M/S ABS FUJITSU GENERAL PVT LTD vs. DEPUTY COMMISSIONER OF INCOME TAX

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ITA/275/2024HC KarnatakaKAHC01072233202420 January 2025Bench: KRISHNA S DIXIT,G BASAVARAJA5 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the first question framed by the assessee, concerning the justifiability of not condoning the delay, has the characteristics of a substantial question of law and therefore, the appeal merits admission on this basis. The Court agreed with the submission that disposing of the appeal on this first question would do justice to both parties. The Court also agreed with the assessee's submission that delay in appeals of this nature should be addressed with leniency, as has been the approach of the Court in several appeals filed by the Revenue. The Court found that condoning the delay would not add additional merits to the assessee's case, and dismissing the appeal solely on delay would cause 'heart burn' to the assessee. Accordingly, the substantial question of law regarding the justifiability of not condoning the delay was answered in favour of the assessee. The Court held that the delay in filing the first appeal needs to be condoned and, in the peculiar facts of the case, the matter should be remitted to the ITAT for consideration of the appeal on merits. The appeal was disposed of accordingly, keeping open all contentions of the parties.

What were the facts?

The assessee, M/s ABS Fujitsu General Pvt Ltd., filed an appeal before the Income Tax Appellate Tribunal (ITAT) for the Assessment Year 2021-22. The ITAT, in its order dated 04.07.2024 in ITA No. 845/Bang/2024, dismissed the assessee's appeal. The dismissal was based on the ITAT's finding that there was no sufficient cause to condone the delay in filing the appeal before the Commissioner of Income Tax (Appeals). The assessee is challenging this order of the ITAT before the High Court of Karnataka under Section 260-A of the Income Tax Act, 1961.

What were the issues?

1. Whether, in the facts and circumstances of the case, the Tribunal committed an error of law in dismissing the appeal of the assessee on the ground that there is no sufficient cause to condone the delay without giving due consideration to the material and evidence on record demonstrating sufficient cause for the delay in filing the appeal before CIT(A)? (Section 253 of the Income Tax Act, 1961). 2. Whether the findings of ITAT are perverse as they are based on incorrect appreciation of evidence and without appreciating that there was sufficient cause for delay in filing appeal before CIT(A)? The ITAT has erred in not exercising judicial discretion vested in it in accordance with established legal principles. (Mixed question of law and fact). 3. Whether, in the facts and circumstances of the case, the Tribunal erred in not appreciating the fact that disallowance of contingent liability under Section 37 of the Act, is unjustified as no deduction for same was claimed, thus leading to substantial injustice to the Appellant? (Section 37 of the Income Tax Act, 1961). Assessee's Contentions: The assessee argued that the ITAT erred in dismissing the appeal due to delay without properly considering the evidence of sufficient cause. They contended that the ITAT failed to exercise its judicial discretion appropriately and that dismissing the appeal solely on delay causes injustice. The assessee also argued that disallowance of contingent liability was unjustified as no deduction was claimed for it. Revenue's Contentions: The Revenue contended that the questions framed by the assessee do not involve substantial questions of law.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 37,Section 253

AI-generated summary — verify with the full judgment below

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NC: 2025:KHC:2074-DB ITA No. 275 of 2024

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 20TH DAY OF JANUARY, 2025 PRESENT THE HON'BLE MR JUSTICE KRISHNA S DIXIT AND THE HON'BLE MR JUSTICE G BASAVARAJA INCOME TAX APPEAL NO. 275 OF 2024 BETWEEN:

M/S ABS FUJITSU GENERAL PVT LTD., NO 63/4, BASAVA SADANA, VISHWANTHA RAO ROAD, MADHAVANAGAR, BANGALORE 560 001. KARNATAKA. (REP BY ITS DIRECTOR MR. VINOD SALADI S/O PRAKASH RAO SALADI, AGED ABOUT 50 YEARS. …APPELLANT (BY SRI. NARENDRA KUMAR J JAIN., ADVOCATE FOR SMT. GEETHA RANI K.,ADVOCATE)

AND:

DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 1 (1)(1), BANGALORE. BMTC BUILIDNG, 80 FEET ROAD, KORAMANGALA, BANGALORE 560 095. …RESPONDENT (BY SRI.DILIP M.,ADVOCATE)

THIS ITA FILED UNDER SECTION 260-A OF THE INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 04.07.2024 PASSED IN ITA NO.845/BANG/2024, ASSESSMENT YEAR 2021- 22, PRAYING TO A) FORMULATE THE SUBSTANTIAL QUESTION OF LAW AS STATED ABOVE AND B) ALLOW THE APPEAL AND SET ASIDE THE IMPUGNED ORDER OF THE INCOME TAX

Digitally signed by SHARADA VANI B Location: HIGH COURT OF KARNATAKA

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NC: 2025:KHC:2074-DB ITA No. 275 of 2024

APPELLATE TRIBUNAL, BENGALURU C BENCH BEARING IN ITA NO.845/BANG/2024 FOR THE ASSESSMENT YEAR 2021-22 DATED 04.07.2024 TO THE EXTENT PREJUDICIAL TO THE APPELLANT. ORIGINAL ORDER OF THE TRIBUNAL IS ENCLOSED HEREWITH AS ANNEXURE A, AND ETC.,

THIS ITA COMING ON FOR ADMISSION THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

CORAM: HON'BLE MR JUSTICE KRISHNA S DIXIT and HON'BLE MR JUSTICE G BASAVARAJA

ORAL JUDGMENT

(PER: HON'BLE MR JUSTICE KRISHNA S DIXIT)

Appeal by the Assessee has raised the following substantial questions of law: “I. Whether in the facts and circumstances of the case, the Tribunal committed an error of law in dismissing, the appeal of the assessee on the ground that there is no sufficient cause to condone the delay without giving due consideration to the material and evidence on record demonstrating sufficient cause for the delay in filing the appeal before CIT(A)?

II. Whether the findings of ITAT are perverse as they are based on incorrect appreciation of evidence and without appreciating that there was sufficient cause for delay in filing appeal before CIT(A). The ITAT has erred in not exercising judicial discretion

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NC: 2025:KHC:2074-DB ITA No. 275 of 2024

vested in it in accordance with established legal principles.

III. Whether in the facts and circumstances of the case, the Tribunal erred in not appreciating the fact that disallowance of contingent liability under Section 37 of the Act, is unjustified as no deduction for same was claimed, thus leading to substantial injustice to the Appellant?.”

2.

Learned Panel Counsel on request appears for the sole Respondent-Revenue and opposes the Appeal contending that the questions framed do not have elements of substantial law.

3.

Having heard the learned counsel for the parties and having perused the Petition papers, we are of the considered opinion that, first of the questions framed has the characteristics of the substantial question of law and therefore, Appeal merits admission on that basis. At this stage, learned advocates appearing for the parties in all fairness submit that Appeal after being admitted, need not be kept for an indefinite period of time and that, its disposal on the first question of law would do justice to both the sides. We agree with this submission.

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NC: 2025:KHC:2074-DB ITA No. 275 of 2024

4.

Learned counsel appearing for the Appellant – Assessee is justified in submitting that ordinarily delay in Appeals of the kind needs to be addressed with some amount of leniency inasmuch as, in several Appeals filed by the Revenue, that approach has been adopted by this Court itself. He also adds that after all, condoning delay would not add additional merits to the case of Appellant, be it before this Court or before the Tribunal and that dismissing Appeal on the sole ground of delay would cause heart burn to the Assesses. We agree with this view too.

In the above circumstances, the substantial question of law as to justifiability of not condoning delay, needs to be answered in favour of the Assessee & accordingly it is. Therefore, we are of the considered opinion that the delay brooked in filing the first Appeal needs to be condoned and in the peculiar facts of the case, the matter be remitted to the portals of ITAT for consideration of the Appeal on merits.

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NC: 2025:KHC:2074-DB ITA No. 275 of 2024

Ordered accordingly and Appeal stands disposed off, keeping open all contentions of the parties.

Costs made easy.

Sd/- (KRISHNA S DIXIT) JUDGE

Sd/- (G BASAVARAJA) JUDGE

Bsv List No.: 1 Sl No.: 25

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