KIREET KEDARNATH RAI ,MUMBAI vs. DCIT, 24(1), MUMBAI

There is a delay of 319 days in filing appeal before the Tribunal. The assessee, in a duly sworn in affidavit stated that the delay in filing the appeal occurred as the assessee did not have sufficient knowledge about taxation related matters. The contents of the affidavit are as below:- “AFFIDAVIT I, Shri KIREET KEDARNATH RAI having premises at B KANAKIA WALLSTREET, ANDHERI KURLA ROAD, ANDHERI (EAST). MUMBAI 400093, Maharashtra, India, do hereby declare on solemn oath and affirmation as follows:

That the Appellate order of NFAC, Delhi for AY 2018-19 against assessment order u/s 143(3) was served to us on 18-07-2024. We were required to file the appeal before ITAT on or before 17-08-2024. However, there is a delay of 319 days. This was because due to the fact that I do not have sufficient knowledge about taxation related matters. Moreover, I was not aware about the Appellate order passed in my case and there is no staff in order to handle the same and therefore now I have appointed a new Consultant to guide us in this matter. Hence the delay by us was not intentional. Thus the late filing was due to the reasons totally beyond our control. Looking at the above facts the necessary steps could not be taken, please take a lenient view and condone the delay.

This delay is wholly unintentional & beyond the control of the appellant. The word 'Sufficient cause has been construed quite liberally in case of R.J. Pratap Singh (100 ITR 698 S.C.J. S.N. Ghorpade (48 ITR 54 Mumbai).

The word 'Sufficient cause is used in section 5 of the Limitation Act, hence equally important relevance is attached to it. The Supreme Court has interpreted this phrase which is hinding on all courts and Qu-asi-judicial authorities that decide condonation of delay on sufficient cause bein-g shown. Section 5 of the Limitation Act gives the court discretion to be exercised upon the principles which are well understood by the words 'sufficient cause, which receive a liberal construction so as to advance substantial justice when no negligence or want of bonafide is imputable to the appellant. [Shankutala Jain AIR 69 S.C.]

Recently in the case of Improvement Trust vs. Ujagar Singh (Supreme Court) it was held that, "Justice can be done only when the matter is fought on merits and in accordance with law rather than to dispose it off on such technicalities and that too at the threshold; Unless malafied are writ large on the conduct of the party, generally as a normal rule. delay should be condoned.

In case of MST Katji [167 ITR 471 S.C.J, the S.C. enunciated the following principles:  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 at the very threshold & cause of justice being defeated as against this, when the delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties.  The doctrine must be applied in a rational, common sense and pragmatic manner.  When substantial justice and technical consideration are pitted against cach other cause of substantial justice deserves to be preferred for the other side can not 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 malafides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk.

Whatever is stated above in Para no I is true to my knowledge and belief:

I therefore request Your Honour to kindly condone the delay and admit theappeal as required & oblige. Solemnly declared this 12th day of July, 2025. (Kireet Kedarnath Rai)

The brief facts of the case is that the assessee is a civil contractor and doing civil works for various departments in Public Works Department (PWD), (CPWD) and Airport Authority of India (AAI). The Ld.AO, while making the assessment, made various additions under different heads. The aggrieved assessee filed appeal before the Ld. CIT(A). The Ld.CIT(A) sustained addition @1% of the closing stock amount to Rs.5,67,45,824/- which comes to Rs.5,67,458/- which was added back with the total income of the assessee. Aggrieved assessee filed an appeal before us challenging only ground relating to 1% addition of the closing stock.

The Ld.AR submitted a paper book containing pages 1 to 98 which is kept on record. The Ld.AR stated that the Ld.AO asked for the details related to valuation of closing stock. The assessee executed civil jobs contract and hundreds of various works and all running bills are prepared in detail. All projects run for 2 or 3 years. In .Y. 2018-19 as on 31/03/2018, the job-wise stock as on 31/03/2018 is already submitted at the time of hearing. The assessee invited our attention to APB pages 29 to 90 where the assessee submitted all the details before the Ld.AO dated 11/01/2021. But without any basis, the addition was confirmed by the Ld. AO @1% of the closing stock. The Ld.AR further invited our attention to appeal order, para 7.3 on pages 9 & 10, which is extracted below:- “7.3 DECISION: 7.3.1 The closing slack reported by the appellant in balance sheet is Rs. 5.67.45.824/- The appellant submitted final bill copies for the work being carried out "Construction of Circuit House at Silvassa (Site development)" passed for an amount of Rs. 3,44.97.401/- and Rs.

3.2 The appellant has relied upon various judicial procurements mainly on the ground that mere suspicion can not be a ground for the addition. The decisions cited by the appellant have been gone through and the decisions are not similar to the facts of the appellant's case. In his case, the basis of valuation of stock which will have a bearing in the profit element has not been furnished. In the absence of such details, the AO has come to a conclusion that there is a revenue leakage and arrived at 1% of such leakage in adopting closing stock valuation. When the onus was on the appellant to support his claim with evidence and the same was not discharged, the AO in the facts and circumstances of the case adopted a adhoc figure which in his opinion is appropriate. This action of the AO can not be stated as 'mere suspicion as argued by the appellant. In view of the above discussion the action of the AO can not be found fault and therefore, the addition on this ground is upheld.”

The Ld.DR argued and stands in favour of the orders of revenue authorities.

We have heard the rival submissions and perused the material available on record. We find that during the assessment proceedings, the assessee had 6 KireetKedarnath Rai furnished before the Ld. AO complete details relating to the closing work-in- progress, including running bills for the works executed, which were received in the first quarter of the subsequent financial year and were duly prepared by the relevant departments. The assessee also produced bank statements for the first quarter of the following year, evidencing that payments relating to the purchases reflected in the closing work-in-progress were duly received. Furthermore, we note that the Ld. AO did not reject the assessee’s books of account, yet proceeded to estimate the closing stock at 1%. In our considered opinion, such an estimation of closing stock amounting to Rs. 5,67,458/- is without any rational basis and is arbitrary and unsustainable in law. Accordingly, we set aside the impugned appellate order and direct that the addition made by the Ld. AO be deleted. 8. In the result, the appeal of the assessee bearing ITA No.5222/Mum/2025 is allowed. Order pronounced in the open court on 15/12/ 2025. (GIRISH AGRAWAL) JUDICIAL MEMBER Mumbai,िदनांक/Dated: 15/12/2025 Pavanan

अपीलाथ /The Appellant , 2. ितवादी/ The Respondent. 3. आयकरआयु CIT 4. िवभागीय ितिनिध, आय.अपी.अिध., मुंबई/DR, ITAT, MUMBAI 5. गाडफाइल/Guard file.