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Facts
The assessee filed an appeal after a significant delay of 1881 days. The CIT(A) dismissed the appeal in limine due to this delay, without considering the merits. The assessee claimed the delay was due to a misunderstanding of the online response process and seeking professional advice.
Held
The Tribunal held that the assessee's explanation for the delay, while lacking procedural diligence, was bona fide and not tainted with mala fides. It condoned the delay and restored the matter to the CIT(A) for adjudication on merits.
Key Issues
Whether the delay in filing the appeal before the CIT(A) was sufficiently explained to warrant condonation, and if so, whether the matter should be remanded for adjudication on merits.
Sections Cited
143(1), 249(2)(b), 249(3), 147, 148
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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC” MUMBAI
Before: SHRI SANDEEP GOSAIN & SHRI OM PRAKASH KANT
This appeal by the assessee is directed against order dated 18.02.2025 passed by the Ld. Additional/Joint Commissioner of Income-tax (Appeals) – 3, Hyderabad [in short „the Ld. CIT(A)‟] for assessment year 2018-19, raising following grounds:
Ground 1. The Ed. CIT(A) has completed the assessment without considering the facts and circumstances of the case, which is contrary to law and is against the principles of natural justice. Ground 2. Erroneous dismissal of Appeal by Ld. CIT (A) for delay in filing the Appeal. a. The Ld.CIT (A) has erred in law and on facts by dismissing the appeal on the ground of delay of 1881 days which is technically 805 days only after taking into account the period of Covid pandemic. b. The Ld.CIT (A) had erred in not condoning the delay without appreciating that there is a 'sufficient cause' as submitted by the Appellant in terms of sec. 249(3) of the Income Tax Act 1961. c. The Ld.CIT(A) erred in not considering that, 'sufficient cause' should be interpreted flexibly to advance substantial justice rather than dismissing them on the technical grounds especially when the delay is not attributable to malafide intent or deliberate negligence. d. The Ld. CIT(A) has erred in relying on certain judicial precedents which are clearly distinguishable since in the case of appellant delay was caused due to genuine hardship, including the employer's default, the Appellant's lack of legal knowle Ground 3. Appeal dismissed by Ld. CIT(A) without considering the merits of the case. a. The Ld.CIT(A) has erred in dismissing the Appeal without considering the merits of the case that, where TDS is deducted by the employer and the same has not been deposited with the government, in those cases the employees may not be made responsible and the tax must be recovered from the employer. b. The Ld.CIT(A) has erred in not considering the circular no. 275/29/2014- IT-(B) dated 01.06.2015 issued by the CBDT stating that tax credit mismatch cannot be enforced against the assessee in the cases where there is a failure on the part of the deductor to deposit the TDS in the Government Treasury Ground 4. Ground of SA Tax credit not given, not adjudicated The Ld.CIT(A) has erred in not considering the appellant's ground that credit of SA Tax amounting to Rs. 10,000 duly reflecting in Form 26AS, (which inadvertently claimed as Advance Tax in the Return of Income) be granted to the appellant Ground 5.The appellant craves leave to add, alter, amend, modify, substitute or delete any or all of the above grounds of appeal”
2. The brief facts of the case are that the assessee is a salaried individual, formerly employed with M/s. Nirmal Lifestyle Ltd., Mumbai. The assessee filed his return of income on 20.05.2019, declaring a total income of ₹17,38,007/-. During the relevant assessment year, the assessee received a salary of ₹20,63,189/-, from which a loss of ₹1,75,182/- was claimed under the head “Income from House Property”, resulting in a gross total income of ₹18,88,007/-. After claiming a deduction of ₹1,50,000/- under Chapter VI-A of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), the assessee computed and declared his total income at ₹17,38,007/-.
2.1 Against the returned income, the assessee claimed credit of taxes aggregating ₹3,53,920/-, which included ₹3,43,920/- as Tax Deducted at Source (TDS) on salary and ₹10,000/- paid as self- assessment tax. The return was processed under Section 143(1) of the Act vide intimation dated 28.05.2019, wherein the returned income was accepted. However, the claim for TDS and self- assessment tax credit was disallowed, resulting in a demand of ₹4,43,510/- including interest.
2.2 Aggrieved by the said demand, the assessee submitted an online response through the income tax portal, contending that the employer, M/s. Nirmal Lifestyle Ltd., had deducted tax at source but failed to deposit the same with the Central Government. Consequently, Form 26AS did not reflect the said credit. The assessee asserted that he could not procure Form No. 16 due to such non-deposit.
2.3 Subsequently, the assessee filed an appeal before the Commissioner of Income-tax (Appeals) [CIT(A)] on 14.08.2024, after a delay of 1881 days. The Ld. CIT(A) rejected the appeal in limine, citing inordinate delay and holding that no sufficient cause was shown for condonation. This appeal has not been admitted by the Ld. CIT(A) and dismissed in-limine for the reasons that appeal was belated by 1881 days. The finding of the Ld. CIT(A) is reproduced as under:
“7.1 In the case of the appellant the intimation order u/s 143(1) of the Income Tax Act, 1961 was issued and received by the appellant on 20/05/2019. The appellant was therefore required to file an appeal against the said intimation on or before 20.06.2019 as per provisions the time limit prescribed u/s 249(2)(b) of the Act. The appellant has filed the appeal on 14/08/2024 after a delay of 1881 days. 7.2 A The appellant has requested for condonation of delay in filing of appeal by giving reasons that an online response was filed against the outstanding demand on the Income Tax portal portal and he was under impression that the demand would be waived off. The appellant has submitted that he was not aware about the further course of action that was required in the matter. The appellant has further submitted that when the demand was not being waived off he has approached a Chartered Accountant to seek advice and only then he was made aware that the proper course of action would be to file an appeal against the said intimation. 7.3 I have examined the reasons given by the appellant seeking condonation of delay in filing of appeal. The appeal has been filed after a delay of 1881 days which is an inordinate delay. Even if the period of prevalence of covid pandemic during the intervening period is taken into account then also after 31.05.2022 (till which time the Hon'ble Supreme Court has granted suo-moto condonation) the delay in filing of appeal is of 805 days.
7.4 The only reason given by the appellant for the delay in filing appeal of being under impression that the demand will be waived off on filling of online response against demand cannot be considered as sufficient reason. The appellant has not given detail reasons or the various steps taken during this inordinate period of delay to show that he was neither negligent nor inactive in taking necessary steps to take further action in the matter.” 2.4 The relevant observations of the Ld. CIT(A) are summarised as follows:
The intimation under Section 143(1) was issued on 20.05.2019 and the last date for filing appeal under Section 249(2)(b) of the Act was 20.06.2019. The assessee explained the delay on the ground that he had filed an online response to the demand and was under a bona fide impression that the same would suffice for resolution of the issue. The Ld. CIT(A) held that such explanation could not be accepted as sufficient cause, even after taking into account the period excluded pursuant to the Supreme Court‟s order in Suo Motu Writ Petition (Civil) No. 3 of 2020 extending limitation during the Covid-19 pandemic.
2.5 The Ld. CIT(A) placed reliance on the decision of the Hon‟ble Madras High Court in Royal Stitches (P) Ltd. v. DCIT [(2023) 156 taxmann.com 361], while dismissing the appeal on limitation alone, without going into the merits of the matter.
We have heard the rival contentions and perused the material placed on record. The issue that arises for our consideration is whether the explanation rendered by the assessee constitutes “sufficient cause” within the meaning of Section 249(3) of the Act to warrant condonation of delay.
3.1 The assessee before the Ld. CIT(A) submitted that against the intimation u/s 143(1) the raising a demand of Rs. 4,43,510/- (including interest) the assessee had already filed an online response against the outstanding demand seen on the income tax portal explaining that the tax credit was not appearing in the form No. 26AS since the employer had not deposit the TDS to the government account. Further, it was submitted by the assessee before the Ld. CIT(A) that he was under the impression that filing an online response would suffice the compliance and demand would get waived off but even after filing an online response, when the demand did not get waived off, he approached a chartered accountant to seek advice in the matter and it was only when he was advised to file an appeal before the Ld. CIT(A) for seeking appropriate relief, he filed the appeal. He submitted that delay was not intentional and it was for the bonafide reasons.
3.2 We find that limitation period for filing the appeal before the Ld. CIT(A) u/s 249(2) of the Act is of 30 days but the Sec. 249(3) of the Act empowers the Ld. CIT(A) to condone the delay if he is satisfied that assessee has sufficient cause for not presenting the appeal within the limitation period. For evaluating sufficient cause for condonation of delay, For evaluating sufficiency of cause for condonation of delay, the Hon‟ble Supreme Court in the case of Collector of Land Acquisition v. Katiji AIR (1987) 167 ITR 471 (SC) has laid down following six principles:
(i) Ordinarily, a litigant does not stand to benefit by lodging an appeal late. (ii) 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. (iii) "Every day's delay must be explained" does not mean that a pedantic approach should be taken. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common-sense pragmatic manner. (iv) When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. (v) There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk. (vi) It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so."
3.3 The Co-ordinate Bench of the Tribunal in the case of Bajaj Hindustan Ltd. v. JCIT (2005) 92 ITD 11 has condoned the delay for one of the reason that Revenue had not filed any counter affidavit opposing the application for condonation of the delay. The Hon‟ble Supreme Court in the case of Sandhya Rani Sarkar v. Sudha Rani Debi AIR 1978 SC 537 held that non-filing of affidavit in opposition to an application for condonation of the delay may be sufficient cause for condonation of the delay. The Coordinate bench of Tribunal in the case of Bajaj Hindustan Ltd. (supra), accordingly, condoned the more than 180 days. The Hon‟ble Madras High Court in the case of Sreenivas Charitable Trust v Dy. CIT [2006] 154 Taxman 377/280 ITR 357 held that in order to advance substantial justice which is of prime importance, the expression "sufficient cause" should receive a liberal interpretation. The Hon‟ble Supreme Court in the case of OP Kathpaliya v. Lakhmir Singh AIR 1984 SC 1744 has held that refusal to condone the delay results in grave miscarriage of justice, thus it would be a ground to condoning the delay. The Hon‟ble Supreme court in the case of Ornate Traders (P.) Ltd. v. ITO (2008) 312 ITR 193 (Bombay) held that expression 'sufficient cause' will always have relevancy to reasonableness and actions, which can be condoned by Court and it should fall within realm of normal human conduct or normal conduct of a litigant. In the case of Concord of India Insurance Co. Ltd. v. Smt. Nirmala Devi (1979) 118 ITR 507 (SC) Hon‟ble Supreme Court held that what is to be looked into is whether there is any taint of mala fide or element of recklessness or ruse and if neither is present, legal advice honestly sought and actually given, must be treated as sufficient cause for condoning the delay. The Hon‟ble Supreme Court in the case of Ram Nath Sao v. Gobardhan Sao, AIR 2002 SC 1201 held that by taking a pedantic or hyper-technical view, the explanation furnished by the assessee for condonation of delay should not be rejected particularly where assessee had arguable points of law on merits and refusal for condonation of delay will cause erroneous loss and irreparable injury to the aggrieved party by terminating lis at the inception. 3.4 The object of prescribing the time period for filing of the appeal is to expedite the proceedings before the concerned authorities and advance cause of the substantial justice 3.5 In the present case, the explanation of the assessee, though lacking in procedural diligence, does not appear to be tainted with mala fides or indifference. The assessee has taken steps by filing online responses and seeking professional advice, and ultimately filed the appeal. The omission appears to be bona fide and arising from ignorance rather than deliberate default. 3.6. In view of ratio of the decisions referred above and uncontroverted affidavit filed by the assessee, we feel it appropriate to condone the delay in filing the appeal before the ld. First Appellate Authority. 3.7 Before the Ld. CIT(A) the assessee referred to CBDT circular no. 275/29/2014-IT-(B) letter dated 01.06.2015 stating that tax credit mismatch cannot be enforced against the assessee in case where there is failure on the part of the deducted to deposit the TDS in the government treasurer. Since the Ld. CIT(A) dismissed the appeal without adjudicating on merits, we deem it just and proper to restore the matter to the file of the Ld. CIT(A) for deciding the grounds raised on merits after affording adequate opportunity of hearing to the assessee. The ground No. 2 of the appeal of the assessee is accordingly allowed.
9. Since we have restored the appeal to the file of the Ld. CIT(A), the other grounds raised on merits are not adjudicated upon at this stage. Accordingly same are dismissed as infructuous.
10. In the result, the appeal of the assessee is allowed for statistical purpose.
Order pronounced in the open Court on 30/06/2025.