ORDER
G. Santhanam, Accountant Member
1. These appeals are by the assessee and relate to the asst. yrs. 1983-84 and 1984-85 respectively.
2. The appeal for the asst. yr. 1983-84 Is against the order of the CIT(A) in not condoning the dealy of 30 days in the filing of the appeal. The delay of one month, it was explained by the appellant, was due to the delay caused in the Chartered Accountant’s office. The Chartered Accountant in turn had filed an affidavit before the first appellate authority stating that he was instructed by the client to file the appeal on receipt of the order for the assessment year 1983-84 which was acknowledged in his office on 12th February, 1985 and that in the normal course the appeal should have been filed on or before 14th March, 1985 but was, in fact, filed only on 14th April, 1985 involving a delay of about a month and that the delay occurred in his office due to certain staff problem and that the appellant was, in no way, responsible for such delay. The learned CIT(A) was of the view that the Chartered Accountant’s affidavit was rather vague and the delay was not explained by sufficient cause. Thus he refused to condone the delay and dismissed the appeal as barred by limitation. The assessee is on further appeal.
3. The learned Departmental Representative relies on the decision of the Supreme Court in the case of Mrs. Sandhya Rani Sarkar v. Smt. Sudha Rani Debi AIR 1978 SC 537. He also placed reliance on the decision of the Kerala High Court in the case of P.D. Varghese and E.J. Davis v. CIT [1989] 180 ITR 187 (Ker.). The assessee relies on the decision of the Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji [1987] 167 ITR 471.
4. In para 8 of the decision of the Supreme Court in Mrs. Sandhya Rani Sarkar’s case (supra) it was explained as follows :
Discretion is conferred on the Court before which an application for condoning delay is made and if the Court after keeping in view relevant principles exercises its discretion granting relief, unless it is shown to be manifestly unjust or perverse, the Supreme Court would be loathe to interfere with it.
It is undoubtedly true that in dealing with the question of condoning the delay under Section 5 the party seeking relief has to satisfy the Court that he had sufficient cause for not preferring the appeal or making the application within the prescribed time and this has always been understood to mean that the explanation has to cover the whole period of delay. However, it is not possible to lay down precisely as to what facts or matters would constitute sufficient cause under Section 5. But those words should be liberally construed so as to advance substantial justice when no negligence or any inaction or want of bonafides is imputable to a party, i.e., the delay in filing an appeal should not have been for reasons which indicate the party’s negligence in not taking necessary steps when he would have or should have taken. What would be such necessary steps will again depend upon the circumstances of a particular case AIR 1960 SC and AIR 1972 SC 749, Rel. on.
But then there is a later decision of the Supreme Court in Mst. Kaliji’s case [supra) on the question of limitation wherein their Lordships indicated the kind of approach the Court should adopt in the matter of condonation of delay in the filing of petitions, suits, etc. in the following terms :
The expression ‘sufficient cause’ employed by the Legislature is adequately elastic to enable the Courts to apply the law in a meaningful manner which subserves the ends of justice-that being the life- purpose of the existence of the institution of Courts. It is common knowledge that this Court has been making a justifiably liberal approach in matters instituted in this Court. But the message does not appear to have percolated down to all the other Courts in the hierarchy. And such a liberal approach is adopted on principle as it is realized that:
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 legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
The decision in Mst. Katyi’s case [supra) is a later decision in point of time; the later decision has amplified the former decision of the Bench of coordinate jurisdiction. In this view of the matter, we hold that the CIT(A) should have adopted a liberal approach in the matter of condonation of delay, especially when the Chartered Accountant had categorically stated in the affidavit that he had received the order on 12th February, 1985, but the delay had occurred in his office due to staff problems and that the assessee was, in no way, responsible for the belated filing of the appeal.
5. Sri P. Balakrishnan would invite our attention to the decision of the Kerala High Court in the case of P.D. Varghese and E.J. Davis (supra) wherein their Lordships held that if two views are possible and one view has been taken by the CIT, the High Court would not be justified in interfering with the exercise of his discretion. That was in relation to waiver or reduction of penalty, where two views were possible and in that context the Hon’ble High Court held that once a discretion has been judiciously exercised by adopting one of the two views, the High Court will be loathe to interfere with the exercise of such discretion. This decision, in our considered opinion, is not relevant to decide the issue before us. The case on hand is about condonation of delay and reasons adduced for such delay. In our considered opinion, the affidavit of the Chartered Accountant is categorical about the entrustment of the work to him by the assessee within the prescribed time for filing the appeal and that, the delay had occurred in his office due to certain staff problems. We do not find any vagueness in the averments made by the Chartered Accountant insofar as the reason for late filing of the return (sic appeal) is concerned. The CIT(A) in order to advance the cause of substantial justice should have entertained the appeal and disposed it of on merits. This having not been done, we set aside his order and restore the appeal to his file with a direction to entertain the appeal and decide the same on merits in accordance with law.
6. For the assessment year 1984-85 the assessee is aggrieved against the determination of the income on estimate basis at 12% of the gross receipts excluding the cost of materials supplied by the Government. The appellant is a civil contractor and his gross receipts less cost of materials amounted to Rs. 25 lakhs approximately on which it had disclosed a net profit of 8.4%. The learned Assessing Officer estimated the net profit at 12% and no separate deduction for depreciation was granted from such net profit. Aggrieved, the assessee carried the matter in appeal. The learned CIT(A) held that in the succeeding year the assessee has disclosed a net profit of 12.8% and, therefore, the estimation of net profit at 12% for the impugned assessment year was proper. He saw no reason to give a separate deduction for depreciation. The assessee is on further appeal.
7. Having heard rival submissions, we estimate the net profit at 11.5% of about Rs. 25 lakhs. The reduction of 1/2% is given for the reason that the assessee’s turnover of Rs. 25 lakhs is not very high as compared to others in this line of business. The reduction is granted for the further reason that as the work progresses from year to year, the would be gaining experience and expertise as a result of which economy will be affected in the later years. Therefore, the profit of 12.8% disclosed by the assessee in the succeeding year cannot be taken to be a sure guide for determining the profit for the preceding year. For all these reasons, we estimate the net profit at 11.5% of the receipts of Rs. 25 lakhs (approximately). This determination of net profit is only on the working1 of the contract by the assessee and depreciation of Rs. 8,061 (the correct amount is to be quantified by the Assessing Officer after verification) which is an allowance granted under the IT Act should be viewed as a separate deduction. Another reason for considering depreciation for separate deduction is that in some cases of contracts, huge machineries may have to be employed; whereas is some other cases labour intensive device would be employed. Therefore, in order to have uniform estimate of profit, it is desirable that profit is estimated first ignoring the depreciation and then granting depreciation separately. Then and then only true profit can be ascertained as between persons employing high cost machinery and persons employing labour intensive devices. In this view of the matter, we hold that depreciation should be separately deducted from the net profit thus estimated.
8. In the result, the appeal for the assessment year 1983-84 is allowed and the appeal for the assessment year 1984-85 is partly allowed.