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Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: SHRI RAJPAL YADAV, VICE- & MS.ANNAPURNA GUPTA
आदेश/O R D E R
PER RAJPAL YADAV, VICE-PRESIDENT
Assessee is in appeal before the Tribunal against order of the ld.CIT(A)-5, Ahmedabad dated 30.01.2019 passed for Asstt.Year 2013- 14.
The assessee has taken six grounds of appeal; in ground nos.1, 2 and 3, it has pleaded that the ld.CIT(A) has erred in law and on facts in not condoning delay in filing of the appeal, and therefore, he erred in confirming action of the AO; in ground nos.4, 5 and 6, the assessee has challenged confirmation of addition by the ld.CIT(A).
ITA No.641/Ahd/2019 2 3. Since appeal before the ld.CIT(A) was time barred, and he refused to condone the delay, therefore, we first take preliminary issue only.
Brief facts of the case are that the assessee has filed his return of income on 14.10.2013 declaring total income at Rs.2,20,730/-. According to the AO, this case was selected through CASS. Notice under section 143(2) dated 2.9.2014 was issued and served upon the assessee. Thereafter, the ld.AO has narrated details of other notices issued and served upon the assessee, which were required to be complied with. The assessee did not give any reply. The ld.AO haS made addition of Rs.1,49,15,000/- to the total income of the assessee. Along with assessment order, the ld.AO annexed office note which provided background as to how he has made the addition. This office note read as under: “Office Note:
This case has been selected for scrutiny through CASS. In this regard, complete details/explanation was called from the assessee but the assessee has not complied any notices issued by this office. Thereafter, show cause notice issued to the assessee and initiate penalty u/s 271(l)(b) of the I.T. Act for non-comply of the notice. Subsequently, the assessee has not complied show cause notice. Thus, on verification of the case records it was found that the assessee has not complied show cause notice the penalty proceedings u/s 271(l)(b) of the I.T. Act is initiate and assessment is made exparte on the basis of Reason for scrutiny selection "Large investment in property compared to Total Income and Capital Gains consideration in ITR is less than sale of property reported in A-'R'?; Thereafter, as per ITS Data the assessee has made Investment in Immovable Property of Rs.1,10,00,000/- and sold immovable property of Rs.37,00,000/- and made payment of Rs.2,15,000/- against credit card bill. As the assessee has not complied the notices issued by this office. I have reason to believe that assessee has not satisfactory submissions and evidences. Therefore, in this case, made exparte assessment after making addition 011 following grounds:
(i) Purchase of Immovable property of Rs.1,10,00,000/- on account of unexplained investment u/s 69 of the I.T. Act.
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Sold Immovable property Income of Rs.37,00,000/- as (ii) concealed income. (iii) Credited card payment of Rs.2,15,000/- on account of Un- explained expenses u/s 69C of the I.T. Act. Thus, total addition of Rs.1,49,15,000/- is added in the total income of the assessee.”
Dissatisfied with the assessment order dated 26.2.2016, the assessee filed an appeal before the first appellate authority on 6.3.2018. It was brought to notice of the assessee that the appeal was time barred by 26 months. In order to explain the delay, and explain issues on merit, the assessee filed written submission before the ld.CIT(A). Copy of the written submissions has been placed on record before us also on page no.4 to 8 of the paper book. First we take note of the explanation given for condonation of delay, which reads as under: “Under the instructions received from the above mentioned client, we state as under:
The assessee is in receipt of Assessment Order dated 26/02/2016 for AY 2013-14 showing assessed income of Rs.1,51,35,730/- as against returned income of Rs.2,20,730/-. The assessee was living in Kolkata for to set up a new project and does not come to Ahmedabad. Your honour can see from the Assessment Order that Assessing Officer has issued six notices but the assessee has not replied for the same. The house of the assessee remains closed and sometimes servant was there. Assessment order was collected by the servant and information was not communicated to the assessee as there was family dispute in relation to the sale of property. The assessee being very busy in Kolkata in setting up a new project and layman could not understand these important things. The learned Assessing Officer has levied penalty and issued penalty order but this information was also received late by the assessee. Recently the assessee contacted chartered Accountant who made him understand the importance of these papers. Accordingly, the assessee got ready to file appeal. There is neither any malafide intention nor any benefit on the part of assessee for delay in filing the appeal.
We request your honour to condone the delay in appeal filing, accept the same and oblige.
Though we are not going to adjudicate the issue on merit, because, if we find some reasonable cause for condonation of delay,
ITA No.641/Ahd/2019 4 then the issue on merit were required to be relegated to the file of the Revenue authorities; but in order to appraise ourselves about the genuine hardship of the assessee, and how Revenue authorities have exercised their power for assessing income, we deem it appropriate to take brief note of the explanation of the assessee on the additions. A perusal of the office note would indicate that the ld.AO has made two substantial additions i.e. Rs.1,10,00,000/- on account of unexplained investment in the purchase of immovable property, and Rs.37.00 lakhs as concealed income earned on sale of immovable property. With regard to the unexplained investment in the purchase of immovable property, it was contended by the assessee that this was purchased by obtaining loan of Rs.70.00 lakhs and Rs.60.00 lakhs. Details of these loans have been given, which are reflected in his bank account. This explanation reads as under: “The assessee has purchased two properties worth Rs. 41,00,000/- and Rs. 69,00,000/- respectively and enclosed herewith copy of the purchase deeds for the same for your reference. We would like to draw your honour's attention that the assessee has taken loan of Rs.1,30,00,000/- as under and the same amount has been utilized for purchase of properties. Current Ac PAN NO Name ChNo Date Amount No (In INR) 32 AFDPS6209P Viraj Trading 6668 27/08/2012 20,00,000 6670 27/08/2012 20,00,000 6671 27/08/2012 20,00,000 6674 27/08/2012 10,00,000 TOTAL 70,00,000 Ac No PAN NO Name ChNo Date Amount
61 AFDPS6212E Bhavna 12184 27/08/2012 19,00,000 Trading 12185 27/08/2012 20,00,000 12186 27/08/2012 21,00,000 TOTAL 60,00,000
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The assessee has taken the loan on 27/08/2012 and made the investment from the same and enclosed herewith copy of the bank statement for your honour's ready reference. Also enclosed herewith copy of the confirmation received from the lenders.
The assessee has applied to the bank for copies of cheques through which the amounts were transferred by the parties to the assessee's account and enclosed herewith copy of the application for your reference.
Hence we request your honour to delete the addition made by assessing officer of Rs.1,10,00,000/- on account of unexplained investment u/s 69 of the IT. Act as the immovable property is purchase from the loan taken from the two genuine parties.
Concealed Income on account of Sale of Immovable property of Rs. 37,00,000/-. Assesse's father and mother has jointly purchased the immovable property amounting Rs. 14,00,000/- in 1988 and later on assessee's father expired in 2008 and his share in property was transferred to his wife, son and daughter equally and revised share in the property at the time of sale was as under.
Name Vinod Mitra Anupama Gaurav Mitra Himadri
(Father) Vinod Mitra Sheetal
(Mother) Thakker
Original Share 50 50 0 0
Share Transferred (50) 16.66 16.66 16.66 after the death of Vinod Mitra
Revised Share 0 66.66 16.66 16.66
The above mentioned Immovable property was sold during the Assessment Year 2013-14 for Rs. 37,00,000/- . We would like to draw your honour's attention that the assessee has received only Rs. 6,16,698 i.e. 16.66 percent his share in property (Rs. 37,00,000*16.66% = Rs. 6,16,698) out of Rs. 37,00,000/-. Enclosed herewith copy of the bank account statement of the assessee with highlighting the amount Rs. 6,16,698/- received in bank. Further enclosed herewith sale deed of the immovable property with highlighting the cheque details given to assessee which is also reflecting in bank statement.
ITA No.641/Ahd/2019 6 We failed to understand how the Assessing officer has concluded that the entire amount of sale of property of Rs.37,00,000/- belonged to the assessee inspite of the fact that Assessee officer was in possession of the sale deed.
As far as the assessment of Rs.37.00 lakhs on account of receipt of sale proceedings from sale of an immovable property is concerned, it was contended by that the assessee that this property was purchased by his parents in equal share. His father died and accordingly, he got 1/3rd share. In other words, 50% share of his father was distributed amongst assessee’s mother, sister and himself. Total property sold was at Rs.37.00 lakhs, and his share was only Rs.6,16,698/- i.e. 16.66% of the total. The assessee gave this explanation before theld.CIT(A).
Before us, while impugning orders of the Revenue authorities, the ld.counsel for the assessee submitted that the assessee has shifted to Kolkatta and was not aware about the assessment proceedings. The assessment order must have been served at the house address, which must have been collected by the domestic help, and not brought to the notice of the assessee. Thus, there happened delay of 26 months in filing appeal before the ld.CIT(A).
On the other hand, the ld.DR contended that there is a huge delay of 26 months. The assessee must be confronted with demand, and other aspects from the income-tax department, but he conducted himself in a very negligent manner. Therefore, no sympathy deserves to be shown to the assessee. He relied upon the order of the ld.CIT(A).
We have considered rival submissions, and gone through the material available on record. Expression “sufficient cause” employed in sub-section 3 of section 249 of Income Tax Act, which provides powers to the ld.Commissioner to condone the delay in filing the appeal before him, has also been used in section 5 of Indian Limitation Act, 1963. Whenever interpretation and construction of this expression has fallen
ITA No.641/Ahd/2019 7 for consideration before Hon’ble High Court as well as before the Hon’ble Supreme Court, then, Hon’ble Court were unanimous in their conclusion that this expression is to be used liberally. We may make reference to the following observations of the Hon’ble Supreme court from the decision in the case of Collector Land Acquisition Vs. Mst. Katiji & Others, 1987 AIR 1353: “1. Ordinarily a litigant does not stand to benefit by lodging an appeal late.
Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties.
"Every day's delay must be explained" does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common sense pragmatic manner.
When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay.
There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk.
It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.” 11. Similarly, we would like to make reference to authoritative pronouncement of Hon’ble Supreme Court in the case of N.Balakrishnan Vs. M. Krishnamurthy (supra). It reads as under: “Rule of limitation are not meant to destroy the right of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. Law of limitation
ITA No.641/Ahd/2019 8 fixes a life-span for such legal remedy for the redress of the legal injury so suffered. Time is precious and the wasted time would never revisit. During efflux of time newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So a life span must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. Law of limitation is thus founded on public policy. It is enshrined in the maxim Interest reipublicae up sit finis litium (it is for the general welfare that a period be putt to litigation). Rules of limitation are not meant to destroy the right of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time.
A court knows that refusal to condone delay would result foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is always deliberate. This Court has held that the words "sufficient cause" under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shakuntala Devi lain Vs. Kuntal Kumari [AIR 1969 SC 575] and State of West Bengal Vs. The Administrator, Howrah Municipality [AIR 1972 SC 749]. It must be remembered that in every case of delay there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy the court must show utmost consideration to the suitor. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time then the court should lean against acceptance of the explanation. While condoning delay the Could should not forget the opposite party altogether. It must be borne in mind that he is a looser and he too would have incurred quiet a large litigation expenses. It would be a salutary guideline that when courts condone the delay due to laches on the part of the applicant the court shall compensate the opposite party for his loss.”
We do not deem it necessary to re-cite or recapitulate the proposition laid down in other decisions. It is suffice to say that the Hon’ble Courts are unanimous in their approach to propound that whenever the reasons assigned by an applicant for explaining the delay, then such reasons are to be construed with a justice oriented approach.
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In the light of the above, if we examine the explanation given by the assessee, then it would reveal that no doubt there is huge delay of 26 months in fling appeal before the first appellate authority. But explanation of the assessee is required to be examined by keeping in mind background of the assessee. Assessee is an individual who has very meager income and addition on account of sale of immovable property amounting to Rs.37.00 lakhs has been made. The ld.AO even did not bother to collect sale deed from the sub-Registrar’s office in order to identify as to who are the vendors. He simply got information that some sale has taken placed, and therefore, without collecting complete facts made addition of whole of the amount in the hands of the assessee. Had the AO been acted judiciously then atleast Rs.30.00 lakhs could have not been made in the hands of the assessee. We are not making it as a finding. At the cost of repetition, we again remind ourselves that we are not touching the issues on merit. Reference to the addition of Rs.37.00 is being made only with an angle that how adjudicator has worked. We are trying to weigh the action of the AO vis-à-vis negligence of the assessee for not appearing before him as well as for not filing appeal in time. In that background, if we weigh all aspects, then it would reveal that it is a case of contributory negligence at the end of the department as well as at the end of the assessee. Negligence of the assessee of not being vigilant would result a huge tax demand on addition of Rs.1,49,15,000/-; whereas non-collection of complete details by the AO with regard addition of Rs.37.00 lakhs no accountability would be on the Revenue, because he has made addition and has raised demand. Visualizing this aspect, we are of the view that punishment in the shape of tax liability is disproportionate to the negligence of the assessee of not challenging this ex parte assessment order within the time limit, therefore, taking a sympathetic view of the matter, we deem it appropriate to condone the delay in filing appeal, and set aside order of the ld.CIT(A). We remit the issue back to the file of the ld.CIT(A) for adjudication of the issue on merit.
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Observation made by us will not impair or injure the case of the AO on merit, and will not cause any prejudice to the defence/explanation of the assessee. The assessee will be at liberty to file any fresh evidence or explanation before the ld.first appellate authority, because, the assessment order is ex parte order. With the above observation, the appeal of the assessee is allowed for statistical purpose. 15. In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the Court on 6th December, 2021 at Ahmedabad.
Sd/- Sd/- (Ms.ANNAPURNA GUPTA) (RAJPAL YADAV) ACCOUNTANT MEMBER VICE-PRESIDENT