NACL INDUSTRIES LIMITED,HYDERABAD vs. ACIT, CIRCLE - 5(1), HYDERABAD

The brief facts of the case are that, the assessee, NACL Industries Limited, filed its return of income for the assessment year 2018-19 on 30.10.2018 declaring total income of Rs. 12,59,49,190/-. The return of income filed by the assessee was processed u/s 143(1) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”). Subsequently, the case was selected for scrutiny under the Complete Scrutiny category and notice u/s 143(2) of the Act was issued and served on the assessee. The assessee company is engaged in the business of crop protection. Thereafter, notices u/s 142(1) of the Act were issued from time to time calling for the requisite details, in response to which the assessee filed submissions and documents electronically through the e-Proceeding facility on the e-filing account of the Income Tax

During the course of assessment proceedings, the A.O. noticed that the assessee had claimed weighted deduction u/s 35(2AB) of the Act of Rs. 4,93,51,823/- on expenditure of Rs. 3,29,01,215/-. However, as per Form No.3CL, the expenditure approved by the Department of Scientific and Industrial Research (DSIR) was only Rs. 2,94,64,000/-. Accordingly, the A.O. restricted the weighted deduction u/s 35(2AB) to Rs. 4,41,96,000/-. The assessee had also made an alternate claim for allowing the difference amount of Rs. 34,37,215/- u/s 35(1)(i) or u/s 37 of the Act, which was accepted by the A.O. and the said amount was allowed as deduction u/s 35(1)(i). Thus, the effective disallowance made by the A.O. was Rs. 17,18,608/-. Accordingly, the total income of the assessee was assessed at Rs. 12,76,67,800/- u/s 143(3) r.w.s. 144B of the Act.

Aggrieved by the assessment order, the assessee is now in appeal before the Ld. CIT(A). Before the Ld. CIT(A), the assessee challenged the disallowance made by the A.O. and filed an appeal on 07.09.2021 against the assessment order dated 01.06.2021

The Ld. CIT(A), after taking into consideration the submissions of the assessee, observed that the assessee had neither filed any petition seeking condonation of delay nor furnished any explanation for the delay in filing the appeal. The Ld. CIT(A) further observed that the incorrect declaration made by the assessee in Form No.35, stating that there was no delay in filing the appeal, further weakened the assessee’s case. Since the assessee had not furnished any reasonable cause for the delay in filing the appeal, the Ld. CIT(A) held that the delay could not be condoned and accordingly dismissed the appeal as time-barred.

Aggrieved by the order of Ld. CIT(A), the assessee is now in appeal before the Tribunal.

The learned counsel for the assessee, Shri C S Subrahmanyam, C.A., and Shri V. Siva Kumar, Advocate, submitted that, the appeal before the Ld. CIT(A) was filed during the period affected by the COVID-19 pandemic. It was submitted that, as per the judgment of the Hon’ble Supreme Court in the case of Cognizance for Extension of Limitation, In re, 438 ITR 296 (SC), read with the judgment in Cognizance for Extension of Limitation, In re, 432 ITR 206 (SC), dated 08.03.2021 and 421 ITR 314, the period covered by the COVID-19 pandemic was excluded for the purpose of limitation. The learned counsel for the assessee further submitted that, the Hon’ble Supreme Court, in its order dated 10.01.2022 passed in Suo Motu Writ Petition (C) No.3 of 2020 in the case of Cognizance for Extension of Limitation, excluded the period from 15.03.2020 till 28.02.2022 and granted a grace period of 90 days from 01.03.2022, which expired on 31.05.2022. Accordingly, under a bona fide belief that the period

The learned Senior A.R. for the Revenue, Shri K. Prasad, supporting the order of the Ld. CIT(A) submitted that the assessee had not filed any petition seeking condonation of delay either along with Form No.35 or subsequently. He further submitted that the assessee had itself stated in Form No.35 that there was no delay in filing the appeal. Accordingly, he supported the action of the Ld. CIT(A) in dismissing the appeal on the ground of limitation.

We have heard both parties, perused the material available on record and had gone through the orders of the authorities below. We find that the appeal filed by the assessee before the learned CIT(A) was not filed within the prescribed period of limitation. It is an admitted fact that the assessee has not submitted any grounds seeking condonation of delay, either in Form No.35 or in any of the subsequent attachments filed along with the appeal. Further, the

We find force in the arguments of the learned counsel for the assessee that the delay in filing the appeal was covered under the period affected by the COVID-19 pandemic. It is the claim of the assessee that, as per the judgment of the Hon’ble Supreme Court in the case of Cognizance for Extension of Limitation, In re, 438 ITR 296 (SC), read with the judgment in Cognizance for Extension of Limitation, In re, 432 ITR 206 (SC), dated 08.03.2021 and 421 ITR 314, and the order dated 10.01.2022 passed by the Hon’ble Supreme Court in Suo Motu Writ Petition (C) No.3 of 2020 in the case of Cognizance for Extension of Limitation, the period covered by the COVID-19 pandemic was excluded for the purpose of limitation. Under a bona fide belief that the period involved in the present case was covered by the aforesaid orders of the Hon’ble Supreme Court, the assessee was under the impression that a separate petition seeking condonation of delay was not required to be filed explaining the reasons for the delay.

Since the delay in filing of the appeal is stated to be covered under the period affected by the COVID-19 pandemic and the assessee was under a bona fide belief, based on the aforesaid orders of the Hon’ble Supreme Court, that no separate petition for condonation of delay was required to be filed, in our considered view, the learned CIT(A) ought to have condoned the delay in filing of the appeal. Thus, we set aside the order of the learned CIT(A) and restore the issue back to the file of the learned CIT(A) for reconsideration of the issue along with the appeal, after considering the delay in filing of the appeal. The assessee is directed to file the relevant condonation petition along with affidavit and explain the reasons for such delay. Needless to say, the learned CIT(A) shall provide reasonable opportunity of being heard to the assessee and thereafter decide the appeal in accordance with law.

In the result, the appeal of the assessee is allowed for statistical purposes.