Assessee holding General Power of Attorney with respect of Land Sold Not Liable for Capital Gains

ITO Vs Sejal Gopalbhai Shah (ITAT Ahmedabad)

The issue under consideration is whether capital gain will be taxed in the hands of general power of attorney holder with respect to land sold?

ITAT states that, the assessee was just general Power of Attorney holder with respect to the lands in dispute. This fact has not been disputed by the authorities below. As such there was no documentary evidence available before the authorities below suggesting that the assessee has received consideration against the transfer of such lands. ITAT also find that the learned CIT (A) has given very clear finding that the impugned lands were not transferred. The learned DR has not brought anything on record contrary to the finding of the learned CIT (A). In such a situation we have no alternate except to confirm the finding of the learned CIT (A). Hence the ground of appeal raised by the Revenue is dismissed.

FULL TEXT OF THE ITAT JUDGEMENT

1. This appeal filed by the Revenue is directed against the order of the Ld. CIT(A)-3, Ahmedabad dated 09.01.2016 pertaining to A.Y. 2011-12.

2. The Revenue has raised the following grounds of appeal:

1. “that the Id. CIT(Appeal) has erred in law and on facts in deleting the addition amounting to Rs. 15,78,571/- made on account of Short term capital Gain on sale o f immovable property. “

2. “that the Id. CIT(Appeal) has erred in law and on facts in deleting the addition amounting to Rs.23,72,127/- made on account of Unexplained Cash Credit u/s. 68 of the Income tax Act, 1961. “

3. “that the Id. CIT(Appeal) has erred in law and on facts in deleting the addition amounting to Rs.15,64,00,000/- made on account of Unexplained Cash Credit u/s. 68 of the Income tax Act, 1961. “

4. “that the Id. CIT(Appeal) has erred in law and on facts in deleting the addition amounting to Rs.25,70,000/- made on account of treating the agriculture income as income from other sources. “

5. “that the Id. CIT(Appeal) has erred in law and on facts in admitting additional evidences produced by the assessee without waiting for the remand report of the A.O. “

3. The 1st issue raised by the revenue is that the learned CIT (A) erred in deleting the addition made by the AO for Rs.15,78,571/- on account of short-term capital gain on the sale of immovable property.

4. The facts in brief are that the assessee in the present case is an individual and earning income from salary, Business & profession, capital gain and other sources. The assessee was holding general power of attorney with respect to certain piece of land belonging to 8 persons. The assessee during the assessment proceedings claimed to have sold on behalf of such persons the lands belonging to them for Rs. 17 lakhs vide sale deed No. 4837 dated 8th November 2010 to the buyer namely Shri Shivbhai Popatbhai Gohil. As per the assessee the entire consideration was received by the landowners directly from the buyer of such lands.

5. However, the AO during the assessment proceedings to verify the genuineness of the impugned transaction for the sale of the lands issued notices to the landowners and the buyers of such land. But none of them replied. Further, the AO also requested the assessee to produce them (the owners of land) to prove that the transaction of sale of such land not belong/pertain to him (the assessee). However, the assessee failed to produce them.

6. The AO further found that the stamp value of such lands was determined at Rs. 24,78,571/- whereas the assessee is claiming to have sold such land at Rs. 17 Lakhs only. Accordingly the AO invoked the provisions of section 50C of the Act to this transaction. Accordingly the AO determined the value taken for the purpose of the stamp duty as the sale consideration.

7. Furthermore, the assessee has not furnished the purchase value of such lands, the AO has treated the cost of such land at Rs. 8,50,000/- being 50% of the documentedsale price of such lands. But the AO has taken the sale consideration as per the provisions of section 50C of the Act for working out the capital gain of Rs. 15,78,571/- and added to the total income of the assessee.

8. Aggrieved assessee preferred an appeal to the learned CIT (A).

9. The assessee before the learned CIT (A) submitted that the sale deed was executed on 8 November 2010 which was cancelled and filed the extract of 7/12 along with form No. 6 in support of her contention.

10. The land in dispute is the agricultural land within the meaning of section 2(14)(iii) of the Act. Accordingly, the question of charging the capital gain on the sale of such lands does not arise.

11. The AO has not collected necessary details from the landowners about the actual cost of acquisition of such lands. Accordingly the purchase consideration was assumed by the AO for Rs. 8,50,000/-which is not based on any cogent material.

12. The AO should have referred the matter to the DVO to determine the market value as he found difference in the sale price viz a viz the value determined for the purpose of Stamp duty.

13. The learned CIT (A) after considering the submission of the assessee deleted the addition made by the AO by observing as under:

It is understood that the appellant raised objections to the proposal of applying Stamp Duty Valuation as much as the disputes in property were highlighted and the AO failed to send the matter for valuation to DVO as per provisions of section 50C(2). in fact, the land in question remained in the name of original owners as the impugned registration deed was cancelled and the appellant was mere POA holder for execution of that deed. To my mind the AO overburdened herself with avoidable responsibility by not sending the issue for expert opinion to the DVO as per specific provisions of sub section 2 of section 50C o f IT Act, 1961. AO’s attempt is to make addition on estimation basis without having credible evidence on record as per provisions of the Act. In view of above facts and the ratio laid down by various High Courts and ITATs, the addition of Rs.7,28,571/- made U/S.50C of IT Act, 1961 is hereby deleted.

The appellant was Power of Attorney holder on behalf of certain persons who could not be produced before the AO inspite of many opportunities provided. Consequently, the whereabouts of the purported sellers of the land were not available before AO. However, the AO estimated the purchase price at 50% with the comment that Sanand was not a booming reality market in 2008. No comparable cases quoted by the AO for that decision. The appellant continue to say that she has nothing to do with the transaction. Also the impugned sale deed was cancelled and land was never transferred. There is no finding of any cash transfer in relation to cancelled sale deed from or to any party. The addition made by the AO of Rs.8,50,000/- is without any basis and not supported by any credible evidences, the same is hereby deleted. The ground No.2 is allowed.

14. Being aggrieved by the order of the learned CIT (A), the Revenue is in appeal before us.

15. The learned DR and the AR before us relied on the stand of the authorities below by reiterating the findings contained in the respective orders as favorable to them.

16. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion we find that the assessee was just general Power of Attorney holder with respect to the lands in dispute. This fact has not been disputed by the authorities below. As such there was no documentary evidence available before the authorities below suggesting that the assessee has received consideration against the transfer of such lands.

17. We also find that the learned CIT (A) has given very clear finding that the impugned lands were not transferred. The learned DR has not brought anything on record contrary to the finding of the learned CIT (A). In such a situation we have no alternate except to confirm the finding of the learned CIT (A). Hence the ground of appeal raised by the Revenue is dismissed.

18. The 2nd issue raised by the revenue is that the learned CIT (A) erred in deleting the addition made by the AO for Rs. 23,72,127/- on account of unexplained cash credit under section 68 of the Act.

19. The assessee in the year under consideration claimed to have received a loan of Rs. 23,72,127/- from Shri Gautam H. Sheth and Usha H. Sheth but failed to furnish the details such as name , complete address , PAN and the creditworthiness of these parties. Accordingly, the AO treated the same as unexplained cash credit under section 68 of the Act and added to the total income of the assessee.

20. Aggrieved assessee preferred an appeal to the learned CIT (A).

21. The assessee before the learned CIT (A) submitted that the amount received from the parties as discussed above for Rs. 23,72,127/- represents the sale consideration for the shares sold to them. The assessee in support of her contention filed the supporting documents such as agreement for transfer of shares.

22. The assessee also furnished the details of the PAN, bank statement and income tax return showing the income of Rs. 2,15,28,889/- for the assessment year 2010-11 of the party in support of her contention.

23. The learned CIT (A) after considering the submission of the assessee deleted the addition made by the AO by observing as under:

7.1 Decision: I have seen the facts in assessment order/ remand proceedings and submission of the appellant. The requisite detail including bank statement/ITR/PAN o f Gautam H. Sheth and Usha H. Sheth as mentioned in ground Mo.2A have been filed. A copy of the explanation dated 23.03.2015 filed before AO on 24.03.20-15 alongwith enclosures such as confirmation/address/PAN has been placed on record. It is observed that there was mistake in passing the journal entry in the books of accounts though the sale and purchase of impugned shares (Dumas Beach Enc Ltd.) have resulted in no taxable gains. The share transfer agreement duly notarized in nine pages is placed on record. Nevertheless, it is not a fit case for addition u/s.68 as full particulars of creditors are before AO

24. Being aggrieved by the order of the learned CIT (A), the Revenue is in appeal before us.

25. The learned DR and the AR before us relied on the stand of the authorities below by reiterating the findings contained in their respective orders as favorable to them.

26. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion we find that the amount received by the assessee as discussed above represents the sale consideration of the shares transferred by her to the parties aforesaid. The learned AR in support of his contention has filed the confirmation, shares transfer certificates and share purchase agreement along with the ledgers which are placed on pages 151 to 163 of the paper book.

27. The learned DR has not brought anything on record contrary to the finding of the learned CIT (A). In such a situation we have no alternate except to confirm the finding of the learned CIT (A). Hence the ground of appeal raised by the Revenue is dismissed.

28. The next issue raised by the Revenue in ground No. 3 is that the learned CIT (A) erred in deleting the addition made by the AO for Rs. 15,64,00,000/- on account of unexplained cash credit under section 68 of the Act.

29. The assessee in the year under consideration has made the investment in a company namely Yuva Sports Academy amounting to Rs. 15,64,00,000/- The assessee on question by the AO about the source of investment in such Academy submitted that she has received the money from various companies in which she is interested. The assessee in support of her contention filed the confirmation from the companies along with their PAN and addresses, copies of the income tax return and the bank statement.

30. However, the AO found that the companies which have made advance to the assessee did not carry out any business activity. Accordingly the AO held that the source of fund have not been explained by the assessee. Accordingly the AO treated the same as unexplained cash credit and added to the total income of the assessee.

31. Aggrieved assessee preferred an appeal to the learned CIT (A).

32. The assessee before the learned CIT (A) submitted that she has already justified the source of money in the hands of the companies. The necessary details about the source of money in the hands of the parties who provided the loan to her are available on pages 24 to 28 of the learned CIT (A) order.

33. The assessee also furnished the details of the PAN, bank statement and income tax return in support of her contention to justify the source of money invested in YuvaSports Academy private Ltd.

34. The learned CIT (A) after considering the submission of the assessee deleted the addition made by the AO by observing as under:

I have perused the ratio of the above case laws vis-a-vis facts of the case. In my opinion, onus has been discharged by the appellant as held by Hon’ble Gujarat High Court in the case of CIT vs. Ranchhod Jivabhai Nakhava 208 Taxmann 35 (Gujarat). The confirmations have been filed giving PAN No. of the creditors. The creditworthiness o f the creditor(s) cannot be decided by the AO of the appellant. In fact, the AO of appellant can get the matter investigated through the AO of the creditors. The AO of appellant cannot become AO of the creditors. Explanation about ‘source of source1 or ‘origins o f origin’ cannot be asked from the appellant while making inquiry under section 68. It/is not the case of AO that the impugned amount is appellant’s own money generated out o f books of account and the same is introduced in its books of accounts through bogus creditors. If that is so, what evidences AO has collected to place it on record. Once confirmations have been filed, further action, if any, is required to be taken in case o f creditor and not in case of appellant. Reliance is placed on the ratio laid down in the case of DCIT v. Rohini Builders (2002) 256 ITR 360 (Guj):

“Mere identification of the source of the creditors even without evidence as to the nature of the income could justify acceptance, where the assesseee has given the GIR number / PAN of the creditor and also shows that the amounts were received by account payee cheques. It was further held that it is not necessary, that there should .be an explanation as to the source of the money on the part of the creditors in every case. “

Reliance is also placed on another case i.e. CIT vs. Dharamdev Finance Pvt. Ltd. 43 Taxmann 395 (Guj.) wherein it is held,

“No addition on account of cash credits could be made, where assesses had given PAN of creditors, their confirmations and their bank statements which established their creditability”.

There are other case laws supporting the case of the appellant as under:

i) Murlidhar Lahorimal Vs. CIT 280 ITR 512 (Guj.)

ii) CIT Vs. Pragati Co-op. Bank Ltd. 278 ITR 170 (Guj.)

iii) CIT Vs. Orissa Corporation Pvt. Ltd. 159 ITR 78 (SC)

iv) CIT vs. Sanjay K. Thakkar Tax Appeal Nos.524 of 2004, 525 and 526 o f 2004 and 579 to!

583 of 2003 dated 12-9-2005 (Guj. HC) I

v) ITO Vs’Kailpar Credit & Mercantile Pvt. Ltd. in ITA No.421/Ahd/2008 (ITAT, And.)

There are other case laws supporting the case of the appellant as under:

i) Murlidhar Lahorimal Vs. CIT 280 ITR 512 (Guj.)

ii) CIT Vs. Pragati Co-op. Bank Ltd. 278 ITR 170 (Guj.)

iii) CIT Vs. Orissa Corporation Pvt. Ltd. 159 ITR 78 (SC)

iv) CIT vs. Sanjay K. Thakkar Tax Appeal Nos.524 of 2004, 525 and 526 o f 2004 and 579 to!

583 of 2003 dated 12-9-2005 (Guj. HC) I

v) ITO Vs Kailpar Credit & Mercantile Pvt. Ltd. in ITA No.421/Ahd/2008 (ITAT, And.)

I am not inclined to accept the findings of the A.O. that the creditors have not returned adequate income in their returns of income. The plethora of other evidences on record cannot be ignored. There is no finding on record to prove that I appellant’s own undisclosed money has been brought in books of account by depositing cash etc. The creditors are standing for the impugned money, therefore, it cannot be ascribed as ghost money. In fact, the AR was repeatedly explaining the provision u/s.68 and discussed and submitted number of case laws on the issue. In the circumstances, the conditions to invoke the provisions of section 68 are non-existent in this case.

35. Being aggrieved by the order of the learned CIT (A), the Revenue is in appeal before us.

36. The learned DR and the AR before us relied on the stand of the authorities below by reiterating the findings contained in their respective orders as favorable to them.

37. We have heard the rival contentions of both the parties and perused the materials available on record. The dispute in the instant case relates to the loans and advances received by the assessee in the year under consideration from certain parties as mentioned in the order of the authorities below. But the same was treatedas unexplained cash credit under section 68 of the Act. However, the learned CIT (A) was pleased to delete the addition made by the AO by observing that the assessee has discharged his onus by furnishing the necessary details as specified under section 68 of the Act.

38. The provision of section 68 of the Act, fastens the liability on the assessee to provide the identity of the lenders, establish the genuineness of the transactions and creditworthiness of the parties. These liabilities on the assessee were imposed to justify the cash credit entries under section 68 of the Act, by the Hon’ble Calcutta High Court in the case of CIT Vs. Precision finance (p) Ltd reported in 208 ITR 465 wherein it was held as under:

“It was for the assessee to prove the identity of the creditors, their creditworthiness and the genuineness of the transactions. On the facts of this case, the Tribunal did not take into account all these ingredients which had to be satisfied by the assessee. Mere furnishing of the particulars was not enough. The enquiry of the ITO revealed that either the assessee was not traceable or there was no such file and, accordingly, the first ingredient as to the identity of the creditors had not been established. If the identity o f the creditors had not been established, consequently, the question of establishment o f the genuineness of the transactions or the creditworthiness of the creditors did not and could not arise. The Tribunal did not apply its mind to the facts of this particular case and proceeded on the footing that since the transactions were through the bank account, it was to be presumed that the transactions were genuine. It was not for the ITO to find out by making investigation from the bank accounts unless the assessee proved the identity of the creditors and their creditworthiness. Mere payment by account payee cheque was not sacrosanct nor could it make a non-genuine transaction genuine. ”

39. Admittedly the assessee has discharged its onus by furnishing the necessary details such as a copy of PAN, passport, bank details, etc. in support of identity of the parties. There is also no dispute that all the transactions were carried out through the banking channel. Therefore, we are conscious of the fact that the assessee has discharged onus regarding the genuineness of the transactions. In this regard, we find support and guidance from the judgment of Hon’ble High court of Bombay in the case of CIT Vs. Green Infra Ltd reported in 78 com 340 wherein it was held as under:

‘So far as the genuineness of the transaction of share subscriber is concerned, it concludes as the entire transaction is recorded in the books of account and reflected in the financial statements of the assessee since the subscription was done through the banking channels as evidenced by bank statements which were examined by the Tribunal. With regard to the capacity of the subscribers the impugned order records a finding that 98 per cent of the shares is held by IDFC Private Equity Fund-II which is a Fund Manager of IDFC Ltd. Moreover, the contributions in IDFC Private Equity Fund-II are all by public sector undertakings.

The Tribunal has examined the case of the revenue on the parameters of section 68 and found on facts that it is not so hit. Therefore, section 68 cannot be invoked. The revenue has not been able to show in any manner the factual finding recorded by Tribunal is perverse in any manner.

40. Now coming to the 3rd condition, i.e. creditworthiness of the parties, regarding this we note that the assessee claimed to have refunded part of the amount through banking channel to the aforesaid parties as discussed above. The repayment of the loan amount by the assessee was duly accepted by the Revenue. Thereore,there remains no doubt that the transactions of the advance received by the assessee from the parties were genuine. In this regard, we find support and guidance from the judgment of Hon’ble Gujarat High Court in the case of the CIT Vs. Rohini builders reported in 256 ITR 360 wherein it was held as under:

“The genuineness of the transaction is proved by the fact that the payment to the assessee as well as repayment of the loan by the assessee to the depositors is made by account payee cheques and the interest is also paid by the assessee to the creditors by account payee cheques. ”

41. We also note that the assessee has furnished the source of the money received from the parties which was used for the purpose of investment in Yuva Sports Academy Pvt. Ltd.

42. In our considered view, once the assessee is able to prove that the money received by it was returned in the subsequent assessment year in the account of the party, then there remains no doubt that the loan and advances received by the assessee werenot unexplained cash credit.

43. Similarly, we also note that the assessee in respect of all the parties as discussed above has furnished the sufficient documentary pieces of evidence including the details of the income of the parties which has been elaborated in the preceding paragraph. Therefore in our considered view, the assessee has discharged its onus imposed under section 68 of the Act.

44. The assessee in the present case has duly explained the source of money received in her hands. The assessee is not answerable to justify the source of the source of the money received by it. In this connection, we place our reliance on the judgment of Hon’ble Gujarat High Court in the case of DCIT Vs. Rohini builders reported in 256 ITR 360 wherein it was held as under:

“It has also proved the capacity of the creditors by showing that the amounts were received by the assessee by account payee cheques drawn from bank accounts of the creditors and the assessee is not expected to prove the genuineness of the cash deposited in the bank accounts of those creditors because under law the assessee can be asked to prove the source of the credits in its books of account but not the source of the source as held by the Bombay High Court in the case of Orient Trading Co. Ltd. v. CIT [1963] 49 ITR 723. The genuineness of the transaction is proved by the fact that the payment to the assessee as well as repayment of the loan by the assessee to the depositors is made by account payee cheques and the interest is also paid by the assessee to the creditors by account payee cheques. ”

45. We also note that the learned DR has not brought anything on record contrary to the finding of the learned CIT (A). In such a situation we have no alternate except to confirm the finding of the learned CIT (A). Hence the ground of appeal raised by the Revenue is dismissed.

46. The next issue raised by the Revenue is that the learned CIT (A) erred in deleting the addition made by the AO by treating the agriculture income of Rs. 25,70,000/- as income from other sources.

47. The assessee in the year under consideration has declared agriculture income of Rs. 25,70,000/- and filed the extract of 7/12 to justify the agriculture lands owned by her. However the assessee has not furnished the details of the sales bills of the agricultural produce and other necessary details to justify that she has carried on any agriculture operations either directly or through a partner. In the absence of the documentary evidence, the AO treated the impugned agriculture income of Rs. 25,70,000/- as income from other sources and added to the total income of the assessee.

48. Aggrieved assessee preferred an appeal to the learned CIT (A) who deleted the addition made by the AO by observing the order of his predecessor for the assessment year 2013-14.

49. Being aggrieved by the order of the learned CIT (A), the Revenue is in appeal before us.

50. The learned DR and the AR before us relied on the stand of the authorities below by reiterating the findings contained in the respective orders as favorable to them.

51. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset we note that the assessee has shown such agriculture income in the earlier years which was accepted by the revenue. The relevant details of the agriculture income offered to tax in the earlier years stand as under:

52. We also find that the assessee has furnished the affidavit of Shri Vinod Rambhau Patil which is placed on pages 110 to 112 of the paper book wherein it was admitted that he was carrying out the agricultural activity on the lands belonging to the assessee. However, the AO has not verified the same during the assessment proceedings.

53. We are also conscious to the fact that the onus lies on the assessee to furnish the documentary evidence such as sales bills of the agriculture produce but he failed to do so. However in the present facts of the case we note that the assessee has been showing the agriculture income consistently which have been accepted by the revenue. Even the contention of the assessee that the inspector of Income Tax Department has also confirmed the fact of existence of the mango trees since 2007 which has not been doubted by the AO. Thus after considering the facts in totality and there being no adverse record brought by the learned DR contrary to the finding of the learned CIT (A), we do not find any reason to interfere in the order. Hence the ground of appeal of the Revenue is dismissed.

54. The last issue raised by the Revenue is that the learned CIT (A) has admitted the additional evidences without waiting for the remand report from the AO.

55. In this regard we note that the learned CIT (A) have referred the additional evidences filed by the assessee vide letter dated 24th of May 2016 and there was also the remand report furnished by the AO vide letter dated 30 January 2017 as evident from the order of the learned CIT (A). The learned DR at the time of hearing has not brought anything on record contrary to the fact that the learned CIT (A) has passed the order without considering the remand report from the AO. Accordingly we do not find any merit in the ground of appeal raised by the revenue. Hence the ground of appeal of the revenue is dismissed.

56. Before we part with the issue/appeal as discussed above, it is pertinent to note that the clause (c) of rule 34 of the Appellate Tribunal Rules 1963 requires the bench to make endeavour to pronounce the order within 60 days from the conclusion of the hearing. However the period of 60 days can be extended under exceptional circumstances but the same should not ordinarily be further extended beyond another 30 days. In simple words the total time available to the Bench is of 90 days upon the conclusion of the hearing.

However, during the prevailing circumstances where the entire world is facing the unprecedented challenge of Covid 2019 outbreak, resulting the lockdown in the country, the orders though substantially prepared but could not be pronounced for the unavoidable reasons within the maximum period of 90 days. In such circumstances we find that the Hon’ble Mumbai Tribunal in the case of JSW Limited Vs Deputy Commissioner of Income Tax in ITA No. 6103/MUM/2018 vide order dated 14-5-2020 extended the time for pronouncing the order within 90 days of time by observing as under:

9. Let us in this light revert to the prevailing situation in the country. On 24th March, 2020, Hon’ble Prime Minister of India took the bold step of imposing a nationwide lockdown, for 21 days, to prevent the spread of Covid 19 epidemic, and this lockdown was extended from time to time. As a matter of fact, even before this formal nationwide lockdown, the functioning of the Income Tax Appellate Tribunal at Mumbai was severely restricted on account of lockdown by the Maharashtra Government, and on account o f strict enforcement of health advisories with a view of checking spread of Covid 19. The epidemic situation in Mumbai being grave, there was not much of a relaxation in subsequent lockdowns also. In any case, there was unprecedented disruption of judicial wok all over the country. As a matter of fact, it has been such an unprecedented situation, causing disruption in the functioning of judicial machinery, that Hon’ble Supreme Court of India, in an unprecedented order in the history of India and vide order dated 6.5.2020 read with order dated 23.3.2020, extended the limitation to exclude not only this lockdown period but also a few more days prior to, and after, the lockdown by observing that “In case the limitation has expired after 15.03.2020 then the period from 15.03.2020 till the date on which the lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of action arises shall be extended for a period of 15 days after the lifting of lockdown”. Hon’ble Bombay High Court, in an order dated 15th April 2020, has, besides extending the validity of all interim orders, has also observed that, “It is also clarified that while calculating time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly”, and also observed that “arrangement continued by an order dated 26th March 2020 till 30th April 2020 shall continue further till 15th June 2020”. It has been an unprecedented situation not only in India but all over the world. Government of India has, vide notification dated 19th February 2020, taken the stand that, the coronavirus “should be considered a case of natural calamity and FMC (i.e. force majeure clause) maybe invoked, wherever considered appropriate, following the due procedure…”. The term ‘force majeure’ has been defined in Black’s Law Dictionary, as ‘an event or effect that can be neither anticipated nor controlled’ When such is the position, and it is officially so notified by the Government of India and the Covid-19 epidemic has been notified as a disaster under the National Disaster Management Act, 2005, and also in the light of the discussions above, the period during which lockdown was in force can be anything but an “ordinary” period.

10. In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit o f rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning o f our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon’ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon’ble Bombay High Court itself has, vide judgment dated 15th April 2020, held that directed “while calculating the time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly”. The extraordinary steps taken suo motu by Hontble jurisdictional High Court and Hontble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words “ordinarily”, in the light of the above analysis o f the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90-day time-limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the pronouncement of orders within ninety days, clearly comes into play in the present case. Of course, there is no, and there cannot be any, bar on the discretion of the benches to refix the matters for clarifications because of considerable time lag between the point of time when the hearing is concluded and the point of time when the order thereon is being finalized, but then, in our considered view, no such exercise was required to be carried out on the facts of this case.

11. To sum up, the appeal of the assessee is allowed, and appeal of the Assessing Officer is dismissed. Order pronounced under rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1962, by placing the details on the notice board.

Considering the above, we express to pronounce the order beyond the period of 90 days. Accordingly, we proceed to pronounce the order as on date.

57. In the result the appeal filed by the revenue is dismissed.

Order pronounced in Open Court on 01 – 06 – 2020