SAINT XAVIER EDUCATIONAL & CHARITABLE TRUST,BHUBANESWAR vs. ITO(EXEMPTION) WARD, BHUBANESWAR

Shri Brajabandhu Bihar, ld AR appeared for the assessee and Shri Saroj Kumar Dubey, ld CIT DR and Shri Charan Dass, ld Sr. DR appeared for the revenue.

It was submitted by ld AR that the appeals have been dismissed by the ld CIT(A), NFAC, Delhi and ld ADDL/JCIT(A), Vadodara in limine on account of non-condonation of delay. It was the submission that admittedly, there was 1331 days delay in filing the appeal before the ld CIT(A) for the assessment year 2017-18 and for the assessment year 2021- 22, the delay was 345 days. It was the submission that for the assessment year 2017-18, the appeal was liable to be filed before the ld CIT(A) on 10.1.2020 but the same has been filed only on 2.9.2023. For the assessment year 2021-22, the appeal was liable to be filed on 23.9.2022 but the appeal has been filed on 2.9.2023. It was the submission that the delay in filing appeals before the ld CIT(A) for both the assessment years was on account of illness and subsequent demise of the Accountant of the assessee. It was also the submission that when filing the appeal before the Tribunal for the assessment year 2017-18, there is delay of 24 days and for the assessment year 2021-22, there is a delay of 132 days. It was the submission that this delay was on account of the illness/hospitalization of the Chairman of the assessee trust. It was the submission that from the ld CIT(A), admittedly, no notice had been received by the assessee and consequently, the assessee was unable to give further explanation for the P a g e 2 | 9 & 406 /CTK/2024 Assessment Years : 2017-18 & 2021-2022 delay. It was the prayer that the delay in filing in both the appeals may be condoned and issues restored to the file of the ld CIT(A) for adjudication on merits.

In reply, ld CIT DR submitted that though the assessee has made various claims such as illness and subsequent demise of the Accountant, the details of the period of illness of the Accountant much less the name of the Accountant who was deceased also not provided. It was the further submission that in respect of delay in filing of appeal before the Tribunal though there is a claim that the Chairman of the Trust was hospitalized due to cardiac problem but no medical certificate and evidence had been produced. It was the submission that in respect of issue of condonation of delay, the Hon’ble Supreme Court in the case of Pathapati Subba Reddy in S.L.P. (Civil) No.31248 of 2018 has in para 26 interpreted various earlier decisions of the Hon’ble Supreme Court on the aspect/principles of condonation of delay and has laid down various conditions. For better understanding, para 26 of the said order is extracted hereinbelow:

It was the submission that the assessee has not complied with any of the conditions and, therefore, the delay should not be condoned.

We have considered the rival submissions. At the outset, a perusal of the decision of the Hon’ble Supreme Court in the case of Pathapati Subba Reddy (supra) shows that same is in respect of Limitation Act. We are live to the very basic principles that the Limitation Act specifically does not apply to the Income Tax Act, 1961. However, we are live to the fact that the P a g e 4 | 9 & 406 /CTK/2024 Assessment Years : 2017-18 & 2021-2022 principles laid down by the Hon’ble Supreme Court in respect of the issues of limitation being the Rule of Law can also be considered. A perusal of the principles laid down by the Hon’ble Supreme Court shows that firstly, there should be an end to litigation by forfeiting the right to remedy rather than the right itself. In the present case, clearly the fact that the assessee has filed its appeal and has disputed the demand created on it itself shows that it has not forfeited its right to the remedy.

The second principle is that the right or the remedy that has not been exercised or availed of for a long time must come to an end or cease to exist after a fixed period of time. In the present case, the Hon’ble Supreme Court itself in its suo moto order had extended the period of limitation on account of Covid. 2020-2022 was a period of great hardship when Covid had struck the country financially and through loss of life. The Hon’ble Supreme Court itself had shown its hand of mercy suo moto by staying the law of limitation so that genuine litigant is not put to hardship. In the present case, the period of delay is the period during which the country went through Covid. Admittedly, this was a period after effect of Covid had also hit the country.

The next principle is in regard to the interpretation of Section 3 and Section 5 of the Limitation Act, to which, we would not try to apply the facts in the present case.

The next principle is that in order to advance substantial justice, the law of limitation should not be defeated. A perusal of present case shows that the assessee has challenged the intimation and the rectification application which has been rejected by the Revenue. A perusal of the intimation shows that under the guise of intimation for rectification of mistake, entire expenditures incurred by the assessee which are nothing but the application of income have been disallowed bringing to tax the entire receipts of an Organisation. How and under which principles of mistake apparent from the record, the entire receipts get disallowed in intimation without verification. We are not going into the issue of substantial justice but substantial injustice has been noticed. Admittedly, the liberal approach is called for from the Court.

Coming to the next principles laid down by the Hon’ble Supreme Court that Courts are empowered to exercise discretion to condone the delay if sufficient cause had been explained and the Courts have also the powers to refuse to apply the discretion even if sufficient cause is provided for such as, where there is inordinate delay, negligible and want of due diligence. In the present case, admittedly, if the Covid period is removed, the delay in respect of assessment year 2017-18 would be nearly 1 and ½ years and for the assessment year 2021-22, it would be nearly one year. This cannot be considered as inordinate delay

The other conditions which have been laid down by the Hon’ble Supreme Court do not apply to the case before us. In these circumstances, we are of the view that the issue of limitation cannot be very strictly applied unless it shows that there has been negligence or there has been failure of due diligence by the assessee when it has filed appeal before the Appellate Forum. In these circumstances, looking into the facts of the case and considering the fact that the assessee has categorically mentioned the delay in filing appeal before the CIT(A) was on account of the illness of the Accountant and subsequent demise, we are of the view that the assessee has shown reasonable cause. The affidavit filed by the assessee in respect of reasons for the delay before the Tribunal has also not found to be false. This being so, in the interest of justice and fair play, the delay in filing of appeal before the Tribunal is condoned and heard on merits. The delay in filing appeal before the ld CIT(A) is also condoned and the issues on merits are restored to the file of the ld CIT(A) for adjudication after granting the assessee adequate opportunity of being heard. We may mention here that the order of the ld CIT(A) does not show of any opportunity having been given to the assessee for the assessment year 2017-18.

One of the arguments of ld CIT DR is that after the Faceless Scheme have been introduced, the notice could only be issued through IT Portal. P a g e 7 | 9 & 406 /CTK/2024 Assessment Years : 2017-18 & 2021-2022 We are not in agreement with this contention. It is true that the ld CIT(A) cannot issue notice directly to the assessee, however, the notice can be issued through Assessing Officer also. Just because the ld CIT(A) when hearing the appeals also intimates the AO in the event the AO who represent from his side and if the assessee has not cooperated or has not stated anything, nothing stopped the ld CIT(A) from using the alternate method to intimate the assessee of hearing using the system available in the department itself.

In the result, appeals of the assessee stand partly allowed for statistical purposes.