ORDER
N.D. Raghavan, Judicial Member
1. This is an appeal of the assessee against the order dated 7-2-1986 of the Appellate Assistant Commissioner of Income-tax on the effective ground that the Tribunal may be pleased to condone the delay of nearly two months in filing the form for registration and direct the grant of registration which the Appellate Assistant Commissioner has failed to do.
2. The facts of the case are briefly these M/s. Padmasri Rice Mill originally came into existence through a deed of partnership dated 11-9-1979 consisting of six partners including two minors admitted to the benefits of partnership. The assessee firm was granted registration for the first time for the assessment year 1981-82. A fresh deed of partnership was again executed on 20-2-1981, as one of the minors became major electing to become a partner of the firm. This deed of partnership along with Form Nos. 11 & 11A were filed before the assessing officer on 28-3-1981 seeking registration of the firm for the assessment year 1982-83. The firm as reconstituted was granted continuation of registration for the assessment year 1983-84. There was again a change in the constitution of the firm during the course of the accounting year relevant to the assessment year 1984-85 as one of the partners retired from the firm as per the retirement deed dated 10-9-1982. The firm closed its books of accounts on 10-9-1983. Form Nos. 11 & 11A along with the deed of partnership in original were received from the assessee on 5-11-1983. Thus there was a delay of two months in submitting the application for registration. The assessing officer refused to accept the explanation submitted by the assessee for condoning the delay and passed order under Section 184(4) of the Income-tax Act rejecting the request. On appeal it was dismissed by the Appellate Assistant Commissioner as not maintainable under Section 246 of the Act. The order dated 7-2-1986 was served upon the assessee on 19-2-1986. Subsequently the assessment was reopened by issue of notice dated 4-4-1986 under Section 148 of the Act which resulted consequently in determination of the total income at Rs. 1,36,790. It resulted in a tax demand of Rs. 76,869 for which demand was raised by the assessment order dated 22-3-1989. Immediately thereafter the firm submitted the present appeal before the Tribunal on 3-4-1989.
3. The learned representative for the assessee submitted that : The orders of the authorities below are contrary to law, facts of the case, probabilities of the circumstances and weight of evidence. Genuineness of the firm was never doubted by the assessing officer. Refusal to grant registration is only on account of delay in submitting the application for registration. As a matter of fact, the firm was granted registration for the earlier years, It had undergone a change in its constitution due to retirement of one of the partners in the earlier firm. This change in the constitution of the firm was brought about at the beginning of the previous year relevant to the assessment year under appeal. Banking authorities had granted a term loan on the security of the assets of the firm. Partnership deeds were considered as title deeds and were retained with the bank. The assessee came to know of the situation after close of the previous year. Consequently he rushed to the bank for claiming return of the partnership deed. He submitted the application for registration late by nearly two months only. The authorities below should have considered the assessee’s situation and accepted its explanation for condoning the delay to grant registration to the firm. The appellate officer has not disposed of the appeal on merits and directed the assessing officer to condone the delay and grant registration. The view taken by the appellate officer is a short-sighted one. He wrongly took into consideration only the existing facts but did not imagine the future contingencies as has happened in this case. The assessment was reopened under Section 147 and the reassessment resulted in a total income of Rs. 1,36,790 giving rise to tax demand of Rs. 76,869 on the assessee. Hence the delay of nearly two months only has to be condoned and registration of the firm has to be directed to be granted.
4. At the outset before giving reply to the submissions of the assessee on the merits of the appeal, the learned representative for the Revenue strongly raised his preliminary objection on the ground that this appeal itself before the Tribunal was time barred by more than 3 years. The assessee itself has computed the delay in its affidavit filed before the Tribunal as has also been admitted by the registry in 1079 days. Being the delay running to more than 3 years, the appeal is time barred outright and this has to be dismissed in limine. There is no satisfactory explanation for such inordinate and huge delay by the assessee.
5. He has also added that even on merits, the assessee has no case. Earlier registration has no effect for the year in question. Conduct of the assessee is of delaying nature. Even before the assessing officer when he applied for registration it caused delay of merely two months which is therefore rightly rejected by the assessing officer. The appellate officer too correctly confirmed such rejection by the Income-tax Officer and dismissed the appeal as being not maintainable. The addition made in the assessment under Section 144 was not challenged as the issue was not agitated at the relevant time when he ought to have done. In any event either for registration purposes where he has been sleeping over his right for nearly two months or even at the threshold of this proceeding praying for condonation of inordinate delay of more than three years for the duration of which too the assessee has been in coma, the prayer of the assessee has to be rejected outright.
6. On the other hand, the learned representative for the assessee issued a strong rejoinder to the stand taken by the Revenue on counts of both preliminary objection and merits that It is absolutely wrong to state that the assessee is in the habit of delaying the matters. By adopting the technique of delay nothing is there for the assessee to be achieved excepting to land itself at a disadvantageous position. Registration was denied only for the assessment year 1984-85. Because the income was determined at nil the assessee thought it was futile to exercise himself to take up the matter on appeal to the Appellate Tribunal against the impugned order before reopening of the assessment. Only when the assessment was reopened which resulted in determining the total income at Rs. 1,36,790 and giving emergence to a tax demand of Rs. 76,869, the assessee became aggrieved and at that point of time only. Had there not been such reopening of assessment and lax demand, there is no necessity for the assessee to come in appeal against the order impugned as the income disclosed by the assessee at nil was accepted by the assessing officer. That apart on the merits of the case the delay caused was nearly two months alone that too for justifiable reason. The relevant partnership deed was considered as document of title by the banking institution while granting term loans to the assessee. The assessee could not obtain the partnership deed in time so that application for registration could be submitted to the Income-tax Officer. However, application for registration along with the deed obtained in November 1983 was submitted to the Income-tax Officer on 15-11-1983 itself. It is only this delay that has to be condoned for the purpose of granting registration, on the merits of the case. As far as the preliminary objection of the revenue is concerned, it is meaningless to advance the argument by the revenue that the appeal is time barred by more than three years as the assessee had nothing to lose for appealing against the order impugned as soon as it was received since, as has already been submitted, the income disclosed for the year in question at nil was also accepted by the Income-tax Officer in toto.
7. He has also drawn support to his stand for condoning the delay either on merits or on the preliminary objection of the Revenue, from the decisions of the Hon’ble Supreme Court in the case of Concord of India Insurance Co. Ltd. v. Smt. Nirmala Devi [1979] 118 ITR 507 and in the case of Collector, Land Acquisition v. Mst. Katiji [1987] 167 ITR 471 besides the decision rendered by the Hon’ble M.P. High Court in the case of CIT v. Khemraj Laxmichand [1978] 114 ITR 75 at 78 particularly referring to another decision of the Hon’ble Supreme Court in the case of Mata Din v. A. Narayanan AIR 1970 (SC) 1953 which was extracted therein, as also the decision of the Hon’ble Punjab and Haryana High Court in the case of Manoj Ahuja v. IAC [1984] 150 ITR 696 at 701. He ultimately concluded by praying that in any event either on preliminary objection or on the merits of the case, the submissions of the revenue have no iota of substance. He thus prayed for the allowance of the appeal.
8. Learned representative for the revenue answered the assessee by slating that the cases relied upon by him have no applicability to the instant appeal and reiterated his objections on both counts.
9. We have heard the learned representative for the assessee and the revenue on both the counts of preliminary objection taken as well as the merits of the case, besides going through the facts of the case on record and the orders of the authorities below including the citations relied upon by the assessee. At the outset, we shall now take up the preliminary objection raised regarding the appeal being time barred.
10. The decision of the Hon’ble Supreme Court of India in the case of Mst. Katiji (supra) holds that power to condone delay for ‘sufficient cause’ is for doing substantial justice and that the Courts should have a pragmatic and liberal approach. The expression ‘sufficient cause’ 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. A justifiably liberal approach has to be adopted on principle. Every day’s delay must be explained does not imply a pedantic approach. The doctrine must be applied in a rational, common sense and pragmatic manner. 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 a vested right in injustice being done because of a non-deliberate delay.
11. The facts of the case of Khemraj Laxmichand (supra) are these. A delay in application for registration was condoned and the firm was granted registration by the Appellate Asst. Commissioner and this order was confirmed by the Tribunal. In doing so, the Tribunal relied on the following facts. It was not the revenue’s case that the firm was bogus or had no legal existence. The assessee was a firm of repute. The firm had been granted registration year after year. In 1961, the new partners joined the firm. A fresh deed was executed in 1963, with retrospective effect from Diwali 1961. The delay in application was due to the mistake of the counsel who had been looking after the income-tax work of the assessee for over 20 years. On a reference, the High Court held that the question whether the mistake of the counsel was bonafide being one of fact and that the Tribunal having come to the conclusion that the lapse on the part of the counsel was bonafide, the Tribunal was justified in condoning the delay and upholding the registration of the firm.
12. The sum and substance of the submissions of the assessee focussed emphatically was that there was no deliberate or wanton delay or lapse due to culpable negligence or mala fide on the part of the assessee in the instant case and that the mistaken advice of the earlier counsel to the assessee as has happened in this case will constitute a ground sufficient for condonation as held in the case of Manoj Ahuja (supra). The mistake that has happened in the instant case was a bonafide one had there is no ulterior motive which therefore deserves condonation as per the decision in the case of Concord of India Insurance Co. Ltd. (supra). The grievance of the assessee is that only when the matter was said to be reopened and huge tax demand was raised as a result of the re-assessment, the assessee hastened to file this appeal against the order with a delay of nearly two months in filing the application for registration.
13. If sufficient cause for excusing delay is shown discretion is given to the Court to condone the delay and admit the appeal. This discretion has been conferred on the Court in order that judicial power and discretion in that behalf should be exercised to advance substantial justice vide Ramlal v. Rewa Coalfields Ltd. AIR 1962 SC 361. The expression ‘sufficient cause’ is not defined hut it must mean a cause which is beyond the control of the party invoking the aid of the section [vide Ashutosh Bhadra v. Jatindra Mohan Seal AIR 1954 Cal. 238 at 239]. Any cause which prevents a person approaching the Court within time is sufficient. In doing so it is the test of reasonable man in normal circumstances which has to be applied (vide 1979 (All.) LJ 70). The test whether or not a cause is sufficient is to see whether it could have been avoided by the party by the exercise of due care and attention. In other words, whether it is 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, [vide Hisaria Plastic Products v. CST AIR 1980(A11.) 185]. The words sufficient cause should be liberally construed so as to advance substantial justice when no negligence or any inaction or want of bona fide is imputable to a party. The application for condonation of delay containing substantially all the relevant material and is supported by affidavit shows that there has been sufficient cause for condonation (vide 1979 Cr LR (Mah) 475 at 478). What may be sufficient cause in one case may be otherwise in another. What is of essence is whether it was an act of prudent or reasonable man.
14. In the instant case, we do not find that the stand of the Revenue is that the firm was a bogus one or had no legal existence. The firm was earlier granted registration. Afterwards due to change in the constitution of the firm fresh deed was executed. The copy of the deed could not be produced before the assessing officer along with the application for registration as it could not be immediately obtained as it was deposited with banking institutions as title-deed for having raised loans on account of which there was delay of nearly 60 days. When such delay was not condoned by the assessing officer, he had gone on appeal before the appellate officer. The Appellate Asst. Commissioner has dismissed the appeal as not maintainable and observed that he did not find any reason why the assessee could be aggrieved against determination of its status as URF when it does not make any difference either to the assessee or to the assessing officer if the status of the assessee is taken as URF or RF when for the assessment year in question viz. 1984-85, the assessee’s total income was disclosed at nil which was also accepted by the Income-tax Officer. He has also given his finding that the assessee can file an appeal as per the provisions of Section 246 only when he is aggrieved and that he could not see any grievance of the assessee in the appeal before him. Thus he found that there was no need to adjudicate on the grounds of appeal raised before him. The assessee was given a mistaken advice that no appeal is necessary to be filed against such impugned order when his income disclosed for the assessment year in question was accepted by the Income-tax Officer. Thus the mistaken advice and the wrong findings of the Appellate Asst. Commissioner impressed the assessee that he was not aggrieved at that stage. He found that he was really aggrieved only when received the notice demanding tax of Rs. 76,869 pursuant to action taken under Section 148 in the reassessment on total income of Rs. 1,36,790 as per the order dated 22-3-1989. Immediately thereafter, the assessee firm submitted the present appeal before the Tribunal, thus resulting in the cropping up of grievance on 24-3-1989 when such assessment order dated 22-3-1989 was served on the assessee. Thus the instant appeal was filed by the assessee firm on 3-4-1989.
15. Indeed the relevant Section 253 which deals with the appeals to the Tribunal employs the word “aggrieved” i.e.
(a) Any assessee aggrieved by any of the following orders may appeal to the Appellate Tribunal against such order-….
Therefore, only on the date when the reassessment order was served on the assessee, the assessee, according to him in accordance with the above section, became aggrieved and not on the date when the order impugned was served upon him i.e. 19-2-1986. To this extent, the order impugned clearly supports the stand of the assessee as it specifically gives a finding that the assessee can file an appeal as per the provisions of Section 246 only when he is aggrieved and that the appellate officer did not find any grievance of the assessee is the appeal before him in view of the fact that when the assessee’s total income was disclosed at nil it was accepted by the Income-tax Officer. That apart, we find that there was also an affidavit filed by the assessee showing reasons for the delay, unlike the Department where no counter affidavit has been filed in the event of which it is not open for the revenue to brush aside the averments in the affidavit by merely stating that the assessee’s averments are untrue [vide Lekh Raj. v. Fourth Addl. District Judge AIR 1982 (All.) 265]. There has been no negligence or any inaction or want of bona fide that could be imputed to the assessee. The moment he came to know that he has been aggrieved by the order of reassessment, he has filed the second appeal against refusal to grant registration supported by affidavit with all the relevant materials for the delay to be condoned. Right of appeal is a substantial right and it cannot be lightly thrown out, especially on the facts and circumstances of the case herein, to prevent the party from exercising such a valuable right.
16. It will be relevant and pertinent to quote here the principles laid down by the Hon’ble Supreme Court in the case of Mst. Katiji’s case (supra):
(i) Ordinarily, a litigant does not stand to benefit by lodging an appeal late.
(ii) 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.
(iii) “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.
(iv) 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.
(v) 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.
(vi) 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.
17. On the peculiar facts and circumstances of the case now before us and in view of all the reasons aforesaid in the light of the decisions referred to above, we give a clear finding that the period up to 24-3-1989 on which day the grievance of the assessee cropped up by receiving the reassessment order resulting in the recomputation of total income at Rs. 1,36,790 emerging with tax demand of Rs 76,869, as against the total income determined at nil earlier, from 19-2-1986 when the appellate order dated 7-2-1986 dismissing the appeal not adjudicating the grounds therein regarding registration was received, well deserves to be condoned though the period of delay is more than three years especially when the impugned order declares that it has not adjudicated the appeal on the grounds raised therein and also has given wrong impression to the assessee that he would not be aggrieved.
18. We note that the order impugned has not dealt with the merits of the appeal before the Appellate Asst. Commissioner. It states that in the event of the assessee’s total income being disclosed at nil which was accepted by the Income-tax Officer, it does not find any reason why the assessee could be aggrieved against the determination of its status as U.R.F. and it does not make any difference either to the assessee or to the Income-tax Officer if the status of the assessee is U .R.F. or R.F. and that the assessee could file an appeal as per the provisions of Section 246 of the Act only when he is aggrieved. Having the appeal been not adjudicated on the ground raised before the Appellate Asst. Commissioner as per his own such finding in his order, we are not giving our finding on the merits of the case i.e. as regards the question whether the delay of nearly two months in filing the application for registration of the firm in the proper proforma along with partnership deed before the Income-tax Officer be condoned or not. We, therefore, set aside the impugned order and restore the matter to the Appellate Asst. Commissioner himself to adjudicate the grounds raised in the appeal before him after giving real opportunity to the assessee and examining the facts and issues in the appeal before him particularly keeping in view the ratio of the aforesaid decisions and in the light of the discussions made hereinabove as regards preliminary objections dealing with the question of law for condonation.
19. In the result, the appeal is allowed for statistical purposes.
