THE ADAMPUR CO-OP AGRICULTURE SERVICE SOCIETY LIMITED, ,FATEHGARH SAHIB vs. INCOME TAX OFFICER, WARD - SIRHIND, SIRHIND

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ITA 1/CHANDI/2026Status: DisposedITAT Chandigarh14 July 2026AY 2018-197 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the explanation provided by the assessee for the delay did not constitute a 'sufficient cause' under Section 249(3) of the Act. The Tribunal found the reasons vague, unsupported by evidence, and indicative of inaction and lack of diligence.

What were the facts?

The assessee filed an appeal before the CIT(A) after a delay of 1353 days. The CIT(A) dismissed the appeal in limine on grounds of limitation, holding that the assessee failed to provide sufficient cause for the delay. The assessee's reasons included non-communication by counsel, employee retirement, and a vacancy in the Secretary position.

What were the issues?

Whether the CIT(A) was justified in refusing to condone the inordinate delay in filing the appeal, and whether electronic generation of an order with a DIN constitutes valid service.

Which sections of the Income-tax Act were involved?

Section 249(3),Section 282,Section 143(3),Section 144B,Section 40A(7),Section 145(3),Section 226(3)

AI-generated summary — verify with the full judgment below

IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCHES, “SMC” CHANDIGARH HEARING THROUGH: HYBRID MODE BEFORE: SHRI. LALIET KUMAR, JUDICIAL MEMBER आयकर अपील सं./ ITA No. 1 /Chd/2026 िनधा�रण वष� / Assessment Year : 2018-19 The Adampur Co-op Agriculture बनाम The ITO Service Society Limited, Ward-Sirhind C/o Tejmohan Singh, Advocate Punjab-140403 # 527, Sector 10-D, Chandigarh- 160011 �ायी लेखा सं./PAN NO: AAALT0063C अपीलाथ�/Appellant ��थ�/Respondent िनधा�रती की ओर से/Assessee by : Shri Tejmohan Singh, Advocate राज� की ओर से/ Revenue by : Dr. Ranjit Kaur, Addl. CIT, Sr. DR (Virtual Mode) सुनवाई की तारीख/Date of Hearing : 23/06/2026 उदघोषणा की तारीख/Date of Pronouncement : 14/07/2026 आदेश/Order PER LALIET KUMAR, J.M: This is an appeal filed by the Assessee against the order of the Ld. CIT(A), NFAC, Delhi dt. 03/12/2025 for the Assessment Year 2018-19. 2. In the present appeal Assessee has raised the following grounds:

1.

That the Ld. CIT(A) erred in dismissing the appeal in limine on the alleged delay of 1353 days without appreciating the explanation placed on record and without demonstrating why the cause shown did not constitute "sufficient cause" u/s 249(3), thereby rendering the order mechanical, arbitrary and contrary to settled judicial principles on liberal condonation. 2. That the Ld. CIT(A) further erred in presuming service of the assessment order merely because it bore a DIN in ITBA, without establishing actual service in accordance with section 282 r.w. Rule 127, and without dealing with the appellant's categorical plea that the order came to its knowledge only on receipt of notice u/s 226(3) on 15.01.2025. 3. That the Ld. CIT(A) failed to consider the bona fide circumstances- noncommunication by the earlier counsel, retirement of the concerned employee, and vacancy of the Secretary-which prevented earlier filing of appeal; the refusal to condone delay has resulted in denial of statutory appellate remedy and violation of natural justice. 4. Without prejudice to the above, the Ld. CIT(A) has erred in upholding the addition of Rs.59,885/- on account of alleged "increase in investment" which is arbitrary, unreasoned and made without any discrepancy having been found in the audited books of account.

5.

That the disallowance of Rs.10,00,000/- u/s 40A(7) towards gratuity provision is unjustified as the AO made the disallowance without examining the underlying liability, supporting records or actuarial basis. 6. That the estimation of net profit @ 8% on sales of Rs.95,56,804/- resulting in addition of Rs.7,64,544/- is illegal since the books were neither rejected u/s 145(3) nor any defect pointed out, and the estimation is ad hoe and contrary to law. 7. That the appellant craves leave to add, amend or modify any grounds before or at the time of hearing.

3.

Briefly the facts of the case are that the assessee, M/s The Adampur Co-op Agriculture Service Society Ltd., is a resident local authority that e-filed its return of income for the Assessment Year 2018-19 on 16/10/2018, declaring a total loss of Rs. 10,45,679/-. The case was subsequently selected for Limited Scrutiny under the CASS (Computer Assisted Scrutiny System) via the E- assessment Scheme, 2019, to examine specific issues concerning Investments/Advances/Loans and Disallowance u/s 40A(7) regarding gratuity provisions. Statutory notices under section 143(2) and section 142(1) were issued and served upon the assessee. While the assessee filed a partial reply on 26/03/2021 contending that it had paid a gratuity of Rs. 10,43,830/- to its deceased Secretary and claiming exemption under section 80P, it failed to furnish requisite documentary evidences or respond comprehensively to subsequent reminders and the final show-cause notice dated 31/03/2021.

3.1 The Assessing Officer observed that the assessee continuously failed to comply with the statutory notices or provide full documentation in support of its return of income. Left with no option but to finalize the assessment based on the material available on record, the AO made specific additions and adjustments in the assessment order passed under section 143(3) read with section 144B of the Act, dated 07/04/2021. Firstly, an addition on account of an increase in investment amounting to Rs. 59,885/- was made because the total investments of the assessee had increased from Rs. 14,44,140/- to Rs. 15,04,025/- without proper reconciliation. Secondly, a disallowance of the gratuity provision totaling Rs. 10,00,000/- was made under section 40A(7) of the Act due to the lack of supportive documentary evidence regarding the

3 underlying liability or its actuarial basis. Lastly, regarding the estimation of net profit, the AO found low income in comparison to high loans, advances, and investments, and subsequently estimated the net profit at the rate of 8% on the total sales/receipts of Rs. 95,56,804/-, which resulted in an addition of Rs. 7,64,544/-. Consequently, the total income of the assessee was assessed at Rs. 18,24,430/- against the returned loss.

4.

Against the order of the AO the assessee went in appeal before the Ld. CIT(A). On appeal, the Ld. CIT(A) dismissed the assessee's appeal in limine without entering into the merits of the case, on the ground of limitation. The Ld. CIT(A) noted that while the assessment order was passed on 07/04/2021, the appeal in Form No. 35 was preferred only on 18/01/2025, leading to an inordinate delay of 1353 days. The Ld. CIT(A) rejected the assessee’s plea that it only gained knowledge of the assessment on 15/01/2025 via a bank notice under section 226(3), holding that since the order was generated in the ITBA module with a valid DIN on 07/04/2021, it must be presumed to have reached the appellant on the same day. Referring to various judicial precedents, the Ld. CIT(A) concluded that the reasons cited by the assessee such as the non-communication by the erstwhile counsel, retirement of the concerned employee, and vacancy in the office of the Secretary— amounted to mere "bald assertions" devoid of cogent documentary evidence. Holding that the delay was a product of deliberate inaction, negligence, and lack of due diligence, the Ld. CIT(A) ruled that the assessee failed to establish "sufficient cause" under section 249(3) of the Act and refused to condone the delay.

5.

Against the order of the Ld. CIT(A) the assessee preferred in appeal before the Tribunal.

6.

During the course of hearing, the Ld. AR strongly argued that the Ld. CIT(A) erred both in law and on facts by dismissing the appeal in limine in a highly mechanical and arbitrary manner. He submitted that the assessee was prevented by bona fide circumstances from filing the appeal in time due to a breakdown in internal administration, triggered by the retirement of the

4 handling employee, a prolonged vacancy in the critical post of the Secretary, and professional non-communication by the erstwhile counsel.

6.1 The Ld. AR vehemently challenged the presumption of service, pointing out that generating an order with a DIN on the ITBA portal does not equate to actual legal service as mandated under Section 282 r.w. Rule 127. He emphasized that the assessment order came to the actual knowledge of the society only on 15/01/2025 when bank attachment notices u/s 226(3) were received, after which the new Secretary acted with utmost dispatch to file the appeal on 18/01/2025.

6.2 On merits, the Ld. AR contended that the addition of Rs. 59,885/- was unreasoned since no discrepancies were found in the audited books; the Rs. 10,00,000/- gratuity disallowance was made without checking the actual liability records; and the estimation of net profit @ 8% on sales was illegal as the AO never rejected the books of accounts under section 145(3). He prayed for the delay to be condoned in line with settled judicial principles of liberal condonation to advance substantial justice.

7.

The Ld. DR, on the other hand, heavily relied upon the concurrent findings of the lower authorities and strongly supported the order of the Ld. CIT(A). He argued that a massive delay of 1353 days cannot be condoned on mere text-book excuses and administrative narratives. The Ld. DR submitted that in the faceless regime, generating and uploading an order with a DIN on the ITBA portal constitutes valid electronic service, and the assessee cannot plead ignorance of portal notifications for nearly four years. He stressed that the law of limitation protects the vigilant and not the indolent, and that the explanations offered by the assessee were completely unsupported by any corroborative documentary evidence.

7.1 On merits, the Ld. DR argued that since the assessee chose to remain non-compliant during the assessment proceedings and failed to produce books or actuarial reports, the AO was fully justified in making the ad-hoc additions for increased investments, provisions for unapproved gratuity, and

5 estimating profit at a standard 8% rate. He concluded that the Ld. CIT(A) rightly exercised his statutory discretion under section 249(3) in refusing to condone the delay, and the order deserves to be upheld.

8.

I have heard the rival submissions, perused the material available on record and carefully gone through the orders of the authorities below. The short issue arising for consideration is whether the Ld. CIT(A) was justified in refusing to condone the delay of 1,353 days in filing the appeal. Admittedly, the assessment order under section 143(3) read with section 144B of the Income-tax Act, 1961 was passed on 07.04.2021, whereas the appeal before the Ld. CIT(A) came to be filed only on 18.01.2025, resulting in an undisputed delay of 1,353 days. The assessee sought condonation of the said delay by pleading that the assessment order was never communicated to it by its earlier counsel, that the concerned employee had retired, that there was a vacancy in the post of Secretary, and that the assessment order came to its knowledge only upon receipt of a notice issued under section 226(3) of the Act on 15.01.2025. In my considered opinion, the explanation furnished by the assessee does not constitute "sufficient cause" within the meaning of section 249(3) of the Act. The reasons advanced are vague, general and unsupported by any contemporaneous documentary evidence. No affidavit of the earlier counsel has been placed on record. Likewise, no documentary material has been produced to substantiate the plea regarding the retirement of the concerned employee, the alleged administrative vacuum on account of the vacancy in the office of the Secretary, or the steps taken by the managing committee to monitor the tax proceedings during the intervening period of nearly four years.

8.1 The contention that the assessment order came to the knowledge of the assessee only on receipt of the notice under section 226(3) is also devoid of merit. The assessment order was admittedly generated through the ITBA system with a valid Document Identification Number (DIN). In the faceless assessment regime, electronic communication through the designated portal is a recognized mode of service under the statutory framework. A registered

6 assessee cannot remain completely oblivious to proceedings conducted on the designated electronic platform for an inordinately long period and thereafter seek condonation merely by pleading lack of actual knowledge. Such an explanation, in the absence of cogent supporting material, cannot be accepted.

8.2 It is no doubt true that while considering an application for condonation of delay, a liberal approach is ordinarily required to be adopted so that substantial justice prevails over technical considerations. However, the expression "sufficient cause" cannot be interpreted so liberally as to render the law of limitation otiose. The discretion vested in the appellate authority has to be exercised judiciously, balancing the cause of substantial justice with the requirement of certainty and finality in litigation. A party seeking condonation must demonstrate bona fide conduct, due diligence and circumstances beyond its control. Mere negligence, administrative lapses or internal mismanagement cannot, by themselves, furnish a legally sustainable ground for condoning an enormous delay.

8.3 In the present case, the assessee has failed to explain each day's delay or even furnish a plausible explanation covering the entire period of default. The explanation offered is neither convincing nor supported by any credible material. The delay appears to have occurred due to sheer inaction and lack of diligence on the part of the assessee. I, therefore, find no infirmity in the exercise of discretion by the Ld. CIT(A) in declining to condone the delay.

8.4 Once the appeal before the Ld. CIT(A) has rightly been held to be barred by limitation, the grounds raised by the assessee on the merits of the additions do not survive for adjudication. Accordingly, I refrain from expressing any opinion on the merits of the additions made by the Assessing Officer, lest it prejudices either party in any subsequent proceedings, if permissible in law.

7 8.5 In view of the foregoing discussion, I uphold the order of the Ld. CIT(A) refusing to condone the delay of 1,353 days. Consequently, the appeal filed by the assessee stands dismissed.

9.

In the result, appeal of the Assessee is dismissed.

Order pronounced on 14/07/2026 Sd/- ( LALIET KUMAR) JUDICIAL MEMBER AG आदेश की �ितिलिप अ�ेिषत/ Copy of the order forwarded to : अपीलाथ�/ The Appellant 1. ��थ�/ The Respondent 2. आयकर आयु�/ CIT 3. आयकर आयु� (अपील)/ The CIT(A) 4. िवभागीय �ितिनिध, आयकर अपीलीय आिधकरण, च�ीगढ़/ DR, ITAT, CHANDIGARH 5. गाड� फाईल/ Guard File 6.

BY ORDER, ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KENDRIYA SADAN, SECTOR-9A CHANDIGARH

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