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Income Tax Appellate Tribunal, DELHI BENCH “B”: NEW DELHI
Before: SHRI SHAMIM YAHYA & MS. ASTHA CHANDRA
O R D E R PER ASTHA CHANDRA, JM The appeal filed by the assessee is directed against the order of Ld. Commissioner of Income Tax (Appeals)–35, New Delhi (“CIT(A)”) dated 13.02.2017 relating to the Assessment Year (“AY”) 2012-13.
The assessee has raised the following ground of appeal:-
“1. That the Ld. CIT(A) has grossly erred in law and on facts of the case while sustaining additions made by Ld. AO.
2. That the Ld. CIT(A) grossly erred in law and on facts of the case
while sustaining rejection of books of accounts by invoking the provision of section 145 of the Income Tax Act.
3. That the Ld. CIT(A) grossly erred in law and on facts of the case while sustaining additions of Rs. 2,57,66,755/- on account of disallowance of losses.
That the Ld. CIT(A) grossly erred in law and on facts of the case while sustaining additions of Rs. 32,43,285/- which was arrived at by applying notional profit rate of 5% on Gross Turnover.”
The assessee company is engaged in the business of import and trading of mobile phones and accessories. It filed its return for AY 2012-13 on 30.09.2012 declaring loss of Rs. 2,57,66,755/-. The case was selected for scrutiny under CASS. During the assessment proceedings, the Ld. Assessing Officer (“AO”) found that the assessee has shown profit of Rs. 10,79,316/- on turnover of Rs. 6,48,65,701/- and that the P&L account is debited by the expenses being cost of materials consumed (Rs. 6,37,86,386/-); employee benefits (Rs. 58,97,807/-); finance cost (Rs. 3,99,067/-); depreciation and amortisation expense (Rs. 55,184/-) and other expenses (Rs. 1,73,70,032/-). The Ld. AO also noticed that the assessee has shown huge creditors of Rs. 3,39,34,590/- out of total purchases of Rs. 9,43,64,639/-. The Ld. AO required the assessee to explain the reasons of drastic loss in net profit though the assessee has booked gross profit. The explanation offered by the assessee was not acceptable to the Ld. AO who observed, inter alia that only ledger copies of few expenses without any supporting documents, viz. bills/vouchers were filed before him and therefore genuineness of expenses claimed could not be established. He applied section 145(3) of the Income Tax Act, 1961 (the “Act”) and rejected the book results. By applying net profit rate of 5% on declared turnover of Rs. 6,48,65,701/-, the Ld. AO determined the profit of Rs. 32,43,285/-. Accordingly, he completed the assessment under section 143(3) of the Act on 08.03.2015 on total income of Rs. 32,43,285/-.
4. Aggrieved, the assessee carried the matter before the Ld. CIT(A) who dismissed all the grounds including rejection of books under section 145(3) of the Act, disallowance of losses claimed and addition of Rs. 32,43,285/- by applying net profit rate of 5% to declared turnover taken before him and directed the Ld. AO to give credit for TDS after due verification and in accordance with law.
Dissatisfied, the assessee came in appeal before the Tribunal challenging the finding of the Ld. CIT(A) on the issue(s) of sustaining rejection of books of account under section 145(3) of the Act; sustaining disallowance of losses claimed as also addition of Rs. 32,43,285/- to the income of the assessee and all the grounds of appeal relate thereto.
6. The Registry noticed that the appeal filed by the assessee is late by 121 days. The assessee filed an application dated 14.03.2018 for condonation of the said delay in filing appeal. It is stated therein that the assessee was unaware that appeal has not been filed before the Tribunal and came to know about it after notice under section 271(1)(c) was issued by the Ld. AO on 12.03.2018. It is also stated that the assessee has provided CIT(A) order to its Chartered Accountant and was under the impression that appeal has already been filed. However, as the partner incharge of the case (namely CA Shashi Shekhar Rai) resigned from the firm on 08.11.2018, the appeal was not filed in time. Immediately after the receipt of notice of penalty, the appeal was filed. The assessee cited the decision of Hon’ble Supreme Court in Concord India Insurance Co. Ltd. vs. Nirmala Devi 118 ITR 507 (SC); Ramnath Sao vs. Gobardhan Sao and ors. (2002) AIR 1201; Collector Land Acquisition vs. MST. Katiji and ors. 167 ITR 471 (SC). It also prayed that the assessee be provided fair, meaningful and proper opportunity to establish that the order passed by the CIT(A) and the AO are without jurisdiction and lack merits.
Records shows that before the Tribunal there is only one appearance for the assessee on 05.09.2018. On that date hearing was adjourned at the written request of the assessee. Thereafter the hearing was fixed on 06.12.2018, 13.01.2021, 18.03.2021, 04.08.2021, 13.10.2021, 20.12.2021, 03.03.2022, 31.05.2022, 01.06.2022, 30.08.2022, 13.12.2022 and lastly on 15.03.2023. None attended for and / or on behalf of the assessee whereas the Ld. DR was present on all the above dates of hearing. We, therefore, proceed to decide the appeal ex-parte after hearing the Ld. DR. It is submitted by the Ld. DR that it is not a fit case for condoning the impugned delay in filing the appeal.
We have considered the submissions of the Ld. DR and perused the application for condonation of delay available in the records. It is observed that the assessee company has alleged that inordinate delay in filing the appeal is attributable to its Chartered Accountant (CA). However, no evidence has been brought on record which confirms that the CA has admitted his fault. As stated in the application, the concerned CA Shashi Shekhar Rai resigned from his firm on 08.11.2018 i.e. long after appeal was filed, then why did he not sworn an affidavit admitting his fault by assigning reasons therefor. It is stated in the application that order of CIT(A) was received on 21.09.2017 and was handed over to the CA but no specific date of handing it over to the CA has been mentioned. It is therefore not convincing that delay was caused due to the reasons beyond the control of the assessee company as stated in the application. The facts on record clearly indicate that delay was due to negligence, lethargy or inaction on the part of the assessee company and therefore not worthy of condonation.
In Sitaram Ramcharan vs. Nagarshana (1960) 1 SCR 875 the Hon’ble Supreme Court observed at page 889 of the Report that it cannot be disputed that in dealing with the question of condoning delay under section 5 of the Limitation Act, the party has to satisfy the court that he had sufficient cause for not preferring the appeal within the prescribed time and this has always been understood to mean that the explanation has to cover the whole of the period of delay.
The Hon’ble Supreme Court in Veda Bai alias Vaijayanta Bai Baburao Patil vs. Shantaram Baburao and ors. 253 ITR 798 (SC) held that in exercising the discretion under section 5 of the Limitation Act the Court should adopt a pragmatic approach. A distinction must be made between a case where the delay is inordinate and a case where the delay is of a few days. Whereas in the former case the consideration of prejudice to the other side will be a relevant factor so the case calls for a more cautious approach and in the latter case no such consideration may arise and such a case deserves a liberal approach. No hard and fast rule can be laid down in this regard. The court has to exercise its discretion on facts of each case keeping in mind that in construing the expression “sufficient cause” the principle of advancing substantial justice is of prime importance.
In CIT vs. Shankarlal Ved Prakash (HUF) 271 ITR 171 (Del) the Hon’ble Delhi High Court observed that in a case of apparent lethargy, the observation of Hon’ble Supreme Court in State of Haryana vs. Chandramani AIR 1996-SC-1623 that the expression “sufficient cause” should be considered with pragmatism could not be permitted to be used as a shield for inaction.
Having regard to the principle of law laid down in the decisions (supra) and in the facts and circumstances of the assessee’s case, we decline to condone the inordinate delay of 121 days in filing appeal before the Tribunal.
In its application of condonation of impugned delay the assessee has also urged for providing fair, meaningful and proper opportunity to establish that the orders passed by the Ld. CIT(A)/AO are completely without jurisdiction and lack merits and appeal of the assessee deserves to be allowed. In para 7 above we have enumerated the dates fixed for hearing of the appeal. Despite numerous opportunities provided to the assessee, the assessee chose not to avail them to rebut the findings of the Ld. AO/CIT(A). Resultantly, the findings of the Ld. AO/CIT(A) remain uncontroverted by the assessee before us.
For the reason aforesaid, the appeal of the assessee is dismissed as time barred and devoid of any merit.
In the result, the appeal of the assessee is dismissed.