PER B.C. MEENA, ACCOUNTANT MEMBER : The appeal filed by the revenue and cross objection filed by the assessee emanate from the order of the CIT (Appeals)-VII dated 28.02.2011 for the assessment year 2006-07. ITA No.1884/Del./2011 CO No.339/Del/2011

2. The assessee company filed the return of income on 13.11.2006 declaring income of Rs.15,38,38,582/-. The assessee is a listed company in which public substantially interested and engaged in the business of manufacturing and trading of photosensitized goods, chemicals and photographic equipments. The assessment was finalized u/s 143(3) of the Income-tax Act, 1961 on 22.12.2008 at an income of Rs.15,62,29,979/-. Thereafter, the assessment was reopened by issuing a notice u/s 48 on 18.01.2010. The assessment u/s 147/143(3) of the Act was completed on 02.12.2010. Against which, the assessee filed an appeal before the CIT (A) by taking the grounds on merits of additions as well as the ground against the validity of reopening u/s 147 of the Act. It is prayed that the reopening was beyond jurisdiction, bad in law and void ab initio as its was reopened simply on the basis of change of opinion, without any new information / details that any new material / information coming to the possession of the Assessing Officer. The CIT (A) dismissed the ground and upheld the reassessment proceedings valid. However, the CIT (A) granted the relief to the assessee by deciding the grounds on merits in favour of the assessee.

3. The revenue has filed the appeal on the issue of granting the relief on 18.04.2011. As per the Income-tax Act, 1961, the assessee could have filed valid cross objection within 30 days of the receipt of the notice that an appeal against the order of CIT (A) has been preferred by the revenue. Once it is ITA No.1884/Del./2011 CO No.339/Del/2011 filed within the permitted time limit then only all the rules so far as may be, shall apply to such appeal. The assessee has filed cross objection on 07.10.2011. There is a delay of approximately 140 days. The assessee has filed an application for condonation of delay in filing the cross objection in form no.36A. The assessee has prayed for condonation of delay. Before, hearing the appeal of the revenue on merits, we heard both the sides on the condonation of the delay in filing cross objection by assessee. The ld. AR submitted that the assessee is a public limited company engaged in manufacturing and trading of photosensitized goods, chemicals and photographic equipments. The original return of income was filed on 13.11.2006. The assessment was reopened and assessee filed the appeal before the CIT (A). The CIT (A) decided the appeal on 28.02.2011. The ld. AR submitted that CIT (A) granted relief on merits of addition but sustained the validity of reopening u/s 147 of the Act. Against the deletion of addition, the revenue filed the appeal before the ITAT. As per Rule, the assessee could have filed the cross objection in Form No.36A within 30 days. However, the cross objection was filed after a delay of 140 days. Ld. AR submitted that there is a delay in filing the cross objection. The assessee was not aware about the right available to file cross objection. It was also submitted that the appeal filed by the revenue was fixed for hearing first time on 15.06.2011 and on that day, the matter was adjourned sine die as the Bench was not ITA No.1884/Del./2011 CO No.339/Del/2011 functioning. The next date of hearing was fixed for 11.10.201 through a fresh notice, pursuant to which counsels were engaged to represent the matter. Pursuant to the appointment of counsels to handle the appeal filed by the revenue, the assessee was advised to file cross objection and accordingly, cross objection was filed after a delay of 140 days. Ld. AR also submitted that this delay was neither willful nor deliberate. It cannot be attributable to latches on part of the assessee. Ld. AR further submitted that the ground raised in the cross objection is purely a legal issue not requiring any fresh investigation into the facts. Facts are already on record. Ld. AR relied on the decision of Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. MST. Katiji & Ors. Reported in 167 ITR 471 and submitted that for advancing the substantial justice, the express sufficient cause should receive liberal construction. Ld. AR also submitted that the view taken by the Hon'ble Supreme Court in the case of Collector , Land Acquisition, cited supra, has been reiterated in the case of Vaijayanatabai Baburao Patil vs. Shantaram Baburao Patil & Other reported in 253 ITR 798 (SC). Ld. AR also relied on the decision of Delhi Bench, ITAT in the case of Royal Airways Ltd. vs. Addl. Director of Income-tax reported in 98 ITD 259. Ld. AR also submitted that in that case, delay of 9 11 years in filing appeal before the CIT (A) was condoned. Ld. AR also relied on the following decisions :- ITA No.1884/Del./2011 CO No.339/Del/2011

(i) Bombay Mercantile Co-op Bank Ltd.: WP No. 1544 OF 2010

(ii) Gujarat State Fertilizers and Chemicals Limited v CIT : 283 ITR

149 (Guj)

(iii) Bharat Auto Center v. CIT : 282 ITR 366 (All.)

(iv) Auto Centre v State of Uttar Pradesh :278 ITR 291 (All)

(v) Dinesh Nagindas Shah V. CIT : 273 ITR 229 (Guj.)

(vi) Autoser (P) Limited V. ACIT : 101 Taxman 70 (Coch.) (Mag.)

(vii) Ashwin S. Mehta (HUF) V. ACIT : 75 TTJ 960 (Mum.)

(viii) Sirius Shipping Co. Ltd V. ACIT : 257 ITR 38 (Chennai)(Trib.)

(ix) Ramlal Agrawal V. DCIT : 78 TTJ 123 (Nag.) In view of the above submissions, ld. AR prayed that the delay may be condoned.

4. On the other hand, the ld. DR submitted that the assessee is a company where the in-house legal and tax experts are available. These in-house personnel have duty to review the appellate orders decided in favour and against the assessee. The assessee has taken the ground of reopening before the CIT (A) which has been decided against it. Cross objection filed by the assessee has the delay of 140 days. The assessees claim that it was not aware of the right available to file cross objection against the appeal filed by the revenue is completely unjustified and untrue. Even after notice of appeal filed by revenue assessee remained silent for filing cross objection. The assessee has to explain every days delay. The assessees plea that it was not aware of the right to file the cross objection is completely unbelievable. Such pleadings are not based on any evidence. These are bald assertions. Liberal approach in the matter can be adopted only when the facts of the case allowed ITA No.1884/Del./2011 CO No.339/Del/2011 to adopt such approach. In assessees case, condoning the delay will not serve ends of justice, rather it will go against the substantial justice where an assessee has failed to file cross objection without any reasonable cause. It can certainly be attributable to latches on the part of the assessee. If delay is condoned then it will be a reward to the latches of the assessee. Liberal construction of the limitation provision can be made to advance substantial justice only when no negligence or inaction or want of bonafide cannot be imputed to assessee. Seekers of justice must come with clean hands. Here it is not a question of substantial justice and technical consideration against each other. There is no evidence on the record which could support the assessees bald claim that the assessee has engaged the counsel only after 11.10.2011. Why assessee could not use the in-house legal aid available to the assessee. The cause of delay in filing cross objection could have been avoided by due care and attention. In such a situation, it cannot be a sufficient cause for condoning the delay. The facts of the case relied upon by the assessee are completely at variance. In the case of Collector, Land Acquisition, cited supra by the ld. AR, the delay was only of 4 days. Here in assessees case, the delay was 140 days. Further in the case of Royal Airways Ltd., cited supra by ld. AR, the delay was related to the period when the assessees business operations came to grinding halt. There was cessation of business activities which was commercially worst calamity that could happen. Ld. DR ITA No.1884/Del./2011 CO No.339/Del/2011 submitted that the facts of assessees case are completely different. Ld. DR submitted that the doctrine of equality before law demands all litigants, including the state as a litigant, are accorded the same treatment and the law is administered in an even handed manner.

5. The CIT (A)-VII, New Delhi decided the appeal of the assessee vide its order dated 28.02.2011. Against which revenue came in appeal before the ITAT by filing appeal on 18.04.2011. As per Rule 47 of Income-tax Rules, the assessee was entitled to file memorandum of cross objections to Appellate Tribunal in form no.36A under sub-section (4) of section 253 within 30 days of the receipt of the notice. The assessee has filed the cross objection on 07.10.2011. Thus, there was a delay of 140 days. Prima facie, the cross objection filed by the assessee was time barred. The assessee submitted application for condonation of delay and the ground taken for delay is that the assessee was not aware of the right available to file cross objection. The other ground for delay is also taken that the appeal filed by the revenue was fixed for hearing for the first time on 15.06.2011 and on that date, the case was adjourned sine die. The next date of hearing was fixed for 11.10.2011 and on that date, the assessee engaged counsel to handle the appeal and then only the assessee was advised of the right available to file the cross objection. In such a situation, the assessee has tried to explain the delay stating that the delay ITA No.1884/Del./2011 CO No.339/Del/2011 was neither willful nor deliberate nor attributable latches on the part of the assessee.

6. We have heard both the sides. Assessee is a limited company. The turnover is more than Rs.400 crores for the year. From the related party disclosure in para 19 of Notes to Accounts, it is clear that assessee has many associate companies (13 companies). It is a part of Jindal Group. Assessee has also subsidiaries. No detail has been given how the order of the CIT (A) was received in the office of the assessee. Since assessee is a limited company of a big group where every such order which is decided in favour or against the assessee must have been reviewed by the legal / tax experts available in the office of the assessee. In this factual aspect, assessee has to explain every day of delay in filing cross objection. Assessee had not done so. Therefore, in our considered view, the assessee has failed to establish that there was sufficient cause beyond reasonable doubt for delay in filing the cross objection. It is a well settled principle of law that ignorance of law could not be a ground. Assessees plea that it was not aware of the right to file the cross objection has no meaning as every assessee is duty bound to know the provisions of law. Particularly in the case where company is a limited company and also belongs to a big industrial group, therefore, such pleadings do not inspire much of the confidence. In such cases, the ignorance of law could not be a ground for condoning the delay in filing the cross ITA No.1884/Del./2011 CO No.339/Del/2011 objection. Liberal approach in such cases rather goes against the basic spirit of the law. Considering these facts and in view of the legal position on the issue, we dismiss assessees cross objection as barred by limitation.

7. The revenue is in appeal before us by taking the following grounds of appeal :-

01. The order of the learned CIT (APPEALS) is erroneous & contrary to facts & law.

02. On the facts and in the circumstances of the case and in law, the Ld CIT (Appeals) has erred in deleting the addition of Rs.1,24,04,816/- on account of excess debt written off. 2.1 The Ld. CIT (A) has ignored the findings recorded by the AO and the fact that the assessee did not file required evidences to substantiate its claim.

03. On the facts and in the circumstances of the case and in law, the Ld CIT (Appeals) has erred in deleting the addition of Rs.9,15,25,575/- made on account of disallowance excessive expenditure. 3.1 The Ld. CIT (A) has ignored the findings recorded by the AO and the fact that the assessee did not file required evidences to substantiate its claim.

4. The appellant craves leave to add, to alter, or to amend any grounds of the appeal raised above at the time of the hearing.

8. Ground Nos.1 & 4 are general in nature and do not require any adjudication.

9. Ground No.2 and 2.1 are related to the deletion of addition of Rs.1,24,04,816/- on account of excess debt written off. The ld. DR relied on the order of Assessing Officer and also submitted that the order of CIT (A) may be set aside and the order of the Assessing Officer be restored. Ld. AR relied on the order of the CIT (A). ITA No.1884/Del./2011 CO No.339/Del/2011

10. We have heard both the sides on the issue. The CIT (A) has granted the relief to the assessee by holding as under :- 5.1 I have considered the written and oral submissions made on behalf of the appellant, the findings of the Assessing Officer and the facts on record. The perusal schedule "T" (relating to selling and distribution expenses) to the audited accounts for the relevant assessment year reveals that the entry corresponding to bad debts has been shown in the following manner:- Bad Debts written off Rs.3,75,38,619/- Less:- Provision for doubtful debts Rs.1,24,04,361/- in earlier years Rs.2,51,34,258/- This implies that the deduction claimed on account of bad debts written off through profit and loss account is to the extent of Rs.2,51,34,258/-. Apart from the above, the appellant has claimed deduction of Rs.1,24,04,361/- on account of provision for doubtful debts written back in the computation of income furnished with the return of income for the assessment year under consideration. The reason, as explained on behalf of the appellant for claiming the deduction of Rs.1,24,04,361/-, is that the said amount has already been added back or disallowed by the appellant itself on account of provision for doubtful debts written back in the earlier assessment years. On perusal of the copies of the computation of income for assessment years 2003- 04, 2004-05 & 2005-06, the explanation of the appellant is found to be correct as the same has been added back to the total income, the break-up of which is as under:- Assessment Year 2003-04 Rs. 13,62,267/- Assessment Year 2004-05 Rs. 90,06,195/- Assessment Year 2005-06 Rs. 20,35,539/- Rs.1,24,04,361/- Therefore, the total amount actually written off as bad debts is to the extent of Rs.3,75,38,619/- out of which the amount of (a) Rs.2,51,34,258/- has been claimed through the profit and loss account and (b) Rs.1,24,04,361/- has been claimed through computation of income furnished along with the return of ITA No.1884/Del./2011 CO No.339/Del/2011 income for the assessment year under consideration. In these circumstances, I am of the considered view that there was no excess claim of expenditure made by the appellant on account of bad debts written off. Hence, the addition of Rs.1,24,04,361/- on account of excess bad debts written off is directed to be deleted. As a result, Grounds of appeal No.2 to 2.2 are allowed. After considering the factual aspect of the case, we find that the assessee has written off bad debts of Rs.3,75,38,619/-, out of which the provision for doubtful debts was made in the earlier years of Rs.1,24,04,361/-. These provisions have been disallowed in the earlier years. The details of these provisions made in earlier years and which were added back in the income of the assessee are available at page 65 of the paper book. The assessee has debited Rs.2,51,34,258/- in the profit & loss account in the year under consideration. Thus, the assessee had actually written off the bad debits during the year to the extent of Rs.3,75,38,619/-. As per provisions of law, the assessee was entitled to claim such bad debts for the year under consideration. Keeping these facts in view, we find no fault in the order of the CIT (A) and dismiss this ground of revenues appeal.

11. Ground No.3 & 3.1 is related to deletion of addition of Rs.9,15,25,575/- on account of disallowances of excess expenditure. The CIT (A) has granted the relief in paras 6.1 & 6.2 which read as under :- 6.1 I have considered the written and oral submissions made on behalf of the appellant, the findings of the Assessing Officer and the facts on record. I have also perused the audited accounts of the appellant for the year under consideration. The perusal of ITA No.1884/Del./2011 CO No.339/Del/2011 schedule 'O' (relating to materials consumed, manufacturing and other operating expenses) to the audited accounts for the relevant assessment year reveals that the opening stock of raw- material consumed is shown to the extent of Rs.27,73,94,598/- instead of Rs.l8,58,65,023/- shown as closing stock for financial year 2004-05. The Assessing Officer was in principle correct to hold that there should not be any difference between the closing stock of Financial year 2004-05 and the opening stock of Financial year 2005-06 which is the year under consideration. As there was a difference of Rs.9,15,25,575/- between the two, the Assessing officer made the addition to that extent. However, the assessee had explained the reason for the above-mentioned accounting discrepancy. In this regard, the certificate dated 24.11.2010 issued by the auditors pointing out the mistake in accounting of Rs.9,15,25,575/- was furnished before the Assessing Officer as well as before the undersigned wherein it was clarified that "in the financial statements for the said year, opening stock of raw material in transit had been added twice and reduced from the current year purchases erroneously as a result of which opening stock of raw material had increased and purchases for the current year had been reduced by Rs.9,15,25,575/-. The error being compensatory in nature, does not effect the profitability of the company for that year. Accordingly the accounts of the company reflect the true and fair view as per our audit report dated 04.09.2006. 6.2 The perusal of Schedule 'F' (relating to Inventories) to the audited accounts for the relevant assessment year also reveals that an amount of Rs.9,15,25,575/- was shown as raw materials- in-transit as at 31-03-2005 which was also included in the closing stock ck of raw materials shown to the extent of Rs.18,58,65,023/- as at 31-03-2005. It has been explained by the appellant that the aforementioned amount of Rs.9,15,25,575/- was erroneously reduced from the total purchases of the relevant previous year by the accountant under the mistaken belief that the said amount was included in the purchases of the year under consideration instead of purchases of the preceding year. As a consequence, the accountant correspondingly increased the amount of opening stock by the amount of Rs.9,15,25,575/-. Accordingly, the amount of opening stock of raw materials as at 31-03-2006 after the aforesaid addition aggregated to Rs.27,73,94,598/- (Rs.18,58,65,023 + Rs.9,15,29,575). After ITA No.1884/Del./2011 CO No.339/Del/2011 having considered the totality of the facts and circumstances of the case, the explanation of the appellant is found to be correct. As the deduction on account of purchases for the relevant previous year was claimed short by an amount of Rs.9,15,25,575/-, the same was neutralized by a corresponding increase in the value of opening stock of raw materials. In these circumstances, it can be safely concluded that the revenue effect of the accounting treatment of the aforesaid amount of Rs.9,15,25,575/- was zero. In other words, if the value of opening stock is to be reduced, the amount of purchases is to be correspondingly increased, which would not result in addition to the net taxable income of the appellant company. Hence, I am of the considered view that no excess deduction has been claimed by the appellant resulting in any income escaping assessment. Hence, the addition of Rs.9,15,25,575/- on account of excess expenditure is directed to be deleted. As a result, Grounds of appeal No.3 to 3.3 are allowed.

12. We have considered the rival submissions made on behalf of both the sides. We have also perused the audited accounts. Schedule O of the assessees audited accounts reveals the opening stock of raw material consumed of Rs.27,73,94,598/- instead of Rs.18,58,65,023/- as shown in the closing stock of financial year 2004-05. Thus, there was a difference of Rs.9,15,25,575/-. However, this mistake has been clarified by stating that opening stock of raw material in transit had been added twice and reduced from the current year purchases erroneously as a result of which opening stock of raw material has increased and purchases for the current year has been reduced to the extent of Rs.9,15,25,575/-. We have also perused the ScheduleF of the audited accounts wherein the amount of Rs.9,15,25,575/- has been shown as raw material in transit as on 31.03.2005. This amount also ITA No.1884/Del./2011 CO No.339/Del/2011 included in the closing stock of the raw material to the extent of Rs.18,58,65,023/- as on 31.03.2005. Considering the totality of the facts and circumstances of the case, we find that the assessee has explained this mistake. The value of the opening stock is reduced and the amount of the purchases correspondingly increased. Thus, it would not result in any addition to the taxable income. In view of these facts, we agree with the finding of the CIT (A) that no excess deduction has been claimed by the assessee and no income has escaped assessment. In view of these facts, we sustain the order of the CIT (A).

13. In the result, the appeal of the revenue stands dismissed and the cross objection of the assessee is dismissed for treating the same as barred by limitation. Order pronounced in open court on this 31st day of October, 2012. Sd/- sd/- (U.B.S. BEDI) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated the 31st day of October, 2012 Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT(A)-VII, New Delhi. 5.CIT(ITAT), New Delhi. AR, ITAT NEW DELHI.