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Income Tax Appellate Tribunal, MUMBAI BENCH “D”, MUMBAI
Before: SHRI KULDIP SINGH, HONBLE & SHRI S. RIFAUR RAHMAN, HONBLE
PER S. RIFAUR RAHMAN (AM)
This appeal is filed by the assessee against the order of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter in short “Ld.CIT(A)”] dated 22.03.2023 for the A.Y.2012-13.
ITA NO. 1774/MUM/2023 (A.Y. 2012-13) Dilip Premnarayan Kabra 2. Assessee has raised following grounds in its appeal: -
“1. On the facts and circumstance of the case, the learned CIT Appeals)-NFAC had rejected the appellant's application for condonation of delay in filing of appeal. The detailed submissions for condonation of delay in filing appeal was not considered by Honourable CIT(A). 2. On the facts & circumstance of the case the learned assessing officer erred in allowing the business expenses of Rs. 40,26,292/- only out of total expenses incurred for business purpose Rs.1,07,98,605/-. 3. That on the facts & circumstances of the case, the learned Income Tax Officer erred in taking gross receipts of Rs. 9,758,160/- as Total income without reducing the legitimate genuine business expenditure incurred by the appellant. The working prepared by A.O. was totally incorrect and against the principals of accounting. The A.O. could have taken net total income (Loss) i. e. after deducting all expenses from gross receipts. 4. On the facts & circumstance of the case the learned A.O. erred in disallowing a sum of Rs. 7,70,000/- being salary paid to security guards during the year. 5. On the facts & circumstance of the case the learned A.O erred in not deducting Labour charges Rs. 19,07,816/- out of gross receipts of Rs. 97,58,160/- and thereafter disallow the 50% of Labour charges amounting to Rs. 9,53,908/ adhoc basis by learned Assessing Officer. 6. On the facts & circumstance of the case the learned A.O. erred in disallowing a sum of Rs. 9,53,908/- which amounts to 50% of total Labour charges paid to workers during the year.”
We proceed to adjudicate the issues raised by the assessee ground wise.
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ITA NO. 1774/MUM/2023 (A.Y. 2012-13) Dilip Premnarayan Kabra 4. With regard to Ground No. 1 which is relating to Ld.CIT(A) rejecting the application of condonation of delay in filing the appeal before Ld.CIT(A).
At the outset, Ld. AR of the assessee brought to our notice that Ld.CIT(A) has dismissed the appeal by not condoning the delay. Ld.AR of the assessee submitted that assessee and his family during the year 2015 has faced various legal matters in connection the loan defaults and other matters because of which assessee could not file the appeal in time. In support of the above contention, Ld. AR of the assessee submitted before us various legal proceeding documents in the Paper Book and prayed for condonation of delay. Ld. AR of the assessee requested to set-aside the issue back to the file of the Ld.CIT(A).
On the other hand, Ld. DR relied on the order of the Ld.CIT(A) and submitted that Ld.CIT(A) has given several opportunities.
Considered the rival submissions and material placed on record, we observe that Ld.CIT(A) has dismissed the appeal of the assessee without condoning the delay observing as under: -
“5.1 I have gone through the Assessment Order and submissions of the appellant. It is observed that the due date for filing appeal Page No. 3
ITA NO. 1774/MUM/2023 (A.Y. 2012-13) Dilip Premnarayan Kabra was 30th April 2015 and the appellant has filed appeal on 27th January 2016 and the appellant has filed request to condone the delay in filing appeal. In this regard the appellant has mentioned that there were certain legal suites were instituted up on his family member and he was into mental trauma to deal with such legal suites. 5.2 However the appellant merely mentioned the reason but not submitted any evidence that actually there were certain legal suites which filed which bothered appellant. In view of the above and in absence of documentary evidence the plea of the appellant is not accepted. 5.3. Accordingly, the appeal of the appellant is dismissed.”
We observe from the above that Ld.CIT(A) has dismissed the appeal “as assessee has merely mentioned the reason but not submitted any evidence that actually there were certain legal suites which were filed and which bothered assessee”. Before us, assessee has submitted the documentary evidences relating to the legal suits and prayed for admission of the prayer in the interest of natural justice by condoning the delay. After perusal of the documents submitted by the assessee we are of the opinion that assessee has sufficient and reasonable cause in filing the appeal with the delay.
In the case of M/s. Midas Polymer Compounds Pvt. Ltd., v. ACIT in ITA.No. 288/Coch/2017 the Coordinate Bench of the Tribunal has considered the issue of condonation of delay and by following various judicial precedents along with the decision of the Hon'ble Supreme Court
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ITA NO. 1774/MUM/2023 (A.Y. 2012-13) Dilip Premnarayan Kabra in the case of Collector, Land Acquisition v. Mst Katiji and ors. (167 ITR 471) condoned the delay of 2819 days observing as under: -
“6. We have heard the rival submissions and perused the record. There was a delay of 2819 days in filing the appeal before the Tribunal. The assessee has stated the reasons in the condonation petition accompanied by an affidavit which has been cited in the earlier para. The assessee filed an affidavit explaining the reasons and prayed for condonation of delay. The reason stated by the assessee is due to inadvertent omission on the part of Shri Unnikrishnan Nair N, CA in taking appropriate action to file the appeal. He had a mistaken belief that the appeal for this year was filed by the assessee as there was separate Counsel to take steps to file this appeal before the ITAT. Therefore, we have to consider whether the Counsel’s failure is sufficient cause for condoning the delay. The Madras High Court considered an identical issue in the case of Sreenivas Charitable Trust v. Dy. CIT (280 ITR 357) and held that mixing up of papers with other papers are sufficient cause for not filing the appeal in time. The Madras High Court further observed that the expression "sufficient cause" should be interpreted to advance substantial justice. Therefore, advancement of substantial justice is the prime factor while considering the reasons for condoning the delay. 6.1 On merit the issue is in favour of the assessee. But there is a technical defect in the appeal since the appeal was not filed within the period of limitation. The assessee filed an affidavit saying that the appeal was not filed because of the Counsel’s inability to file the appeal. The Revenue has not filed any counter affidavit to deny the allegation made by the assessee. While considering a similar issue the Apex Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) laid down six principles. For the purpose of convenience, the principles laid down by the Apex Court are reproduced hereunder: (1) Ordinarily, a litigant does not stand to benefit by lodging an appeal late (2) Refusing to condone delay can result in a meritorious matter being thrown 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. (3) 'Every day's delay must be explained' does not mean that a pedantic approach should be made. Why not every Page No. 5
ITA NO. 1774/MUM/2023 (A.Y. 2012-13) Dilip Premnarayan Kabra hour's delay, every second's delay? The doctrine must be applied in a rational, commonsense and pragmatic manner. (4) When substantial justice and technical consideration are pitted against each other, the 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. (5) 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. (6) It must be grasped that the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so. 6.2 When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of nondeliberate delay. In the case on our hand, the issue on merit regarding allowability of deduction u/s. 80IB of the Act was covered in favour of the assessee by the binding Judgment of the jurisdictional High Court. Moreover, no counter-affidavit was filed by the Revenue denying the allegation made by the assessee. It is not the case of the Revenue that the appeal was not filed deliberately. Therefore, we have to prefer substantial justice rather than technicality in deciding the issue. As observed by Apex Court, if the application of the assessee for condoning the delay is rejected, it would amount to legalise injustice on technical ground when the Tribunal is capable of removing injustice and to do justice. Therefore, this Tribunal is bound to remove the injustice by condoning the delay on technicalities. If the delay is not condoned, it would amount to legalising an illegal order which would result in unjust enrichment on the part of the State by retaining the tax relatable thereto. Under the scheme of Constitution, the Government cannot retain even a single pie of the individual citizen as tax, when it is not authorised by an authority of law. Therefore, if we refuse to condone the delay, that would amount to legalise an illegal and unconstitutional order passed by the lower authority. Therefore, in our opinion, by preferring the substantial justice, the delay of 2819 days has to be condoned. 6.3 The next question may arise whether 2819 days was excessive or inordinate. There is no question of any excessive or inordinate when the reason stated by the assessee was a reasonable Page No. 6
ITA NO. 1774/MUM/2023 (A.Y. 2012-13) Dilip Premnarayan Kabra cause for not filing the appeal. We have to see the cause for the delay. When there was a reasonable cause, the period of delay may not be relevant factor. In fact, the Madras High Court in the case of CIT v. K.S.P. Shanmugavel Nadai and Ors. (153 ITR 596) considered the delay of condonation and held that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation. Accordingly, the Madras High Court condoned nearly 21 years of delay in filing the appeal. When compared to 21 years, 2819 days cannot be considered to be inordinate or excessive. Furthermore, the Chennai Tribunal by majority opinion in the case of People Education and Economic Development Society (PEEDS) v. ITO (100 ITD 87) (Chennai) (TM ) condoned more than six hundred days delay. It is pertinent to mention herein that the view taken by the present author in that case was overruled by the Third Member. 6.4. The Madras High Court in the case of Sreenivas Charitable Trust (supra) held that no hard and fast rule can be laid down in the matter of condonation of delay and the Court should adopt a pragmatic approach and the Court should exercise their discretion on the facts of each case keeping in mind that in construing the expression "sufficient cause" the principle of advancing substantial justice is of prime importance and the expression "sufficient cause" should receive a liberal construction. Therefore, this Judgment of the Madras High Court (supra) clearly says that in order to advance substantial justice which is of prime importance, the expression "sufficient cause" should receive a liberal construction. In this case, the issue on merit regarding granting of deduction u/s. 80IB was covered in favour of the assessee by the Judgment of the jurisdictional High Court. Therefore, for the purpose of advancing substantial justice which is of prime importance in the administration of justice, the expression "sufficient cause" should receive a liberal construction. In our opinion, this Judgment of the jurisdictional High Court is also squarely applicable to the facts of this case. A similar view was taken by the Madras High Court in the case of Venkatadri Traders Ltd. v. CIT (2001) 168 CTR (Mad) 81 : (2001) 118 Taxman 622 (Mad). 6.5 The Mumbai Bench of this Tribunal in the case of Bajaj Hindusthan Ltd. v. Jt. CIT (AT) (277 ITR 1) has condoned the delay of 180 days when the appeal was filed after the pronouncement of the Judgment of the Apex Court. Furthermore, the Revenue has not filed any counter-affidavit opposing the application of the assessee for condonation of delay. The Apex Court in the case of Mrs. Sandhya Rani Sarkar vs. Smt. Sudha Rani Debi (AIR 1978 SC 537) held that non-filing of affidavit in opposition to an application for condonation of delay may be a sufficient cause for condonation of delay. In this case, the Revenue has not filed any counter-affidavit opposing the Page No. 7
ITA NO. 1774/MUM/2023 (A.Y. 2012-13) Dilip Premnarayan Kabra application of the assessee, therefore, as held by the Apex Court, there is sufficient cause for condonation of delay. The Supreme Court observed that when the delay was of short duration, a liberal view should be taken. "It does not mean that when the delay was for longer period, the delay should not be condoned even though there was sufficient cause. The Apex Court did not say that longer period of delay should not be condoned. Condonation of delay is the discretion of the Court/Tribunal. Therefore, it would depend upon the facts of each case. In our opinion, when there is sufficient cause for not filing the appeal within the period of limitation, the delay has to be condoned irrespective of the duration/period. In this case, the non-filing of an affidavit by the Revenue for opposing the condonation of delay itself is sufficient for condoning the delay of 2819 days 6.6 In case the delay was not condoned, it would amount to legalise an illegal and unconstitutional order. The power given to the Tribunal is not to legalise an injustice on technical ground but to do substantial justice by removing the injustice. The Parliament conferred power on this Tribunal with the intention that this Tribunal would deliver justice rather than legalise injustice on technicalities. Therefore, when this Tribunal was empowered and capable of removing injustice, in our opinion, the delay of 2819 days has to be condoned and the appeal of the assessee has to be admitted and disposed of on merit. 6.7 In view of the above, we condone the delay of 2819 days in filing the appeal and admit the appeal for adjudication.”
Respectfully following the above said decision and for the sake of overall justice we condone the delay in filing the appeal before Ld.CIT(A). Accordingly, Ground No.1 raised by the assessee is allowed.
With regard to Ground No. 2 to 6, as we have allowed the ground No.1 by condoning the delay in filing the appeal before Ld.CIT(A), we are of the considered view that these grounds should go back to the file of the Ld.CIT(A) as the Ld.CIT(A) has dismissed the appeal on technical
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ITA NO. 1774/MUM/2023 (A.Y. 2012-13) Dilip Premnarayan Kabra ground without going into the merits of the case. Accordingly, these grounds are remitted back to the file of the Ld.CIT(A) for denovo adjudication in accordance with law. Assessee shall cooperate with the proceedings before the Ld.CIT(A) without taking unnecessary adjournments. Needless to say that the Ld.CIT(A) shall give adequate opportunity of being heard to the assessee. Accordingly, Ground Nos. 2 to 6 are allowed for statistical purpose.
In the result, appeal filed by the assessee is allowed for statistical purpose.
Order pronounced in the open court on 22nd September, 2023.
Sd/- Sd/- (KULDIP SINGH) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai / Dated 22.09.2023 Giridhar, Sr.PS
Copy of the Order forwarded to: 1. The Assessee 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file //True Copy// BY ORDER (Asstt. Registrar) ITAT, Mum Page No. 9