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Facts
The Assessing Officer made an addition under Section 14A read with Rule 8D for expenses related to exempt dividend income. The CIT(A) dismissed the assessee's appeal, citing failure to file necessary documents and diligently prosecute, without addressing the merits. The appellant then filed an appeal before the Tribunal with a 133-day delay.
Held
The Tribunal condoned the delay, finding sufficient cause due to an accountant's abrupt resignation. It held that the CIT(A) erred by dismissing the appeal on technical grounds of non-prosecution without considering the merits of the Section 14A disallowance. Consequently, the Tribunal set aside the CIT(A)'s order and restored the appeal for fresh disposal on merits.
Key Issues
The key legal issues were the condonation of delay in filing the appeal and whether the CIT(A) was justified in dismissing the appeal for non-prosecution without considering the merits of the Section 14A disallowance.
Sections Cited
143(1), 14A
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Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI
Before: JUSTICE (RETD.) C.V. BHADANG & MS. PADMAVATHY S.
PER JUSTICE (RETD.) C.V. BHADANG, PRESIDENT :
By this appeal, the appellant-assessee is challenging the order dated 29.11.2024 passed by the learned Commissioner of Income Tax (Appeals)-47, Mumbai (‘CIT(A)’ for short), which in turn arose out of assessment order dated 28.03.2014 passed by the Assistant Commissioner of Income Tax, Central Circle-2, Mumbai (‘AO’ for short). The appeal relates to assessment year 2011-12.
The appellant filed his Return of Income (RoI) for the relevant assessment year declaring a total income of Rs.82,04,67,227/-. The appellant claimed the dividend income of Rs.1,32,02,977/- as exempt income. The appellant did not claim any expenses as against the exempt income. The return was processed under Section 143(1) of the Income Tax Act, 1961 (‘Act’ for short). The case was selected for scrutiny Sethu Madhavan Athrasseri in which the appellant filed details which were called for. The AO found that the assessee had earned dividend income in the relevant year without claiming any expenditure for earning the exempt income. The appellant, therefore, was asked as to why disallowance should not be made under Section 14A of the Act in respect of the exempt income. The AO found that in the absence of any claim as to expenditure, the expenditure has to be computed as per Rule 8D of the Income Tax Rules, 1962 (‘Rules’ for short). The AO, therefore, made addition of Rs.43,30,864/- towards expenditure relating to exempt income under Rule 8D(2)(iii) of the Rules.
In appeal, the learned CIT(A) found that the appellant had failed to respond to the various notices. It was found that the appellant had even not filed Form no. 35, the assessment order, notice of demand, statement of facts and grounds of appeal inspite of notices and opportunities. The learned CIT(A) has noticed the decision of Supreme Court in CIT vs B.N. Bhattachargee & Anr., 118 ITR 0461 (SC) in order to find that an appeal means an effective appeal and the appellant is required to diligently prosecute the appeal. In the absence of the same, the appeal came to be dismissed by the impugned order.
4. In this case, there is a delay of 133 days in filing the appeal. The appellant has filed an Affidavit seeking condonation of delay. It is contended that the Accountant who was responsible for handling the tax related matters of the appellant had resigned abruptly without proper handing over of the responsibility. As a result of this, the appellant missed the important deadline out of inadvertence and his old age. It is submitted that the delay is not on account of any negligence and arose out of circumstances beyond the appellant’s control.
5. On merits, it is submitted by the learned AR that the appeal was duly filed before the learned CIT(A) and the appellant had also filed a detailed Paper Book containing facts and supporting documents of the case. It is thus submitted that the learned CIT(A)
Sethu Madhavan Athrasseri was in error in finding that Form no. 35 alongwith statement of facts and grounds of appeal, etc. were not filed in the appeal. He submitted that proper opportunity of hearing has not been granted. He, therefore, requested that the appeal be restored to the file of the learned CIT(A).
The learned DR has submitted that the appellant has failed to prosecute the appeal diligently and, therefore, he is not entitled to any indulgence.
We have heard parties. Perused record.
We have considered the rival circumstances and the submissions made. At the outset, we find that the delay in filing the appeal deserves to be condoned for the reason that, according to the appellant, on account of the Accountant leaving the job, the delay has occasioned. We find that the appellant has sufficient cause for not filing the appeal within time. It is well-settled that no party stands to gain by approaching the appellate forum late and there is no presumption that delay is intentional [see decision of Supreme Court in Collector, Land Acquisition vs Mst. Katiji & Ors., 167 ITR 471 (SC)]. We, therefore, condone the delay and admit the appeal.
A perusal of the impugned order shows that the learned CIT(A) has not considered the merits of the impugned addition. The learned CIT(A) has principally decided the appeal on the ground of appellant not having filed Form no. 35, assessment order, statement of facts and grounds of appeal, etc. In short, the learned CIT(A) has dismissed the appeal on the ground that the appellant has failed to prosecute the appeal diligently.
The learned AR, as noticed earlier, has submitted that the Paper Book was indeed filed, which has not been considered. If that be so, we find that the appeal deserves to be restored to the file of the learned CIT(A).
In that view of the matter, the present appeal is allowed for statistical purposes. The impugned order is hereby set aside. The appeal filed by the appellant is restored to the file of the learned CIT(A) for disposal according to law. Needless to mention that the appellant shall diligently prosecute the appeal and co-operate for its early disposal.
Order pronounced in the open court on 12/08/2025.