ORDER
N. D. RAGHAVAN, J. M. :
This is an appeal of the assessee challenging the order dt. 16th Sept., 1993, of the CIT(A) as erroneous.
2. The facts of the case are briefly these : The assessee, a foreign company, as part of a consortium arrangement contracted with National Hydro-Electric Power Corporation Ltd. (NHPC), a Government of India enterprise, to set up a turnkey hydro-electric power project at Uri, J&K. The project was approved by the Department of Energy, Ministry of Power under s. 44BBB of the IT Act. As part of consortium arrangement the assessee entered into a contract with NHPC for erection, testing and commissioning of mechanical plant and machinery for the Uri Hydro Electric Project. Under the agreement with NHPC, the assessee is to receive payments for storage, erection testing and commissioning of mechanical plant and machinery and also payments for marine freight and insurance in respect of shipment of capital equipment and other goods. Under the agreement, the entire tax of the contract was to be borne by the NHPC. The assessee was liable for any tax due on self-assessment pursuant to application of r. 115 of the IT Rules. The assessee paid an amount of Rs. 1,62,773 towards the tax on self-assessment as a result of application of r. 115. On the basis of the decision in the case of Chowgule & Co. vs. CIT (1992) 195 ITR 810 (Bom) holding that r. 115(c) of the IT Rules was ultra vires and beyond the scope of the provisions of the IT Act, the assessee sought refund of the tax paid on self-assessment by filing a belated appeal, as on the date of the said decision itself, limitation for filing the first appeal ran out. The CIT(A), therefore, dismissed the appeal as time-barred. Hence, the instant second appeal by the assessee before us.
3. The learned counsel for the assessee submitted that : The CIT(A) erred on facts and in law in not condoning the delay in filing the appeal but dismissing it as out of time. True, the appeal is late by one year in as much as the order was shown in the appeal memo before the CIT(A) to have been served upon the assessee on 22nd October, 1991 when the appeal was filed on 23rd Nov., 1992. However, an application for condensation of delay was filed mentioning that initially the assessee was under the belief that the assessment had been correctly framed. As subsequently, the Bombay High Court in the aforesaid judgment held r. 115(c) of the IT Rules to be ultra vires the Act, the assessees tax liability on that basis would have been less by Rs. 1,62,773. The assessee, accordingly, therefore, filed the appeal before the CIT(A) claiming the benefit of the aforesaid Bombay High Court judgment and also stressing that it was a reasonable cause on his part under the circumstances aforesaid and that, therefore, the appeal should have been admitted by the CIT(A) and give the relief prayed for before him on merits. Reliance is placed on the decisions following :
(a) Collector of Land Acquisition vs. Mst. Katiji & Ors. (1987) 167 ITR 471 (SC) (b) Karam Chand Prem Chand Pvt. Ltd. vs. CIT (1976) 101 ITR 46 (Guj) (c) State of Andhra Pradesh vs. Venkata Ramana Chuduva & Muramura Merchant & Anr. (1986) 159 ITR 59 (AP) (d) CIT vs. Sothia Mining & Mfg. Corpn. Ltd. (1990) 186 ITR 182 (Cal) (e) All India Lakshmi Commercial Bank Officers Union vs. Union of India & Ors. (1984) 150 ITR 1 (Del) (f) Indo-Java & Co. vs. IAC (1989) 35 TTJ (Del) (SB) 111 : (1989) 30 ITD 161 (Del) (SB) (g) CIT vs. Bharat General Reinsurance Co. Ltd. (1971) 81 ITR 303 (Del) (h) Thakar Dass Vishan Dass vs. ITO (1980) 10 TTJ (Del) 455.
4. On the other hand, the learned representative for the Revenue, to say in brief, countered the aforesaid submissions of the assessee by defending the order impugned and by also submitting that the assessees case laws cited supra are distinguishable.
5. Rival submissions heard and relevant orders read including the concerned pages of the paper book referred to before us as well as the case laws relied upon by the parties concerned. The stand of the assessee is that no appeal was filed against the additions made as per advice of NHPC since additional tax levied had to be borne by NHPC and after the decision in the case of Chowgule & Co. Ltd. (supra) holding r. 115 of the IT Rules to be ultra vires, the assessee after obtaining necessary advice filed a belated appeal with a petition for condensation of delay in filing it on the ground that the assessee was a foreign company having no knowledge of Indian tax laws, that the assessee paid self-assessed tax by applying r. 115 in terms of application (sic) cast upon it on account of special agreement with NHPC, that the year ended 31st March, 1990, was the first year of operation of the assessee in India, that the decision of the Honble Bombay High Court in the case of Chowgule & Co. Ltd. cited supra was not available when the assessment was finalised and when the appeal was also due for filing, that the CIT(A) did not consider the issue regarding the applicability of the rule of law on merits but dismissed the appeal for the reason that it was filed out of time, that the assessee, therefore, filed the second appeal before the Tribunal on 29th Dec., 1993, against the order of the CIT(A), that the Assessing Officer meanwhile in subsequent years following its order for asst. yr. 1990-91 calculated the assessees income by applying r. 115 which has been further diluted by the IT (9th Amendment) Rules, 1993, coming into force w.e.f. 25th May, 1993, that the action of the Assessing Officer in applying rule without appreciation of facts of law as resulted in additional demand against the assessee causing avoidable harassment to it, that the assessee, a foreign company is not certain about its exposure to tax in India and that the issue involved is not complicated but purely a legal issue. Our attention was drawn to page 12 of the paper book which is a petition for condensation of delay before the CIT(A) highlighting that the assessment was completed by the order dt. 30th Sept., 1991, on the basis of income returned except for the Assessing Officer treating 10% of the receipts for marine insurance as income as against nil per cent of such receipts treated as income by the assessee, that no appeal was preferred against the assessment as per instructions of NHPC who were to bear the incremental tax liability arising out of variations in the assessment, that in view of the Bombay High Court decision cited supra, the assessee was preferring the present belated appeal to claim refund of Rs. 1,62,773 being the tax paid on self-assessment by application of r. 115 of the IT Rules, that the aforesaid assessment order dt. 30th Sept., 1991, was received on 22nd Oct., 1991, when the appeal against it was due to be filed by 21st Nov., 1991, that the assessee in any event deserves condensation of delay considering that the assessee is a foreign company having no knowledge of Indian tax laws, that the assessee paid the self-assessment tax by applying r. 115 in terms of application in Art. 22 of the special agreement between the assessee and the NHPC, that the year ended 31st March, 1990, was the first year of operation of the assessee in India and that the Bombay High Court decision has been rendered recently and that, therefore, the delay in filing the present appeal certainly qualifies for condensation by admitting it on merits even by the CIT(A) himself.
6. No doubt, it is true that as urged on behalf of the assessee, no tax shall be levied or collected except by authority of law as enshrined in Art. 265 of the Constitution of India. Therefore, the assessee heavily relies upon the decision of the Honble Bombay High Court cited supra claiming its benefits and also urging before us that the delay caused in filing the appeal before the CIT(A) was bona fide and for a sufficient cause. The points raised by the assessee and narrated above particularly as contained at page 5 of the paper book cannot be attributed to be those which have no force. The only point that arises for adjudication before us is, as laid down by the order impugned, that as a general proposition of law that whenever an issue which was initially thought to be settled is later decided in favor of the assessee by High Court, the assessee would not become entitled to file belated appeals for claiming the benefit of the judgment particularly when the judgment is not of the jurisdictional High Court, is correct or not. Insofar as the decision in the case of Thakar Dass Vishan Dass cited supra relied upon by the assessee, the Delhi Bench of the Tribunal held that as the Madras High Court in A. M. Sali Maicar vs. ITO (1973) 90 ITR 116 (Mad) has struck down s. 140A(3), the said provision can legitimately be treated as non-existent and ultimately the penalty in question was not sustained by it. In our opinion, only from the viewpoint of condensation of delay but not on the judicial principle of considering other High Court decision is concerned this decision would be distinguishable to the instant case as that was a decision when that decision of the Honble Madras High Court was in existence even prior to the disposal of the appeal by the Tribunal, unlike in the instant case where the decision of the Honble Bombay High Court in the case of Chowgule & Co. Ltd. (supra) which is heavily relied upon by the assessee was available neither at the stage of the assessment nor during the period of limitation of filing the first appeal before the CIT(A). Well laid down legal propositions are that a litigant does not stand to benefit by lodging an appeal belated and in fact by resorting to delay, he runs a serious risk as refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and the cause of justice being defeated, as against which when the delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties, that the doctrine that every days delay must be explained in a rational commonsense and pragmatic manner without meaning a pedantic approach, that when substantial justice and technical consideration are pitted against each other the cause of substantial justice deserves to be preferred for either side cannot claim to have vested right in injustice being done because of a non-deliberate delay, there is no presumption that the delay is occasioned deliberately or on account of culpable negligence or on account of mala fides and that it must be grasped that the judiciary is respected not on account of legalising injustice on technical grounds but because it is capable of removing injustice and is expected to do so, as well propounded by the decision of the Honble Supreme Court in the case of Collector of Land Acquisition vs. Mst. Katiji & Ors. cited supra. Therefore, if sufficient cause for excusing delay is shown, discretion has to be given to the Court to condone the delay and admit the appeal in order that judicial power and discretion in that behalf is exercised to advance substantial justice, as again laid down by the Honble Supreme Court in the case of Ramlal vs. Rewa Coalfield Ltd. AIR 1962 SC 361. The undefined word sufficient cause means a cause which is beyond the control of the party invoking the aid of the provisions of law and any cause that prevents a person approaching the Court within time is sufficient, and in doing so, it is the test of reasonable man in normal circumstances which has to be applied and the test whether or not a cause is sufficient is to see as to whether it could have been avoided by the party by the exercise of due care and attention; in other words, whether it is a bona fide cause inasmuch as nothing shall be deemed to be done bona fide or in good faith which is not done with due care and attention and the words sufficient cause should be liberally construed so as to advance a substantial justice when no negligence or any inaction or want of bona fide is imputable to the party, according to well settled propositions of law.
In the instance case, we are of the considered opinion that only due to the bona fide reasons, the assessee, a foreign company could not file the appeal in time which is further discussed hereinafter below and that, therefore, the assessee should not be denied of being heard on its merits and rejected by merely on grounds of technicalities. In the case of Venkata Ramana Chuduva (supra) decided by the Honble Andhra Pradesh High Court, however, holds that where the decision of the High Court in Nooka Agaiah 39 STC 521 was not rendered, much less reported by the date of receipt of the assessment orders by the assessees and both the judgments of the High Court and the Supreme Court were rendered long after the period of limitation for filing the appeals in their case expired and the assessees filed appeals after the decision of the Supreme Court with a petition to condone the delay, it could not be said that the assessees had established sufficient cause for condoning the delay in filing the appeals and nothing prevented them if they chose to dispute their liability from filing an appeal within 30 days after receiving the orders of assessment. At the same time, it may also be seen that in the case of Sothia Mining & Mfg. Corpn. Ltd. (supra), the Honble Calcutta High Court has held that where the question whether certain expenditure was revenue or capital was in dispute and the assessee accepted the decision of the Assessing Officer for the time being and thereafter there was a judgment of the Supreme Court on the controversy raised and because of that judgment, the assessee found that it had a good reason to prefer an appeal, the AAC was competent to condone the delay in filing the appeal. Under the circumstances of these two conflicting decisions, we have to give due weightage to the later decision of the Honble Calcutta High Court as it goes in favor of the assessee in accordance with the principles of tax jurisprudence well propounded by the Honble Supreme Court in the well known case of CIT vs. Vegetable Products (1973) 88 ITR 192 (SC). In the instant case before us, as has already been said, the order of assessment was passed on 30th Sept., 1991, having been received on 22nd Oct., 1991, for which the due date of appeal before the CIT(A) was 21st Nov., 1991, admittedly. While so, the decision of the Honble Bombay High Court now relied upon by the assessee was not available, as has already been said either at the time of passing the order of assessment or during the time of the period of limitation to file the first appeal having that been delivered on 3rd/4th March, 1992. Thus, this judgment which was delivered nearly 3-1/2 months after the expiry of the limitation period for filing the first appeal is heavily relied upon and for causing the institution of the first appeal before the CIT(A) with a prayer to condone the delay as the assessee was under the bona fide belief that the position of law prior to the decision of the Honble Bombay High Court was correct and that, therefore, it constitutes a good and sufficient cause which prevented the assessee from filing the appeal. While we carefully deliberate upon the stand of the assessee which was incorporated in the petition for condensation of delay before the CIT(A) who rejected it and which has come up before us for our scrutiny in the second appeal, the decision of the Honble Gujarat High Court also in the case of Karam Chand Prem Chand Pvt. Ltd. cited supra relied upon by the assessee heavily comes to its rescue in our considered opinion. In that case, the assessee did not claim deduction in assessment on the basis of law as propounded by the High Court, but the later decision of the Supreme Court permitted the deduction and therefore revision petition to the CIT was filed based on law as later expounded by the Supreme Court even though that petition was time-barred. The questions arose as to whether there was sufficient cause to excuse such delay and whether the CIT was right in refusing to excuse such delay, such refusal to exercise the discretion was also judicious in a writ petition before the Honble Gujarat High Court. The Gujarat High Court ultimately maintained the writ petition by holding that the petition for rectification of assessment was sustainable and that, therefore, the revision petition was not barred by time as the delay in preferring the application before the CIT was rightly condoned and that the CIT was directed to proceed further in the matter and to dispose of the case on its merits according to law, besides the Honble High Court observing that ever since the decision of the Bombay High Court (referred to in that case) which was followed by three or four other High Courts, the accepted view was that the expenditure in question was capital expenditure and this view was taken as settled law and, therefore, the petitioner had no cause to invoke the revision jurisdiction of the CIT and that such situation changed on account of subsequent decision of the Supreme Court which decision alone gives cause to the petitioner to move the CIT in revision and ultimately holding that the CIT was palpably wrong in holding that the change of legal situation brought about by the decision of Supreme Court was hardly a valid ground.
7. Therefore, in the light of the aforesaid decision in the instant case too, the apparent illegality declared by the Honble Bombay High Court in the case of Chowgule & Co. (supra) on r. 115 as ultra vires, seems to have crept into the assessment and became quite patent only because of the decision of the Honble Bombay High Court. It was, therefore, only after this decision of the Honble Bombay High Court that the assessee had reason to move the appeals to the CIT(A) with a view to obtain relief in accordance with the ratio decidendi rendered by the Honble Bombay High Court. The fact that the petitioner did not keep the question alive by preferring appeal in time, was on account of the situation that before the Honble Bombay High Court took a different view in the case of Chowgule & Co., the legal position was practically settled in regard to r. 115. If the assessee did not keep the question alive by filing an appeal in time, it was obviously because the real legal position appeared to be settled not only to the Assessing Officer but also to the assessee and that, therefore, there was no point in pursuing the question any further. Hence, for the purpose of deciding as to whether the assessee had sufficient cause for not preferring the appeal within time, the fact that it did not keep the question alive by preferring appeal before the expiry of the limitation period, which was likely to prove infructuous did not make any difference. Therefore, in our carefully considered opinion, after hearing the parties at length besides in our careful deliberation over the issue in question, the delay caused by 3-1/2 months approximately from the last date of filing the appeal, i.e., 21st Nov., 1991, up to the date of judgment of the Honble Bombay High Court which is 4th March, 1992, is a bona fide one constituting sufficient cause preventing the assessee in filing the appeal before CIT(A). Now, coming to the period of delay caused subsequent to the date of delivery of the aforesaid judgment of 4th March, 1992, until the date of filing the first appeal before the CIT(A) on 24th Nov., 1992, it was submitted before us that the aforesaid decision of the Honble Bombay High Court was reported in the law journal on 24th Aug., 1992, which was brought to the notice of the assessee thereafter. If it would have been reported in the journal on 24th Aug., 1992, normally about a week or two may be taken for reaching the hands of even a regular law journal subscriber. In fact, it has been held by the decision in the case of S. Ratnam Pillay vs. ITO (1987) 20 ITD 578 (Coch) that in view of the decision in the case of Asia Tobacco Co. Ltd. vs. Union of India (1985) 155 ITR 568 (Mad), the notification dt. 29th March, 1987, in that case was effective for the assessee as well as the Department or for that matter of the public in general from 3rd April, 1979, only when it was published in the Gazette and which fell within the accounting year 1979-80 relevant to the asst. yr. 1980-81 and that, therefore, the CIT was not justified in directing the Assessing Officer to tax that amount in the asst. yr. 1979-80 based on the date of the notification. Hence, in accordance with the ratio decidendi of the Cochin Bench also, the period between the date of delivery of the Bombay High Court judgment, namely, 3rd/4th March, 1992, and the date of publication of the judgment in the journal namely, 24th Aug., 1992, or say the release of that reported journal was by the end of August, 1992 is also deemed to be excusable. After having got the knowledge of this decision thereafter, the assessee took steps for consultation and preparation of the appeal after which the relevant papers were sent to the United Kingdom for the signature of the assessee, a foreign company and from where the papers have to be returned back by taking appropriate time in this regard and after all these, the appeal could be filed by the assessee before the CIT(A) only on 23rd Nov., 1992, as urged by the assessee and which were all not disputed by the Revenue before us. Under these circumstances, we are of the considered view that the time taken approximately for consultation, preparation of the case and sending the papers to the United Kingdom for the signature of the assessee and getting it returned and filing it, appears to be not unreasonable but constitute a bona fide one which, therefore, could be taken as sufficient cause that has prevented the assessee from filing the appeal early. Thus, on all these grounds, we are of the clear opinion that substantial justice would be rendered by condoning the delay caused in the appeal filed before the first appellate authority. Thus, we accept the first ground of appeal of the assessee before us.
8. Insofar as the second ground of appeal is concerned which has not at all been dealt with by the order impugned by virtue of having dismissed the appeal in liming as time-barred, we set it aside to the file of the CIT(A) himself to decide it in accordance with law after giving opportunity of being heard to the assessee duly considering merits of the case and the stand of the assessee with any relevant supporting material and the case law that may be relied upon in this regard.
9. In the result, the appeal of the assessee is partly allowed.