Loading judgment…
Facts
The assessee filed appeals against orders by the Ld.CIT(A) for assessment years 2013-14 and 2019-20 to 2021-22. The appeals were filed with significant delays, which the assessee attributed to pending rectification applications under Section 154.
Held
The Tribunal condoned the delay in filing the appeals, citing sufficient cause and the principles of natural justice. On merits, the Tribunal held that adjustments made by the CPC under Section 143(1) without affording the assessee an opportunity of being heard were unsustainable.
Key Issues
Whether the delay in filing appeals before the CIT(A) can be condoned due to pending rectification applications, and whether adjustments made by the CPC under Section 143(1) without providing an opportunity to be heard are valid.
Sections Cited
154, 143(1), 80P, 143(2)(a)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SMT. BEENA PILLAI
Per: Smt. Beena Pillai, J.M.: The Present appeals filed by the assessee is against separate orders passed by Ld.CIT(A) 10 Delhi for assessment years 2013-
2. It is submitted that as the issue alleged in all these appeals are common and identical, ground raised by the assessee for a suspended 2013-14 are reproduced as under:
“1. On the facts and the circumstances of the case and in law, the learned ADDL/JCIT (A) erred in not admitting appeal for the delay in filling of an appeal and dismissing the appeal in limine and not considering the merits of the case. 2 a)On the facts and the circumstances of the case and in law the learned ADDL/JCIT (A) erred in not admitting appeal for the delay in filling of an appeal though there was sufficient reason for delay in filling of appeal. b) The learned ADDL/JCIT (A) erred in not considering that the application for rectification u/s 154 for allowing deduction u/s 80P was pending before AO. Application was not disposed of 3 On facts and circumstances of the case and in law, the order of CPC is bad in law since the adjustment envisaged in the intimation u/s. 143(1) was beyond the jurisdiction of the AO. The CPC had no jurisdiction to make any adjustments in respect of deduction claim u/s.80P(2)(d) since the said authority was given only with effect from A.Y.2021-22 by amending the Act. 4 On the facts and the circumstances of the case and in law, the learned ADDL/JCIT (A) erred in confirming the disallowance of deduction u/s.80P(2)(d) of the Act of Rs. 1,27,475 5 On the facts and the circumstances of the case and in law, the learned ADDL/JCIT (A) erred in not considering fact that AO has no power make an adjustment without issuing a notice u/s 143(1) (a) of the act. 6 On the facts and the circumstances of the case and in law, the learned ADDL/JCIT (A) erred in not considering that the disallowance of deduction u/s.80P(2)(d) of the Act, is allowable to a Co-operative Society if the amounts are invested in another Co- operative Society and interest is earned on the said investment.
A.Y. 2021-22 Suraj Co operative Housing Society Limited 7 The appellant craves leave to add, amend, modify, substitute and /or cancel any of the ground of the appeal.”
The Ld.AR at the outset submitted that there was huge delay in filing appeals before the Ld.CIT(A). It is submitted that after excluding the covert. As per the order of the honourable Supreme Court the delay that remained was as under: assessment year Delay in filing appeal 2013-14 2412 days 2019-20 302 days 2020-21 313 days 2021-22 114 days 3.1 It is submitted that the assessee had filed application under section 154 against the intimation that was received for the respective assessment years and was awaiting for the rectification to be issued. The Ld.AR submitted that till date the rectification application is pending before the CPC and no order is passed till date. It is due this reason that the delay was caused in filing the appeals before the Ld.CIT(A). 3.2 On the contrary, the Ld.DR relied on the orders passed by the authorities below. I have perused the submissions advanced by both sides in the light of records placed before this Tribunal.
From the submissions filed by the assessee, there does not arise any malafide intention on behalf of assessee for not filing appeals before the Ld.CIT(A). In my view, the assessee has made out a reasonable cause for the delay that is caused in filing the present appeals before the Ld.CIT(A). In my opinion, there is sufficient cause to condone the delay as observed by Hon’ble Supreme Court in case of Collector Land Acquisition Vs. Mst.
A.Y. 2021-22 Suraj Co operative Housing Society Limited Katiji&Ors., reported in (1987) 167 ITR 471 in support of his contentions. 4.1 Reliance is placed on following observations by Hon’ble Supreme Court in case of Collector Land Acquisition Vs. Mst. Katiji&Ors., reported in (1987) 167 ITR 471 wherein, Hon’ble Court observed as under:-
“The Legislature has conferred the power to condone delay by enacting section 51 of the Limitation Act of 1963 in order to enable the courts to do substantial justice to parties by disposing of matters on de merits". The expression “sufficient cause” employed by the Legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice that being the life-purpose of the existence of the institution of courts. It is common knowledge that this court has been making a justifiably liberal approach in matters instituted in this court. But the message does not appear to have percolated down to all the other courts in the hierarchy.
And such a liberal approach is adopted on principle as it is realized that :
Ordinarily, a litigant does not stand to benefit by lodging an appeal late.
Refusing to condone delay can result in a meritorious matter being thrown out 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. ......................................................1.Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period.” 4.2 Considering the submissions by both sides and respectfully following the observation by Hon’ble Supreme Court, we find it fit A.Y. 2021-22 Suraj Co operative Housing Society Limited to condone the delay caused in filing the present appeals as it is not attributable to the assessee.
In any event, though the procedural law pertaining to the limitation has been drafted to construe it strictly, the fact remains that, considering such technicalities will not advance the cause of justice.
I take support from the observations of Justice Krishna Iyer wherein he has quoted at various occasion while dealing with technicalities that “any interpretation that alludes substantive justice is not to be followed and that substantive justice must always prevail over procedural technicalities”. Even Hon’ble Supreme Court in case of Collector Land Acquisition Vs. Mst. Katiji&Ors., reported in (1987) 167 ITR 471 has laid down a ratio of similar principles. Respectfully following the thoughts propounded by Late Hon’ble Justice Krishna Iyer, as well as various decisions of Hon’ble Supreme Court on similar issues, I condone the delay caused in filing the appeals before Ld. CIT(A).
On merits, the Ld.AR submitted that the only issue is in respect of the disallowance made by the CPC under section 80 P (2) of the act under section 143 (1) of the act, without giving any reason or opportunity of being herded to the assessee.
The Ld.CIT(A) dismiss the appeal by not condoning the delay, and thus the disallowance made by the CPC under section 143 (1) has been upheld.
Aggrieved by the order of the Ld.CIT(A) the assessee is in appeal before this Tribunal.
A.Y. 2021-22 Suraj Co operative Housing Society Limited 9. The Ld.AR submitted that assessee had filed rectification or application for the years under consideration on 02/03/2015, 06/08/2020, 14/03/2022 and 13/02/2023. It is submitted that no order has been passed against the petition filed under section 154 of the act till date and the Ld.CIT(A) did not take cognizance of the above details before dismissing the appeals filed by the assessee. 9.1 He submitted that, section 143 confers power to pass intimation to rectifying arithmetical mistakes, or any disallowances permissible u/s.143(1) of the Act on the face of it. He submitted that, the CPC is permitted only to rectify arithmetical mistakes and prima facie adjustment in the return, based on the documents accompanying the return of income that includes tax audit report. He submitted that, if at all any adjustment is to be made, a notice should have been issued to assessee to represent its claim. 9.2 As per the first proviso to Section 143(1), the CPC cannot make any adjustments which are permissible there under unless an opportunity is given to the assessee. 9.3 On the contrary, the Ld.DR relied on the orders passed by the authorities below. I have perused the submissions advance by both sides in the light of record placed before this Tribunal. 9.4 The Ld.AR submitted that CPC while issuing intimation under section 143 (1) had disallowed the claim of assessee under section 80 P without giving an opportunity of being her to the assessee. It is submitted that such an action by the CPC is beyond the scope of prima facie adjustment allowable under A.Y. 2021-22 Suraj Co operative Housing Society Limited section 143 (1) of the act. The Ld.AR and support has placed reliance on the decision of coordinate of this Tribunal in case of Rushabh of apartment cooperative Housing Society Ltd vs ITO in UM/2024 for assessment year 2012-13 vide order dated 18/12/2024. 9.5 The issue alleged by the assessee is that before making adjustment not being “prima facie” in nature, while processing the return of income u/s.143(1) of the Act, notice must be issued and an opportunity of being heard must be granted to the assessee in accordance with the proviso section 143(2)(a) of the Act. 9.6 It is a well settled law that, before making any adjustment which results in increase in the tax liability or reduction in the refund claim or loss, the assessee has to be served with a notice, even if the assessment is completed u/s 143(1)(a) of the Act. The proviso to section 143(1)(a) specifically provides that no adjustment shall be made unless (as specified in clause (a) to section 143(1) of the Act) intimation is given to the assessee of such adjustments either in writing or in an electronic mode. In case the response is received from the assessee within a period of 30 days from the date of such intimation, the same should be considered before making any adjustment. 9.7 The principles of natural justice demand that, before passing any order which has the effect of enhancing the liability of assessee, an opportunity of hearing should be given to the assessee.
Reliance is placed reliance on the decision of Hon’ble Bombay High Court in case of Khatau Junkar Ltd. Vs. K.S.
A.Y. 2021-22 Suraj Co operative Housing Society Limited Pathania reported in (1992) 196 ITR 55, wherein Hon’ble Court while dealing with phrase “prima facie inadmissible” in clause (iii) of section 143(1)(a) of the Act held that, the word “prima facie” means, on the face of it, the claim is not admissible. Hon’ble court held that, it also means that the claim should be such that it does not require any further inquiry before the disallowance. The Ld.AR submitted that, Hon’ble Court observed that where the claim is made that requires further inquiries, cannot be disallowed, without hearing the assessee and or giving assessee an opportunity to submit the proof in support of such claim. The Ld.AR thus submitted that, in the absence of notice being issued in respect of the issue in consideration, no adjustment can be made u/s. 143(1)(a) of Act. He also placed reliance on instruction No. 1814 dated 04/04/1989, issued by CBDT that explains the scope of the word. “word "prima facie disallowance" under Section 143(1) (a) of the Act as being different from a debatable issue. It clarifies that a debatable issue is one where a claim made by an assessee on the basis of a decision of a Court/Tribunal. A debatable claim cannot be disallowed by an intimation under Section 143(1)(a) of the Act.” 10.1 From the above discussion it is clear that that an adjustment made in a unilateral proceedings is in violation of the principles of natural justice, as well as mandate of Section 143(1)(a) of the Act, hence, the same is unsustainable. Accordingly all the grounds raised by the assessee stands allowed.
In the result the appeal filed by the assessee stands allowed.