TMI Blog2024 (2) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... order on the issue. It is not that the ld. CIT in his order passed u/s 263 had categorically and specifically held that the arbitral award of Rs. 990 lakhs was taxable and be taxed by the AO in the impugned year. What he had held and directed was that the AO was to pass a fresh assessment order following the decision in the case of Gajapathy Naidu which, he noted, held that when the assessee had accrued the right to receive, it should be included or accounted for in that year. There is no factual finding by the CIT that the amount of arbitral award of Rs. 990 lakhs accrued as right to receive to the assessee in the impugned year. The entire order of the CIT does not contain any such finding. In fact, there is no possibility of such finding in the order of the CIT since he has noted in his order that the assessee did not file copy of the arbitral award before him. CIT(A) s direction to the AO was to subject it to tax in the impugned year, subject to finding the same to have accrued to the assessee in the impugned year in accordance with the decision in the case of CIT Vs. Gajapathy Naidu [ 1964 (4) TMI 6 - SUPREME COURT] In terms of this direction of the CIT, the AO was re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereas Supreme Court awarding Rs. 26.34 lakhs only means that the appellant was not required to account income as per arbitral award on the mercantile basis. 3. Ld. CIT (A) erred in law and on facts confirming order giving effect without giving adequate opportunity to the appellant to present documentary evidence that no such income accrued to the appellant. 4. Levy of interest u/s 234B of the Act is not justified. 3. The appeal is stated to be barred by limitation by 2359 days. The ld. CIT(A) s order, against which the present appeal has been filed before us, was passed on 09.08.2012. The assesse was required to file appeal before us within 60 days, i.e. by 08.10.2012. However, the present appeal has been filed before us on 26.03.2019, resulting in delay in filing of the appeal by 2359 days. 4. The ld. Counsel for the assessee has filed an application in writing seeking condonation of delay and has made oral submissions also before us regarding the same. 5. Beginning with pointing out the chronology of events leading to the filing of the present appeal before us, it was pointed out that initially the assessee had filed return of income declaring total income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to pass fresh order to include claim receivable of Rs. 9,90,00,052/- by the appellant company from Rajasthan Government as taxable income on mercantile basis. (3) That AO in order giving effect to the order u/s 263 of the Act made addition of Rs. 9,90,00,052/- being the amount of Arbitral Tribunal Award raised demand of Rs. 2,10,58,532/- payable by the appellant. (4) That the award of Arbitral Tribunal was set aside by Hon'ble Supreme Court only an amount of Rs. 26.34 lakhs along with interest was confirmed to be payable to the appellant company. (5) Although amount of Rs. 26.34 lakhs has been confirmed to be payable by Rajasthan Government by the Supreme Court to the appellant, till date no payment is received by the appellant. The recovery suit is already filed in the district court at Jaipur. As such the matter is yet judicial. (6) That meanwhile appeal against order giving effect to order u/s 263 of the Act was dismissed by ld. CIT (A) - III, Baroda vide order dated 09.08.2012. (7) That the appellant filed application u/s 155(16) of the Act on 28/11/2018 before Dy. Commissioner of Income Tax, Central Circle - 1, Vadodara to amend the order giving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9-8-2012 Appeal dismissed by CIT(A) III, Baroda 8-8-2015 New Award Arbitration (Rs Crl410.09 -354.75 -- 1055.24 min payable) 1-29 (Additional Document) 8-8-2015 Application before Hon ble Sessions Court for Execution of the award 30-35(Additional Document) 17-8-2017 Section 34 dismissed by the District Court 36-79 (Additional Document) 28-11-2018 Application made u/s 155(16) to AO 244-245 11-3-2019 AO dismissed application u/s 155(16) 246-247 18-3-2019 Appeal filed with CIT(A) 8. Referring to both the above, ld. Counsel for the assessee argued for the condonation of the delay on the ground that:- (i) there was a reasonable cause for the delay; (ii) there was no gross negligence on the part of the assessee; (iii) there was no lack of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO after the same. The ld. Counsel for the assessee further contended that the copy of the arbitral award granting the award of 990 lakhs to the assessee is now being filed as an additional evidence. He contended that, even without admitting the same, a bare perusal would reveal that the award of the arbitrator was made on 01.12.2003. That even as per the findings of the ld. CIT in his order passed u/s 263 of the Act that the award was taxable in the year in which it was granted, the same was taxable in Assessment Year 2004-05 and not in the impugned Assessment Year i.e. AY 2005-06. That as per the assessee, however, it was taxable in the year when the award attained finality i.e. in the FY 2017-18, pertaining to AY 2018-19. The contention of the ld. Counsel for the assessee was that, in any case, the award was not taxable in the impugned year. That, therefore, if the delay in filing the appeal is not condoned, it would cause grave injustice to the assessee who would be required to pay tax merely for being negligent when admittedly the award or income added by the AO was not taxable in this year. The ld. Counsel for the assessee contended that for the purpose of condonation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... planation for waiting for 7 years in filing the appeal before the Tribunal. She also pointed out that even otherwise there is no merit in the assessee s appeal since the ld. CIT(A) has rightly pointed out that the AO was required to pass the order as directed by the ld. CIT in his order passed u/s 263 of the Act; that the AO had no choice but to make addition in the impugned year and no appeal lay against such orders passed by the AO giving effect to the order of the ld. CIT. She contended that the ld. CIT(A) has rightly noted that the only remedy available to the assessee was by way of filing appeal against the order of the ld. CIT passed u/s 263 of the Act. She, therefore, stated that no purpose would be served by condoning the delay in filing the appeal since the appeal was rightly held by the ld. CIT(A) to be non-maintainable. 13. We have heard the arguments of both the parties at length and have gone through the facts of the case as pointed out to us from the orders passed by various Revenue authorities leading to the present appeal before us. Considering the facts of the case as pointed to us by both the parties, we find it a fit case for condoning the delay of 2359 days i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the Hon'ble Supreme court from the decision in the case of Collector Land Acquisition Vs. Mst. Katiji Others, 1987 AIR 1353 on condonation of delay: 1. Ordinarily a litigant does not stand to benefit by lodging an appeal late. 2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties. 3. Every day's delay must be explained does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common sense pragmatic manner. 4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a nondeliberate delay. 5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dilatory strategy the court must show utmost consideration to the suitor. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time then the court should lean against acceptance of the explanation. While condoning delay the Could should not forget the opposite party altogether. It must be borne in mind that he is a looser and he too would have incurred quiet a large litigation expenses. It would be a salutary guideline that when courts condone the delay due to laches on the part of the applicant the court shall compensate the opposite party for his loss. 17. We do not deem it necessary to re-cite or recapitulate the proposition laid down in other decisions. Suffice to say that the Hon'ble Courts are unanimous in their approach to propound that whenever the reasons assigned by an applicant for explaining the delay, then such reasons are to be construed with a justice oriented approach. 18. In the light of the above, in view of our findings that the assessee had adduced sufficient bonafide cause for the delay, and was neither lax nor negligent in pursuing its case, we condone the delay in filing the present appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal to be non-maintainable since the AO s order was simply to give effect to the findings of the ld. CIT and against which no appeal lay. His findings in this regard at paragraph No.7 of his order is as under:- 7. I have considered the appellants submissions, AO's observations and the order passed under section 263 by the CIT. From the order of CIT, it is quite evident that he has given a clear direction to the AO to pass a fresh order following the decision of honourable Supreme Court in the case of CIT vs Gajapathy Naidu 53 ITR 114 (SC) wherein it is held that in mercantile accounting system, when the assessee accrued the right to receive, it should be included/ accounted for in that particular year. The CIT had asked the appellant to furnish certain documents to ascertain if there was a lack of reasonable certainty as advocated by it. However, despite service of notice, the appellant did not respond and did not furnish requisite details. Besides, the CIT has also given a finding that revenue recognition cannot be deferred till the claim finally gets decided by the final appellate authority. Thus, the order passed by AO is to simply to give effect to these findings of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne the facts of the case and apply the law as laid down in CIT Vs. Gajapathy Naidu (supra) to it while subjecting the arbitral amount to tax. The findings of the ld. CIT(A), therefore, that the order of the AO was to give effect to the findings of the ld. CIT and, therefore, not appealable is incorrect. The assessee, we hold, is well within his rights to have filed an appeal against this order passed by the AO. Even otherwise, it has been held by the Hon ble Apex Court in the case of Kalyankumar Ray Vs. CIT, [1991] 191 ITR 634 (SC), that an assessment order comprises the detailed order passed by the AO as well as the computation of income done by him. Therefore, for all purposes, the computation of income by the AO giving effect to the ld. CIT s direction is an assessment order which is appealable. The order passed by the ld. CIT(A), we hold, therefore, holding the assessment order to be not appealable is incorrect in law. Having held so, we deem it fit to restore the issue back to the AO to verify the facts of the case and thereafter pass an order in accordance with the directions of the ld. CIT in his order passed u/s 263 of the Act. 23. In effect, the appeal of the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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