ORCHID INDUSTRIES PRIVATE LIMITED,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX - 2(3)(1), MUMBAI

At the outset, the learned counsel for the assessee submitted that appeal has been filed with a delay of 1614 days. In support of the application for condonation, the assessee has filed a detailed affidavit stating that it had been under severe financial distress for several years preceding the assessment year; that demand notices aggregating approximately Rs. 30 crores were issued by its lending banks under the SARFAESI Act on 03.11.2015 and 18.06.2016; that the banks took possession of the appellant's factory premises and the directors' residential flats in March 2016 and sold them through e-auctions held in 2017 and 2018; and that the appellant discontinued its business operations with effect from 31.10.2019. The reassessment under Section 147 was completed on 16.12.2019, and the first appeal was filed before the CIT(A) within time on 04.01.2020; however, by the time the hearing notice dated 06.10.2021 was issued, the appellant had no financial resources, employees, administrative infrastructure or professional support left to respond, and the appeal came to be dismissed under Section 250 on 08.11.2021 without any further opportunity. The affidavit explains that the resulting delay in approaching this Tribunal was on account of the appellant's continuing financial collapse, loss of key managerial personnel, and the time consumed in retrieving scattered records and arranging professional assistance, and that the appeal was filed promptly once the appellant was in a position to do so.

We have heard rival submissions of the parties and perused the relevant material on record in relation to condonation of delay in filing the appeal. The expression "sufficient cause" is to be liberally construed so as to advance substantial justice, and a litigant does not ordinarily stand to benefit from delay; refusing to condone delay risks a meritorious matter being thrown out at the threshold as held by the Hon’ble Supreme court in Collector, Land Acquisition v. Mst. Katiji [(1987) 167 ITR 471 (SC)]. Further Hon’ble Supreme court in the case of N. Balakrishnan v. M. Krishnamurthy [(1998) 7 SCC 123] held that length of delay is not by itself decisive where the explanation is bona fide and free of mala fides. In the present case, the explanation is supported by an affidavit and is corroborated by the undisputed fact of SARFAESI action, loss of the appellant's business premises, and cessation of its operations, circumstances substantially beyond the appellant's control, and distinct from cases of mere negligence or conscious indifference where condonation has been declined as held in the cases of P.K. Ramachandran v. State of Kerala [(1997)

As far as issue on merit is concerned, the learned CIT(A) dismissed the appeal on the footing that the appellant had opted for the Vivad se Vishwas Scheme vide Form No. 1 dated 30.12.2020, and directed recovery of the outstanding demand of Rs. 4,38,32,790/-. The learned counsel for the assessee has placed on record Form No. 5 issued under the Scheme, which, as the CIT(A)'s own order itself records, relates to Assessment Year 2015-16 and not to Assessment Year 2012-13, the year under appeal. The CIT(A) having acknowledged this distinction in the body of the order while nonetheless dismissing the present appeal for Assessment Year 2012-13 on that very ground, the finding is self-contradictory and cannot be sustained. We accordingly set aside the order of the learned CIT(A) and restore the matter to his file for fresh adjudication on merits, in accordance with law, after affording the assessee adequate opportunity of being heard. The learned CIT(A) shall ensure that the cost directed above has been paid before proceeding to decide the appeal afresh.

In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 06/10/2026.