ACIT-6(1)(1),MUMBAI, MUMBAI vs. M/S DILIGENT MEDIA CORPORATION LIMITED, MUMBAI

At the outset, it is noticed that the Revenue's appeal has been filed with a delay of 09 days and the assessee has filed the Cross Objection with a delay of 73 days. Separate applications supported by affidavits have been filed explaining the respective delays.

In support of the application for condonation of delay, the Revenue has filed an affidavit sworn by Smt. Shilpa Khanikar, Assistant Commissioner of Income Tax, Circle-6(1)(1), Mumbai. In the said affidavit, it has been explained that the impugned CO-58/Mum/2026 M/s. Diligent Media Corporation Limited appellate order passed by the learned CIT(A), NFAC, Delhi dated 31.03.2025 was received by the Department and the limitation for filing the appeal before the Tribunal expired on 31.05.2025. It has been stated that the concerned office resumed functioning after a brief interruption on 15.05.2025 and efforts were immediately undertaken for tracing the assessment records pertaining to Assessment Year 2011-12, which being an old matter was time-barred and had already been transferred to the DTVSV records. It has further been stated that the scrutiny report was prepared and submitted on 28.05.2025 and the requisite authorization memo was received on 03.06.2025. Owing to the aforesaid administrative and procedural circumstances, the appeal could not be filed within the prescribed period and came to be filed with a delay of 09 days. It has been averred that grave prejudice would be caused to the interests of the Revenue if the delay is not condoned, whereas no prejudice would be caused to the assessee if the appeal is admitted and heard on merits.

In support of the condonation application relating to Cross Objection filed by the assessee, an affidavit has been sworn by Shri Nagendra Bhandari, Authorised Signatory of the assessee- company. In the said affidavit, it has been stated that the Revenue's appeal was received by the assessee on 10.10.2025 and the statutory period available for filing the Cross Objection expired on 09.11.2025. It has been explained that while preparing for the hearing of the appeal and after obtaining legal CO-58/Mum/2026 M/s. Diligent Media Corporation Limited advice in the light of various judicial pronouncements, the assessee was advised to challenge the validity of the reassessment proceedings initiated under section 148 of the Act on certain legal grounds which had not been adjudicated by the learned CIT(A). It is further stated that the assessee has a substantial legal challenge to the validity of the reassessment notice and the consequential reassessment proceedings and that the Cross Objection came to be filed only after obtaining such legal advice. According to the deponent, the delay was occasioned due to bona fide circumstances and was neither deliberate nor intentional. It has also been stated that no prejudice would be caused to the Revenue if the delay is condoned and the Cross Objection is adjudicated on merits.

During the course of hearing, the learned Departmental Representative (DR) fairly submitted that the Revenue has no objection to the condonation of delay in filing the assessee's Cross Objection. Similarly, the learned Authorised Representative (AR) for the assessee submitted that the assessee has no objection to the condonation of delay in filing the Revenue's appeal. Thus, both the parties have consented to the condonation of the respective delays and have requested that the controversy be decided on merits.

We have carefully considered the applications for condonation of delay, the affidavits filed in support thereof and the submissions advanced by the rival parties. The law relating to CO-58/Mum/2026 M/s. Diligent Media Corporation Limited condonation of delay is fairly well settled. The expression "sufficient cause" occurring in the relevant provisions governing limitation is required to receive a liberal and justice-oriented interpretation so as to advance substantial justice. The Hon'ble Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji & Ors. (167 ITR 471) has held that a pragmatic and liberal approach should ordinarily be adopted while considering applications for condonation of delay and that substantial justice should prevail over technical considerations. Similar principles have been reiterated by the Hon'ble Supreme Court in N. Balakrishnan v. M. Krishnamurthy [(1998) 7 SCC 123], wherein it was held that length of delay is not decisive and acceptability of the explanation is the primary criterion.

Applying the aforesaid principles to the facts of the present case, we find that the Revenue has explained the delay of 09 days by referring to administrative requirements relating to tracing of old records and obtaining statutory authorization. Likewise, the assessee has explained the delay of 73 days in filing the Cross Objection by stating that the legal grounds challenging the validity of reassessment proceedings were raised pursuant to legal advice received while preparing for the hearing of the appeal. The explanations furnished by both sides appear to be bona fide and do not indicate any mala fide intention, deliberate inaction or conscious negligence. Moreover, neither side has disputed the correctness of the explanation offered by the other side. CO-58/Mum/2026 M/s. Diligent Media Corporation Limited

Considering the totality of facts and circumstances, the explanations furnished in the respective affidavits, the relatively short nature of the delay in the Revenue's appeal, the bona fide explanation offered by the assessee in support of the Cross Objection and particularly the fact that neither party has objected to the condonation of delay sought by the opposite side, we are satisfied that sufficient cause has been shown both for the delay of 09 days in filing the Revenue's appeal and for the delay of 73 days in filing the assessee's Cross Objection.

Accordingly, in the interest of substantial justice, the delay of 09 days in filing the Revenue’s appeal and the delay of 73 days in filing the assessee’s Cross Objection are condoned. The appeal filed by the Revenue as well as the Cross Objection filed by the assessee are admitted for adjudication on merits. Facts of the Case

The brief facts of the case are that the assessee company is engaged in the business of publishing and printing of newspapers. The assessee filed its return of income on 28.09.2011 declaring loss of Rs. 1,12,09,54,399/-. The original assessment was completed under section 143(3) of the Act on 16.03.2014 determining the loss at Rs. 1,12,08,90,111/-.

Subsequently, on examination of the balance sheet, the Assessing Officer observed that the assessee had disclosed receipt of share premium aggregating to Rs. 5,80,22,18,142/- as on CO-58/Mum/2026 M/s. Diligent Media Corporation Limited 31.03.2011. According to the Assessing Officer, the cumulative balance of share premium as on 31.03.2010 stood at Rs. 4,67,70,00,000/- and during the year under consideration the assessee had received additional share premium of Rs. 1,12,52,18,142/-. The Assessing Officer formed a prima facie view that the issue relating to charging of share premium over and above the intrinsic value of shares had not been examined in the original scrutiny assessment. Accordingly, after recording reasons and obtaining sanction under section 151(2) of the Act, notice under section 148 dated 31.03.2016 was issued and reassessment proceedings were initiated.

The Assessing Officer noted that prior to reopening, notice under section 133(6) dated 29.03.2016 had been issued calling upon the assessee to justify the share premium received. Upon examination of the details furnished, the Assessing Officer observed that the assessee was continuously incurring losses and that the intrinsic value of its shares was negative. According to him, the valuation adopted by the assessee under the Discounted Cash Flow (DCF) method was not supported by the actual financial position of the company and was in sharp contrast with the value that would emerge under the Net Asset Value (NAV) method.

During the reassessment proceedings, the assessee submitted that during the relevant year it had issued 1,66,77,533 equity shares of face value of Rs.10/- each at a premium of CO-58/Mum/2026 M/s. Diligent Media Corporation Limited Rs.67.4691 per share to its holding company, M/s. Mediavest India Private Limited. The assessee furnished the valuation report determining the issue price at Rs.77.46 per share and contended that the valuation had been carried out by an independent Chartered Accountant in accordance with the DCF method. The assessee also furnished copies of income-tax returns, audited financial statements, assessment orders, confirmations, bank statements, Form No.2 filed before the