KEMPEGOWDA CREDIT CO-OPERATIVE SOCIETY LIMITED,BANGALORE vs. ITO, WARD 4(3)(3), BANGALORE

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ITA 447/BANG/2026Status: DisposedITAT Bangalore24 August 2026AY 2016-201711 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal condoned the delay in filing the appeal, finding sufficient cause and prioritizing substantial justice over technicalities. It also decided to remit the entire issues to the AO for fresh adjudication.

What were the facts?

The assessee filed an appeal before the ITAT with a delay of 125 days, citing mismanagement and delayed appointment of a new CEO. The assessee also failed to represent its case before the lower authorities, leading to ex-parte orders.

What were the issues?

Whether the delay in filing the appeal should be condoned, and whether the case should be remitted to the AO for fresh assessment due to the assessee's failure to represent its case before lower authorities.

Which sections of the Income-tax Act were involved?

Section 253(5),Section 147,Section 144,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A’’ BENCH: BANGALORE

Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY

For Appellant: CA T.R. Girish, A.R
Hearing: 18.06.2026Pronounced: 24.08.2026

PER KESHAV DUBEY, JUDICIAL MEMBER:

This appeal at the instance of the assessee is directed against the order of the ld. CIT(A)/NFAC dated 28.07.2025 vide DIN & Order No. ITBA/NFAC/S/250/2025-26/1078971276(1) passed u/s 250 of the Income Tax Act, 1961 (in short “the Act”) for the assessment year 2016-17.

2.

The assessee has raised the following grounds of appeal:-

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ITA No.447/Bang/2026 Kempegowda Credit Co-operative Society Limited, Bengaluru Page 4 of 11 3. At the outset, the ld. A.R. of the assessee submitted that there is a delay of 125 days in filing the appeal before this Tribunal. The ld. A.R. of the assessee also drew our attention to the application for condonation of delay dated 27.01.2026 filed along with an affidavit in original sworn before the notary public, which are reproduced below for ease of reference and record:

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4.

Before us, the ld. AR of the assessee reiterated the same as stated above & vehemently submitted that the assessee could not file the appeal within prescribed period for the reason that the Chief Executive Officer (CEO) of the assessee society was dismissed due to mismanagement and new CEO appointment was delayed and hence there is a delay in filing the appeal. The ld. A.R. also submitted that the delay is unintentional and no benefit can be attributed to the assessee in filing the appeal belatedly. He thus prayed to condone the delay and requested to consider the issues raised by the assessee on merits.

5.

On the contrary the ld. D.R. vehemently objected for granting the condonation of delay and submitted that the assessee is very callous in its approach in filing the appeal before this Tribunal.

6.

We have perused the details filed by the assessee to justify the delay and we are satisfied that there is no malafide intention on the part of the assessee in filing the appeal belatedly before us. In our considered opinion, the assessee has demonstrated the sufficient cause in filing the appeal belatedly before us. It is to be noted that u/s 253(5) of the Act the Tribunal may admit the appeal filed beyond

ITA No.447/Bang/2026 Kempegowda Credit Co-operative Society Limited, Bengaluru Page 8 of 11 the period of limitation where it has established that there exists a sufficient cause on the part of the assessee for not presenting the appeal within the prescribed time. The explanation therefore, becomes relevant to determine whether the same reflect sufficient and reasonable cause on the part of the assessee in not filing the appeal within the prescribed time. We have gone through the reasons explained by the assessee in which we find that the Chief Executive Officer (CEO) of the assessee society was dismissed due to mismanagement and new CEO appointment was delayed and hence there is a delay in filing the appeal.

6.1 While considering a similar issue the Apex Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) laid down six principles. For the purpose of convenience, the principles laid down by the Apex Court are reproduced hereunder:

(1) Ordinarily, a litigant does not stand to benefit by lodging an appeal late.

(2) Refusing to condone delay can result in a meritorious matter being thrown at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. (3) 'Every day's delay must be explained' does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational, commonsense and pragmatic manner.

(4) When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a nondeliberate delay. (5) There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk. (6) It must be grasped that the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so.

ITA No.447/Bang/2026 Kempegowda Credit Co-operative Society Limited, Bengaluru Page 9 of 11 6.2 When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of nondeliberate delay. Therefore, we have to prefer substantial justice rather than technicality in deciding the issue. As observed by Apex Court, if the application of the assessee for condoning the delay is rejected, it would amount to legalize injustice on technical ground when the Tribunal is capable of removing injustice and to do justice. Therefore, this Tribunal is bound to remove the injustice by condoning the delay on technicalities. If the delay is not condoned, it would amount to legalizing an illegal order which would result in unjust enrichment on the part of the State by retaining the tax relatable thereto. Under the scheme of Constitution, the Government cannot retain even a single pie of the individual citizen as tax, when it is not authorized by an authority of law. Therefore, if we refuse to condone the delay, that would amount to legalize an illegal and unconstitutional order passed by the lower authority.

6.3 Further, in the case of People Education & Economic Development Society Vs/ ITO reported in 100 ITD 87 (TM) (Chen), wherein held that “when substantial justice and technical consultation are pitted against each other, the cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of non-deliberate delay”.

6.4 The next question may arise whether delay was excessive or inordinate. There is no question of any excessive or inordinate when the reason stated by the assessee was a reasonable cause for not filing the appeal. We have to see the cause for the delay. When there was a reasonable cause, the period of delay may not be relevant

ITA No.447/Bang/2026 Kempegowda Credit Co-operative Society Limited, Bengaluru Page 10 of 11 factor. In fact, the Madras High Court in the case of CIT vs. K.S.P. Shanmugavel Nadai and Ors. (153 ITR 596) considered the condonation of delay and held that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation. Accordingly, the Madras High Court condoned nearly 21 years of delay in filing the appeal. When compared to 21 years, 125 days cannot be considered to be inordinate or excessive. Furthermore, the Chennai Tribunal by majority opinion in the case of People Education and Economic Development Society (PEEDS) v. ITO (100 ITD 87) (Chennai) (TM) condoned more than six hundred days delay. Therefore, in our opinion, by preferring the substantial justice, the delay of 125 days has to be condoned and accordingly we condone the delay and admit the appeal for adjudication.

7.

Now having condoned the delay, before us both the parties fairly conceded that the assessee could not represent its case before both the authorities below. On perusal of the order of the AO, we observed that the assessment order is passed ex-parte on 30.12.2023 u/s 147 r.w.s. 144 of the Act by making total addition of Rs.3,95,33,893/-. Further, on perusal of the order of ld. CIT(A)/NFAC, we also observed that the ld. CIT(A)/NFAC despite providing five number of opportunities of being heard, the assessee did not response to any of the notices and accordingly the ld. CIT(A)/NFAC held that law assist those who are vigilant and not those who sleep over their rights. Thus, in the absence of any reasonable, cogent and valid arguments/contentions advanced by the assessee to counter the AO’s decision, the addition/disallowances made by the AO was sustained. Before us, the ld. A.R. of the assessee vehemently submitted that there was mismanagement in the case of the society and accordingly complaint was filed and for this reason, the assessee could not represent its

ITA No.447/Bang/2026 Kempegowda Credit Co-operative Society Limited, Bengaluru Page 11 of 11 case before both the authorities below and accordingly prayed that the case may be remitted to the file of AO to decide a fresh in the interest of justice and fair play.

7.1 This being so, in the interest of justice, equity and fair play and as requested by the ld. A.R. of the assessee, we deem it fit and proper to remit the entire issues in dispute to the file of AO to decide afresh in accordance with law. Needless to say, a reasonable opportunity of being heard must be granted to the assessee. The assessee is also directed to produce/submit all the relevant documents/records/ information to substantiate its claim or as may be required by the AO for the completion of the assessment. We make it clear that in case of further default, the assessee shall not be entitled to any leniency. It is ordered accordingly.

8.

In the result, appeal filed by the assessee is partly allowed for statistical purposes.

Order pronounced in the open court on 24th Aug, 2026

Sd/- Sd/- (Waseem Ahmed) (Keshav Dubey) Accountant Member Judicial Member

Bangalore, Dated 24th Aug, 2026. VG/SPS

Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The DR, ITAT, Bangalore. 5 Guard file By order

Asst. Registrar, ITAT, Bangalore.

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