Income Tax Appellate Tribunal - Rajkot
Shri Nareshbhai R. Lakhani, Porbandar vs Asst. Comm. Of Income Tax, Cir-2, ... on 28 July, 2020
IN THE INCOME TAX APPELLATE TRIBUNAL
RAJKOT BENCH, RAJKOT
BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER &
Ms. MADHUMITA ROY, JUDICIAL MEMBER
ITA No. 239/RJT/2019
(Assessment Year : 2011-12)
Shri Nareshbhai R. Lakhani Vs. Asst. Comm. of Income Tax
LIC of India, M.G. Road, Circle-2, Jamnagar
Porbandar.
[PAN No. AAT PL1 698 J]
(Appellant) .. (Respondent)
Appellant by : Shri Chetan Agarwal, CA
Respondent by : Shri Suhas Mistry, Sr. D.R.
Date of Hearing 28.02.2020
Date of Pronouncement 28.07.2020
ORDER
PER MADHUMITA ROY, JUDICIAL MEMBER:
The instant appeal filed by the assessee is directed against the order dated 30.07.2019 passed by the Commissioner of Income Tax (Appeals), Jamnagar arising out of the order dated 29.03.2014 passed by the ACIT, Circle-2, Jamnagar under section 144 of the Income Tax Act, 1961 (hereinafter referred as to "the Act") for the Assessment Year (A.Y.) 2011-12.
2. The grounds taken by the assessee in the instant appeal are as under:-
"1. Learned A.O. erred in law as well on facts in making disallowance of Rs. 47,900/- in respect of fixed conveyance allowance.
2. Learned A.O. erred in law as well on facts in making disallowance of Rs. 1,27,999/- in respect of conveyance allowance.-2- ITA No.239/RJT/2019
Shri Nareshbhai R. Lakhani vs. ACIT Asst.Year - 2011-12
3. Learned A.O. erred in law as well on facts in making disallowance of Rs. 29,464/- u/s. 24 in respect of interest on housing loan."
Ground Nos. 1 & 2:-
3. At the time of hearing of the instant appeal the Ld. Counsel Appearing for the assessee submitted before us that Ground No. 1 & 2 are squarely covered by a judgment passed by and under a judgment dated 19.05.2017 passed by the Hon'ble Tribunal Ahmedabad Bench in ITA Nos. 2771 to 2773/Ahd/2014 for A.Y. 2006-07 to 2008-09. A copy whereof has also been submitted before us. The said contention made by the Ld. AR has not been confronted by the Ld. DR with all his fairness.
We have heard the parties and perused the relevant materials available on record including the order passed by the Hon'ble Tribunal. The relevant observation made by the Ld. Tribunal relating to the identical issue in question is as follows:-
"10. This leaves us with assessee's third substantive ground challenging the lower appellate findings restricting conveyance disallowance of Rs.40,620/- to Rs.20,310/- only after adopting estimation method. The assessee had quoted Section 10(14) of the Act in raising the impugned claim. The Assessing Officer took into account his alleged failure in producing evidence in incurring the expenses in the course of performing his insurance job. The CIT(A) agrees with assessee's claim in principle. He observes in lower appellate order that such kind of expenditure in the form of petrol, vehicle, insurance, office expenses are bound to be there even in absence of the relevant supportive evidence. We observe in these facts that there is no plausible reason for the CIT(A) to restrict the impugned expenditure in absence of any specific irregularity being pointed out. The fact however also remains that the assessee's evidence in the case file does not produce the relevant details. We thus conclude that the impugned disallowance of conveyance allowance @50% is too high. The same is accordingly ordered to be deleted to the extent of75%. The balance 25% disallowance amount of Rs.10,155/- is accordingly upheld. The very order shall be followed in latter two years regarding this third substantive ground (supra) wherein the impugned disallowance would stand confirmed @25% of the original claim ITA Nos. 2771 to 2773/Ahd/2O14 (Shri Dharmedrasinh G. Gohil vs. ITO) A.Ys. 2006-07 to 2008- -3- ITA No.239/RJT/2019 Shri Nareshbhai R. Lakhani vs. ACIT Asst.Year - 2011-12 09 -7- raised before the Assessing Officer. This third substantive ground in all three appeals is partly accepted."
Respectfully relying upon the order passed by the Ld. Tribunal we direct the Ld. AO to delete the addition to the case of 75% and to grant relief accordingly to the assessee. Hence, assessee's appeal is partly allowed.
Ground No.3:-
4. This ground relates to disallowing of Rs. 29,464/- under Section 24 in respect of interest of housing loan. The appellant claimed set off loans of Rs. 29,464/- from the house property against his income.
It appears from the records that since no supporting evidence on the claim was filed by the assessee the issue was disallowed by the Ld. AO before the First Appellate Authority. The Ld. CIT(A) observe in his order that the appellant as per the written submission submitted before him specifically admitted that he had paid interest of Rs. 29,464/- as expenses on the loan taken for self-occupied property for A.Y. 2011-12 but the genuinity of such claim of the assessee could not be verified due to no submission of supporting evidence before the Ld. AO. He, therefore, directed the Ld. AO to verify this claim on payment of interest of Rs. 29,464/- of the appellant and to allow the same in the event if it is found to be correct upon verification of the records to be placed before the Ld. AO which according to our considered opinion is just and proper without any ambiguity for proper adjudication of the matter. We find no infirmity in the order impugned for the reason so assigned by the Ld. CIT(A) as also discussed hereinabove so as to -4- ITA No.239/RJT/2019 Shri Nareshbhai R. Lakhani vs. ACIT Asst.Year - 2011-12 warrant interference. Hence, we find no merit in this ground preferred by the assessee, thus, the same is dismissed.
5. In the result the appeal filed by the assessee is partly allowed.
6. Before parting we would like to make certain observation relating to the issue cropped up under present scenario of Covid-19 pandemic as to whether when the hearing of the matter was concluded on 28.02.2020 the order can be pronounced today i.e. on 24.07.2020. The issue has already been discussed by the Co-ordinate Bench in the case of DCIT vs. JSW Ltd. (ITA Nos. 6264 & 6103/Mum/2018) pronounced on 14.05.2020 in the light of which it is well within the time limit permitted under Rule 34(5) of the Appellate Tribunal Rules, 1963 in view of the following observations made therein:
"7. However, before we part with the matter, we must deal with one procedural issue as well. While hearing of these appeals was concluded on 8th January 2020, this order thereon is being pronounced today on the day of 14th May, 2020, much after the expiry of 90 days from the date of conclusion of hearing. We are also alive to the fact that rule 34(5) of the Income Tax Appellate Tribunal Rules 1963, which deals with pronouncement of orders, provides as follows:
(5) The pronouncement may be in any of the following manners :--
(a) The Bench may pronounce the order immediately upon the conclusion of the hearing.-5-
ITA No.239/RJT/2019
Shri Nareshbhai R. Lakhani vs. ACIT Asst.Year - 2011-12
(b) In case where the order is not pronounced immediately on the conclusion of the hearing, the Bench shall give a date for pronouncement.
(c) In a case where no date of pronouncement is given by the Bench, every endeavour shall be made by the Bench to pronounce the order within 60 days from the date on which the hearing of the case was concluded but, where it is not practicable so to do on the ground of exceptional and extraordinary circumstances of the case, the Bench shall fix a future day for pronouncement of the order, and such date shall not ordinarily (emphasis supplied by us now) be a day beyond a further period of 30 days and due notice of the day so fixed shall be given on the notice board.
8. Quite clearly, "ordinarily" the order on an appeal should be pronounced by the bench within no more than 90 days from the date of concluding the hearing. It is, however, important to note that the expression "ordinarily" has been used in the said rule itself. This rule was inserted as a result of directions of Hon'ble jurisdictional High Court in the case of Shivsagar Veg Restaurant Vs ACIT [(2009) 317 ITR 433 (Bom)] wherein Their Lordships had, inter alia, directed that "We, therefore, direct the President of the Appellate Tribunal to frame and lay down the guidelines in the similar lines as are laid down by the Apex Court in the case of Anil Rai (supra) and to issue appropriate administrative directions to all the Benches of the Tribunal in that behalf. We hope and trust that suitable guidelines shall be framed and issued by the President of the Appellate Tribunal within shortest reasonable time and followed strictly by all the Benches of the Tribunal. In the meanwhile(emphasis, by underlining, supplied by us now), all the revisional and appellate authorities under the Income-tax Act are directed to decide matters heard by them within a period of three months from the date case is closed for judgment". In the ruled so framed, as a result of these directions, the expression "ordinarily" has been inserted in the requirement to pronounce the order within a -6- ITA No.239/RJT/2019 Shri Nareshbhai R. Lakhani vs. ACIT Asst.Year - 2011-12 period of 90 days. The question then arises whether the passing of this order, beyond ninety days, was necessitated by any "extraordinary" circumstances.
9. Let us in this light revert to the prevailing situation in the country. On 24th March, 2020, Hon'ble Prime Minister of India took the bold step of imposing a nationwide lockdown, for 21 days, to prevent spread of Covid 19 epidemic, and this lockdown was extended from time to time. As a matter of fact, even before this formal nationwide lockdown, the functioning of the Income Tax Appellate Tribunal at Mumbai was severely restricted on account of lockdown by the Maharashtra Government, and on account of strict enforcement of health advisories with a view of checking spread of Covid 19. The epidemic situation in Mumbai being grave, there was not much of a relaxation in subsequent lockdowns also. In any case, there was unprecedented disruption of judicial wok all over the country. As a matter of fact, it has been such an unprecedented situation, causing disruption in the functioning of judicial machinery, that Hon'ble Supreme Court of India, in an unprecedented order in the history of India and vide order dated 6.5.2020 read with order dated 23.3.2020, extended the limitation to exclude not only this lockdown period but also a few more days prior to, and after, the lockdown by observing that "In case the limitation has expired after 15.03.2020 then the period from 15.03.2020 till the date on which the lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of action arises shall be extended for a period of 15days after the lifting of lockdown". Hon'ble Bombay High Court, in an order dated 15th -7- ITA No.239/RJT/2019 Shri Nareshbhai R. Lakhani vs. ACIT Asst.Year - 2011-12 April 2020, has, besides extending the validity of all interim orders, has also observed that, "It is also clarified that while calculating time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly", and also observed that "arrangement continued by an order dated 26th March 2020 till 30th April 2020 shall continue further till 15th June 2020". It has been an unprecedented situation not only in India but all over the world. Government of India has, vide notification dated 19th February 2020, taken the stand that, the corona virus "should be considered a case of natural calamity and FMC (i.e. force majeure clause) may be invoked, wherever considered appropriate, following the due procedure...". The term 'force majeure' has been defined in Black's Law Dictionary, as 'an event or effect that can be neither anticipated nor controlled' When such is the position, and it is officially so notified by the Government of India and the Covid-19 epidemic has been notified as a disaster under the National Disaster Management Act, 2005, and also in the light of the discussions above, the period during which lockdown was in force can be anything but an "ordinary" period.
10. In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while -8- ITA No.239/RJT/2019 Shri Nareshbhai R. Lakhani vs. ACIT Asst.Year - 2011-12 interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon'ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon'ble Bombay High Court itself has, vide judgment dated 15th April 2020, held that directed "while calculating the time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly". The extraordinary steps taken suo motu by Hon'ble jurisdictional High Court and Hon'ble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words "ordinarily", in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90-day time-limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the pronouncement of orders -9- ITA No.239/RJT/2019 Shri Nareshbhai R. Lakhani vs. ACIT Asst.Year - 2011-12 within ninety days, clearly comes into play in the present case. Of course, there is no, and there cannot be any, bar on the discretion of the benches to re-fix the matters for clarifications because of considerable time lag between the point of time when the hearing is concluded and the point of time when the order thereon is being finalized, but then, in our considered view, no such exercise was required to be carried out on the facts of this case."
7. On the basis of the observation made in the aforesaid judgment we exclude the period of lockdown while computing the limitation provided under Rule 34(5) of the Income Tax (Appellate Tribunal) Rule 1963. Order is, thus, pronounced in the open court.
8. In the result the appeal filed by the assessee is partly allowed.
This Order pronounced in Open Court on 28/07/2020
Sd/- Sd/-
( WASEEM AHMED ) ( Ms. MADHUMITA ROY )
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad; Dated 28/07/2020
TANMAY, Sr. PS
आदे श क त ल प अ े षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. संबं धत आयकर आय
ु त / Concerned CIT
4. आयकर आय
ु त(अपील) / The CIT(A) -
5. वभागीय त न ध, आयकर अपील य अ धकरण,राजोकट/DR,ITAT, Rajkot
6. गाड# फाईल / Guard file.
आदे शानुसार/ BY ORDER, स या पत त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, राजोकट / ITAT, Rajkot