Umesh Das Seth vs Income-Tax Officer.
1987 Latest Caselaw 377 Del

ORDER

Per Shri S. K. Chander, Accountant Member - All these appeals have been filed simultaneously on 16-2-1987. There is no dispute about the factum that each and every one of these appeals has been filed late by 402 days. The Registry of the Tribunal, therefore, issued a notice to each of the appellants to show cause as to the reasons for delay. In each case, an explanation has been filed by the person concerned. The reason for delay given is that on an appeal filed against each assessment concerned in each case, the AAC made an order on 15-10-1985. This order was served upon each assessed on 11-11-1985. According to the assesseds, the main issue in appeal before the AAC was with regard to the valuation of interest of each assessed in the firm known as M/s. Narsingh Dass & Sons. The WTO had held that the genuineness of the above firm had not been proved and as such, the assets belonging to the firm were liable to be included in the hands of the respective partners as their individual assets. The 1d. AAC found from record that the instrument of partnership and deed of dissolution had not been filed before the WTO. These were, however, filed before him. He observed that the genuineness of the firm has not been conclusively proved and at best it could be treated as an AOP. According to the assessed, the AAC further held that while valuing the interest of the assesseds in the said firm / AOP deduction was not to be allowed for certain liabilities claimed by the assessed as standing in the balance sheet of the said concern, because according to the AAC relevant statement of accounts had not been prepared. According to the assessed, the above findings of the 1d. AAC recorded in his order dated 15-10-1985 were factually incorrect and, therefore, applications dated 25-11-1985 u/s. 35 of the W. T. Act were filed by these assesseds for relevant assessment years pointing out that balance sheets of the said firm/ AOP had in fact been prepared and filed before the AAC and it was contended that as such, there was a mistake of fact denying the deduction of the liabilities to these assesseds. The petition states that the 1d. AAC accepted the said applications u/s. 35 and gave directions to the WTO to value the interest of the assesseds in the aforesaid firm/ AOP, by scrutinising balance sheets which were to be produced by the assesseds before him. This order of rectification u/s. 35 of the Act was made by the 1d. AAC in each case on 31-12-1985. Although there is no evidence of its receipt by these assesseds, yet the claim has been made in these petitions that the said order was so received by the assesseds as to be within time for filing the appeals against the orders dated 15-10-1985.

2. After recording the above in the petition for condensation of delay, it is averred that since the 1d. AAC had accepted the claim of the assesseds that deduction for liability should be considered after scrutiny of the balance sheets of the above firm/ AOP in the order u/s. 35, the assesseds were advised by Shri Brijesh Mathur, C. A., that there remained no necessity for filing the appeals against the order of the AAC dated 15-10-1985. The revenue, however, filed an appeal against the order made u/s. 35 on 31-12-1985 and when the assesseds received a copy of the memo of the appeal filed by the revenue, the assesseds did not file any cross-objections. The appeals filed by the revenue, in these cases, were disposed of by the Tribunal by its consolidated order dated 24th Dec., 1986. This order of the Tribunal was served upon the assesseds on 15-1-1986. In this order, the assesseds found that for the reasons recorded therein, the Tribunal held that there was no mistake in the orders passed by the 1d. AAC disposing of the assesseds appeals on 15-10-1985 since, there was no mistake apparent from record in the order of the 1d. AAC dated 15-10-1985, the Tribunal held that the orders passed by the AAC u/s. 35 of the W. T. Act on application made by these assesseds were without jurisdiction. The revenues appeals were, therefore, allowed by cancelling these orders.

3. In these circumstances, these appeals have been filed simultaneously on 16-2-1987. There is limitation in each case with a delay of 402 days. The explanation on these facts given for this delay is that the order of the 1d. AAC dated 15-10-1985 in each case had been modified in favor of the assesseds and thus, at that stage, there was no occasion for the assesseds to file appeals against the order of the 1d. AAC dated 15-10-1985. The revenues appeals by the Tribunal against the order of the AAC dated 31-12-1985. After receipt of this order the assesseds has not lost much time and has filed these appeals after consulting a counsel and as such, the delay of 402 days in each case is on account of sufficient cause and requires to be condoned. To support this claim an affidavit of Shri B. C. Mathur, son of Shri Hem Chand R/o 6/13, Western Extn. Area, Karol Bagh, New Delhi, sworn on 11-8-1987 has been filed before us. In this affidavit, Shri B. C. Mathur has averred that he advised, as claimed by these assesseds, and, therefore, the delay in filing these appeals occurred.

4. The 1d. counsel for the assesseds relying upon the judgment of the Supreme Court in the case [1955] 1 SCR 114 (sic) and another judgment of the Supreme Court in the case of Concord of India Insurance Co. Ltd. v. Smt. Nirmala Devi [1979] 118 ITR 507 contended that the mistake of the counsel in advising these assesseds wrongly resulting in an inordinate delay in filing these appeals may be taken as sufficient ground as the assesseds bona fide believed on this advice that after the order of the 1d. AAC made u/s 35 on 31-12-1985 nothing more was required to be done. It was contended that since it was bona fide belief and neither a device to cover an ulterior purpose nor an attempt to save limitation in an underhand way, the explanation of the assesseds constitutes sufficient cause for condoning the delay.

5. The 1d. counsel for the assesseds submitted that the Income-tax Appellate Tribunal is empowered to admit an appeal, if it is satisfied that there was sufficient cause for not presenting the appeal within the statutory time provided, as held by the Honble Bombay High Court in the case of Arun S. Meher v. M. A. Twigg, CWT [1985] 153 ITR 131. It was prayed, therefore, that the delay in each case be condoned and appeals admitted for hearing on merits.

6. Opposing these submissions, the 1d. D. R. projected that the petition is merely a self-serving device because in the very first ground taken up in each case there is a grievance that the 1d. AAC erred in holding that the appellants interest in the partnership is in fact not so but the properties were individual properties of the appellants. According to the 1d. DR it was, therefore, clear that when the order u/s. 35 was made by the 1d. AAC on 31-12-1985 it could not have given the type of satisfaction projected in the application seeking condensation of delay. He projected that in the application u/s. 35, the genuineness of the existence of the firm had not been required to be reviewed or questioned in any other manner. Therefore, it is clear that the assessed failed to avail of the right of appeal against the order of the AAC dated 15-10-1985 with in the statutory period provided and is now making an effort to make an entry by the back door. The explanation is not factually correct and is only a device to save the assesseds from the delay which occurred due to laches. There was, according to him, no justification for condensation of the delay and the appeals deserve dismissal in liming. For these submissions, reliance was placed by him on the case of Raju v. CIT [1983] 14 Taxman 198(Bom.).

7. After hearing both sides, we find that there is no sufficient cause shown by these assesseds to us to arrive at such a satisfaction so as to condone the inordinate delay of 402 days. We find from the explanation filed by the assesseds for the delay and on persual of the averments made in the affidavit filed by Shri B. C. Mathur, C. A. that the type of advice that the assesseds claim to have received and that the 1d. C. A. avers to have given would not be coming forth from a learned counsel, who can give type of reasons given in the affidavit leading to the delay, which is under consideration for condensation. A careful perusal of the orders made by the AAC on 15-10-1985 and on 31-12-1985, shows that the assesseds could not have got the type of relief that it claims it believed, it would receive from the ITO at the directions of the AAC contained in the order of amendment dated 31-12-1985 made u/s. 35 of the W. T. Act. Therefore, the very premises on which the explanation for the delay starts, to our mind, are incongruous with the facts of the case.

8. We also find that at the very material time, when after the order of the AAC made u/s. 35 of the I. T. Act, the revenue put up a challenge to it before the Tribunal, the type of belief that the assesseds claim they carried would have definitely been shattered and the counsel, as learned as one the assesseds had, would have not continued to advise the assesseds not to challenge the original order of the AAC made on 15-10-1985. After the Tribunals order dated 24th Dec., 1986 allowing the appeals of the revenue against the order of the AAC made u/s 35 of the Act on 31-12-1985 was received by the assesseds, the assesseds realised the grave position in which all these assesseds had come to be trapped on account of gross negligence leading to laches.

9. We find that the Honble Supreme Court in the judgment of Concord of India Insurance Co. Ltd. (supra) has laid down guidelines in such matters for condensation of delay. When we apply these guidelines, we find firstly, the delay is inordinate. It extends over a period of more than one year. Secondly, the explanation given by the assesseds and the averments made by the C. A. in his affidavit dated 11-8-1987 do not reflect the factual position and in fact, important dates like the receipt of the order of the AAC made u/s. 35 on 31-12-1985 and the receipt of the copy of the appeal memo filed by the revenue before the Tribunal though known to the assesseds apparently have not been placed before us. Therefore, when we consider the explanations of the assesseds on the entirety of the facts and circumstances of the case along with the guidelines laid down by the Supreme Court for condensation of delay in such matters, we find ourselves unable to reach a satisfaction that the delay was due to sufficient cause. We, therefore, reject the appeals as barred by limitation. Appeals dismissed.