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Before: SHRI SANDEEP GOSAIN & SHRI PRABHASH SHANKAR
PER PRABHASH SHANKAR [A.Μ.] :- The present appeal arising from the appellate order dated 03.10.2022 is filed by the assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)"] pertaining to assessment order passed u/s.143(3) of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 17.03.2016 for the Assessment Year [A.Y.] 2013-14. Page 2 Α.Υ. 2013-14 Aditya Sapru, Mumbai
In the grounds of appeal, it is claimed that the ld.CIT(A) erred in :
Restricting the claim of deduction u/s 54 of the Income Tax Act 1961 only to the extent of Rs.18,72,360/- being construction cost incurred from the date of sale of property at Hiranandani Gardens Powai Mumbai i.e. from 26.11.2012 till the completion of the project in Jan 2013. 2. Not allowing the full claim of deduction u/s 54 of the Income Tax Act 1961 in accordance with law, of the entire construction cost of the New house of Rs.2,58,13,721/- and the second house purchased on 27.11.2013 for Rs. 99,35,550/-being restricted to Rs.2,01,14,431/- (Rs.82,70,277/- + Rs. 1,18,44,154/-) so as to render the Long Term Capital Gains to Rs. NIL.
At the outset, it is intimated by the Registry that the appeal of the assessee is delayed by 790 days. In this regard a written application alongwith relevant affidavits have been submitted with a request to condone the delay. In the oral and written submissions made, the ld.AR has contented that the delay was unintentional and bonafide. It is stated that the assessee, a Management Consultant, was earlier settled in Mumbai and got relocated to Bengaluru. The assessment order for the year was passed by the AO at Mumbai u/s 143(3) of the Act by disallowing the entire claim of deduction u/s 54 of the Act. The work related to the attending of the appeal proceedings was handed over to Mumbai based C.A. M/s Kastury & Talati. The assessee was very well represented before the ld.CIT(A) for assessment and subsequent rectification proceedings u/s 154 of the Act and the learned CIT(A) passed both the orders on the same date being 03.10.2022. The Page 3 ΙΤΑ Νο. 1421/Mum/2025 Α.Υ. 2013-14 Aditya Sapru, Mumbai quantum assessment appeal was partly allowed and the 154 matter appeal was fully allowed. After analysing both the orders of the ld. CIT(A), the CA advised the assessee that since the appeal w.r.t 154 matter was fully allowed, there was nothing to be done further and that since the appeal w.r.t 143(3) order was only partly allowed, an appeal be filed before the Hon'ble ITAT Mumbai. However, due to mistake of the staff, no appeal was filed against the quantum appeal order. The assessee accordingly was under the bonafide impression that appeal against the CIT(A) order w.r.t 143(3) had been filed before the ITAT. However, subsequently on being realised the mistake, appeal was filed though belatedly after 819 days on 28.02.2025.
1 It is further submitted that the delay in filing the appeal is purely a bonafide mistake and a genuine error from the side of the Chartered Accountant and his staff. There is no malafide intention either on the part of the CA or the assesse in not filing the appeal in time. It is also pleaded that no injustice will be caused to the revenue, if the delay in filing the appeal is condoned but grave injustice will be caused to the assessee as on merits he has a very good case. A lenient view of the matter under consideration may be taken and the delay in filing the appeal be condoned. Reliance is placed on a few decisions of the Page 4 Α.Υ. 2013-14 Aditya Sapru, Mumbai coordinate bench of ITAT, Mumbai claiming that on similar facts, delay was condoned.
The ld.DR representing the department has vehemently objected to the delay stating that there was no sufficient reason for the delay. Moreover, the appeal is inordinately delayed.
We consider it appropriate to adjudicate on the delay rather than merits of the case at the outset considering the enormity of the delay. We need to examine the issue in the light of facts and the circumstances of the case and also in view of the in terms of section 5 of the Limitation Act, whereby discretion is vested in the Court/Appellate Authority to admit an appeal or an application, after the expiry of the prescribed period of limitation, if the appellant shows 'sufficient cause' for not preferring the application within the prescribed time. The expression 'sufficient cause' commonly appears in the provisions of order 22 Rule 9 (2), CPC and Section 5 of the Limitation Act. The Court while allowing such application has to draw a distinction between delay and inordinate delay for want of bona fides of an inaction or negligence which would deprive a party of the protection of Section 5. “Sufficient cause" is a condition precedent for exercise of discretion by the Court for condoning the delay. Courts Page 5 ΙΤΑ Νο. 1421/Mum/2025 Α.Υ. 2013-14 Aditya Sapru, Mumbai have time and again held that when mandatory provision is not complied with and that delay is not properly, satisfactorily and convincingly explained, the Court cannot condone the delay on sympathetic grounds alone. The law of Limitation is enshrined in the legal maxim “Interest Reipublicae Ut Sit Finis Litium” (It is for the general welfare that a period be put to litigation).
1 To understand the scope of the term “sufficient cause" in matters of delay, reliance is placed on the decision of Hon'ble Supreme Acquisition Officer, AIR 2014 SC 746 wherein the Hon'ble Supreme Court held that the sufficient cause does not include the negligent manner in which the applicant had acted or/and there was a want of bona fide, on his/her part. If a party does not act diligently or remains inactive, it cannot qualify as sufficient ground allowing the court to exercise discretion in favour of such a party. Condonation of delay is not an automatic right but requires the person requesting it to provide a valid explanation for each day of delay and demonstrate a reasonable cause. "Sufficient Cause" cannot be liberally interpreted, if negligence, inaction or lack of bona fides is attributed to the party. In the case of Page 6 ΙΤΑ Νο. 1421/Mum/2025 Α.Υ. 2013-14 Authority (2011) 14 SCC 578, the hon'ble Apex Court held that the reason provided for the delay must be something beyond the individual's control that prevented them from approaching the Court.
2 It is well established in law that the period of limitation has to be construed somewhat strictly as it has the effect of vesting for one and taking away right from the other. To condone the delay in a mechanical or a routine manner may amount to jeopardizing the legislative intent behind Section 5 of the Act. Where the parties chose to sleep over their rights for prolonged periods without any just cause, can hardly claim equity in justice particularly faced with the statutory provisions of Section 5.In construing enactments which provide period of limitation for institution of proceedings, the purpose is to intimate people that after lapse of certain time from a certain event, a proceeding will not be entertained where a strict grammatical construction is normally the safe guide.
3 The hon'ble Apex Court in the case of N. Balakrishnan V. M. Krishnamurthy, AIR 1998 SC 3222 held as under:- "
Rules of limitation are meant to see that parties do not resort dilatory tactics, but Howrah Municipality, AIR 1972 SC 749, the Hon'ble Supreme Court held that:- ...........parties must act bonafidely, expeditiously and with due care. A casual or a negligent litigant who has acted with utter irresponsible attitude, cannot claim the condonation of delay in law when the right has accrued to the other side. The expression "sufficient cause" will always have relevancy to reasonableness. The actions which can be condoned by the Court should fall within the realm of normal human conduct or normal conduct of a litigant. It is neither expected nor can it be a normal conduct of a public servant or a litigant that they would keep the files unmoved, unprocessed for months together on their tables.
5 The Hon'ble Delhi High Court in its decision in the case Hon'ble High Court has further held as under: "Where the delay is prolonged and the assessee is not able to show that the delay had occurred in spite of exercise of due attention and diligence, the assessee cannot complain, if the delay is not condoned."
6 In the decision rendered in the case of Rankak and Ors. v Rewa Coalfields Ltd. reported at AIR 1962 SC 361, the hon'ble Apex Court has held that the party has to show reason for delay on the last day of the limitation period and for each day thereafter. It was further held that condonation is not a matter of right and that the Courts have to exercise discretionary juri iction. Page 7 Α.Υ. 2013-14 Aditya Sapru, Mumbai
7 The issue of condonation of delay had come up before Hon'ble Orissa High Court in the case of Brijbandhu Nanda (44 ITR 688). The delay was not condoned by the Tribunal and on further appeal, the Hon'ble High Court had held that there is no justification for the delay as under: "Even assuming that the questions referred are questions of law, I am of opinion that there was no error on the part of the Tribunal in not condoning the delay in Its discretion. In fact, as appears from the assessee's own petition for condonation of delay in I.T.A. Nos.85, 86 and 87 of 1954-55 dated May 5, 1955, the assessee does not appear to have explained why he waited for 56 days after he received the order on February 5, 1954, as aforesaid. It further appears from a letter dated April 9, 1954, from the