SIDHARTH CO-OPERATIVE CREDIT AND THRIFT SOCIETY vs. THE INCOME TAX OFFICER,

The present appeal is filed against the order dated 08.02.2024 passed by the Income Tax Appellate Tribunal (ITAT), Raipur Bench, Raipur.

After going through the contention of the appellant, the following question of law arises for consideration : (i) Whether the learned ITAT was justified in denying to condone the delay of 530 days, ignoring the fact that the appellant has already availed a forum under the Income Tax Act, 1961 for rectification whether such period spent therein should have been favourably considered.

The particulars of the case is that on 25.01.2019, the return was filed by the assessee/appellant and a deduction was claimed of Rs. 16,47,748/- under Section 80P(2)(a)(i) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act, 1961’). The said return was processed under Section 143(1)(a) of the Act, 1961

Being aggrieved by such dismissal of the rectification application under Section 154 of the Act, 1961 first appeal was filed under Section 246A. The said appeal was dismissed on 07.09.2022 by the CIT (A). Thereafter, a second appeal was filed against the order of the CIT (A) which was predominantly against the rejection of application under Section 154 of the Act and the second appeal was also dismissed on 27.10.2023 by the ITAT.

Thereafter, the appellant/assessee came back and again challenged the initial order dated 19.04.2022. According to the appellant, the delay of about 530 days was not condoned specially taking into the fact that even after dismissal of the second appeal on 27.10.2023, the appeal before the ITAT was filed beyond the stipulated period of one month and four days.

The submission is made that the assessee availed the remedy of rectification wherein the deduction claimed by the assessee was denied and time spent therein after dismissal of the appeal against such order should have been condoned in view of Section 14 of the Limitation Act, which provides for exclusion of time spent in pursuing a remedy outside the prescribed period.

Learned counsel for the appellant placed reliance on the law laid down by the Supreme Court in Rahimal Bathu & others versus Ashiyal Beevi (2023 LiveLaw (SC) 829) to submit that the appellant was pursuing his remedy which was available under the statute which apparently is a bona fide and should have been condoned and the bona fide and good faith are writ large. Para 28 & 30 of the said judgment are reproduced hereinbelow:-

For all the reasons above, we are of the considered view that where an appealable decree has been passed in a suit, no revision should be entertained under Section 115 of the CPC against an order rejecting on merits a review of that decree. The proper remedy for the party whose application for review of an appealable decree has been rejected on merits is to file an appeal against that decree and if, in the meantime, the appeal is rendered barred by time, the time spent in diligently pursuing the review application can be condoned by the Court to which an appeal is filed. xxx xxx xxx

However, this will not affect the right of the plaintiff/respondent to file an appeal against the decree of the trial court along with an application to condone the delay, if any, in filing the appeal. Parties to bear their own costs.

Learned counsel for the Revenue opposed the submission and stated that as per para 12 of the order of the ITAT, which is impugned, even after the rejection of the appeal on 27.10.2023, further delay of one month and four days occurred in filing the appeal. Consequently, the order is well merited, which do not call for interference.

We have heard learned counsel for the parties and went through the records and documents filed.

Indisputably, after the return was filed, the deduction claimed by the appellant was denied on 07.06.2019. Consequently, first appeal was filed under Section 246A, which was dismissed on 19.04.2022. The statute provides for rectification i.e. a review, in case where certain facts have been left out or wrongly considered. The appellant thought it proper to avail such remedy but did not succeed and eventually the rectification prayer was subsequently dismissed, thereby upholding the original order of first appeal on 19.4.2022. Against such rejection of the rectification application process of first appeal and second appeal was availed which were ultimately decided on 27.10.2023 which leads to point out that it only envelops the issue of rectification. Subsequently, the main order dated 19.04.2022 was challenged before the ITAT on 30.11.2023. 12. The submission of the appellant and the learned ITAT dismissed

After going through the records of the proceeding and the principles, which is laid down by the Supreme Court, we are of the view that the appellant availed the remedy of rectification and in the instant case, if rectification would have been allowed, the subsequent findings of the appeal would have been rendered infructuous.

Under the circumstances, the remedy availed which is available under the statute, cannot be said to have been branded with the delay, it was eventually when the prayer for rectification in the appeal were dismissed, the appellant came back to the original order which was already available to him and filed the appeal. The order of the ITAT which records that there has been a delay of one month and four days, even after dismissal of the second appeal on 27.10.2023. We do not concur as the time which has been explained prima facie shown to be bona fide. The record shows that the time spent diligently pursuing the review/ rectification application ought to have been condoned and the facts has to be seen in a cluster not in fagment .

Consequently, we allow the appeal and condone the delay of 530 days in filing the appeal before the ITAT and remit back the case to the ITAT to adjudicate afresh, in accordance with law and on its own merits. Accordingly, the question of law is answered in favor of the appellant. (Goutam Bhaduri) (Radhakishan Agrawal) Judge Judge Ashu/RD