Judgment:
1. This is bunch of two appeals i.e. one by the assessee and another by the Revenue. In addition, the CO has been filed by the assessee. The appeal of the assessee in ITA No. 223 of 2003 for the asst. yr. 1998-99 has been directed against order dt. 31st March, 2003 of Commissioner of Income-tax, Bhatinda (In short 'the CIT') passed under Section 263 of the IT Act, 1961 (in short 'the Act'). The appeal of the Revenue in ITA No. 576 of 2004 has been filed against the order of CIT(A), Bhatinda, dt. 31st Aug., 2004 which arises from the assessment order passed by the AO under Section 143(3) in pursuance of order of CIT, Bhatinda, under Section 263 of the Act. CO No. 1/Asr/2006 filed by the assessee relates to appeal of the Revenue against order of CIT(A), Bhatinda, for the asst. yr. 1998-99. Since the issues in the appeals filed by the assessee and the Revenue as well as CO of the assessee are inter-related and relate to the same assessment year, these were heard together and are being disposed of by this consolidated order for the sake of convenience.
2. First, we take up appeal of the assessee filed against the order passed by the CIT, Bhatinda, under Section 263 of the Act. In this appeal, the assessee has taken the following two grounds of appeal: (i) That the learned CIT, Bhatinda, has grossly erred in law and facts in passing order under Section 263 setting aside AO order dt.
8th Feb., 2001 by wrongly assuming jurisdiction as the issues involved has already been subject-matter of appeal under Section 250(6). As such the order passed under Section 263 is unjust and unlawful being patently invalid.
(ii) That the learned CIT, Bhatinda, has erred in law and facts in passing order under Section 263 without affording proper opportunity to assessee appellant. Therefore, the order passed is against natural justice, the same be set aside.
3. The facts of the case are that the assessee filed return of income for the assessment year under consideration on 21st Oct., 1998 declaring therein income of Rs. 1,68,896. The assessee was carrying on business of 'Kachi Arhat' (commission agent) in respect of agricultural produce grown by the farmers. The IT authorities carried out survey operation under Section 133A of the Act where a large number of loose papers containing transactions of loans advanced to the agriculturists, interest received on such advances and sale of agricultural crop/produce of the farmers were found. The assessee surrendered income of Rs. 2 lakhs on account of additional income not reflected in the regular books of account. Thereafter, the AO selected the case under scrutiny and issued notices under Section 143(2) from time to time. He also called for information in respect of the seized documents. The AO observed that the debit and credit balances noted on the documents found during the course of survey did not tally with the debit and credit balances shown in the regular books of account. The assessee was, therefore, called upon to produce the parties. However, there was no compliance on the part of the assessee. The AO, therefore, completed assessment under Section 144 of the Act. A copy of the assessment order is placed at pp. 31 to 39 of the paper book. The AO noted the details of the names of persons in whose names debit and credit balance appeared along with specific amounts of debits and credits, closing balance and interest received/accrued etc. on pp. 4 and 7 of the assessment order. The AO also noted that at the time of survey, Sh.
Surinder Kumar, partner confirmed that these transactions related to the assessee and its associate concern namely, M/s Sunder Sales Corporation. Still, there was no explanation given by the assessee and these persons were not produced. On the basis of entries noted on the documents found during the course of survey, the AO worked out the peak of unexplained investment by way of loans given to the agriculturists at Rs. 1,65,000 by observing that all the amounts were not advanced on the same date. In addition, the AO also worked out the undisclosed interest earned on the advances given to agriculturists at Rs. 6,35,787. In this manner, the assessment was completed under Section 144 at an income of Rs. 8,19,690.
4. Being aggrieved, the assessee filed an appeal against assessment completed by the AO under Section 144 of the Act. The learned CIT(A), Bhatinda, decided the appeal vide his order dt. 19th April, 2001 (a copy placed at pp. 40 to 48 of the paper book) where he upheld the action of the AO for completing the assessment under Section 144 of the Act. He also observed that transactions noted on the documents found during the course of search related to the business of the assessee and the assessee was entitled to benefit of Rs. 2 lakhs being income surrendered at the time of survey. The excess amount was liable to be added in the hands of the assessee. However, after appreciating the entries in the seized documents, he reduced the addition in respect of interest income from Rs. 6,35,787 to Rs. 5,09,477 and allowed a relief of Rs. 1,26,310 on this point. As regards the addition made on account of peak credits i.e. unexplained investment by way of loans, the learned CIT(A) observed that admittedly these transactions did not appear in the regular books of account. However, he observed that the assessee being an Arhtia, rotated the money fast as number of agriculturists bring their produce for sale and the same was sold on the same day to different parties including Government agencies. Thus, keeping in view the circulation of money, the learned CIT(A) reduced the addition in respect of peak credit from Rs. 1,65,000 to Rs. 85,000 and thereby allowed a relief of Rs. 80,000 on this account. Both the Revenue and the assessee filed appeals against the order of CIT(A) before the Tribunal. The appeal filed by the Revenue was dismissed by the Tribunal, Amritsar Bench vide its order dt. 28th May, 2002 on the ground that the tax effect was less than the monetary limit prescribed by the CBDT for filing an appeal before the Tribunal. However, the assessee's appeal filed against the order was pending with the Tribunal.
5. Subsequently, the CIT, Bhatinda issued a show-cause notice dt. 28th March, 2003 under Section 263 to the assessee stating therein that the order passed by the AO under Section 144 of the Act was erroneous and prejudicial to the interest of the Revenue. He referred to the documents found during the course of survey and observed that aggregate of entries noted therein worked out to Rs. 27,09,100 and the pattern of recorded entries suggested that there was no reason or basis for ITO to adopt peak credit amount. According to him, the entire amount of Rs. 27,09,100 representing loans advanced to various agriculturists require to be added under Section 69 of the IT Act. He also observed that the addition on account of interest was wrongly adopted by the AO at Rs. 6,35,787 as against actual amount of Rs. 8,07,703 resulting in underassessment of Rs. 1,71,916. The assessee was asked to submit a reply to the show-cause notice on 31st March, 2003 at 10.30 A.M. This notice was served on the assessee in the afternoon of 29th March, 2003.
In reply to the show-cause notice, the assessee submitted that time allowed for one day for submitting reply was not sufficient for the assessee to submit detailed objections. Therefore, request was made to allow sufficient time to enable the assessee to submit a detailed reply and also the CIT was requested to supply the copies of the relevant documents and loose papers referred to in the show-cause notice. The CIT, Bhatinda passed an order under Section 263 on 31st March, 2003 and observed that the AO had erroneously considered the peak amount for the purpose of working out unexplained investment. The entries in 11 accounts were omitted. He further observed that the AO had ignored entries of interest aggregating to Rs. 1,71,916 while completing assessment under Section 144. Therefore, the CIT, Bhatinda, held that the order passed by the AO under Section 144 of the Act was erroneous insofar as it was prejudicial to the interest of the Revenue.
Accordingly, the CIT, Bhatinda set aside the order with a direction that fresh order be passed after giving reasonable opportunity of being heard to the assessee. Aggrieved with the order of the CIT, Bhatinda, the assessee has filed the present appeal.
6. The learned Counsel for the assessee submitted that Section 263(1) of the Act mandates that before passing an order, the assessee must be given an opportunity of being heard. Relying on the judgment of Hon'ble Allahabad High Court in the case of Renusagar Power Co. Ltd. v. CIT , the learned Counsel submitted that no enforceable order under Section 263 could be passed by the CIT without hearing the assessee. He further relied on the judgment of Hon'ble Andhra Pradesh High Court in the case of CIT v. G.K. Kabra , the judgment of Hon'ble Madhya Pradesh High Court in the case of CIT v.Chandan Wood Products . He submitted that opportunity to be granted to the assessee must be effective and cannot be an empty formality. He submitted that in the present case, the CIT issued a show-cause notice on 28th March, 2003 and served on the assessee in the evening of 29th March, 2003 for compliance on 31st March, 2003 at 10.30 A.M. He submitted that despite the fact that the assessee requested for grant of sufficient time so as to enable it to file proper reply, the CIT, Bhatinda, proceeded to pass order under Section 263 on 31st March, 2003. Thus, he submitted that time allowed by the CIT, Bhatinda, just for one day could not be considered as sufficient and, therefore, the order passed by the CIT, without meeting the statutory requirement of law deserves to be quashed.
7. The learned Counsel further submitted that in the assessment order passed under Section 144, the AO considered entries noted on the documents found during the course of survey and worked out the amount of unexplained investment on the basis of peak amount at Rs. 1,65,000.
He also worked out the amount of interest accrued/recovered on the loans at Rs. 6,35,787. The assessee impugned both the additions in appeal before the CIT(A). The learned CIT(A) after due consideration of evidence and material on record reduced the peak amount to Rs. 85,000 and addition on account of interest to Rs. 5,09,477. He submitted that as per Expln. (c) to Section 263(1) of the Act, the jurisdiction of the CIT to revise order under Section 263 is restricted only to issues which have not been considered and decided by the CIT(A). But in the present case, both the issues on which the CIT, Bhatinda revised the order under Section 263 were subject-matter of appeal and were considered and decided by the CIT(A). Thus, the assessment order got merged with the order of the CIT(A) and, therefore, the CIT was not competent to exercise jurisdiction under Section 263 of the Act. In support of such contention, the learned Counsel for the assessee relied on the following judgments:CIT v. Shashi Theatre (P) Ltd. 5. CIT v. Orissa Assam Oil Industries Ltd. (1992) 103 CTR (Ori) 178 : (1992) 193 ITR 183 (Ori).
Thus, he submitted that since the issues considered by the CIT under Section 263 had been subject-matter of appeal and considered and decided by the CIT(A), the CIT, Bhatinda had no jurisdiction to revise such order under Section 263 of the Act. He, therefore, submitted that such order was illegal and bad in law and, therefore, deserves to be quashed.
8. The learned CIT (Departmental Representative), Sh. Kuldip Singh, was fair enough to concede that in the present case reasonable opportunity has not been allowed by the CIT, Bhatinda before passing an order under Section 263. He submitted that for this purpose, the order of the CIT under Section 263 may be set aside and restored to the file of CIT, Bhatinda for reconsideration of the issue after allowing reasonable opportunity to the assessee. As regards the contention of the learned Authorised Representative that the issues have been subject-matter of appeal and decided by the CIT(A), Bhatinda, the learned CIT (Departmental Representative) submitted that while completing the assessment under Section 144, the AO had not taken into account all the entries for working out the peak amount of unexplained investment and had also not included the entire interest received/accrued on the unexplained advances given to the farmers. Thus, he submitted that it could not be said that the CIT(A) has considered and decided the issues on which CIT passed an order under Section 263.
9. We have heard both the parties and carefully considered the rival submissions, examined the facts, evidence and material placed on record. We have also gone through the orders of the authorities below.
The undisputed facts of the case are that while completing the assessment under Section 144, the AO considered the entries noted on the documents found during the course of survey and worked out the peak amount at Rs. 1,65,000 for addition under Section 69 of the Act. On the basis of the said entries, the AO also worked out the interest accrued/recovered on undisclosed advances given to the parties at Rs. 6,35,787. While doing so the AO has referred to the names of 19 parties on pp. 4 and 7 of the assessment order. It is also a fact that the assessee impugned both the additions in appeal before the CIT(A) and after considering the relevant entries in the documents found during the course of survey, the learned CIT(A) reduced the peak amount to Rs. 85,000 by observing that circulation of money by the assessee was fast and number of agriculturists brought their produce for sale and the same was sold on the same day to different parties including Government agencies. This only shows that he was of the view that entire amount appearing in the names of various parties was not to be considered for the purpose of addition under Section 69 of the Act. He further held that interest of Rs. 5,09,477 was liable to be added to the income of assessee. Thus, the assessment order got merged with the order of the CIT(A). Subsequently, the CIT, Bhatinda has revised order under Section 263 in respect of the entries noted on the documents found during the course of survey as according to him the AO was not justified in taking the peak amount instead of taking the entire credit of Rs. 27,09,100.
Similarly, he observed that the entire amount of interest of Rs. 8,07,703 on the undisclosed advances required to be added to the income of the assessee as against Rs. 6,35,787 taken by the AO. Now the main question that requires to be decided by this Bench is whether the CIT was justified in assuming jurisdiction under Section 263 of the Act in the light of these facts and circumstances of the case.
9.1 Section 263 of the Act empowers the CIT, to call for and examine the record of any proceeding under the IT Act, and if he considers that any order passed therein by the AO or Dy. CIT or Jt. CIT is erroneous insofar as it is prejudicial to the interests of the Revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order which may also include an order enhancing or modifying assessment or cancelling the assessment and directing a fresh assessment. However, in order to confer jurisdiction on the CIT under Section 263, twin conditions i.e. that the order passed by the AO should be an erroneous and prejudicial to the interests of Revenue must be satisfied. Both the conditions must be satisfied simultaneously. If only one condition is satisfied, the order passed by the CIT under Section 263 would be without jurisdiction and bad in law. Reliance in this regard is placed on the judgment of Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT (2000) 159 CTR (SC) 1 : (2000) 243 ITR 83 (SC). No doubt, the powers conferred on the CIT are very wide to cover any order passed by the AO, but Expln. (c) to Sub-section (1) of Section 263 of the Act inserted by the Finance Act, 1988, w.e.f. 1st June, 1988 circumscribes powers of CIT under Section 263 in cases where the issues have been subject-matter of appeal only to those issues which have not been considered and decided in such appeal. It would be appropriate to reproduce hereunder Expln. (c) to Section 263(1) of the Act: Explanation (c): where any order referred to in this Sub-section and passed by the AO had been the subject-matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the CIT under this Sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal.
In fact, this part of the Explanation was inserted in the Act w.e.f.
1st June, 1988 but even prior to that the view held by the various Courts was that the jurisdiction of the CIT to exercise powers under Section 263 is confined only to those issues which have not been considered and decided by the CIT(A) in appeal. This view was based on the doctrine of merger as the order of the AO got merged with the CIT(A). The judgments of the following cases though relating to assessment years prior to 1st June, 1988 supported the view that the issues which have been subject-matter of appeal and decided by the appellate authority cannot be the subject-matter of revision:CIT v. Shashi Theatre (P) Ltd. In fact, the Hon'ble Supreme Court in the case of CIT v. Shri Arbuda Mills Ltd. (1998) 147 CTR (SC) 474 : (1998) 231 ITR 50 (SC) also considered this issue and held that powers of the CIT under Section 263 extended to such matters which had not been considered and decided in appeal. Thus, the insertion of Expln. (c) to Section 263(1) merely clarified the position that the powers of CIT under Section 263 are circumscribed only to those issues which have not been considered and decided in an appeal.
9.2 Now when we examine the present case in the light of above legal position, we find that while completing the assessment under Section 144 of the Act, the AO referred to the entries noted on the documents found during the course of survey. He also worked out the amount of interest accrued/received by the assessee on the basis of advances given to the farmers. Both these issues were subject-matter of appeal before the CIT(A) who reduced the addition after taking into consideration the rival submissions and on appreciation of the evidence and material placed on record. He also gave reasons as to why peak amount required to be reduced as fast rotation of money by the assessee. Thus, he was of the view that entire amount of credit appearing in the names of parties did not deserve to be added. His finding is not (sic) based on the reasoning that as per entries noted and considered by the AO, the peak amount worked out to Rs. 85,000 and not at Rs. 1,65,000. Therefore, it would not be correct to say that CIT(A) had not considered all the entries noted on the documents found during survey. He also found that exact addition on account of interest worked out to Rs. 5,09,477. Thus, it is clear that the CIT, Bhatinda passed order under Section 263 in respect of both the issues which have already been considered and decided by the CIT(A) in appeal. May be that there was mistake on the part of the AO in1 working out the quantum of addition on account of unexplained investment and interest accrued/received on the undisclosed advances. But it cannot be said that the issues were not considered by the CIT(A) in appeal. In fact, the learned CIT(A) is vested with wide powers coterminus with that of AO. These powers also include enhancement of income. Now if the learned CIT(A) after referring to the entries was of the view that there was under-assessment, he could have exercised such powers and enhanced the income. But the CIT(A) on the contrary allowed partial relief. The fact remains that the issues on which CIT revised the order under Section 263 had been considered and decided in appeal by the CIT(A). Therefore, as per Expln. (c) to Section 263(1), the CIT, Bhatinda was not justified in assuming jurisdiction under Section 263 in respect of matters already considered and decided in appeal. Such action of the CIT was illegal and without jurisdiction. Therefore, the impugned order passed by the CIT is liable to be quashed on this ground itself.
Accordingly, the order passed under Section 263 is quashed and the ground of appeal of the assessee is allowed.
9.3 Even otherwise, the CIT passed the impugned order without affording reasonable opportunity to the assessee. From the facts discussed above, it is obvious that the show-cause notice issued to the assessee on 28th March, 2003 was served on the assessee on 29th March, 2003 asking for compliance on 31st March, 2003 at 10.30 A.M. Thus, effectively the assessee was allowed only one day's time for submitting its reply. The opportunity to be allowed to the assessee before passing an order under Section 263 has to be a reasonable and effective opportunity. It is not merely a formality. The various judgments, relied upon by the assessee and referred to above also support this view. In fact, the assessee had requested the GIT to allow sufficient time so as to enable it to file effective reply. However, this opportunity was denied to the assessee.
Further, the assessee had also requested for supply of documents referred to in the show-cause notice. This was also denied to the assessee. Thus, it is obvious that the statutory requirement of allowing an opportunity of being heard has not been met by the CIT and the impugned order passed by the CIT violated the principles of natural justice. Thus, the impugned order also suffers infirmity on this account.
9.4 Thus, in the light of these facts and circumstances of the case, we quash the impugned order being illegal and without jurisdiction. The grounds of appeal of the assessee are allowed.
10. We now take up Revenue's appeal in ITA No. 576/Asr/2004 where the Revenue has taken the following two effective grounds of appeal: (i) On the facts and the circumstances of the case, the learned CIT(A) has erred in law and on facts in commenting on the order of the CIT, Bhatinda.
(ii) The learned CIT(A) has erred in law and facts in holding that the AO was not within his powers to make any enhancement.
10.1 Briefly stated, the facts of the case are that in pursuance of order passed by the CIT, Bhatinda, under Section 263, the AO completed the assessment under Section 143(3) on 22nd March, 2004 by adding an amount of Rs. 27,09,100 being unexplained investment in the loans advanced to the agriculturists and amount of interest on loans at Rs. 8,07,703. The assessment was completed on a total income of Rs. 34,85,700 after reducing an amount of Rs. 2 lakhs surrendered at the time of survey under Section 133A of the Act.
10.2 Being aggrieved, the assessee filed an appeal before the CIT(A) against the assessment order where grounds relating to legality of order passed by CIT, Bhatinda, under Section 263 were also taken. The grievances of the assessee projected through its grounds before the CIT(A) were that since the issues on which order under Section 263 is passed have already been considered and decided by the CIT(A), the order, passed by the CIT under Section 263 was illegal and bad in law.
It was also submitted that the order passed under Section 263 without affording reasonable opportunity in violation of principle of natural justice was illegal and bad in law. The learned CIT(A) considered the submissions and held that since both the issues were considered and decided by the CIT(A), the order passed by the CIT, Bhatinda under Section 263 suffered from legal infirmity and was without the jurisdiction and powers of the CIT. He further observed that the AO was not within his powers to make any enhancement of additions already decided by the CIT(A). The learned CIT(A) did not decide quantum of additions made by the AO on merits on the ground that this did not deserve any consideration on merits. Accordingly, he cancelled the order of the AO to the extent addition was made as per revised order.
The Revenue is aggrieved by the order of CIT(A). Hence, this appeal before us.
10.3 The learned CIT (Departmental Representative) submitted that the learned CIT(A) had no powers to comment on the order passed under Section 263 by the CIT, Bhatinda. Similarly, he had no jurisdiction to hold that the AO was not justified to make any enhancement of income in pursuance of order passed by the CIT, Bhatinda under Section 263 of the Act.
10.4 The learned Counsel did not advance any specific arguments except relying on the order of the CIT(A).
10.5 We have heard both the parties and carefully considered the rival submissions, examined the facts, evidence and material placed on record. As per provisions of Section 246A, no appeal lies to the CIT(A) against order passed under Section 263 by the Administrative CIT. As per provisions of Sub-section (1) of Section 253 an appeal against order passed under Section 263 lies before the Tribunal. Thus, even though the order passed by the CIT under Section 263 of the Act was illegal and bad in law, CIT(A) was not competent to comment on such order. The assessee had already filed an appeal against order of CIT under Section 263 before the Tribunal and the same was pending. The correct course for the CIT(A) was to await the outcome of the appeal filed by the assessee against order under Section 263 rather than assuming powers to declare order under Section 263 as illegal and bad in law more so when he did not decide the grounds relating to specific additions made by the AO on merits which was within his jurisdiction.
Further, once the order is passed by the CIT under Section 263 of the Act, it is binding on the AO. The AO cannot ignore directions given by the CIT while completing the assessment in pursuance of order under Section 263. Now in the order under Section 263, the CIT, Bhatinda, had recorded a clear finding that the addition on account of unexplained investment was not required to be made on the basis of peak amount but on the basis of entire amount of Rs. 27,09,100. The CIT had further observed that the entire interest of Rs. 8,07,703 accrued/received on the advances was liable to be included in the total income of the assessee. Since such order was binding on the AO, these additions were rightly made by him. Therefore, the observations of the CIT(A) that the AO could not enhance the income while completing the assessment in pursuance of the directions given by the CIT under Section 263 were illegal and without jurisdiction. Since the appeal against order under Section 263 lies with the Tribunal, such observation could have been made only by the appellate authority before whom the appeal is filed.
Thus, we set aside the order of the CIT(A) and allow these grounds of appeal of the Revenue. However, considering the fact that the order under Section 263 has already been quashed by this order in the appeal filed by the assessee, this order will not have any effect on the final outcome of this appeal. We order accordingly.
11. We now take up CO filed by the assessee which relates to appeal of the Revenue in ITA No. 576/Asr/2004. It was found that the CO filed by the assessee was late by 10 months and 6 days. In Form No. 36A, the assessee had indicated the date of receipt of notice of appeal filed by the assessee to the Tribunal as 7th March, 2005. The assessee submitted an application requesting for condonation of delay in filing the cross-objections stating therein that the delay in filing the CO took place because of the accident of the Authorised Representative of the assessee and major fire that occurred in the office of Sh. Rakesh Bansal, chartered accountant, Muktsar, who was having all the documents and records which got burnt. Subsequently, the assessee also filed an affidavit in support of the averments made in the application. It was noted from the affidavit that the assessee had not mentioned specific date as to when the accident of the Authorised Representative took place and also when fire in the office of the Authorised Representative took place. However, the documents enclosed with the affidavit indicated that Sh. Rakesh Bansal, chartered accountant had met with an accident on 10th Jan., 2005 and was discharged from the hospital on 16th Jan., 2005. A copy of the FIR filed indicated that fire in the office of the Authorised Representative took place on 19th July, 2005.
Admittedly, notice of appeal filed by the assessee (sic-Revenue) was received by the assessee on 7th March, 2005 and the learned Counsel of the assessee was discharged from the hospital much before i.e. on 16th Jan., 2005. The CO if any, was required to be filed on or before 6th April, 2005. Thus, the accident of the learned Counsel which happened much before the due date when CO was to be filed and Authorised Representative was also discharged from hospital on 16th Jan., 2005, this could not constitute a reasonable cause for the delay. Thereafter, fire took place in the office of the learned Counsel on 19th July, 2005 i.e. after a period of 3 months from the date when CO was due to be filed. Here again, this could not constitute a sufficient cause for the delay in filing the CO. The attention of the learned Authorised Representative was drawn to these facts at the time of hearing of the appeal. However, he could not give any satisfactory reply to the same.
11.1 Sub-section (5) of Section 253 of the Act vests the Tribunal with powers to condone the delay in filing an appeal or cross-objections after the expiry of the relevant period, if it is satisfied that there was a sufficient cause for not presenting it within prescribed period.
But it is for the party concerned to explain the delay with a sufficient cause. In the case of CIT v. Ram Mohan Kabra , the Hon'ble Punjab & Haryana High Court has held that where the legislature spells out a period of limitation and provides for power to condone the delay as well, such delay can be condoned only for sufficient and good reasons supported by cogent and proper evidence. It is a settled principle of law that provisions relating to the specific period of limitation must be applied with their rigour and effective consequences. In this case, the Tribunal had not condoned the delay of 4 days in filing the appeal. On the basis of reasons given by the Tribunal, the Hon'ble High Court upheld the order of the Tribunal for not condoning the delay. The attention of the learned Counsel was drawn to the judgment of the Hon'ble Supreme Court in the case of Vedabai alias Vaijayanatabai Baburao Patil v. Shantaram Baburao Patil and Ors. (2002) 173 CTR (SC) 300 : (2002) 253 ITR 798 (SC), wherein the Hon'ble apex Court has held that while condoning the delay a distinction was to be made between the case where the delay is inordinate and a case, where the delay is of a few days. Whereas in the former, consideration of prejudice to the other side will be a relevant factor and calls for a more cautious approach, in the latter case no such consideration may arise and such a case deserves a liberal approach. While taking such a view, the Hon'ble Supreme Court has also referred to its earlier two judgments in the following cases.State of West Bengal v. Administrator, Howrah Municipality and Smt. Sandhya Rani Sarkar It would be appropriate to reproduce herein the relevant findings of the Hon'ble Supreme Court recorded at p. 798 of Vol. 253: In exercising discretion under Section 5 of the Limitation Act, 1963, to condone delay for sufficient cause in not preferring an appeal or other application within the period prescribed, Courts should adopt a pragmatic approach. A distinction must be made between a case where the delay is inordinate and a case where the delay is of a few days. Whereas in the former consideration of prejudice to the other side will be a relevant factor and calls for a more cautious approach, in the latter case no such consideration may arise and such a case deserves a liberal approach. No hard and fast rule can be laid down in this regard. The Court has to exercise its discretion on the facts of each case keeping in mind that in construing the expression 'sufficient cause' the principle of advancing substantial justice is of prime importance. The expression 'sufficient cause' should receive a liberal construction.
In the present case, the delay is not of a few days but for a period of 10 months and 6 days for which there is no valid explanation given by the assessee.
11.2 Similar matter came to be considered by Tribunal, Calcutta Bench in the case of Asstt. CIT v. Taggas Industries Development Ltd. (2002) 75 TTJ (Cal) 569 : (2002) 80 ITD 21 (Cal), where a request of the Department for condonation of delay in filing an appeal attributing it partly to CIT's office and partly at AO's level was considered. There was a delay for 13 days for filing the appeal. On the basis of explanation and evidence submitted, the Tribunal observed that there was no merit in the Revenue's petition for condonation of delay.
Therefore, the Tribunal declined to condone the delay. Thus, from the facts discussed above, it is obvious that the assessee failed to explain that delay in filing the CO was caused due to a sufficient reason. Therefore, we are of the considered opinion that it is not a fit case for condoning such inordinate delay. Accordingly, the request of the assessee for condoning the delay is rejected and the CO is dismissed being filed beyond the statutory time limit prescribed in the Act.
11.3 Before parting with this issue, we wish to add that this issue is only of an academic interest. The cross-objections of the assessee relate to the appeal filed against the order of CIT(A) relating to an assessment under Section 143(3) made by the AO in pursuance of order under Section 263 passed by the CIT, Bhatinda. We have already quashed the order under Section 263. Therefore, all subsequent actions taken including the assessment made by the AO in pursuance of order under Section 263 are also illegal and bad in law. Therefore, even if the CO filed by the assessee is dismissed, the same would have no consequential effect insofar as merits of the additions made by the AO are concerned.
12. In the result, the appeal filed by the assessee in ITA No.223/Asr/2003 and appeal filed by the Revenue in ITA No. 576/Asr/2004 are allowed and the CO filed by the assessee is dismissed.