Income Tax Appellate Tribunal - Jaipur
Birbal Khan Chand Khan And Party vs Income-Tax Officer on 15 December, 1994
Equivalent citations: [1995]52ITD522(JP)
ORDER
M.A.A. Khan, Judicial Member
1. This is an appeal by an assessee from the order of CIT(A) whereby the CIT(A) confirmed, inter alia, an addition of Rs. 2,19,065 made on account of non-disclosure of the empty bottles in the closing stock.
2. The relevant facts are that during the accounting period relevant to A. Y. 1985-86 the assessee-firm dealt in liquor on retail basis. It had declared gross profit rate of 3.6% on total turnover of Rs. 6,52,53,557. However, on going through the statements filed along with the return of income, -the AO noticed that during the month of March 1985 the assessee-firm had purchased 3,59,198 empty bottles from the market and 35,032 empty bottles from the distillery against which expenditure of Rs. 3,94,230 was claimed, but in the very same month the sale of 1,75,165 liquor bottles only had been shown and the balance of 2,19,065 bottles was not reflected in the closing stock. On being asked the assessee-flrm explained that as of practice and procedure certain number of liquor both say 20% of the total requirement was supplied by the distillery against payment of Rs. 2 per empty bottle and the rest of the required number of empty bottles was used to be supplied by the assessee. At times it was not possible for the assessee to supply the required number of empty bottles to the distillery and in that case the distillery supplied extra bottles to the assessee-firm, and the deficiency, if any, used to be made good to the distillery at the time of final settlement of the account. It was further submitted that at times the consumers used to bring back empty bottles to the 53 retail shops run by the assessee-firm and such bottles used to be purchased by it at the rate of Re. 1 per bottle. The AO summoned the record of the distillery and also examined the Manager Shri Vishal Singh Shekhawat. Shri Shekhawat told that the procedure followed at the distillery was that 20% of the empty bottles, involved in the sale to be made to the assessee, used to be supplied to the assessee by the distillery @ Rs. 2 per bottle and the rest of the 80% empty bottles were supplied by the assessee itself from its sources other than the distillery. Mr. Shekhawat clarified that under no circumstances any bottle was supplied to the assessee-firm without charging the price @ Rs. 2 per empty bottle. The record of the distillery did not corroborate assessee's version of purchase of extra bottles.
3. On scrutiny of the empty bottle a/c for the period from 4/84 to 2/85, the AO further noted that the assessee-firm had supplied to the distillery 30,935 bottles more than these reflected in the account books. He was, therefore, of the view that addition of Rs. 30,935 being the value of the empty bottles @ Rs. 1 per bottle be also made.
4. Above all, the AO was of the view that the gross profit rate was quite low. He, therefore, proposed a further trading addition of Rs. 12,501 by applying a g.p. rate of 4% instead of 3.6% applied by the assessee. The AO accordingly sought approval from his IAC.
5. In his instructions Under Section 144A, the IAC endorsed the view of the AO but instructed him to make an overall addition of Rs. 2,50,000 on account of discrepancy in the empty bottle a/c. This addition was to include the specific addition of Rs. 2,19,065 required to be made on account of nondisclosure of that number of empty bottles in the closing stock. However, he approved of the proposed addition of Rs. 12,501 to the trading results. The AO, therefore, made the additions accordingly.
6. In appeal, the 1d. CIT(A) found no justification for the addition of Rs. 30,935 on account of discrepancy in the empty bottles a/c for the period from 4/84 to 2/85. He, therefore, deleted the said addition but at the same time directed the AO to make necessary enquiries in that behalf and take appropriate action as per provisions of law in case any discrepancy is found in the overall position. He, however, confirmed the addition of Rs. 2,19,065 on account of non-disclosure of the empty bottles in the closing stock and which were purchased in the month of March 1985. The trading addition of Rs. 12,501 was reduced to Rs. 8,000 only.
7. At the hearing before us, the 1d. D/R raised a preliminary objection to the effect that the appeal of the assessee was barred by limitation and the delay was not satisfactorily explained by the assessee-firm.
8. Refusing this preliminary objection, Mr. S.K. Jain, Advocate appearing for the assessee, vehemently urged that though the appeal was filed late yet the delay caused in filing the appeal late was satisfactorily explained by the assessee. Mr. Jain explained that Sri H.K. Ojha, Advocate, who had conducted assessee's appeal and prepared papers to be filed in the Tribunal, had duly sent the necessary documents to Sri Panna Lal Jain, the then Accountant of the assessee at Jaipur, but the said accountant by one reason or the other did not receive such papers which appeared to have gone to the hands of other liquor contractors who forgot to deliver the same to Sri Panna Lal or to a partner of the assessee-firm. It was further submitted that as soon as the assessee came to know of the non-filing of the appeal in the Tribunal, it filed the appeal on 16-6-1994 along with an application praying for condonation of delay. In this behalf, Sri Jain referred to the affidavits of S/Shri A. K. Ojha, Advocate and Panna Lal Jain, Accountant and further submitted that in the matter of condonation of delay the courts are expected to take a liberal view and should not shut the doors of justice upon the aggrieved persons. In this behalf Shri Jain relied upon the decision of Collector Land Acquisition v. Mst. Katiji [1987] 167 ITR 471 (SC), wherein interpreting Section 5 of the Limitation Act, 1963, the Hon'ble Supreme Court observed as under :
The Legislature had conferred power to condone delay by enacting Section 5 of the Limitation Act, 1963, in order to enable the courts to do substantial justice to parties by disposing of matters on merits. The expression 'sufficient cause' in Section 5 is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice - that being the life-purpose of the existence of the institution of courts. A justifiably liberal approach has to be adopted on principle.
'Every day's delay must be explained' does not imply a pedantic approach. The doctrine must be applied in a rational common sense and pragmatic manner.
The doctrine of equality before law demands that all litigants, including the State as a litigant, are accorded the same treatment and the law is administered in an evenhanded manner. There is no warrant for according a stepmotherly treatment when the State is the applicant praying for condonation of delay.
When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have a vested right in injustice being done because of a non-deliberate delay.
In his rejoinder, the 1d. D/R submitted that appeal effect in this case was given on 26-12-1989 and demand was raised against the assessee on that date. The assessee paid the demand on 15-2-1990 as per challan filed on that date. The 1d. D/R thus urged that the assessee had come to know the order of the CIT(A) as early as on 26-12-1989, paid demand on 15-2-1990 but chose to file the appeal as late as on 16-6-1994 after the lapse of about 41/2 years. The 1d. D/R submitted that the facts and circumstances of the case as also the conduct of the assessee itself did not justify the condonation of the inordinate delay.
9. After having given our thoughtful consideration to the facts of the case and the prayer for condonation of delay in filing the appeal, we are of the considered opinion that howsoever lenient and liberal view we take of the delay committed in filing the appeal by the assessee, it is not possible for us to exercise our discretion and that too judicially, for the benefit of the assessee-appellant.
10. It is well-settled that in the matter of condoning delays the courts should adopt a liberal attitude. The main duty entrusted to the courts is to decide the disputes between the parties on merits and finally and, therefore, procedural sins should not result in loss or death of the rights of the parties. The doors of justice should not be shut on the parties for their non-deliberate and unintentional lapses or defaults committed under circumstances which are beyond their control. Efforts should be made to settle their disputes after hearing them. But at the same time, no party should be allowed to take benefit of his own faults to the disadvantage or at the cost of his adversary as it is likely to frustrate the very object of administration of justice. It is, therefore, necessary for doing justice between the parties that where an authority is vested with the discretion to do an act either way it should exercise such discretion judicially and not arbitrarily. A discretion exercised judicially leads to just decisions, promotes authority of law and establishes rule of law, a discretion exercised arbitrarily leads to miscarriage of justice and causes erosion in the very system of administration of justice. These views we think are fortified by the decision of the Hon'ble Supreme Court as reproduced above.
11. Judged in the light of the observations made hereinabove, the position in the instant case comes to this. The order appealed against was made on 6-12-1989. It was given effect to by the ITO on 26-12-1989 and the challan raising the demand was duly sent to the assessee-firm. The assessee paid the demand on 15-12-1990. These facts were not controverted by the 1d. counsel for the assessee. These facts clearly prove that the assessee-firm had come to know of the order of the CIT(A) dismissing its appeal, as early as on, at least 15-2-1990. But the appeal was filed as late as on 16-6-1994, i.e., with a delay of more than four years. And how the assessee has explained this inordinate delay, let us examine.
12. Along with the memorandum of appeal, the assessee filed an application for condonation of delay. The said application reproduced in extenso, runs as a under :-
Before the ITAT, Jaipur Bench, Jaipur.
In the matter of M/s Birbal Khan Chandan Khan & Party, Assessment year : 1985-86 Appeal against order Under Section 143(3) Application for condonation of delay Hon'ble Sirs, We are submitting along with this application an appeal in the case of M/s Birbal Khan Chandan Khan & Party, against the order of the CIT(A) dt. 6-12-1989, relevant to the assessment year 1985-86.
It is submitted that the above case was earlier looked after by the Advocate of Bikaner Shri H.K. Ojha, who have also appeared before the CIT(A).
When the appeal against the order Under Section 271(1)(c) in the case of the above assessee-firm came up for hearing before the Tribunal, then we have also tried to locate the quantum appeal against the order of the CIT(A), it is now revealed to us after lot of investigations at all the ends that the appeal was sent from Bikaner to Jaipur for signatures and for submission before the Tribunal, but after that it is not known what has happened to that appeal so sent from Bikaner by the then Advocate. It appears that it had gone in the hands of the then country liquor contractor of Jaipur and they have forgotten to hand over the same to the partners of M/s Birbal Khan Chandan Khan and Party and therefore, there is no alternative but to file an appeal now against the order of the 1d. CIT(A) with the humble pray that the delay may please be condoned.
It is further submitted that we have applied for the certified copy to the CIT(A), Range-Ill, Jaipur who is at present having jurisdiction of Churu & Bkr. Range on 9-6-1994, but the 1d. CIT(A) has expressed her inability to supply the certified copy as the record is not available. Therefore, we are filing the appeal with the photo copy of the order of the 1d. CIT(A) with the humble pray that under these circumstances, when the record is not traceable, the appeal may please be directed to take on record.
Submitted accordingly, Yours faithfully, Sd/-
(S.K. Jain) Encl: As above Authorised Advocate.
This application was not supported with the affidavit of any person. On 2-7-1994, the assessee moved another application which reads as under :
Before the ITAT, Jaipur Bench, Jaipur Re : In M/s Birbal Khan Chandan Khan & Party v/s ITO Assessment year: 85-86 Appeal against order Under Section 143(3) ITA No. 1382/JP/94 Application for condonation of delay Hon'ble Sirs, It is submitted that the above appellant-firm has filed the second appeal against the order of the CIT(A), dated 16-2-1989 in appeal No. 2/88-89 on 16-6-1994 along with an application for condonation of delay.
It is submitted that this appeal is against the order Under Section 143(3) for the A.Y. 85-86.
It is submitted that the delay is caused due to the fact that although the appeal was sent at Jaipur by Shri H. K. Ojha, Advocate from Bikaner for submitting the same before the Tribunal to one Shri Pannalal Jain, who was the then Accountant of M/s Birbal Khan Chandan Khan & Party in 1985-86 and who was at that time working with the then liquor contractors of Jaipur. But Shri Pannalal Jain did not receive the appeal and it appears that it had gone in the hands of the then liquor contractors of Jaipur who had forgotten to hand over the same to Shri Pannalal Jain or to partners of M/s Birbal Khan Chandan Khan and Party and thus the appeal remained unfiled.
A photocopy of the affidavit of Shri B.K. Ojha, Advocate in this regard is enclosed herewith.
It is, therefore, submitted that as the appeal was not filed before the Tribunal in time as it had fallen in the wrong hands at Jaipur when it was sent for submitting before the Hon'ble Tribunal by Shri H.K. Ojha, Advocate from Bikaner and as soon as these facts came to the knowledge of the partner of M/s Birbal Khan Chandan Khan and Party, the appeal was filed on 16-6-1994 along with the application for condonation of delay. It is therefore, prayed that the delay which is caused due to the inadvertant mistake of the Advocate Shri H.K. Ojha, may, therefore, be condoned.
Submitted accordingly.
Yours faithfully, Sd/-
Encl: 1 (S.K. JAIN) Along with this application affidavit of Shri H.K. Ojha, Advocate was filed. This affidavit is to the following effect :-
(NO CAPTION) I, H.K. Ojha, Advocate S/o Late Suraj Karanji Ojha, aged 67 years, declare on oath as follows :-
1. That I had conducted the Income-tax case of M/s Birbal Khan Chandan Khan and Party, Taranagar for the assessment year 1985-86 before the ITO, Bikaner.
2. That I had also conducted the appeal for assessment year 1985-86 before the CIT (Appeals) filed against the assessment order passed by ITO, Bikaner.
3. That the firm of M/s Birbal Khan Chandan Khan and Party was closed on 31-3-1986 and after that they were neither having any office at Bikaner nor Taranagar.
4. That I had sent the appeal papers duly completed in all respects for signature by the partner and for submitting the same before the Income-tax Tribunal, Jaipur against the order of CIT(A) in appeal No. 2/88-89, dated 6-12-1989 to Jaipur well within time.
5. That the appeal papers were sent to one Shri Panna Lal Jain on the address of office of the then liquor contractors of Jaipur for delivery to the partner of M/s Birbal Khan Chandan Khan and Party available at Jaipur.
What has been stated above is true to the best of my knowledge and belief. Nothing has been concealed. God may help me.
Sd/-
(HARI KISHAN OJHA)
ROUND
SEAL ATTESTED Dt. 15-6-1994
CENTRAL NOTARY, BIKANER (RAJ.)
(INDIA)
Then again an application was filed on 26-7-1994 which runs as under :-
Before the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur.
Re : In M/s Birbal Khan Chandan Khan and Party
v/s.
Income-tax Officer
ITA No. 1382/JP/94-A.Y. 85-86
Appeal against order Under Section 143(3)
Hon'ble Sir,
We have applied for condonation of the delay of the above appeal along with the affidavit of Shri H.K. Ojha, Advocate. However, the affidavit of Shri Pannalal Jain could not have been submitted earlier because of death of his mother. Therefore, we are enclosing herewith an affidavit of Shri Pannalal Jain, the Accountant. This affidavit may please be placed along with the above appeal, which is fixed for 3-8-1994.
Submitted accordingly.
Yours' faithfully, Sd/-
(S.K. JAIN) Encl: as above Authorised Representative
The affidavit of Shri Panna Lal Jain filed along with this application runs as under :-
AFFIDAVIT I, Pannalal Jain S/o Late Shri Parasmal Jain aged 47 years do hereby solemnly state on oath as under :-
1. That I was the Accountant of M/s Birbal Khan Chandan Khan & Party in the year ended on 31-3-1985 at Jaipur.
2. That in the year 1988-89 I was also Accountant to the liquor contractors of Jaipur which was different firm, known as M/s Surjeet Singh & Party.
3. That in order to file an appeal in the ITAT papers regarding appeal sent by Shri H.K. Ojha, Advocate from Bikaner in the case of M/s Birbal Khan Chandan Khan & Party, for the assessment year 1985-86 against the order of the CIT(A) relevant to the assessment year 1985-86 Under Section 143(3) were not received by me.
4. That now I came to know that although the papers regarding the appeal sent by Shri H.K. Ojha, Advocate of Bikaner, who was looking after the case of M/s Birbal Khan Chandan Khan & Party for the A.Y. 1985-86 were received in the office of the then liquor contractors', but those papers were not handed over to me and thus the appeal remained unfiled.
Sd/-
Place : Jaipur (PANNALAL JAIN) Dated : 20-7-1994 Deponent Verification
I, Pannalal Jain, the abovenamed deponent do hereby verify that the contents of the above affidavit from paras 1 to 4 are true to my knowledge and belief.
Sd/-
Place : Jaipur (PANNALAL JAIN) Dated : 20-7-1994 NOTARY True Copy ATTESTED NOTARY PUBLIC, JAIPUR (ROUND SEAL) Sd/- (S.K. Jain) Advocate
13. It may be noted that the case put forth by the assessee in the application dated 16-6-1994 for condonation of delay was that it was in the course of hearing assessee's appeal against CIT(A)'s order confirming penalty Under Section 271 (1)(c) for this very year that the assessee came to know that the quantum appeal was not filed in the Tribunal. A study of the Case file of the penalty appeal (ITA No. 1746/JP/93) which was heard along with this appeal discloses that the penalty appeal was filed on 22-12-1993. On 17-3-1994, the assessee moved for fixation of the penalty appeal for out of turn hearing as prosecution was apprehended by it. The Bench directed for early hearing of the appeal and the same came up for hearing on 29-4-1994. On 29-4-1994, the hearing was adjourned to 19-5-1994 on assessee's request. On 19-5-1994, assessee filed paper book in the penalty appeal and as the D/R prayed for time for verification of the documents filed by the assessee, the hearing was adjourned to 9-6-1994. On 9-6-1994 when the penalty appeal came up for hearing, the Bench enquired of the parties as to what happened on quantum side. It was on such query from the Bench that the ld. counsel for the assessee told the Bench that the assessee intended to file the second appeal on quantum side with prayer for condonation of delay. This state of affairs does not suggest that the assessee had ever filed the quantum appeal before the query was made by the Bench on 9-6-1994.
14. Be that as it may, coming to the merits of the condonation application, it is noticed that it nowhere states as to when the order appealed against was communicated to the assessee and when the appeal was prepared and sent by Shri H.K. Ojha to Jaipur and to whom. It is in the second application, dated 2-7-1994 that it is stated that Shri H.K. Ojha, Advocate had sent the appeal papers to one Shri Panna Lal Jain, Accountant. Now the affidavit of Shri H.K. Ojha, Advocate does not state as to when the deponent had completed the appeal papers and sent them to Shri Pannalal Jain, Accountant. In his turn Shri Pannalal Jain, Accountant has deposed in his affidavit that he never received any appeal papers alleged to be sent to him by Shri H.K. Ojha. What he has deposed is that the papers sent by Shri Ojha were received in the office of the then liquor contractors but at the same time he denies the delivery of the same to him. If the appeal papers were wrongly delivered to any other person in the office of the other liquor contractor for whom Shri Panna Lal Jain was also working as an Accountant and such papers were meant for him, there was no difficulty for him in getting delivery of the same and putting them for the signature of the partner of the assessee. It is noteworthy that nobody from the office of the alleged other liquor contractor has come forward to depose that the papers were so received in that office.
15. To cut the matter short, neither the two condonation applications nor the affirmative of Shri H.K. Ojha, Advocate and Shri Panna Lal Jain tell us the date of communication of the order of the CIT(A) to the assessee which is to make the starting point for computation of the period of delay. Nor do they tell the date on which the assessee allegedly came to know that the appeal was not filed in the Tribunal. It may be pointed out that in column No. 9 of the memorandum of appeal, the date of communication of CIT(A)'s order was left unfilled. The affidavit of Shri H.K. Ojha, Advocate does not say that the order of CIT (A) was communicated late rather it asserts that the appeal papers, stated to have been sent by him to Shri Panna Lal Jain, were complete in all respects. Shri Panna Lal Jain though denies to have received the papers yet asserts the knowledge of their receipt in the office of the other liquor contractor without telling the date of such knowledge and the efforts made by him to receive the same.
16. It is true that in the matters of condonation of delays it is neither practicable nor desirable to explain minute-to-minute and hour-to-hour delay. What is expected of the appellant in such matters is to show that delay was occasioned due to some sufficient cause. The cause pleaded should not only be a probable one but it should be real and sufficiently reasonable. It would not be any sort of assertion that would amount to sufficient cause and would justify the condonation of delay. The cause pleaded must fit in the facts and circumstances of the given case and the explanation offered regarding the delay occasioned by such cause should appeal to reasons so as to get judicial approval.
17. In the instant case neither the very existence of sufficient cause is established nor the delay alleged to have occasioned from such a cause satisfactorily explained. It is not the delay of one minute or one hour and also not of one day, one month or even one year that was required to be explained in this case but a delay of more than four years. And this inordinate delay has remained totally unexplained. The facts and circumstances of the case go to speak that it was after the query made by the Bench on 9-6-1994 in the course of hearing the penalty appeal of the assessee for this very year that the assessee thought of filing this second appeal on quantum side. The provisions contained in Sub-section (5) of Section 253 no doubt sufficiently authorise this Bench to condone the delay in filing the appeals, but we fail to over-look the inordinate delay as that would, we think, amount to exercising the discretion vested in this Bench, in a most arbitrary way. We accordingly, hold that since this appeal was filed with inordinate delay of more than four years and such delay does not stand satisfactorily explained, the appeal has to be dismissed on the ground of limitation. The preliminary objection of the 1d. D/R is, therefore, accepted.
18. In view of the above discusssion, we do not think it necessary to deal with and decide the merits of grounds raised in the appeal.
19. In the result this appeal is dismissed.