Madras High Court
M/S.Precot Meridian Ltd vs Deputy Commissioner Of Income Tax on 23 September, 2021
T.C.A.Nos.489 to 491 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 23.09.2021
CORAM :
THE HON'BLE MR. JUSTICE T.S. SIVAGNANAM
AND
THE HON'BLE MR. JUSTICE SATHI KUMAR SUKUMARA KURUP
T.C.A.Nos.489 to 491 of 2021
M/s.Precot Meridian Ltd.,
Suprem, 737,
Green Fields, Puliakulam Road,
Coimbatore – 641 045.
Now at : SF No.559/4, 'D' Block,
4th Floor, Hanndev Info Park,
Nava India Road, Udaiyampalayam,
Coimbatore – 641 045. ... Appellant
in all appeals
Vs.
Deputy Commissioner of Income Tax,
Company Circle – 1(2),
Coimbatore. ... Respondent
in all appeals
Prayer in T.C.A.No.489 of 2021 : Tax Case Appeal preferred under Section
260A of the Income Tax Act, 1961, against the order of the Income Tax
Appellate Tribunal, Madras, “A” Bench, dated 08.05.2013 in
I.T.A.No.1562/Mds/2012, Assessment Year 1994-95.
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T.C.A.Nos.489 to 491 of 2021
Prayer in T.C.A.No.490 of 2021 : Tax Case Appeal preferred under Section
260A of the Income Tax Act, 1961, against the order of the Income Tax
Appellate Tribunal, Madras, “D” Bench, dated 30.04.2013 in
I.T.A.No.1130/Mds/2011, Assessment Year 1995-96.
Prayer in T.C.A.No.491 of 2021 : Tax Case Appeal preferred under Section
260A of the Income Tax Act, 1961, against the order of the Income Tax
Appellate Tribunal, Madras, “C” Bench, dated 09.05.2013 in
I.T.A.No.838/Mds/2012, Assessment Year 2005-06.
For Appellant : Mr.A.S.Sriraman
in all appeals
For Respondent : M/s.K.G.Usha Rani
Standing Counsel
in all appeals
COMMON JUDGMENT
(Judgment was delivered by T.S. SIVAGNANAM, J.)
These Tax Case Appeals under Section 260A of the Income Tax Act,
1961 (“the Act” for brevity) filed by the assessee, are directed against the
orders passed by the Income Tax Appellate Tribunal, Madras, “A”, “D”, &
“C” Benches, dated 08.05.2013, 30.04.2013 & 09.05.2013, in
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I.T.A.No.1562/Mds/2012, I.T.A.No.1130/Mds/2011 and I.T.A.No.838/
Mds/2012, for the Assessment Years 1994-95, 1995-96 & 2005-06,
respectively.
2.The assessee has raised the following substantial questions of law
for consideration in these appeals :
“1.Whether in the facts and circumstances of the case,
the Income Tax Appellate Tribunal is right in law, in
disallowing the claim of expenditure on replacement of
machinery as revenue expenditure, more-so in the context of
the decision of the Hon'ble Supreme Court in the case of
M/s.Hindustan Textiles which was rendered after the decision
in the case of Mangayarkarasi Mills (P) Ltd.?
2.Whether, in the facts and circumstances of the case,
the test of enduring benefit is the only criteria in determining
whether expenditure is capital or revenue in nature?”
3.We have heard Mr.A.S.Sriraman, learned counsel for the
appellant/assessee and M/s.K.G.Usha Rani, learned Standing Counsel,
accepts notice for the respondent/Revenue.
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4.The assessee has submitted that they have already been issued Form-
3 declaration under the Vivad Se Vishwas Scheme, 2020 (“VSV Scheme” for
brevity) and therefore, these appeals may be disposed of permitting them to
file Form-4 in response to the Form-3 declaration issued by the Income Tax
Department.
5.M/s.K.G.Usha Rani, learned Standing Counsel, appearing for the
respondent/Revenue, submitted that the Form-3, which was issued to the
assessee, was canceled by the Principal Commissioner of Income Tax-1,
Coimbatore, by order dated 17.09.2021.
6.Since this order was passed when the matter was pending before this
Court and when the matter was adjourned by this Court on two earlier
occasions at the instance of the Revenue, strongly opposing the applications
for condonation of delay, we are entitled to examine the correctness, legality,
propriety of the order of the Principal Commissioner of Income Tax-1,
Coimbatore, dated 17.09.2021.
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7.By the said order, the Form-3 issued to the assessee has been
canceled on the sole ground that, on the date when he filed the Form-3
declaration before the Department, opting to avail the benefit of VSV
Scheme, there was no appeal pending before the Court. In these appeals,
there was a delay in representing the papers and by order dated 23.09.2021,
we condoned the delay giving reasons. For convenience, we extract the
order hereunder :.
“C.M.P.Nos.9365, 9343 & 9772 of 2021 in
T.C.A.SR.Nos.84356, 84352 & 84362 of 2013
These petitions have been filed by the petitioners to
condone the delay of more then 2000 days in representing the
appeals.
2.When the matter came up earlier, we expressed that
the reasons are insufficient and we found that sufficient cause
has not been shown for condonation of delay in re-presenting
the papers.
3.This Court can take judicial notice of the fact that,
several appeals filed by the Revenue are presented to the
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Registry with certified copy of the order of the Tribunal along
with Memorandum of Grounds of Appeal, without the Typed
Set of Papers and other relevant documents, for the appeal to
be taken up for numbering. This Court has always been
liberal, either it be the Revenue or the assessee, while
considering the applications for condonation of delay in
representation. On several occasions, the learned Standing
Counsel themselves have filed affidavits praying for
condonation of delay and in all such cases, though the delay
may be exorbitant or may be lacking in sufficient cause, the
Court has exercised discretion and condoned the delay. In
cases filed by the assessees, considering the type of assessee
and the cause shown, the Court has exercised discretion and
condoned the delay, and in certain cases, imposed reasonable
cost as a condition to be complied with for condonation of
delay. The prayer for condonation of delay in representing the
papers is between the appellant and the Court and the Court
may not be required to hear the other side, while exercising
discretion in condoning the delay in representation.
4.As mentioned earlier, the affidavit filed by the
petitioner before us, in support of the condone delay petitions
were bereft of particulars and when we expressed our opinion,
the learned counsel for the assessee requested time to file a
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better affidavit. Accordingly, one of the Directors of the
assessee has filed a better affidavit, stating that the appeals
were filed before this Court within 120 days from the date of
communication of the order by the Registry of the Appellate
Tribunal and they were filed on 23.09.2013 with a delay
ranging from 4 to 16 days and the delay was not deliberate,
but owing to the circumstances beyond the control of the
appellant. It is submitted that, due to the sudden absence of
the Accountant, who was coordinating with the office of the
counsel who initially filed the appeals on behalf of the
appellant/assessee, there was a small delay in filing the
appeals. Further, the assessee submitted that, if the delay is
not condoned, the assessee will miss the opportunity to settle
the proceedings under the Vivas Se Vishwas Scheme, 2020
(“VSV Scheme” for brevity) by way of filing Form-4 in
response to Form-3 issued by the Income Tax Department,
dated 15.04.2021.
5.The learned Standing Counsel appearing for the
respondent/Revenue, on the earlier occasion, sought time to
file counter affidavit, which has been filed and placed before
us today. The counter affidavit largely proceeds on the basis
as to how the petitioner/assessee is not entitled to the benefit of
VSV Scheme. So far as the delay is concerned, it is submitted
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by the respondent that the mistake committed by the erstwhile
counsel in not representing the papers after complying with the
defects pointed out by the Registry, is not a reason to be
accepted for condonation of delay. Further, it is submitted
that the assessee had obtained Form-3 by misrepresentation of
facts by stating that a valid appeal was pending as on
31.01.2020, which is a pre-requisite for availing the benefit of
VSV Scheme and on the date of application, no appeal was
pending before the Court. In this regard, the Revenue placed
reliance on Circular No.21 of 2020, dated 04.12.2020, issued
by the CBDT, which is a FAQ and in particular, the Answer to
Question No.59. Further, the Revenue would also contend
that, on facts, the Revenue has got a good case on merits and
several decisions which are stated to support their case have
been been referred to in Para Nos.9 to 11 of the counter
affidavit.
6.Before we consider as to whether the Revenue was
justified in cancelling the Form-3 issued to the assessee vide
order dated 17.09.2021, we need to first consider as to
whether the assessee has made out a case for condonation of
delay. As pointed out earlier, in substantial number of cases,
either filed by the Revenue or by the assessee, the Court has
exercised discretion and condoned the delay. Even though the
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affidavits are not sworn to by the concerned officer, the Court
has exercised discretion and adopted a liberal approach in
favour of the Revenue, bearing in mind that the jurisdiction of
this Court under Section 260A of the Income Tax Act, 1961,
(“the Act” for brevity) is to decide the substantial questions of
law and therefore, this Court always holds that, on
technicalities, the Court should not shun away from taking a
decision on the substantial questions of law, which if done,
would result in serious miscarriage of justice.
7.Admittedly, the appeals were filed in the Registry of
this Court on 23.09.2013, along with certified copy of the
order passed by the Tribunal, which is impugned in these
appeals. Thereafter, the papers were returned to the erstwhile
counsel for the appellant/assessee and were re-presented on
19.03.2014. The present counsel had filed his vakalat on
11.06.2021, after obtaining No-Objection from the erstwhile
counsel. Thereafter, the matter has been pursued and the
present counsel has taken steps to file an affidavit in support of
the petitions to condone the delay in representation. We find
from the case papers that the appeals were presented and the
Batta which was required to be paid for service of notice on
the respondent has been remitted by the appellant along with
the appeals on 23.09.2013. Subsequently, the appeals were
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represented on 23.12.2016, after complying with the defects
pointed out by the Registry. From the available papers, it is
not clear as to on what date, the papers were returned to the
counsel, after which, it was represented on 23.12.2016.
8.Thus, considering the aforesaid dates and events, we
are of the view that the date of filing of the appeals by the
assessee has to be reckoned as 23.09.2013 for all purposes.
This is so, because if we exercise discretion and condone the
delay in representation, then the delay in filing is ranging only
between 4 to 16 days, which has been calculated as per the
period of limitation prescribed under the Act, reckoning the
date of filing of appeal as 23.09.2013. Therefore, it goes
without saying that the appeals were filed before the Registry
on 23.09.2013.
9.As far as the delay in representation is concerned, the
Revenue may be right in stating that the assessee cannot
escape by blaming the erstwhile counsel. In many of the cases,
we have noticed that, on account of change of jurisdiction,
there is change of Standing Counsel for the Department and
there would be delay in handing over the papers to the
concerned Standing Counsel and these are all cumulative
reasons, which will lead to delay in filing the appeal or
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representing the appeal or getting the appeal numbered or
making submissions in the appeal which have been numbered.
Thus, bearing in mind that we are required to decide the
substantial questions of law in appeals filed under Section
260A of the Act, we exercise discretion and condone the delay
in re-presenting the appeals. These Civil Miscellaneous
Petitions are allowed.”
8.In the above order, we have mentioned as to how the Court has
exercised discretion in several cases filed by the Revenue, where there was
an exorbitant delay in representation. That apart, we have also recorded as to
how and why we have exercised discretion in condoning the delay. The
delay having been condoned, both in representation and filing, which was
marginal, the appeals have been numbered.
9.The appellant cannot be prevented from availing the benefit of VSV
Scheme by referring to FAQ No.59 of the CBDT Circular No.21 of 2020,
dated 04.12.2020. The said question and answer is as follows :
“Q.59.Whether the tax payer in whose case the time
limit for filing of appeal has expired before
31.1.2020 but an application for condonation of
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delay has filed is eligible.
Ans: If the time limit for filing of appeal expired
during the period from 1st April 2019 to 31.1.2020
(both dates included in the period), and the
application for condonation is filed before the date
of this circular, and the appeal is admitted by the
appellate authority before the date of filing of the
declaration such appeal will be deemed to be
pending as on 31.1.2020.”
Question No.59 is in respect of the Tax Payer in whose case, the time limit
for filing an appeal has expired before 31.01.2020, but an application for
condonation of delay has been filed and whether such an assessee is eligible
to avail VSV Scheme. First of all, the question No.59 cannot be applied to
the assessee's case, since in the above order, while condoning the delay in
representation, we have held that the appeals were filed before this Court on
29.03.2013 and the crucial date shall be reckoned as 29.03.2013 for all
purposes. Therefore, the assessee's case cannot be brought under the ambit
of the case dealt with in Question No.59 of the FAQ referred supra.
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10.Therefore, we are of the view that the order of cancellation of
Form-3 dated 17.09.2021, is not sustainable in law. As mentioned earlier,
this order was passed when the Miscellaneous Petitions were pending before
this Court and the matter was adjourned to 15.09.2021 at the instance of the
Revenue by order dated 01.09.2021. Thereafter, on earlier occasion, i.e., on
15.09.2021, once again, at the instance of the Revenue, it was adjourned to
21.09.2021. Thus, the order dated 17.09.2021 having been issued when the
matter was pending before this Court, that too, without seeking leave of this
Court, we are entitled to quash the order dated 17.09.2021, for the reasons
set out above. As a consequence, the assessee would be entitled to file
Form-4 in response to Form-3.
11.In the result, these Tax Case Appeals are disposed of, restoring the
Form-3 issued to the assessee, as a consequence of setting aside the order
passed by the Principal Commissioner of Income Tax-1, Coimbatore, dated
17.09.2021, and the assessee would be permitted to file Form-4 in response
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to Form-3 declaration, which shall be processed in accordance with law.
Consequently, the substantial questions of law are left open. No costs.
(T.S.S., J.) (S.S.K., J.)
23.09.2021
mkn
Internet : Yes
Index : Yes / No
Speaking order / Nonspeaking order
To
1.The Income Tax Appellate Tribunal,
“A” Bench, Chennai.
2.The Income Tax Appellate Tribunal,
“C” Bench, Chennai.
3.The Income Tax Appellate Tribunal,
“D” Bench, Chennai.
4.The Deputy Commissioner of Income Tax,
Company Circle – 1(2),
Coimbatore.
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T.S. SIVAGNANAM, J.
and
SATHI KUMAR SUKUMARA KURUP, J.
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T.C.A.Nos.489 to 491 of 2021
23.09.2021
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