not available with the appellant company). 7. As per the Panchnama dated 28/08/2012 in Appendix-IIIB, the Assistant Commissioner, Central Excise, Division-Ill, Ahmedabad-l attached the factory premises of the appellant company situated at Plot No. 415/2/1, GIDC, Phase-11, Vatva, Ahmedabad. (This was the registered office and factory premises of the company). Further, as per Appendix-IIIC dated 27/08/2012, the Assistant Commissioner, Control Excise, Division-III, Ahmedabad-1 ordered that It is ordered that you are hereby prohibited and restrained, until the further order of the under signed, from transferring or charging the under-mentioned property in any was and that all persons be, and that they are hereby prohibited from taking any benefit under such transfer or charge. The specification of the property given in the said App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Notice u/s. 179 of the Act dated 30/03/2017 addressed to Shri Chhaganlal M. Shah, director of the appellant company. However, the same was not attended/complied by him. (v) The Dy. CIT, Circle-4(1)(1), Ahmedabad issued the Letter No. DCIT/Cir- 4(1)(1)/Recovery/STPL/2017-18 dated 29/08/2017 in connection with the recovery of arrear demand for AY 2007-08 in case of the appellant company. The said letter dated 29/08/2017 was addressed to Shri Chhaganlal M. Shah, director of the appellant company. (However, the same was not attended/ complied by him). (vi) Subsequently, the Dy. CIT, Circle-4(1)(1), Ahmedabad passed the Order u/s. 179 of the Act dated 02/11/2017 in the name of the appellant company having address as 415/2/1, GIDC, Phase II, Vatva, Ahmedabad - 382440. The copy of the said order u/s. 179 of the Act dated 02/11/2017 was also sent to Shri Chhaganlal M. Shah, Director of f the appellant company at his residence address i.e. 11, Nandan Society, Naranpura, Ahmedabad - 380 013 and to Shri Mafatlal H. Shah, also director of the appellant company mentioning the address of the factory premises of the appellant company. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . C/T, Circle- 4(1)(1), Ahmedabad in connection with the demand recovery proceedings in case of Shriram Tubes Pvt. Ltd (i.e. the appellant company), the copy of the scrutiny assessment order u/s.144 r.w.s. 147 of the Act dated 23/03/2015 for AY 2007-08 was provided to him by the DCIT, Circle-(1)(1), Ahmedabad. This is for the first time that the appellant company came to know and received the copy of the scrutiny assessment order dated 23/03/2015 for AY 2007-08. 14. The AO completed the scrutiny assessment u/s. 144 r.w.s. 147 of the Act vide Order dated 23/03/2015 determining the total income at ₹ 28,91,52,500/- as against the returned income of Rs. 93,90,600/- while making following additions/ disallowances: (i) Addition on account of alleged illicitly 15. manufacturing and clandestinely clearing the copper mother tubes (product) during period from April-2006 to 10/10/2006 ₹ 24,04,65,605/- (ii) Addition on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That the company Shriram Tubes Pvt. Ltd. has e-filed its return of income for AY 2007-08 on vide acknowledgment no.10048641011207 dated 01/12/2017 declaring total income of ₹ 93,90,600/-. 3. That the registered office-cum-factory premises situated at above mentioned address was seized and possession was taken by the Central Excise Department on 28/08/2012. No business has been carried out by the company thereafter. 4. Finally, said registered office-cum-factory premises was auctioned by the office of the Pr. Commissioner, CGST, Ahmedabad South on 23/01/2018 and the possession was handed over to the buyer by the Excise Department. 5. That in connection with the recovery of outstanding demand of the company Shriram Tubes Pvt. Ltd., I was summoned u/s. 131 of the Act dated 24/07/2018 to remain present before the CJy. Commissioner of Income Tax, Circle-4(l)(l), Ahmedabad. I attended the, of ice between 02/07/2018 to 05/07/2018 (exact date is not remembered / know due to my old age) 6. That my statement was recorded in the office of Dy. Commissioner of Income Tax, Circle-4(l)(l), Ahmedabad between these da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and not of more than 39 months delay as stated by the CIT(Appeals) in his appellate order dated 13/11/2018. Similarly, there has been a genuine delay of 38 days in filing appeal before the CIT(Appeals) against the penalty order u/s. 271(l)(c) of the Act and not of more than 27 months delay as stated by the CIT(Appeals) in his appellate order dated 13/11/2018. 8. With the assistance of the ld.representatives, we have gone through the record carefully. Sub-section 5 of Section 253 contemplates that the Tribunal may admit an appeal or permit filing of memorandum of cross-objections after expiry of relevant period, if it is satisfied that there was a sufficient cause for not presenting it within that period. This expression sufficient cause employed in the section has also been used identically in sub- section 3 of section 249 of Income Tax Act, which provides powers to the ld.Commissioner to condone the delay in filing the appeal before the Commissioner. Similarly, it has been used in section 5 of Indian Limitation Act, 1963. Whenever interpretation and construction of this expression has fallen for consideration before Hon ble High Court as well as before the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsons to seek legal remedy by approaching the courts. So a life span must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. Law of limitation is thus founded on public policy. It is enshrined in the maxim Interest reipublicae up sit finis litium (it is for the general welfare that a period be putt to litigation). Rules of limitation are not meant to destroy the right of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time. A court knows that refusal to condone delay would result foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is always deliberate. This Court has held that the words sufficient cause under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shakuntala Devi lain Vs. Kuntal Kumari [AIR 1969 SC 575] and State of West Bengal Vs. The Administrator, Howrah Municipality [AIR 1972 SC 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 10.4.2014. Thus, according to the assessee no valid service of notice was ever effected. The ld.counsel for the assessee also drew our attention towards the information collected by the assessee under the RTI Act and the copy of the application of the RTI as well as reply submitted thereunder by the Jt.Commissioner of Income-tax has been placed on pages no.87 to 95. 12. On the other hand, stand of the Revenue is that postal receipts referred by the assessee are not the one under which notice under section 148 was issued and served, rather this was subsequent notice given to the directors informing the proceedings. The first notice was issued to the company at the address given in the return. Similarly, the orders were issued vide speed post receipt no.EG269492778IN dated 30.3.2015 (service of assessment order) and E9258720899IN(Service of penalty order) dated 29.9.2015. It has been observed by the ld.CIT(A) that Excise department has just prohibited the assessee from alienating the property or creating any encumbrance of third party. It has not sealed the property. The assessee could use it; could receive notice, and therefore, it is incorrect at the end of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /-. He treated this short term production as undisclosed income of the assessee without correspondingly setting off the expenditure involved in this production. We could appreciate the action of the AO had he found out something that expenditure were already accounted for in the books of accounts. The case of the assessee is that books have been impounded by the Excise department. Its factory premises was attached and it has not carried out any business thereafter. In this situation, the AO ought to have used his power calling for details from the Excise department and determine the element of income involved in this production instead of exercising his power as quasi judicial officer, he found out a way to punish the assessee by treating the gross production as profit of the assessee, which required to be taxed. It is a negligent and irresponsible act at the end of the AO even in an ex parte order. This action has been further amplified while imposing penalty of more than ₹ 9 crores under section 271(1)(c) of the Act. As observed above, the conduct of the assessee also not aboveboard, which is required to be deprecated and cannot be absolved completely. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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