Court allows appeal delay, finds Tribunal's actions arbitrary. Revenue favored, matter remitted for proper determination.

The court allowed applications to condone a delay in filing appeals due to no objection from the respondent's counsel. Regarding the reduction of disallowance amounts without proper satisfaction, the court found the Tribunal's actions arbitrary despite correctly holding Rule 8D as prospective. The appeal was allowed in favor of the revenue, remitting the matter to the Assessing Officer for a proper determination after granting the assessee an opportunity to present their case. Parties were directed to appear before the Assessing Officer for further proceedings.

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Issues involved:
1. Delay in filing appeals
2. Reduction of quantum of disallowance without recording satisfaction

Analysis:

Issue 1: Delay in filing appeals
The applications sought to condone a delay of 07 days in filing the appeals. The counsel for the respondent had no objection to the applications being allowed. Considering the averments in the applications and the statement made by the counsel for the respondent, the court allowed the applications and condoned the delay in filing the appeals.

Issue 2: Reduction of quantum of disallowance without recording satisfaction
The case involved Income Tax Appeal Nos.199 and 245 of 2014, raising similar substantial questions of law for the same assessee. The revenue challenged the order passed by the Income Tax Appellate Tribunal, arguing that the Tribunal had no jurisdiction to reduce the disallowance amounts without proper satisfaction or reference to relevant facts. The counsel for the assessee contended that once it was established that Rule 8D operates prospectively, the Tribunal was justified in determining the disallowance quantum, even if detailed reasons were not provided.
The court observed that the Tribunal correctly held Rule 8D to be prospective, based on the judgment in Godrej & Boyce Manufacturing v. DCIT. However, the Tribunal's reduction of the disallowance amounts without recording satisfaction or citing relevant facts was deemed arbitrary. The power to determine the disallowance quantum required satisfaction based on relevant factors. The court concluded in favor of the revenue, allowing the appeal to the extent of the error in determining the disallowance quantum. The matter was remitted to the Assessing Officer for a proper determination after granting the assessee an opportunity to present their case.

The judgment directed the parties to appear before the Assessing Officer on a specified date for further proceedings.

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