M/s. Ujjwal Construction v. Income Tax Officer, Ward 1(3), Pune
[Citation -2016-LL-0923-149]

Citation 2016-LL-0923-149
Appellant Name M/s. Ujjwal Construction
Respondent Name Income Tax Officer, Ward 1(3), Pune
Court ITAT-Pune
Relevant Act Income-tax
Date of Order 23/09/2016
Assessment Year 2005-06
Judgment View Judgment
Keyword Tags completion certificate • period of limitation • condonation of delay • land acquisition • time barred • civil suit • land owner
Bot Summary: AR of the assessee further submitted that the Hon'ble Supreme Court of India in the case of Collector, Land Acquisition Vs. Mst. Katiji And Others reported as 167 ITR 471 and in the case of N. Balakrishnan Vs. M. Krishnamurthy reported as 7 SCC 123 : AIR 1998 SC 3222 has held that the explanation furnished by the assessee resulting in delay of filing the appeals should be accepted as a matter of principle. The assessee learnt about the orders of Commissioner of Income Tax when in pursuance to a query raised by the Tribunal in appeal of the assessee for assessment year 2006-07 the assessee approached the office of Commissioner of Income Tax to know the status of its appeal 5 ITA Nos. AR of the assessee has pointed that the appeals of the assessee for assessment years 2005-06 and 2007-08 have been dismissed for non-prosecution by the Commissioner of Income Tax in an ex-party order. The Assessing Officer in the absence of any certificate from the Pune Municipal Corporation observed that the assessee failed to complete the project within the stipulated time prescribed in section 80- IB(10) of the Act i.e. before 31.03.2008 and the deduction claimed u/s 80-IB(10) of the Act at Rs.7,79,060/- was denied to the assessee, which was upheld by the CIT(A). In the above said circumstances, the application for obtaining completion certificate prepared by the assessee was not accepted by the Pune Municipal Corporation and consequent thereto the completion certificate has not been issued to the assessee till date. The issue arising in the present appeal is that where the assessee had completed construction of the building, which had been occupied by the owners within the stipulated time provided under section 80-IB(10) of the Act, merely because the assessee had not received the completion certificate, the said claim under section 80-IB(10) of the Act can be denied to the assessee. Following the order of Co-ordinate Bench, we accept the appeals of the assessee and allow the claim of assessee in the same terms.


IN INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM ITA Nos. 1912 & 1913/PN/2014 Assessment Years : 2005-06 & 2007-08 M/s. Ujjwal Construction, Rajyog Apartments, S. No. 70, Vadgaon Budruk, Pune-411051 PAN : AABFU3163E Appellant V/s. Income Tax Officer, Ward 1(3), Pune Respondent Assessee by : Shri K. Srinivasan Revenue by : Shri Hitendra Ninawe Date of Hearing : 21-09-2016 Date of Pronouncement : 23-09-2016 ORDER PER VIKAS AWASTHY, JM : ITA Nos. 1912 & 1913/PN/2014 have been filed by assessee against orders of Commissioner of Income Tax (Appeals)-I, Pune dated 07-04-2011 for assessment year 2005-06 and dated 28-02-2011 for assessment year 2007-08, respectively. 2 ITA Nos. 1912 & 1913/PN/2014, A.Ys. 2005-06 & 2007-08 Since, identical issues are involved in both appeals, appeals are taken up together for adjudication and are decided by this common order. 2. appeals have been filed with delay of 1224 days. ld. AR of assessee has filed application for condonation of delay supported by affidavit citing reasons for delay in filing of appeal. ld. AR submitted that ex-party orders passed by Commissioner of Income Tax (Appeals) were received by office peon of assessee firm. peon neither informed partners of assessee firm nor any office staff regarding receipt of orders from office of Commissioner of Income Tax (Appeals). issues raised by assessee in appeal before Commissioner of Income Tax (Appeals) for assessment years 2005-06 and 2007-08 were identical to issues raised in appeal for assessment year 2006-07, which was rejected by Commissioner of Income Tax (Appeals) vide order dated 22-10-2010. assessee had filed appeal against order of Commissioner of Income Tax (Appeals) for assessment year 2006-07 before Tribunal in ITA No. 607/PN/2011. During proceedings before Tribunal, query was raised by Bench regarding fate of appeal for assessment year 2005-06 pending before Commissioner of Income Tax (Appeals). assessee was under bonafide impression that first appeal before Commissioner of Income Tax (Appeals) for assessment years 2005-06 and 2007-08 are still pending awaiting order of Tribunal in appeal for assessment year 2006-07. After query of Bench, assessee approached office of Commissioner of Income Tax (Appeals). After enquiry it transpired that appeals of assessee for assessment years 3 ITA Nos. 1912 & 1913/PN/2014, A.Ys. 2005-06 & 2007-08 2005-06 and 2007-08 have already been dismissed for non- prosecution. assessee thereafter searched for impugned orders. Since, peon had left job by then, assessee took some time to locate order. After locating orders, assessee filed appeals for respective assessment years before Tribunal. By time assessee filed appeals before Tribunal, they were already time barred by 1224 days. ld. AR submitted that delay in filing of appeals was not intentional or willful but was caused due to negligence of office peon who failed to communicate receipt of orders passed by Commissioner of Income Tax (Appeals). 2.1 ld. AR of assessee further submitted that Hon'ble Supreme Court of India in case of Collector, Land Acquisition Vs. Mst. Katiji And Others reported as 167 ITR 471 (SC) and in case of N. Balakrishnan Vs. M. Krishnamurthy reported as (1998) 7 SCC 123 : AIR 1998 SC 3222 has held that explanation furnished by assessee resulting in delay of filing appeals should be accepted as matter of principle. expression sufficient cause in explaining delay in filing of appeals beyond period of limitation should be given liberal construction. requirement that every day s delay should be explained should not be stressed by taking pedantic approach. ld. AR submitted that on merits assessee has prima facie good case as Commissioner of Income Tax (Appeals) has dismissed both appeals of assessee for non-prosecution. Tribunal in various decisions has held that Commissioner of Income Tax (Appeals) has no power to dismiss appeals for non- prosecution. assessee had filed appeal for assessment year 2006-07 before Tribunal, identical issues are involved in 4 ITA Nos. 1912 & 1913/PN/2014, A.Ys. 2005-06 & 2007-08 assessment years 2005-06 and 2007-08. assessee would not have gained anything by not filing appeals in impugned assessment years. assessee was under bonafide belief that appeals were still pending before Commissioner of Income Tax (Appeals) for final disposal. ld. AR prayed for admitting appeals after condoning delay. 3. On other hand Shri Hitendra Ninawe representing Department vehemently opposed applications for condoning delay in filing of appeals. ld. DR submitted that there has been inordinate delay of 1224 days in filing of appeals. assessee has been negligent in pursuing his case before Commissioner of Income Tax (Appeals). explanation furnished by assessee for delay in filing of appeals does not show sufficient cause as envisaged under provisions of Limitation Act for condoning day. 4. Both sides heard. appeals filed by assessee are time barred by 1224 days. ld. AR of assessee has tried to explain reason causing delay in filing of appeals. affidavit of Shri Manoj Ranoji Pokale, partner of assessee firm has been filed. delay in filing of appeals has been attributed to negligence of office peon who has received orders passed by Commissioner of Income Tax (Appeals) and thereafter has failed to inform about same to partners of assessee firm or any other office staff. assessee learnt about orders of Commissioner of Income Tax (Appeals) when in pursuance to query raised by Tribunal in appeal of assessee for assessment year 2006-07 assessee approached office of Commissioner of Income Tax (Appeals) to know status of its appeal 5 ITA Nos. 1912 & 1913/PN/2014, A.Ys. 2005-06 & 2007-08 for assessment year 2005-06 wherein identical issue was involved. On enquiry it came to knowledge of assessee that appeals pending before Commissioner of Income Tax (Appeals) have been dismissed for non-prosecution in ex-party order. reasons given by assessee for delay in filing of appeals sufficiently explains cause of delay. Accordingly, same are accepted. Hon'ble Apex Court in case of Collector, Land Acquisition Vs. Mst. Katiji And Others (supra) has held that liberal and meaningful interpretation should be given to expression sufficient cause while considering reasons for condonation of delay. Hon'ble Apex Court has laid down principles to be followed while considering delay applications. same are reproduced here-in-under : 1. Ordinarily, litigant does not stand to benefit by lodging appeal late. 2. Refusing to condone delay can result in meritorious matter being thrown out at very threshold and cause of justice being defeated. As against this, when delay is condoned, highest that can happen is that cause would be decided on merits after hearing parties. 3. Every day's delay must be explained does not mean that pedantic approach should be made. Why not every hour's delay, every second's delay? doctrine must be applied in rational, common sense and pragmatic manner. 4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred, for other side cannot claim to have vested right in injustice being done because of 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. litigant does not stand to benefit by resorting to delay. In fact, he runs serious risk. 6. It must be grasped that judiciary is respected not on 6 ITA Nos. 1912 & 1913/PN/2014, A.Ys. 2005-06 & 2007-08 account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so. 5. Hon'ble Supreme Court of India in case of N. Balakrishnan Vs. M. Krishnamurthy (supra) while dealing with issue of condonation of delay has held as under : 9. It is axiomatic that condonation of delay is matter of discretion of court. Section 5 of Limitation Act does not say that such discretion can be exercised only if delay is within certain limit. Length of delay is no matter, acceptability of explanation is only criterion. Sometimes delay of shortest range may be uncondonable due to want of acceptable explanation whereas in certain other cases, delay of very long range can be condoned as explanation thereof is satisfactory. Once court accepts explanation as sufficient, it is result of positive exercise of discretion and normally superior court should not disturb such finding, much less in revisional jurisdiction, unless exercise of discretion was on wholly untenable grounds or arbitrary or perverse. But it is different matter when first court refuses to condone delay. In such cases, superior court would be free to consider cause shown for delay afresh and it is open to such superior court to come to its own finding even untrammeled by conclusion of lower court. 10. primary function of court is to adjudicate dispute between parties and to advance substantial justice. time- limit fixed for approaching court in different situations is not because on expiry of such time bad cause would transform into good cause." 11. Rules of limitation are not meant to destroy rights of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. object of providing legal remedy is to repair damage caused by reason of legal injury. law of limitation fixes lifespan for such legal remedy for redress of legal injury so suffered. Time is precious and wasted time would never revisit. During efflux of time, newer causes would sprout up necessitating newer persons to seek legal remedy by approaching courts. So lifespan must be fixed for each remedy. Unending period for launching remedy may lead to unending uncertainty and consequential 7 ITA Nos. 1912 & 1913/PN/2014, A.Ys. 2005-06 & 2007-08 anarchy. law of limitation is thus founded on public policy. It is enshrined in maxim interest reipublicae up sit finis litium (it is for general welfare that period be put to litigation). Rules of limitation are not meant to destroy rights of parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. idea is that every legal remedy must be kept alive for legislatively fixed period of time. 12. court knows that refusal to condone delay would result in foreclosing suitor from putting forth his cause. There is no presumption that delay in approaching court is always deliberate. This Court has held that words "sufficient cause" under Section 5 of Limitation Act should receive liberal construction so as to advance substantial justice vide Shakuntala Devi Jain v. Kuntal Kumari (1969) 1 SCR 1006 and State of W.B. v. Administrator, Howrah Municipality(1972) 1 SCC 366. 13. It must be remembered that in every case of delay, there can be some lapse on part of litigant concerned. That alone is not enough to turn down his plea and to shut door against him. If explanation does not smack of mala fides or it is not put forth as part of dilatory strategy, court must show utmost consideration to suitor. But when there is reasonable ground to think that delay was occasioned by party deliberately to gain time, then court should lean against acceptance of explanation. While condoning delay, court should not forget opposite party altogether. It must be borne in mind that he is loser and he too would have incurred quite large litigation expenses" 6. Hon'ble Supreme Court of India in case of Ram Nath Sao @ Ram Nath Sahu And Others reported as 2002 (3) SCC 195 has reiterated law laid down by Hon'ble Apex Court in case of N. Balakrishnan Vs. M. Krishnamurthy (supra). Hon'ble Court has held that expression "sufficient cause" within meaning of Section 5 of Limitation Act or Order 22 Rule 9 of Code of Civil Procedure or any other similar provision should receive liberal construction so as to advance substantial justice when no negligence or 8 ITA Nos. 1912 & 1913/PN/2014, A.Ys. 2005-06 & 2007-08 inaction or want of bona fide is imputable to party. In particular case whether explanation furnished would constitute "sufficient cause" or not will depend on facts of each case. There cannot be straitjacket formula for accepting or rejecting explanation furnished for delay caused in taking steps. courts should not proceed with tendency of finding fault with cause shown and reject petition by slipshod order in over jubilation of disposal drive. Acceptance of explanation furnished should be rule and refusal exception more so when no negligence or inaction or want of bona fide can be imputed to defaulting party. Hon'ble Court further held : However, by taking pedantic and hyper technical view of matter explanation furnished should not be rejected when stakes are high and/or arguable points of facts and law are involved in case, causing enormous loss and irreparable injury to party against whom lis terminates either by default or inaction and defeating valuable right of such party to have decision on merit. While considering matter, courts have to strike balance between resultant effect of order it is going to pass upon parties either way . Thus, in view of facts and circumstances of present case, sufficient cause shown by assessee causing delay in filing of appeals and law laid down by Hon'ble Apex Court, delay of 1224 days in filing appeals by assessee is condoned. appeals are admitted to be heard and disposed of on merits. 7. ld. AR of assessee has pointed that appeals of assessee for assessment years 2005-06 and 2007-08 have been dismissed for non-prosecution by Commissioner of Income Tax (Appeals) in ex-party order. Section 250(6) of Income Tax Act, 9 ITA Nos. 1912 & 1913/PN/2014, A.Ys. 2005-06 & 2007-08 1961 (hereinafter referred to as Act ) prescribes procedure to be followed by Commissioner of Income Tax (Appeals) in disposing of appeals filed by assessee. same is reproduced here-in- under : (6) order of Commissioner (Appeals) disposing of appeal shall be in writing and shall state points for determination, decision thereon and reason for decision. Thus, from bare perusal of aforesaid provision it is amply clear that there is no power vested in Commissioner of Income Tax (Appeals) to dismiss appeal of assessee for non-prosecution. Commissioner of Income Tax (Appeals) being quasi judicial authority is duty bound to decide appeal filed by assessee on merits by passing speaking order, in accordance with law. 8. Mumbai Bench of Tribunal in case of Creative Casuals, Vs. Additional Commissioner of Income Tax in ITA No. 4636/Mum/2009 for assessment year 2006-07 decided on 27-08-2010 has held that Act does not confer any power on Commissioner of Income Tax (Appeals) to dismiss appeal for non-prosecution. He has to examine each and every ground taken before him and dispose of appeal on merits. Similar view has been taken by Chennai Bench of Tribunal in case of M/s. Questnet Enterprises India Private Limited Vs. Assistant Commissioner of Income Tax in ITA Nos. 1821 & 1822/Mds/2011 for assessment years 2006-07 and 2007- 08 decided on 18-01-2012. 9. ld. AR of assessee has pointed that on merits grounds raised in present set of appeals are identical to 10 ITA Nos. 1912 & 1913/PN/2014, A.Ys. 2005-06 & 2007-08 grounds raised by assessee in appeal for assessment year 2006-07 in ITA No. 607/PN/2011 decided by Tribunal on 31-10-2014. grounds raised by assessee in assessment year 2005-06 are as under : 1) Hon. CIT erred in holding assessee is not entitled to claim relief under section 80 IB(10) even though assessee satisfies all requirement for grant of relief. 2) It may be held CIT(A) and A.O.'s orders are bad in law as they have failed to interpret provisions of sec.80 IB(10) correctly in accordance with law and decided cases. 3) Orders passed by A.O. and CIT (A) may be set aside and they be directed to accept return of income claiming relief under sec 80IB(10). 4) appellant pleads for directions allowing his appeal and craves leave to add to, alter, amend, modify or withdraw any or all grounds of appeal. Identical grounds have been raised by assessee in appeal for assessment year 2007-08. 10. We find that Co-ordinate Bench of Tribunal in assessee s appeal for assessment year 2006-07 under identical set of facts and grounds have decided issue relating to claim of deduction u/s. 80IB(10) of Act in favour of assessee. findings of Tribunal on issue are as under : 8. We have heard rival contentions and perused record. issue arising in present appeal is in relation to claim of deduction under section 80-IB(10) of Act. assessee had undertaken project for construction of residential premises at Vadgaon Sheri, Pune Ahmednagar Road, Pune under name and style of Ujjwal Gardens. building plans for said project were first sanctioned by Pune Municipal Corporation in January, 2001 and subsequently in March, 2003 and July, 2004. assessee had claimed deduction under section 80-IB(10) of Act for first time for A.Y. 2004-05 and thereof 11 ITA Nos. 1912 & 1913/PN/2014, A.Ys. 2005-06 & 2007-08 A.Ys. 2005-06 and 2007-08. assessments relating to A.Ys. 2004-05 and 2005-06 were completed by passing order under section 143(3) of Act and claim of assessee was accepted. claim of assessee was accepted vis- -vis deduction claimed under section 80- IB(10) of Act. However, during assessment proceedings, taken up for year under appeal i.e. A.Y. 2006-07, Assessing Officer requisitioned assessee to furnish completion certificate from Pune Municipal Corporation. said completion certificate as per Assessing Officer should have been received by 31.03.208. contention of assessee in reply was that project had been completed and building had been occupied and was being used by occupies which established claim of assessee as to completion of project within stipulated period. Though completion certificate was not received from Pune Municipal Corporation. However, Architect s certificate along with ancillary certificates received from various Department to establish completion of project were filed before Assessing Officer and CIT(A). But Assessing Officer in absence of any certificate from Pune Municipal Corporation observed that assessee failed to complete project within stipulated time prescribed in section 80- IB(10) of Act i.e. before 31.03.2008 and deduction claimed u/s 80-IB(10) of Act at Rs.7,79,060/- was denied to assessee, which was upheld by CIT(A). 9. explanation of assessee in this regard was that project had been completed within time limit i.e. 31.03.2008 as was evident from fact that all ancillary certificates from various Departments had been received, copies of which are available at pages 20 to 24 of Paper Book. completion certificate was also received from Architect which is placed at page 19 of Paper Book. In addition, corporation tax notice had been issued to owners which are placed at pages 37 to 41 of Paper Book. All above said evidences established that construction of building is completed and is fully occupied. In respect of completion certificate to be issued by Pune Municipal Corporation, learned Authorized Representative by assessee admitted that no such certificate has been issued till date. It was explained by assessee in October, 2005, Additional Commissioner, Pune Municipal Corporation issued order asking not only assessee firm but also all its partners, sister concerns and others to stop work at all their sites falling within jurisdiction of Pune Municipal Corporation. said order was issued on basis of complaint filed by one Shri Vasant Mahadev Deshpande, who was 12 ITA Nos. 1912 & 1913/PN/2014, A.Ys. 2005-06 & 2007-08 land owner of another site. Against said, assessee filed Suit with Court of Civil Judge, Senior Division, Pune on 21.06.2006 against Pune Municipal Corporation and relief claimed in said Suit was that if work had to be stopped on complaint of Shri Vasant Mahadev Deshpande then it should be related to site of Shri Vasant Mahadev Deshpande only and work at all other sites should not be stopped. Civil Judge, Senior Division, Pune vide order dated 01.07.2006 lifted restrain order passed by Pune Municipal Corporation in respect of other properties, which did not relate to complainant, Shri Vasant Mahadev Deshpande. copy of Civil Suit filed by assessee is placed at pages 28 to 36 of Paper Book and hand-written order of Civil Judge is available at page 32 of Paper Book. plea of assessee is that consequent to said order of Civil Judge, Senior Division, Pune construction of all sites except site connected with Shri Vasant Mahadev Deshpande were started and was later completed. However, Pune Municipal Corporation did not issue completion certificate in respect of properties constructed by assessee. In above said circumstances, application for obtaining completion certificate prepared by assessee was not accepted by Pune Municipal Corporation and consequent thereto completion certificate has not been issued to assessee till date. 10. issue arising in present appeal is that where assessee had completed construction of building, which had been occupied by owners within stipulated time provided under section 80-IB(10) of Act, merely because assessee had not received completion certificate, said claim under section 80-IB(10) of Act can be denied to assessee. 11. Hon ble Delhi High Court in case of CIT vs. CHD Developers Ltd., (2014) 362 ITR 177 (Delhi) noted provisions of section 80-IB(10) of Act and pre-amended provisions which were amended by Finance Act, 2000 w.e.f. 01.04.2001 and also substitution by Finance (No.2) Act, 2004 w.e.f. 01.04.2005 and held that in pre-amended provisions when plan was sanctioned/approved, there was no condition of production of completion certificate. Hon ble High Court held that it was settled proposition of law that law existing at particular time would be applicable, unless and until it was specifically made retrospective by legislature. Hon ble High Court thus held that substitution so made, is therefore, applicable prospectively and not retrospectively . In 13 ITA Nos. 1912 & 1913/PN/2014, A.Ys. 2005-06 & 2007-08 facts of case before Hon ble High Court in case of CIT vs. CHD Developers Ltd. (supra), approval was granted to assessee on 16.03.2005 and assessee was expected to complete project on or before 31.03.2009. issue arising before Hon ble High Court was whether project was completed by assessee within time. High Court noted that assessee had vide letter dated 05.11.2008 informed authorities that construction have been completed and further request was made for grant of completion certificate. However, no completion certificate was issued to assessee and it was held by Hon ble High Court non-obtaining of completion certificate was not requirement to projects which were approved prior to 01.04.205 when amendment by Finance Act, 2004 was made effective. 12. In present case, project has been approved by local authority before 01.04.2005 within meaning of clause (a) of section 80-IB(10) of Act and therefore ratio of judgement of Hon ble High Court in case of CIT vs. CHD Developers Ltd. (supra) squarely applies. However, it would be required to establish by assessee that construction of project as sanctioned was completed before stipulated date. On this aspect, assessee has been consistently pointing out before Assessing Officer, CIT(A), as well as before Tribunal that construction was completed before stipulated date. flats have been sold and are occupied by respective customers. It has also been pointed out that in some of cases local authority has issued individual completion certificates to respective flat owners. Other document viz. property tax assessment of some individual flat owners, electricity bills showing occupation of flats, etc. have been referred to in course of hearing. We find that said material was placed before lower authorities and same has not been repudiated at all. denial of deduction has been solely on non-obtaining of completion certificate, which in present case is not requirement to be insisted upon in view of judgement of Hon ble Delhi High Court in case of CIT vs. CHD Developers Ltd. (supra). 13. In aforesaid, we hereby set-aside order of CIT(A) and direct Assessing Officer to allow claim of assessee under section 80-IB(10) of Act. Thus, grounds of appeal raised by assessee are allowed. 11. ld. DR has not been able to controvert findings of Co- ordinate Bench of Tribunal or show any distinction in facts in 14 ITA Nos. 1912 & 1913/PN/2014, A.Ys. 2005-06 & 2007-08 assessment years under appeal. Therefore, following order of Co-ordinate Bench, we accept appeals of assessee and allow claim of assessee in same terms. 12. In result, impugned orders are set aside and both appeals of assessee are allowed. Order pronounced on Friday, 23rd day of September, 2016. Sd/- Sd/- ( R.K. Panda) ( Vikas Awasthy) ACCOUNTANT MEMBER JUDICIAL MEMBER Pune; Dated : 23rd September, 2016 RK Copy of Order forwarded to : 1. Appellant. 2. Respondent. 3. CIT(A)-I, Pune 4. CIT-I, Pune 5. DR, ITAT, B Bench, Pune. 6. Guard File. // True Copy// BY ORDER, Private Secretary, ITAT, Pune M/s. Ujjwal Construction v. Income Tax Officer, Ward 1(3), Pune
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