EVEREST GRANDE COMMERCIAL PREMISES CO-OP SOCIETY LIMITED,MUMBAI vs. CPC ITO,24 (1) (1), MUMBAI

Per contra, the Ld. DR submitted that law only helps the vigilant and since the assessee was negligent, the Ld. CIT(A) rightly did not admit the appeal of assessee and has rightly dismissed the appeal of the assessee.

We have heard both the parties and perused the records. We note that the assessee which is a Co-operative Society has filed the return of income on 16.09.2014; and the CPC processed the return of income u/s 143(1) of the Act and vide order dated 20.05.2015 disallowed deduction u/s 80P(2)(d) of the Act claimed by assessee to the tune of Rs.6,73,364/- and the assessee filed an appeal against the impugned order of CPC only on 07.02.2023 (admittedly after delay of 2790 days, but after excluding Covid-19 period, the same will be reduced to 1730 days). The reasons for causing of delay (in filing appeal) was attributed to the omission on the part of official/Shri Shabbir Akolawala, who was entrusted the task of handling taxation issues. The omission (in filing of appeal by Shri Shabbir Akolawala) was due the fact that Shri Shabbir Akolawala was not aware of the 4 A.Y. 2014-15 Everest Grande Commercial Premises Co-op Soc. Ltd intimation order passed by CPC (dated 20.05.2015) since he was involved in taking care of his wife who was suffering from a rare medical problem “Takayasu Arthritis” which is noted to be a rare medical ailment/condition which affected one in million. Due to this serious illness, her body cells in-turn kill its own blood vessels in the body and due to which, bloods vessels need to be regularly operated upon by vascular surgeons; and due to excessive usage of steroids other complexities arose, viz, her bones were brittle/would break at the slightest fall. So, she needed constant medical care & attention and because of which, Shri Shabbir Akolawala could not regularly check the emails, and thus he missed to peruse the CPC order and thus was not aware about the impugned disallowance made by CPC. And only when demand was raised by the department in the year 2020, assessee came to know about the impugned action of CPC, and immediately took steps for filing of appeal before the Ld. CIT(A). And since Covid- 19 Pandemic hit India in 2020, assessee was able to file appeal only on 07.02.2023. Thus there was delay of 1730 days (excluding 716 days due to Covid-19, as per the Hon’ble Supreme Court suo-motto orders). Since the assessee filed the appeal after considerable delay, the Ld. CIT(A) refused to condone delay.

It is noted that the main reason for the delay in filing of appeal was the ill-health of assessee/Society’s official’s wife who was exclusively looking after the taxation matters of the Society. Reading of the condonation application shows that the assessee had explained before the Ld. CIT(A) that Shri Shabbir Akolawala was entrusted with 5 A.Y. 2014-15 Everest Grande Commercial Premises Co-op Soc. Ltd the duties related to taxation/litigation of assessee Society and due to medical treatment of his wife [who was suffering from a rare medical problem “Takayasu Arthritis”] he couldn’t regularly check the emails/updates from the income tax department, and thus omitted to know about the impugned action of CPC disallowing interest of Rs 6,73,364/- earned on fixed deposit with Co-op Banks claimed by assessee as exempt u/s 80(P)(2)(d) of the Act. And the assessee pointed out that non-filing of appeal in time was neither intentional not attributable to willful negligence on part of assessee or Shri Shabbir Akolawala. Before us, Shri Shabbir Akolawala appeared and brought to our notice the rare nature of medical ailment of his wife as well as documents relating to the hospitalisation and seriousness of the disease. After going through the relevant documents, we are convinced that non-filing of appeal in time by assessee was due to the reasons beyond the control of its employee Shri Shabbir Akolawala, and assessee should not suffer for non-filing of appeal in time. The aforesaid cause coupled with the fact that, the issue involved in the appeal relates to disallowance of interest by CPC [earned on fixed deposit with Co-op Banks claimed by assessee as exempt u/s 80(P)(2)(d) of the Act], which has admittedly been verified and allowed in earlier years; and especially in subsequent year by the Ld CIT(A) in AYs 2016-17 & 2017-18 [ Refer page 44 to 68 PB], clearly shows that a lenient view deserves to be taken for the purposes of deciding the plea of condonation of delay. The assessee has been able to demonstrate the delay was not deliberate in as much as this particular issue regarding exemption 80(P)(2)(d) of the Act had 6 A.Y. 2014-15 Everest Grande Commercial Premises Co-op Soc. Ltd already been decided in their favour in susequent years and therefore there was no cogent reason for the assessee to not pursue the claim in relevant AY 2014-15, but the delay occurred due to medical reason (supra), which has already been examined and found to be true in the foregoing. On these facts, refusal to condone the delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. The Ld. CIT(A) failed to understand that when the delay is condoned, the highest that can happen is that the cause would be decided on merits after hearing the parties. On the given facts of the case, the approach of the Ld. CIT(A) should be justice oriented so as to advance cause of justice.

In support of the above proposition, we may take guidance of the decision of the Hon’ble Apex Court in the case of Collector, Land Acquisition v. Mst. Katiji AIR 1987 SC 1353 wherein the Hon’ble Court has held that, in such matters, a liberal approach is adopted as ordinarily a litigant does not stand to benefit by lodging an appeal late. The Hon’ble Court further laid down that 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. The Hon’ble Supreme Court in the case of CIT Vs West Bengal Infrastructure Development Finance Corpn. Ltd. (334 ITR 269) had also inter alia observed that, looking at the amount of tax involved in that case, that the High Court ought to have to 7 A.Y. 2014-15 Everest Grande Commercial Premises Co-op Soc. Ltd decided the matter on the merits, rather than disposing of cases merely on the ground of delay.

It is trite in law that, the expression "sufficient cause" for condonation of delay should receive a liberal construction so as to advance the substantial justice when no negligence or inaction or want of bona fide is imputable to party. For this, we may refer to the decision of Hon’ble Supreme Court in the case of State of West Bengal v. Administrator, Howrah Municipality AIR 1972 SC 749. At this juncture, it is necessary to remind ourselves of the following propositions laid down by the Hon’ble Supreme Court in N. Balakrishnan v. M. Krishnamurthy AIR 1998 SC 3222 regarding sufficient cause and condonation of delay :-

The Hon’ble Supreme Court in the case of OP Kathpaliya v. Lakhmir Singh AIR 1984 SC 1744 has held that, if refusal to condone the delay results in grave miscarriage of justice, it would be a ground to condone the delay. In the facts of the present case, it is an admitted position that the assessee was allowed exemption u/s 80P(2)(d) of the Act in subsequent years as noted (supra). Hence, the deduction claimed in the relevant AY 2014-15 needs to be examined and should not be denied for omission on the part of the employee as noted supra. On these facts, mere denial of deduction, that too by way of an unreasoned adjustment by CPC u/s 143(1) of the Act, would result in gross miscarriage of justice. The Hon’ble Supreme Court in the case of Concord of India Insurance Co. Ltd. v. Smt. Nirmala Devi [1979] 118 ITR 507 has held that, what is to be looked into is whether there is any taint of mala fide or element of recklessness or ruse and if neither is present, legal advice honestly sought and actually given, must be treated as sufficient cause for condoning the delay. In the present case, there is no such malafide discernible from the facts placed before us.

Applying the ratio decidendi emerging from the above cited judgments (supra), and taking into consideration, the relevant facts of 9 A.Y. 2014-15 Everest Grande Commercial Premises Co-op Soc. Ltd this case and the relevant documents placed before us, we are inclined to condone the delay and restore the appeal back to the file of the Ld. CIT(A) with a direction to adjudicate the grounds of appeal raised by the assessee on merits as per sub-section (6) of section 250 of the Act in accordance to law.