INTERNATIONAL COMMISSION ON IRRIGATION AND DRAINAGE EMPLOYEES PROVIDENT FUND (ICID PF TRUST),NEW DELHI vs. COMMISSIONER OF INCOME TAX (APPEALS), DELHI

4.1 Aggrieved with orders under section 154 of the Act, the assessee filed appeals before the CIT(A), who vide orders dated 12.12.2019 dismissed these appeals. Both appellate orders of the Ld. CIT(A) were challenged before the ITAT, who vide order dated 26.08.2022 in and 704/Del/2020 remitted the matter back to the Ld. CIT(A) as under: “7.9 The CPC while processing the return u/s. 143(1) of the Act, has limited jurisdiction and empowered to process the return as per material available and/or claim made by the Assessee in return of Income which has been done in this case. The mistake apparent from record can be rectified u/s. 154 of the Act but mistake must be obvious and patent and not something which can be established by a long- drawn process of reasoning on points on which there may be two opinions. Mistake as such though apparently not visible from the order of process u/s 143(1) of the Act in this case, however, considering the peculiar facts and circumstances of the case as claimed by the Assessee and not refuted by the Ld. DR that the Assessee has been duly recognized as Provident Fund Institution under Rule 3(1) of Part 'A' of the 4th schedule of the Act, by the Ld. Commissioner of Income Tax- VIII, New Delhi vide its order no. 3 of 1985 dated 24.07.1985 and in consequence thereof in the previous and subsequent years treated as exempted u/s 10(25)(ii) of the Act and no such addition has ever been made by the Department and the Id. Commissioner has co-terminus powers with that of the Income Tax Officer and is fully empowered to permit the Assessee to entertain the fresh claim of deduction and to examine the validity of assessment and to modify the assessment order, and therefore, for the ends of substantial justice and just decision of the case, we deem it appropriate to set aside the impugned order and to remand the case to the file of Id. CIT(A) for examining the case of Assessee afresh, in accordance with law and the dictums laid down by the Hon'ble Apex Court and Hon'ble High Court in the judgements referred above, suffice to say by giving reasonable opportunity of being heard to the Assessee. The Assessee shall also be at liberty to place the relevant documents and raise the appropriate issues/claims before the Ld. Commissioner in accordance with law.”

[Emphasis is supplied by us.] 4.2 In pursuance of the above-mentioned order of the Tribunal, the Ld. CIT(A), vide orders dated 07.05.2024 in remanded proceedings, again dismissed appeals on reasoning that there was neither a prima facie mistake apparent from the record as there was no claim of exemption under section 10(25)(ii) of the Act in ITRs nor the assessee was a registered Trust or Institution under section 12A of the Act.

At the outset, the Ld. Authorized Representative (AR) prayed for condonation of delay of 68 days in filing both appeals. The applications for condonation of the delay annexed with the appeal memos stated the reason for delay as the appellant assessee was firstly advised to file rectification applications against impugned orders before the Ld. CIT(A). However, the advice for filing of appeals came later. Per contra, the Ld. Senior Departmental Representative (DR) submitted that the condonation application for delay of 68 days in filing the present appeals did not reflect cogent justification for the delay on the part of the appellant assessee. He accordingly opposed condoning the delay in filing the present appeals.

The Ld. DR defended impugned orders and prayed for dismissal of both appeals.

We have heard both parties and perused the material available on records. There is no dispute and is an admitted fact that there has been a delay in filing the present appeals by 68 days. There is also no dispute that under section 253(5) of the Act, the Tribunal may admit an appeal filed beyond the period of limitation where it is satisfied that there exists a sufficient cause on the part of the appellant for not presenting the appeal within the prescribed time. We are of the considered view that there was no malafide or deliberate delay in filing both appeals in hand and in the interest of substantial justice, the delay in filing these appeals deserve condonation to be decided on merit. We do not see any prejudice which will be caused to the Revenue in deciding these appeals on merit. In case of HL Malhotra & Company Pvt. Ltd. Vs DCIT, Circle12, New Delhi (ITA No. 211/2020 & CM Appeals 32045-32047/2020 dated 22nd December, 2020), the Hon’ble Delhi High Court had held that in absence of anything male fide or deliberate delay as a dilatory tactic, the Court should normally condone the delay as the intent is always to promote substantial justice following the Hon’ble Supreme Court decisions in the case of Collector, Land Acquisition, Anantnag & Anr. Vs Mst. Katiji and others (1987) 2 SCC 107 and N. Balakrishnan Vs M. Krishnamurthy 1998 (7) SCC 123. 6

The explanation of the appellant assessee therefore becomes relevant to determine whether the same reflects sufficient and reasonable cause on its part in not presenting these appeals within the prescribed time. In case of Collector, Land Acquisition vs MST Katiji (Supra), the Hon'ble Supreme Court has held that the expression ‘Sufficient Cause’ employed by the legislature is adequately elastic to enable the Courts to apply the law in a meaningful manner to sub-serves the ends of justice that being the life- purpose of the existence of the institution of Courts. It was further held by the Hon’ble Supreme Court that such liberal approach is adopted on one of the principles that 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. Another principle laid down by the Hon’ble Supreme Court is that when substantial justice and technical considerations 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. It was also held by the Hon’ble Supreme Court that there is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of male fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk. In the instant cases, applying the same principles, we find that there is no culpable negligence or malafide on the part of the assessee in delayed filing of these 7 appeals as the assessee does not stand to benefit by resorting to such delay. Therefore, in the factual matrix of the present cases, we find that there exists sufficient and reasonable cause for condoning the delay in filing these appeals as held by the Hon’ble Supreme Court, where substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserved to be preferred.

In light of aforesaid discussions, in exercise of powers under section 253(5) of the Act, we hereby condone the delay in filing both appeals as we are satisfied that there is sufficient cause for not presenting these appeals within the prescribed time and therefore, these appeals are hereby admitted for adjudication on merits.

We have perused various columns of ITR-7 of the relevant year and have found that the assessee has made overall claim of exemption under section 10 of the Act in ITRs of both years in Column 13 of Part B – TI Statement of Income for The Period Ended On 31st March 2014 of the ITR 7. However, the break-up of the same in both ITRs was wrongly shown in Column 14 instead of Column 16 of Part B – TI Statement of Income for The Period Ended On 31st March 2014 of the ITR 7. It is also an undisputed fact that the Revenue has allowed similar claim of exemption under section 10 of the Act in all preceding and subsequent years as the assessee was recognized as a PF Trust in accordance with the Rule 3 of part A of the Fourth Schedule of the Act since 30.08.1984. A simple prima-facie mistake in filing a particular column of ITR should not go against the intent of the Act. The assessee filed petitions, under section 119(2) of the Act, before the Ld. PCIT to allow the assessee to revise ITRs. However, the same vide orders dated 23.07.2024 [DIN: ITBA/COM/F/17/2024-25/1066910706(1) and ITBA/COM/F/17/2024-25/1066910326(1)] were rejected on the reasoning that the CBDT vide Circular No. 09/2015 prohibits condonation of delay in filing ITR in refunds cases after 6 years. Here, the records show that the subordinate authorities of the PCIT have recommended for condonation of delay for filing revised ITRs with rider that the assessee’s refund claim cannot be entertained after 6 years. In such a situation where the Revenue is not considering overall facts of the case and decide the matter on merit, the only recourse available to the assessee is to file appeal before the Tribunal.

We further see that the Ld. CIT(A), in remanded proceedings, has not considered the case laws specifically mentioned in the Tribunal order dated 26.08.2022 in and 704/Del/2020 as there is no mention of the case laws in operative part of impugned orders. The relevant part of the Tribunal order dated 26.08.2022 is as under: “….the Id. Commissioner has co-terminus powers with that of the Income Tax Officer and is fully empowered to permit the Assessee to entertain the fresh claim of deduction and to examine the validity of assessment and to modify the assessment order, and therefore, for the ends of substantial justice and just decision of the case, we deem it appropriate to set aside the impugned order and to remand the case to the file of Id. CIT(A) for examining the case of Assessee afresh, in accordance with law and the dictums laid down by the Hon'ble Apex

Circular no. 14 - XZ (35) dated 11/04/1955 issued by the CBDT laid down that the Officers and Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer which in the long run benefit the Department that would inspire confidence in the minds of public. Here, the Revenue has raised demand only due to a wrong data entry in Column 14 instead of Column 16 of Part B – TI Statement of Income for The Period Ended On 31st March 2014 of the ITR 7, which is contrary to the intent of the CBDT Circular no. 14 - XZ (35) dated 11/04/1955.

In the case of Goetze (India) Ltd. (2006) 284 ITR 323, the Hon’ble Supreme Court has held that the power of the Tribunal under section 254 of the Act is to entertain for the first time a point of law provided the fact on the basis of which the issue of law can be raised before the Tribunal. The decision does not in any way relate to the power of the AO to entertain a claim for deduction otherwise than by filing a revised ITR. In the case of Indian Express (Madurai) (P.) Ltd. (1983) 140 ITR 705, the Hon’ble Madras High Court observed that unlike a suit in civil appeals, in tax litigation, it cannot be treated as a litigation between two rival parties but the job of the AO is to arrive at the correct taxable income. Therefore, merely on account of fact that the assessee has not claimed exemption, the same could not have been denied. The relevant part of the decision in the case of Indian Express (Madurai) (P.) Ltd. (supra) is as under:

In Rex. v. Special Commissioners of Income Tax, Lord Hewart C. J. laid down the nature of an appeal in tax matters as under (p. 382): "In my opinion, the argument of the learned Attorney-General is absolutely correct, and the argument upon the other side is manifestly based, as he said, upon a misapprehension that an appeal under the Income Tax Act, 1918, is the same in substance as an appeal where two private persons are engaged in litigation. It is, of courts, totally different."

In IRC v.Sneath [1932] 17 TC 149, Greer L. J. gave a similar description of the true position of a tax appeal in the following words (P. 164): "I think, the estimating authorities, even when an appeal is made to them, are not acting as judges deciding litigation between the subject and the Crown. They are merely in the position of valuers whose proceedings are regulated by statute to enable them to make an estimate of the income of the taxpayer for the particulate year in question."

Romer L. J., in the same case, held as under (p. 168): "The appeal is merely another step taken by the Commissioners, at the instance of the taxpayers, in the course of the discharge by them of their administrative duty of collecting the sur-tax."

Rex. v. Special Commissioners of Income Tax [1935] 20 TC 381, went to the Court of Appeal and there Lord Wright M.R. reiterated the position in the following passage in his judgment (p. 387): "I may note here at once that in making the assessment and in dealing with the appeals the Commissioners are exercising their statutory authority and their statutory duty which they are bound to carry out, not as judges deciding an issue between two particular parties: their obligation is wider than that. It is to exercise their judgment on such material as comes before them, and, as we shall see later, to obtain any material which they think is necessary and which they think they ought to have, and on that to make. They are not deciding the case inter prates; they are assessing or estimating the amount which in the interests of the country at large the taxpayer ought to have to deal with as the basis on which he is to be taxed." 32. In a recent Full Bench decision of this court dated November 2, 1982, in T.C.(R) Nos. 78 of 1980 (State of Tamil Nadu v. Arulmurugan & Co. [1982] 51 STC 381), it was held that the appellate authorities perform precisely the same functions as the assessing authority. The Full Bench expressed the view that a tax appeal is a rehearing of the entire assessment and it cannot be equated to adversary proceedings in appeal in civil cases. The following passage (at page 14 392), from the judgment of the Full Bench would be relevant to the discussion in the present case. "An appellate authority under the taxing enactments sits in appeal, only in a manner of speaking. What it does, functioning, is only to adjust the assessment of the appellant in accordance with the facts on the record and in accordance with the law laid down by the legislature. An appeal is a continuation of the process of assessment, and an assessment is but another name for adjustment of the tax liability to accord with the taxable event in the particular taxpayer-s case. There can be no analogy or parallel between a tax appeal and an appeal, say, in civil cases. A civil appeal, like a law suit in the court of first instance out of which it arises, is really and truly an adversary proceeding, that is to say, a controversy or tussle over mutual rights and obligations between contesting litigants ranged against each other as opponents. A tax appeal is quite different. Even as the assessing authority is not the taxpayer's "opponent", in the strictly procedural sense of the term, so too the appellate authority sitting in appeal over the assessing authority's order of assessment is not strictly an arbitral tribunal deciding a contested issue between two litigants ranged on opposite sides. In a tax appeal, the appellate authority is very much committed to the assessment, either by pursuing further investigation or causing further investigation to be done. It can do sos on its own initiative, without being prodded by any of the parties. It can enhance the assessment, taking advantage of the opportunity afforded by the taxpayer's appeal, even though the appeal itself has been mooted only with a view to a reduction in the assessment. These are special and exceptional attributes of the jurisdiction of a tax appellate authority. These attributes underline the truth that the appellate authority is no different, functionally and substantially, from the assessing authority itself."

It seems to us, therefore, that both on principle and on precedent, there is no reason why the Appellate Tribunal must be precluded from handling a point which appertains to the assessee's assessment merely because nobody else had handled it before or because to had not occurred either to the assessee or to the Department to raise and urge that point at earlier stages of the proceedings.

For all the above reasons, we hold that the Tribunal in this case was justified in entertaining the additional ground raised

Respectfully, following the ratio decidendi laid down in the above- mentioned cases (para 13 and 14 of this order), we are of the considered view that the assessee’s claim, which is undisputedly admissible, cannot be denied only on the reasoning that one of the columns of the ITR was wrongly filled up.

We find that this case is squarely covered by the decision of the Co- ordinate Bench of Tribunal in the case of Delhi Policy Group (reg.) [2023] 157 taxmann.com 192 (Delhi-Trib). In the case of Delhi Policy Group (reg.), the fact is that the said assessee, a charitable trust registered under section 12A since 30-12-1993, failed to claim exemption under section 11 of the Act by mentioning its registration under section 12A/12AA of the Act in its ITR. That Assessing Officer rejected claim of the assessee under section 12A/12AA of the Act on the reasoning that the assessee inadvertently omitted to mention its registration under section 12A/12AA of the Act in its ITR. Later, the assessee filed rectification application under section 154 of the Act which that Assessing Officer rejected stating that benefit of exemption under section 12A/12AA of the Act could not be allowed as there was no claim for same in ITR which could have been rectified by filing revised ITR, which was not done. The Ld. CIT(A) affirmed the order of that Assessing Officer. On appeal the Tribunal allowed the appeal holding that since the assessee did not seek registration or any fresh claim of benefit of exemption under section 12A/12AA of the Act in its rectification application under section 154 of the Act instead it made a mere request to rectify inadvertent mistake which had crept in ITR filed by it online, Assessing Officer was not right in denying benefit of registration under section 12A of the Act.

In the result, both appeals of the assessee are allowed as above.