Per CHANDRA POOJARI, AM: This appeal by the assessee is directed against the order of the CIT(A)-IV, Kochi dated 31/03/2016 and pertain to the assessment year 2008-09. The assessee has also filed Stay Petition in S.P. No.23/Coch/2019 seeking stay of recovery of outstanding demand of Rs.16,48,792/-.
2. The assessee has raised the following grounds of appeal:
1. The order of the Commissioner of Income Tax (Appeals) - IV, Kochi, in ITA No.346/CIT(A)-IV/2015-16 dated 31.03.2016 for the Assessment Year 2008-09, is opposed to law, facts and circumstances of the case.
2. The CIT(A) went wrong in confirming the additions of Rs.93,56,364/- for the Assessment Year 2008-09.
3. The appellant respectfully submits that the enhancement of the sales turnover from Rs.2,00,49,352/- to Rs.6,68,31,173/-, is also arbitrary. The above estimate is purely on a mechanical basis by multiplying the declared turnover applying a formula of 100/30, which has resulted in estimation of suppressed turnover of Rs.4,67,81,821/-. Absolutely, no material is brought on record or referred to, in order to apply the formula of 100/30 pertaining to the appellants business, which is different and separate from other business concerns, whose turnover and profits are referred to.
4. It is respectfully submitted that the estimate of profit at 20% of the suppressed turnover is also arbitrary and illegal. Absolutely, no material or evidence is relied on for estimating profit at 20% of the turnover, which is presumably shown as a concession as against 22% taken in the original Assessment Order dated 3112.2009.
5. In this connection, it is also respectfully submitted that the reference to the trading results of various other firms at Kottayam, Kollam and Kottarakkara, and a comparison sought to be made to the trading results of those business firms I.T.A. No. 258/Coch/2019 & S.P. No.23/Coch/2019 3 with the trade results of the appellants proprietary business at Thiruvananthapuram, is also misconceived.
6. The appellant also respectfully submits that reference to the purchase of immovable properties by the appellant and her husband in the impugned Assessment Order for 2008-09/ prior years, is also misconceived. In as much as in the assessment of Shri. Sunny Jacob, the appellants husband, in the appeals for the Assessment Years 2006-07 & 2007-08, the alleged estimates were set aside by the Honble ITAT, Cochin Bench, as per separate orders in the appeals I.T.A. Nos.320 and 321/C/2016, which are disposed of by order dated
10.10.2018 justified in deleting the additions for the Assessment Year 2006-07 and for the Assessment Year 2007-08.
8. In this connection, the appellant respectfully submits that a perusal of the impugned Assessment Order would show that there were no valid reasons for discrediting the books of accounts for the Assessment Year 2008-09 or for making addition as above. It is also respectfully submitted that there is no reference to any unaccounted income, asset or investment found at the time of search in the appellants business premises on 21.08.2007. 9 Without prejudice, it is also respectfully submitted that in the case of Shri. Sunny Jacob, the appellants husband, for the business of M/s Sunny Jacob 916 Jewellery, for the Assessment Year 2008-09, the profit estimated is 16%, instead of 22% in the original Assessment Order,
10. The appellant humbly prays that the grounds of appeal before the lower Appellate Authority may kindly be considered as part of these grounds.
11. The appellant craves leave to file additional grounds at the time of hearing. For these and other grounds that may be urged at the time of hearing, the appellant humbly prays that the Honble Income Tax Appellate Tribunal, Cochin Bench, may kindly be pleased to set aside the addition of Rs. 93,56,364/- made by the Assessing Officer and sustained by the CIT(A), allow the appeal and render justice.
3. There was a delay of 1038 days in filing the appeal before this Tribunal. The assessee has explained the reasons for the delay by way of affidavit as follows:
1. I am the proprietrix of the petitioner firm in the above appeal. I am acquainted with the facts of the case. I am authorized and competent to swear to this affidavit. I.T.A. No. 258/Coch/2019 & S.P. No.23/Coch/2019 4
2. The petitioner herein is the appellant in the accompanying appeal and petitioner in the petition for condonation of delay, for the Assessment tear 2008-09. The appeal is filed against the common order dated 31.03.2016 in I.T.A. No.346/M/CIT(A)-lV/Kochi/2015-16 and connected appeal passed by the ClT(A)-lV, Kochi.
3. The appeal filed by the petitioner before the Commissioner of Income Tax(Appeals)-lV, Kochi, vide I.T.A. No.346/ClT(A)-lV/Kochi/2015-16, was disposed of by order dated 31.03.2016. The appeal was heard on 28.03.2016 and represented by the petitioners Chartered Accountant Shri. Gopalakrishnan. There were three appeals relating to the Assessment Years 2006-07 to 2008-09, all of which were disposed of by common order dated 31.03.2016. The appeals filed before the CIT(A) related to the Assessment Years 2006-07 to 2008-09, of which the appeals for the first two Assessment Years was allowed in favour of the petitioner and the appeal for the Assessment Year 2008-09 was dismissed.
4. In this connection, it is respectfully submitted that the search and seizure operation was carried out on 21.08.2007 in the business and residential premises of the appellant at Kottayam and in the business premises of M/s Sunny Jacob Group of Jewellers at Kottayam, Kollam and Thiruvananthapuram, simultaneously. Thereafter, the assessment proceedings were initiated u/s 153A for six years prior to the search and for the year of search as well. In all, there were more than 24 assessments, all of which were simultaneously being contested before the statutory Authorities, including in the Appellate Tribunal. The appeals were filed before the first Appellate Authority two times, as a result of the setting aside of the orders of the first Appellate Authority, in the first round of litigation, in the appeals before the Income Tax Appellate Tribunal. At that stage, the petitioner herein also was the appellant before the Honble Tribunal to the aforesaid years. In the second round, CIT(A), additions made omission was unnoticed as a result of several appeals having been filed and come up for hearing simultaneously. On identical facts and against identical additions, the firms had taken up the matter before theAT, Cochin Bench and contested the issue. Similar relief was granted by the CIT(A) to the assessee, but the Revenue filed second appeal before the Appellate Tribunal.
5. In the second round of appeals, the Appellate Tribunal dismissed the appeal for 2008-09 adverting to the background of the case and the decisions rendered by the lower Appellate Authority as well as the Appellate Tribunal and further proceedings before the higher forums. The appellant noticed the omission to file the second appeal for 2008-09 only when the appeal was filed and interim orders obtained from the Honble High Court for the Assessment Year 2006-07. As such, the petitioner is advised to file this second appeal, though belatedly, so as to contest the appeal before the Appellate Tribunal and to bring consistency. Accordingly, this second appeal is filed. Compared to the date of service of the Appellate order, now impugned in this I.T.A. No. 258/Coch/2019 & S.P. No.23/Coch/2019 5 appeal, there is a delay of . days, which has occurred unintentionally and without the knowledge of the petitioner. There is no willful omission or neglect on the part of the petitioner.
6. The delay is not intentional or willful, but due to reasons beyond control. The petitioner would suffer great hardship, prejudice and monetary loss, if the delay is not condoned and the appeal decided on merits. The petitioner has raised very valid grounds in the Memorandum of Appeal and there is reasonable chance of success in the appeal. The petitioner is unable to pay the unbearable demand. In such circumstances, if coercive action is taken, it would cause serious hardship, prejudice and mental agony to the petitioner. In the above facts and circumstances of the case, the petitioner humbly prays that the Appellate Tribunal, Cochin Bench, Cochin, may be pleased to condone the delay of 1040 days in filing the appeal in time and accept the same on file and render justice. A separate petition praying the above relief is filed herewith and the same may be considered. All the facts stated above are true and correct to the best of my knowledge, information and belief.
3.1 Thus, the Ld. AR pleaded to condone the delay and to decide the appeal on merits.
3.2 The Ld. DR strongly objected to the condonation of delay and submitted that there was an inordinate delay of 1038 days which was due to negligence of the assessee and it shall not be condoned.
4. We have gone carefully gone through the condonation petition accompanied by an affidavit and the facts narrated by the assessee. We find that the reasons advanced by the assessee in filing the appeal belatedly before this Tribunal is I.T.A. No. 258/Coch/2019 & S.P. No.23/Coch/2019 6 genuine and bona fide. It was submitted by the Ld. AR that the assessee noticed the omission to file the second appeal for 2008-09 only when the appeal was filed and interim orders obtained from the Honble High Court for the Assessment Year 2006-07. As such, the assessee was advised to file this second appeal, though belatedly, so as to contest the appeal before the Tribunal and to bring consistency. Hence, there was delay of 1038 days in filing the appeal before the Tribunal. Therefore, we have to consider whether the assessees failure is sufficient cause for condoning the delay. The Madras High Court considered an identical issue in the case of Sreenivas Charitable Trust v. Dy. CIT (280 ITR 357) and held that mixing up of papers with other papers are sufficient cause for not filing the appeal in time. The Madras High Court further observed that the expression "sufficient cause" should be interpreted to advance substantial justice. Therefore, advancement of substantial justice is the prime factor while considering the reasons for condoning the delay. While considering a similar issue the Apex Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) laid down six principles. For the purpose of convenience, the principles laid down by the Apex Court are reproduced hereunder: (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 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 days delay must be explained does not mean that a pedantic approach should be made. Why not every hours delay, every seconds delay The doctrine must be applied in a rational, commonsense and pragmatic manner. I.T.A. No. 258/Coch/2019 & S.P. No.23/Coch/2019 7 (4) When substantial justice and technical consideration 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.
4.1 When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of non deliberate delay. No counter-affidavit was filed by the Revenue denying the submission made by the assessee. It is not the case of the Revenue that the appeal was not filed deliberately. Therefore, we have to prefer substantial justice rather than technicality in deciding the issue. As observed by Apex Court, if the application of the assessee for condoning the delay is rejected, it would amount to legalise injustice on technical ground when the Tribunal is capable of removing injustice and to do justice. Therefore, this Tribunal is bound to remove the injustice by condoning the delay on technicalities. If the delay is not condoned, it would amount to legalising an illegal order which would result in unjust enrichment on the part of the State by retaining the tax relatable thereto. Under the scheme of Constitution, the Government cannot retain even a single pie of the individual citizen as tax, when it I.T.A. No. 258/Coch/2019 & S.P. No.23/Coch/2019 8 is not authorised by an authority of law. Therefore, if we refuse to condone the delay, that would amount to legalise an illegal and unconstitutional order passed by the lower authority. Therefore, in our opinion, by preferring the substantial justice, the delay of 1038 days has to be condoned.
4.2 The next question may arise whether 1038 days was excessive or inordinate. There is no question of any excessive or inordinate when the reason stated by the assessee was a reasonable cause for not filing the appeal. We have to see the cause for the delay. When there was a reasonable cause, the period of delay may not be relevant factor. In fact, the Madras High Court in the case of CIT v. K.S.P. Shanmugavel Nadai and Ors. (153 ITR 596) considered the delay of condonation and held that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation. Accordingly, the Madras High Court condoned nearly 21 years of delay in filing the appeal. When compared to 21 years, 1038 days cannot be considered to be inordinate or excessive. Furthermore, the Chennai Tribunal by majority opinion in the case of People Education and Economic Development Society (PEEDS) v. ITO (100 ITD 87) (Chennai) (TM ) condoned more than six hundred days delay. It is pertinent to mention herein that the view taken by the present author in that case was overruled by the Third Member.
4.3 The Madras High Court in the case of Sreenivas Charitable Trust (supra) held that no hard and fast rule can be laid down in the matter of condonation of delay I.T.A. No. 258/Coch/2019 & S.P. No.23/Coch/2019 9 and the Court should adopt a pragmatic approach and the Court should exercise their 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 and the expression "sufficient cause" should receive a liberal construction. Therefore, this Judgment of the Madras High Court (supra) clearly says that in order to advance substantial justice which is of prime importance, the expression "sufficient cause" should receive a liberal construction. Therefore, for the purpose of advancing substantial justice which is of prime importance in the administration of justice, the expression "sufficient cause" should receive a liberal construction. In our opinion, this Judgment of the Madras High Court is also squarely applicable to the facts of this case. A similar view was taken by the Madras High Court in the case of Venkatadri Traders Ltd. v. CIT (2001) 168 CTR (Mad) 81 : (2001) 118 Taxman 622 (Mad).
4.4 The Mumbai Bench of this Tribunal in the case of Bajaj Hindusthan Ltd. v. Jt. CIT (AT) (277 ITR 1) has condoned the delay of 180 days when the appeal was filed after the pronouncement of the Judgment of the Apex Court. Furthermore, the Revenue has not filed any counter-affidavit opposing the application of the assessee for condonation of delay. The Apex Court in the case of Mrs. Sandhya Rani Sarkar vs. Smt. Sudha Rani Debi (AIR 1978 SC 537 ) held that non-filing of affidavit in opposition to an application for condonation of delay may be a sufficient cause for condonation of delay. In this case, the Revenue has not filed any counter-affidavit opposing the application of the assessee, therefore, as held by the Apex Court, I.T.A. No. 258/Coch/2019 & S.P. No.23/Coch/2019 10 there is sufficient cause for condonation of delay. The Supreme Court observed that when the delay was of short duration, a liberal view should be taken. "It does not mean that when the delay was for longer period, the delay should not be condoned even though there was sufficient cause. The Apex Court did not say that longer period of delay should not be condoned. Condonation of delay is the discretion of the Court/Tribunal. Therefore, it would depend upon the facts of each case. In our opinion, when there is sufficient cause for not filing the appeal within the period of limitation, the delay has to be condoned irrespective of the duration/period. In this case, the non-filing of an affidavit by the Revenue for opposing the condonation of delay itself is sufficient for condoning the delay of 1038 days.
4.5 In case the delay was not condoned, it would amount to legalise an illegal and unconstitutional order. The power given to the Tribunal is not to legalise an injustice on technical ground but to do substantial justice by removing the injustice. The Parliament conferred power on this Tribunal with the intention that this Tribunal would deliver justice rather than legalise injustice on technicalities. Therefore, when this Tribunal was empowered and capable of removing injustice, in our opinion, the delay of 1038 days has to be condoned and the appeal of the assessee has to be admitted and disposed of on merit.
4.6 In view of the above, we condone the delay of 1038 days in filing the appeal and admit the appeal for adjudication. I.T.A. No. 258/Coch/2019 & S.P. No.23/Coch/2019 11
5. Coming to the merit of the issue of addition of Rs.93,56,364/- on account of estimation of G.P., it is pertinent to mention herein that a similar issue came up for consideration before this Tribunal in the Sunny Jacob Jewellers Group cases in ITA Nos. 314 to 319/Coch/2016, 341 to 344/Coch/2016, 320-321/Coch/2016, 324/Coch/2016 and 371 & 372/Coch/2016 wherein the Tribunal vide order dated 10/10/2018 decided the issue against the assessee. In our opinion, there is no error in the estimation of income of the assessee on the basis of the seized records. The estimation of income by the Assessing Officer is based on the documents found during the search and statement recorded during the course of search. Being so, the Assessing Officer is completely justified in adopting those figures for the whole year and for the next year. For this proposition, reliance is placed on the judgment of the Jurisdictional High Court in the case of Travancore Diagnostics P. Ltd. vs. ACIT (390 ITR 167) wherein it was held that when suppression had been found from the documents and the statement on record, the Assessing Officer was completely justified in adopting those figures for the whole year and for the next year which was based on sound rationale, since from the statement on behalf of the assessee, the suppression was found to be continued. In view of the uncontroverted and admitted statement given on behalf of the assessee u/s. 133A and the documents impounded during the survey, which were also virtually admitted by the assessee, there was no error in the order of the Tribunal in accepting the materials on record in order to arrive at an assessment. Reliance is also placed on the judgment of the Jurisdictional High Court in the case of CIT vs. Hotel Meriya (332 ITR 537) wherein it was held as under: I.T.A. No. 258/Coch/2019 & S.P. No.23/Coch/2019 12
(ii) That the partner of the assessee had in unambiguous terms stated that 20 per cent of the sales outturn was suppressed and only 80 per cent was recorded in the account books and it was the practice from the very beginning. So, it was just and appropriate to presume that there was uniform concealment of income in all the assessment years during the block period. Hence the assessee was liable to be assessed during the block period at a uniform rate.
5.1 In view of the above judgments of the Jurisdictional High Court, we are inclined to dismiss this ground of the assessee. The appeal of the assessee is dismissed.
6. The assessee has filed Stay Petition seeking stay of recovery of outstanding demand of Rs. Rs.16,48,792/-.
7. Since we have decided the appeal against the assessee, the Stay Petition filed by assessee has become infructuous and is dismissed as same.
8. In the result, both the appeal and the Stay Petition filed by the assessee are dismissed. Order pronounced in the open court on 20 th September, 2019. sd/- sd/- (GEORGE GEORGE K.) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER Place: Kochi Dated: 20 th September, 2019 GJ Copy to: I.T.A. No. 258/Coch/2019 & S.P. No.23/Coch/2019 13
1. Smt. Maggy Sunny, Proprietrix, M/s. Sunny Jacob Jewellers 916 Kerala Showroom, Pazhavangadi, Trivandrum-695 002.
2. The ITO, Corp. Ward-3, Kottayam.
3. The Commissioner of Income-tax(Appeals)-IV, Kochi.
4. The Pr. Commissioner of Income-tax, Kottayam.
5. D.R., I.T.A.T., Cochin Bench, Cochin.
6. Guard File. By Order (ASSISTANT REGISTRAR) I.T.A.T., Cochin
