Income Tax Appellate Tribunal - Hyderabad
Mahendra Financial Corpn. vs Income-Tax Officer on 30 November, 1988
Equivalent citations: [1989]29ITD302(HYD)
ORDER
R.D. Agarwala, Judicial Member
1. There is a delay of 110 days in filing this appeal before us. The appellant's prayer seeking condonation is contained in an affidavit sworn by its managing partner on 3rd October, 1985 at Vijayawada.
2. Relevant facts are those : As per the managing Partner's affidavit, the appellant firm received the impugned order dated 17th September 1984 on 19th December, 1984. The appeal which should have been filed on 17th February 1985 was filed on the 7th of June 1985, i.e., with a delay of 108 days, which is calculated by the Tribunal's registry as 110 days.
3. As per this affidavit, the managing partner from the beginning of February 1985 was bed ridden due to back ache and sciatic pain. The pain was so acute that at least for three months he was on bad using tranquilisers or sleeping pills. His back became stiff and he could not move out of bed. That excepting him none of the other partners was looking after the accounts or tax matters. Being so laid up, the deponent could not get in touch with his advocate at Hyderabad for giving instructions for filing the appeal. Being the only person conversant with accounts matters, this confinement made him helpless due to which the appeal could not be filed in time. The illness prolonged till May end. As soon as he was little better, in the beginning of June, immediate steps were taken as a result of which the appeal was filed on 7-6-1985. About his treatment, the deponent states that he was medically looked after by Dr. A. Rudra Nagendra Rao in support of which a medical certificate dated 20th June, 85 has been enclosed.
4. Further, as per the appellant certain appeals preferred by the firm pertaining to assessment years 1978-79 and 1979-80 were posted for hearing in between February 1985 to mid April 1985 which were also adjourned from time to time on this count.
5. Relevant as it is to appreciate the controversy, the medical certificate is reproduced below ;
This is to certify that N. Venkateswarlu, of Vijayawada has laid up with back ache and sciatic pain and is under my treatment since 1st of February 1985. I. advised him complete bed rest for a period of four months i.e. from 1-2-1985 to 31-5-1985 for his complete recovery from his illness.
Sd/ (Dr. A. Rudra Nagendra Rao) M.B.B.S., D. Ch.
Date : 20-6-1985
6. Condonation prayer is fiercely opposed by the revenue. Further we have the advantage of an elaborate enquiry conducted by the Income-tax Officer with a view to verify the contents of the affidavit detailed out above.
7. The enquiry results are contained in a report dated 22-1-1987 submitted by Mr. D.S. Sarma, Income-tax Inspector to the Income-tax Officer which is supported by several documents, such as statements of the managing partner of the appellant-firm, Dr. A Rudra Nagendra Rao and a letter dated 22-1-1987 addressed by the managing partner to the Income-tax Officer.
8. We have heard the learned representatives on both sides at length and have given our utmost consideration to the entire gamut of material referred before us.
9. On behalf of the appellant, Shri Y. Ratnakar, learned counsel, contended that the assessee had a very strong case on merits ; that although the present appeal was filed with inordinate delay, the reasons thereof have been amply explained by the managing partner of the firm in his affidavit. That particularly in view of the law laid down by the Supreme Court in Collector, Land Acquisition v. Mst. Katiji [1987] 167 ITR 471, this Tribunal was bound to treat the condonation prayer in a liberal manner so that the appellant was not deprived of having its case adjudicated upon merits, essential for the rendition of substantial justice between the parties. In this connection, reliance has been placed by Shri Ratnakar on a decision of the Madras High Court in the case of CIT v. Indian Express (Madurai) (P.) Ltd. [1983] 140 ITR 705.
10. The learned counsel made an alternate plea at the fag end of the hearing that in the event of the appellant not succeeding under Section 5 of the Limitation Act, the appeal preferred by them may be treated as cross-objection. In this respect Shri Ratnakar also expressed to file a petition which was eventually filed before us soon after the hearing was over.
11. This petition inter alia states that notice to the appeal preferred by the revenue in this very matter was issued by the registry of the Tribunal on 27th May 1986, which was received by the appellant a few days thereafter ; actual date not known. That the appellant filed an appeal, though belated ; that the assessee could file cross-objections under Section 253(4) of the Income-tax Act, 1961 (referred as Act for brief) within one month from the date of the receipt of the appeal memo filed by the revenue. That although the appeal was filed clearly out of time, since it was filed at a time when the cross-objections could have been filed by the appellant, the appeal preferred by them could lawfully be converted into cross-objections. It is also contended that such a treatment could be given to the appeal on the analogy of certain decisions, which we shall refer at the relevant place, rendered under Order 41, Rule 22 of the CPC containing identical provisions.
12. Strongly opposing the prayer made on behalf of the appellant, Shri K.K. Viswanatham, learned departmental representative, made the following submissions :
(i) That the enquiry report unambiguously and with certainty indicates that there was a violent contradiction in the averments of the managing partner qua his illness, which totally demolishes, the explanation offered, suggesting that the assessee has not only not come with clean hands but has tried to misguide the Tribunal for his benefit.
(ii) Katiji's case (supra) was wholly inapplicable to the facts in hand.
(iii) Merits of the case cannot be gone into and should not influence the minds of a Court or Tribunal in deciding the issue of condonation.
13. Since considerable stress has been laid by the learned counsel for the appellant for taking into consideration that their case was strong on merits and thus entitled for a more liberal approach in the condonation of delay, we take up this aspect first.
14. As is well known, a time barred appeal, suit or petition strikes at the very root of the jurisdiction of the Court or Tribunal from which its hearing is sought. Till such time the delay is condoned, the Court or the Tribunal shall not be clothed with the legal authority to hear it. At the outset it does not appear convincing to us that while considering limitation point, we should or for that matter could go into the merits of the matter. If that is done, would it not mean that if the issue is pre-determined and secondly that if the issue is found more meritorious, the Court or the Tribunal would be more favorably leaned in condoning the delay as compared to a situation wherein the facts are not found that meritorious. It shall be patently discriminatory and arbitrary a treatment not envisaged by law. The two situations which are alike and if law of limitation applied differently shall amount to treating equals as unequals. To our knowledge there are no guidelines and probably there could be none to regulate the Courts or Tribunals to determine the qualitative merits of a case and thereafter apply the hammer of limitation law to say as to whether or not limitation is condoned in one case and denied in other.
15. Shri K.K. Viswanatham, learned departmental representative, also placed reliance on a few authorities in support of the submission that merits of the matter cannot have any play while considering the condonation of delay. The first of these cases is a Special Bench decision of the Tribunal (Bombay Bench 'D') wherein while dealing with the powers of the Appellate Tribunal, it was held that if an assessee filed an appeal to the Appellate Asstt. Commissioner against Income-tax Officer's finding rejecting his claim for allowance of weighted deduction under Section 35B, he was not entitled to raise such a plea before the Tribunal. While referring to this citation, the learned departmental representative impressed upon us that even when the issue was a covered one, it was not permitted to be raised because of the technical reason of the issue not arising out of the AAC's order, which meant that the merits of a case should not weigh in the minds of the Tribunal if it had no jurisdiction to deal with it otherwise.
16. Reliance has also been placed in this respect on a decision rendered by the Rajasthan High Court in Deep Chand Kothari v. CIT [1987] 35 Taxman 223 which is more direct on the controversy. We quote from the head-notes :
Section 250 of the Income-tax Act, 1961 - Appellate Assistant Commissioner/Commissioner (Appeals) - Powers of - Whether in a case where AAC decides appeal, on merit, in assessee's favour without deciding question of jurisdiction raised by assessee, AAC must be deemed to have decided that point against assessee - Held, yes.
We may also reproduce a passage extracted in this authority from a judgment of the Supreme Court in Kiran Singh v. Chaman Paswan AIR 1954 SC 340 which runs as under :
. . . It is a fundamental principle well establised that a decree passed by a Court without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect or jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject-matter of the action, strikes at the very authority of the Court to pass any decree, and such a defect cannot be cured even by consent of parties. . . .
17. From the aforesaid, it is thus abundantly clear that wherein there is a lack of jurisdiction to the consideration of a matter on merits because of any reason whatsoever - may be territorial, pecuniary or on grounds of limitation, the Court or Tribunal is wholly precluded from rendering its decision till such time such legal, inability is overcome. Surely the merits of the matter come only next i.e. after it is otherwise legally fit for hearing without suffering from any of the preliminary vices. To consider the merits of the matter first and thereafter decide a preliminary issue which patently strikes at authority of the Court/Tribunal would be putting cart before the horse.
18. We now take up the merits of the condonation petition. The assessee-firm, to put succinctly has taken a stand that their managing partner was bed ridden for about 4 months from early February 1985 and that there being no other partner to look after the office matters, no steps could be taken to file the appeal during this period which resulted in a delay of 110 days.
19. This aspect was enquired into by the Income-tax Officer and we have the benefit of his report. Since facts ascertained during this enquiry have a direct bearing on the controversy they shall stand to supplement the affidavit. During this enquiry the Income-tax Inspector deputed for the purpose has recorded the statements of Shri Venkateswarlu, Managing Partner of the assessee-firm and Dr. A Rudra Nagendra Rao. At the outset, it may be stated that Dr. Rao as per this report is only a Children's Specialist. He would treat only children and not elders. Taking up then only the broad features of these two statements Dr. Rao stated that he gave consultation to Mr. Venkateswarlu in January/February 1985 but did not make any note thereof anywhere as such a note is made by him only when some fee is charged. To a question as to how without any note he could issue a certificate to Mr. Venkateswarlu in June 1986, the Doctor replied that Shri Venkateswarlu was known to him and his paternal uncle Shri A. Ramchandra Prasad was working under him. As per the Doctor he advised Shri Venkateswarlu to take bed rest although he was not aware as to whether Shri Venkateswarlu actually remained bed ridden at his house ; he was not admitted in his clinic though. When put to the Doctor that as per Shri Venkateswarlu he had paid him a sum of Its. 240 for 4 months stay in his Nursing Home at the rate of Rs. 60 per month, it has been stated that Shri Venkateswarlu was never bed ridden in the Nursing Home. Shri Venkate swarlu only Bought consultation from him for which ho did not receive any consultation fee. It is uesful to reproduce the following relevant passage from Dr. Rao's statement which is the crux of the deposition :
What I state is the correct state of affairs. I flatly deny his two averments(1) that he was bed ridden in my clinic at Kothapet & (2) he paid me any fees for my consultation as I gave consultation as a friend and not for money consideration and also gave certificate to him without charging him any fees.
Now if we turn to the stand taken by Shri Venkateswarlu, even if we ignore other contradictions, it is enough to refer here to a communication dated 22-1-1987 addressed by him to the Income-tax Officer wherein a definite stand has been taken to say that he fell ill due to back ache and siatic pain for a period of 4 months and he was admitted in the Nursing Home of Dr. Rao. That during this period he remained totally bed ridden in the Nursing Home. For this stay he paid a sum of Rs. 240 to Dr. Rao at the rate of Rs. 60 per month. When Shri Venkateswarlu was confronted with these two patently and totally varying stands arising as a result of the doctor's statement extracted above, he stated that this happened due to a state of confusion in his mind at that time. We are unable to appreciate either these contradictions on so vital points or the explanation offered by Venkateswarlu. To be bed ridden at one's own place is entirely different than being admitted in a Nursing Home. That too not for one or two days but for a span of 4 months. Equally important is the issue of payment to Dr. Rao which is wholly denied by him. The two stands are poles apart and like parallel lines cannot be made to meet by the offer of explanation that there was some confusion in the mind of the affected person. There is no question of confusion as there was no occasion or provation for it.
20. If we take into consideration this mistakable shift in the stand taken by the assessee and also keep regard of the two significant factors, namely, that Dr. Rao is basically a Children's Specialist and secondly that he was known to the assessee and could also be easily taken to be influenced by him inasmuch as his uncle Mr. Ramachandra Prasad was serving him which is also evident from his statement referred to above ; that he charged no fee either for consultation or for issuing medical certificate, the only inference which could be legally drawn is that Dr. Rao obliged Mr. Venkateswarlu simply just for the asking. From all this it was amply demonstrated that the assessee has not come before us with clean hands and if cosmetic reasons based on such violent contradictions are permitted to reign successfully, it may lead to utter judicial chaos. To the reference of certain telegrams sent in certain other appeals of the assessee, it is sufficient to say that firstly they are not really relied on by the assessee as they do not find any mention in the affidavit dated 3-10-1985, secondly in view of our specific finding that the stand taken by the assessee before us is found to be false they can't claim any additional strength from them.
21. It is herein that we will now refer to the oft-quoted decision of the apex Court in Mst. Katiji's case {supra). Shri Ratnakar, learned counsel, forcefully urged before us that as per the law laid down by the Supreme Court a very liberal approach was needed to be meted out to a petition seeking condonation of delay. This has been vehemently opposed by the learned departmental representative on the ground that Mst. Ratiji's case {supra) has perhaps not been understood in its proper perspective and had no application in the facts and circumstances of the case in hand.
22. Bound as we are, we have gone through Mst. Katiji' case {supra) with the utmost care. In our opinion it does not help the appellant as no parallel could be drawn in these two cases. In Katiji's case {supra) there was a small delay of 4 days in an appeal preferred by the State of Jammu & Kashmir, which having been denied, their Lordships of the Supreme Court held that the expression 'sufficient cause' in Section 5 of the Limitation Act is adequately elastic to enable the Courts to apply the law in a meaningful manner which subserves the ends of justice. The next Court has enunciated the following principles for the guidance of the Courts and Tribunals of this country in this regard :
(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 and pragmatic manner.
(4) 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 vested right in injustice being done because of a non-deliberate 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 resorting to delay. In fact, he runs a serious risk.
(6) It must be grasped that the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
23. If we go through these propositions, what emerges out is that a liberal approach should be adopted in condoning the delay so that, cause of substantial justice does not suffer. However, it is significant to refer here to proposition No. 5 (supra) according to which a Court or Tribunal cannot proceed on the presumption that the delay is occasioned deliberately or on account of culpable negligence or on account of mala fides. It would obviously in turn mean that if a delay is caused, either deliberately or on account of culpable negligence or on account of mala fides, the litigant will not be entitled to the judicial indulgence.
24. To the facts of the case, if we apply the aforesaid dictum, it is disclosed that during the interregnum of 4 months the managing partner of the assessee-firm has claimed to be bed ridden, there is nothing to suggest that any other work of the assessee-firm suffered in any manner except the filing of this appeal. Without meaning to comment on as to how the assessee-firm takes care of their interests we find some force in the argument advanced by the learned departmental representative that appeal papers could have easily been forwarded to the counsel and some other partner deputed to execute the job of filing of the appeal without such abnormal delay. However, without at all being affected by such inaction on the part of the firm, what is bothering us is the sharp and inconsistent difference on the two vital aspects in the assessee's stand, namely, the hospitalisation of the assessee's managing partner and the payment of the fee to the doctor. As already held there cannot be any meeting point on these contradictions, violent in nature and which coupled with the other facts and circumstances of the case discussed above lead to the only inference that Shri Venkateswarlu was never seriously ill much less incapacitated to move out. He had at best taken some consultation from Dr. Rao and did not pay him any fee. The medical certificate issued by Dr. Rao does not therefore, at all repose any confidence and in fact totally contradict the assessee's stand.
25. In the circumstances, we are of the firm view that the assessee did not come with clean hands before us. Instead he has attempted to misguide the Tribunal by taking these two entirely varying stands and is not, therefore, entitled to any judicial indulgence. If even in the given set of facts and circumstances, wherein a litigant has not come with clean hands, takes a prevaricating stand and has tried to misguide this Tribunal, and the delay of 110 days is condoned by us, we are afraid, it will break the back of the law of limitation which will mock at us. Such a view shall patently have the effect of setting at naught the specific provisions of the Limitation Act.
26. The law laid down in Mst. Katiji's case (supra), as we have understood it is this : The old theory of insisting on each day's explanation while condoning limitation is slighted. A liberal approach in condoning "delay is needed, which would mean that where an assessee is able to justify his incapacity to act even for the lion's part of the delayed period he may succeed under Section 5 of the Limitation Act except, however, when the delay has resulted due to any culpable negligence or mala fide or laches on the part of the assessee. To illustrate, suppose in the case in hand had the assessee satisfied us that out of 110 days' delay due to the serious illness of its managing partner it could not act for 100 days or 90 days or similar period in that event it would not be necessary for us to find out as to when actually Shri Venkateswarlu came out of the bed, when did he contract his learned counsel at Hyderabad, when the appeal was actually ready for signature of the assessee, when the requisite court fee was forwarded and finally when the appeal was filed.
27. Not insisting on all these points, will be taking a liberal approach and not that where a blatantly incorrect stand is found to have been taken by the assessee, its condonation thereof. If the latter situation is made order of the day, it would be the outright reversal of the public policy for which law of limitation stands. It is not as if Mst. Katiji's case (supra) has laid down that a liberal approach may be taken albeit the howsoever deficient and carefree stand an assessee has come with. In saying so we also derive support from two judgments of this Tribunal. The first one is Kantilal K. Adani v. ITO [1988] 25 ITD 57 (Bom.) and the second is an unreported decision dated 8-2-1988 by A-Bench of this Tribunal in the case of Mochlaso Refrigerator Co. [IT Appeal No. 716, 717 and 848 (Hyd.) of 1987] to which one of us is a party.
Thus on merits, the limitation plea fails.
28. We now take up the alternative plea raised by the assessee's counsel to the conversion of this appeal into cross-objection. In this connection, while Shri Ratnakar has placed reliance on two decisions one of the Punjab and Haryana High Court in Sangit Mohinder Singh v. Punjabi University AIR 1975 Punj. & Har. 318 and the other of the High Court of Rajasthan in Ramswarup v. Slate of Rajasthan AIR 1973 Raj. 157, Shri K.K. Viswanatham, representing the revenue has placed reliance on ITO v. Fagoomal Lakshmi Chand [1979] 118 ITR 766 (Mad.), Hukumchand Mills Ltd. v. CIT [1967] 63 ITR 232 (SO), ITO v. R.L. Rajghoria [1979] 119 ITR 872 (CaI.), A. Premchand v. IAC [1985] 153 ITR 744 (Kar.), CIT v. G.M. Chenna-basappa [1959] 35 ITR 261 (AP) and CIT v. B. Pandaiah & Co. [1983] 143 ITR 464 (AP).
29. We have considered this matter carefully.
30. At the outset, we may refer to the contention raised by the learned departmental representative that both the cases relied on on behalf of the appellant arise out of the provisions of Civil Procedure Code and should necessarily not apply to the present proceedings.
31. In Sangit Mohinder Singh's case (supra) wherein one of the appeals out of two appeals filed by the opposite parties against the same judgment was found to be incompetent as not having impleaded the proper parties, it was held by the High Court of Punjab and Haryana that such an appeal should be treated as cross-objection to the other appeal if it was filed after the filing of the other appeal though not if it had been filed before.
32. In the Rajasthan case also, this principle is indirectly accepted although in the case before the Hon'ble Single Judge it was held that a time barred appeal could not be treated as a cross-objection particularly if the right to file such a cross-objection had not accrued at the time of filing the belated appeal.
33. Taking up the cases on which the revenue has placed reliance, in Fagoomal Lakshmi Chand's case {supra), it was held by the Madras High Court that a memorandum of cross-objections has an identity of its own and stands separate and distinct from the appeal and should be disposed of in the manner provided for under the Income-tax Act and Income-tax Rules. In Hukumchand Mills Ltd.'s case (supra), the Supreme Court held that the powers of the Appellate Tribunal in dealing with appeals are expressed in Section 33(4) of the Income-tax Act (1922 Act) in the widest possible terms. Wordings of the Statute restrict the jurisdiction of the Tribunal to the subject-matter of the appeal. It is in this context that the learned departmental representative contended before us that the appellant filed an appeal before this Tribunal ; that while dealing with the plea for condonation of delay under Section 5 of the Limitation Act the law empowers this Tribunal only to deal with the issue of condonation. That it was not legally permissible for this Tribunal to accord a different treatment and interpretation to this appeal and treat it as cross-objection. Proceeding further Shri K.K. Viswanatham urged that in R.L. Rajghoria's case (supra) the Calcutta High Court held that the jurisdiction of the Appellate Tribunal was confined to the question decided by the Income-tax Officer and the Appellate Asstt. Commissioner and that being so, it was held that in the facts and circumstances of the case even the remanding of the matter was beyond the Tribunal's jurisdiction.
34. Particularly referring to the decision of the Karnataka High Court in A. Premchand's case (supra), the learned departmental representative urged that on procedure wherein an additional ground was taken before the Tribunal for the first time it was held that such a ground could not be admitted.
35. Referring to two decisions of the High Court of Andhra Pradesh, Shri Viswanatham submitted that in Chennabasappa's case (supra) and B. Pandaiah & Co.'s case (supra), it was held that the Tribunal could not make out a new case for the assessee by taking up ground or arguments or indulging in guesses and conjectures which the assessee never raised before it.
36. If we recapitulate the facts of this case, it may be recalled that the prayer to treat this time barred appeal as cross-objection was made for the first time and that too at the fag end of the arguments. Such a prayer is not at all borne out of the condonation issue of which alone the Tribunal is in seisin.
37. Although as per the two citations relied on by the learned counsel for the appellant under the Civil Procedure Code a cross-appeal could be treated as cross-objection under certain circumstances, there is no uniformity of views and secondly a plethora of authorities on the Income-tax Law go to suggest that the powers of the Tribunal are limited and confined to the subject-matter of appeal and nothing beyond as has been held particularly in Hukumchand Mills Ltd.'s case (supra) by the apex Court.
38. Then, there is a separate form prescribed under the Rules for preferring a cross-objection. It is Form No. 36A while an appeal has to be filed in Form No. 36, both under the IT Rules, 1962. We are unable to agree with the learned counsel that both the forms are same. Surely, there is something common in them but it is not correct to say that they are same. Incidentally while in the appeal form there are 14 columns, in the cross-objection form there are only 8.
39. Finally, cross-objections have a distinct identity of their own. They are separate from an appeal. In a given situation on account of certain technical difficulties faced by a litigant, while it may be permissible to treat an appeal as cross-objection, as has been held by the High Courts of Punjab and Haryana and Rajasthan while interpreting the provisions of Civil Procedure Code, we are of the considered view that in the peculiar facts and circumstances of this case, wherein the assessee filed an appeal with more than 100 days' delay and has not come up with clean hands and wherein the stand taken by it has been found to be utterly false, they are not entitled to any judicial indulgence to the extent of moulding their appeal into a cross-objection.
40. In the result, the condonation application is dismissed. Consequently, the appeal being time barred also stands dismissed. claimed by the assessee cannot be allowed and the CWT (A) was not correct in giving even a partial relief. While reversing the finding of the CIT (A) we restore the additions made by the Wealth-tax Officer in the two assessments. We accordingly hold on the first issue relating to purchase tax liability.