LODHA GRANDEUR CO OPERATIVE HOUSING SOCIETY LIMITED,MUMBAI vs. ITO WARD 22(2)(1), MUMBAI, MUMBAI

The brief facts of the case are that the assessee is a co-operative housing society registered under the Maharashtra State Co-operative Societies Act, 1960. The assessee filed return of income for the Assessment Year 2014-15 declaring Nil income and claimed deduction under section 80P(2)(d) of the Income-tax Act, 1961 ("the Act") amounting to ₹31,24,366 in respect of interest earned from investments made with Saraswat Co-operative Bank Ltd. The Centralised Processing Centre (CPC) processed the return of income filed by the assessee under section 143(1) of the Act and CPC denied the deduction claimed by the assessee under section 80P(2)(d) of the Act, thereby making an addition of ₹31,24,366 and a tax demand of ₹12,48,143 was raised on the assessee.

The assessee filed an appeal before CIT(Appeals) against the aforesaid adjustment. According to the assessee, CPC had made the aforesaid adjustment without issuing the prior intimation under the proviso to section 143(1)(a), which is a mandatory requirement of law and no opportunity was given to the assessee to explain the claim of deduction made by the assessee. The assessee further contended that the assessee had earned interest earned from investments held with co-operative bank and the same were eligible for deduction under section 80P(2)(d) of the Act, since a co-operative bank is a co-operative society registered under the Maharashtra State Co-operative Societies Act. However, there was a delay of 3,411 days in filing of appeal by the assessee before CIT(Appeals). The assessee filed application for condonation of the delay and submitted that the society had engaged a part-time accountant who was not conversant with taxation matters and, therefore, there was a delay in filing of appeal by the assessee within the prescribed time limit.

In appeal, the CIT(Appeals) confined his order solely to the issue of condonation of delay. The CIT(Appeals) held that although the length of delay is not decisive, it is the duty of the appellant to show sufficient cause for not filing the appeal within the prescribed period given under section 249(3) of the Act. The CIT(Appeals) held that the explanation given by the assessee that the part-time accountant did not have adequate knowledge of taxation did not constitute a sufficient cause for condoning such an extraordinary delay of more than nine years. Accordingly, CIT(Appeals) refused to condone the delay of 3,411 days and dismissed the appeal of the assessee as being barred by limitation and did not adjudicate the appeal of the assessee on merits.

The assessee is in appeal before us against the order passed by the CIT(Appeals) dismissing the appeal of the assessee on the ground of limitation without examining the issues raised on merits.

We have heard the rival contentions and perused the material available on record. The issue arising for our consideration is whether the assessee has shown "sufficient cause" within the meaning of section 249(3) of the Act for the extraordinary delay of 3,411 days in filing the appeal before the CIT(Appeals).

We have considered the affidavit filed by the assessee giving reasons for the delay. However, in our opinion, the assessee has not been able to give a satisfactory explanation for the extraordinary delay of over more than nine years in filing appeal before CIT(Appeals). The reasons furnished by the assessee that the part-time accountant was not conversant with appellate proceedings, that the earlier Managing Committee was under a bona fide belief that the rectified return filed pursuant to the notice under section 139(9) of the Act would be processed and the adjustment made under section 143(1) would automatically stand rectified, that there were changes in the management of the society, and that the COVID-19 pandemic affected the functioning of the society, are general in nature do not, in our view explain such a huge delay. The assessee has not shown any circumstances to have existed, beyond its control which prevented the assessee from filing the appeal within the prescribed period. In our view the explanation given by the assessee is general in nature and does not hold substance. We are of the considered view that mere ignorance of law, mistaken legal advice, or a belief that the Department would suo motu rectify the intimation does not constitute sufficient reasons for condoning an inordinate delay of this magnitude. The explanation given by the assessee also does not explain the period prior to the outbreak of the COVID-19 pandemic as well as the substantial period thereafter. It is well settled that while a liberal approach may be adopted in some cases, the law of limitation cannot be rendered otiose and a litigant seeking condonation must furnish a reasonable and bona fide reason for delay especially when such a huge period of delay is involved.

The assessee has placed reliance on various judicial precedents, but it is a settled principle of law the question of condonation depends upon the facts and circumstances of each case, and no parity can be drawn merely because delay was condoned by Courts in other matters. In the facts of the present case, the assessee has failed to establish sufficient cause for the extraordinary delay of 3,411 days. We, therefore, find no infirmity in the order of the learned CIT(Appeals) refusing to condone the delay and dismissing the appeal as being barred by limitation.

Accordingly, the appeal of the assessee is dismissed.