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Facts
The assessee filed its return of income and subsequently the case was selected for limited scrutiny under the e-assessment scheme. The Assessing Officer made additions and disallowed depreciation. The assessee filed an appeal before the CIT(A) but it was dismissed due to a delay of 100 days, without adjudication on merits.
Held
The Tribunal held that the delay in filing the appeal before the CIT(A) was caused by the pandemic and pending rectification application, and that the delay should be condoned with a justice-oriented approach. The matter was remitted back to the CIT(A) for fresh adjudication on merits.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal on the grounds of delay without adjudicating on the merits, and whether the delay should be condoned considering the reasons provided by the assessee.
Sections Cited
143(3), 142(1), 154, 249(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH MUMBAI
Before: SHRI AMIT SHUKLA & SHRI GIRISH AGRAWAL
O R D E R
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal filed by assessee is against the order of Ld. CIT(A)-2, Noida, vide order no. ITBA/APL/S/250/2024-25/1070952757(1), dated 06.12.2024, passed against the assessment order by National e- Assessment Centre, Delhi, u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 22.06.2020, for Assessment Year 2018-19.
2. Grounds taken by the assessee are reproduced as under:
“1. Under the facts and circumstances of the case and in law the Ld.CIT (A) has erred in law and on facts by disallowing the legitimate claim of depreciation of Rs. 17,62,663/- 2. Under the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in conforming an addition of Rs 4,992/- which is a duplication of the disallowance already reflected in the assessee's original return of income.
3. Under the facts and circumstances of the case and in law ,the Ld. CIT(A) has erred in dismissing the appeal in limine by not granting us condonation of delay of 100 days.
4. The appellant craves the right to add, amend, modify, alter or delete any of the grounds at the time of the hearing.”
Brief facts as culled out from records are that assessee filed its return of income on 22.10.2018, reporting total income at Rs. 4,15,59,520/-. Subsequently, case was selected for limited scrutiny assessment under E-assessment scheme, 2019 and the notice u/s 143(2) and 142(1) was served to assessee. Ld. Assessing Officer passed an assessment order on 22.06.2020 after making total addition of Rs. 17,67,655/-, disallowing the claim of depreciation merely on the basis that the amount of depreciation is not included in DEP schedule of ITR. However, the fact is that assessee had claimed the depreciation amounting to Rs. 19,46,910/- in its return of income in the Part A- P and L-Profit and loss account at point no. 44 and the same has been considered while making computation of income wherein assessee added depreciation as per Companies Act of Rs. 19,46,910/- and claimed depreciation of Rs. 17,62,663/- as per the Act and furnished its return of income. 3.1. During the course of assessment proceedings, assessee submitted the requisite details in response to notice u/s. 142(1) under e-proceeding section, but ld. Assessing Officer did not consider the facts submitted by the assessee and passed an order without taking into consideration legitimate deduction of depreciation. Further, assessee filed a revised return during the assessment proceedings, just to give effect to depreciation amount of Rs. 17,62,663/- in DEP schedule of ITR as it had already claimed the depreciation in its original return. However, disregarding the same, ld. Assessing Officer assessed the total income without giving effect of depreciation claim. Ld. Assessing Officer also added the contributions to recognized provident fund of Rs. 4,992/- which according to him was not offered to tax by the assessee. However, assessee claimed that it had already given the effect of it in its computation of income filed in the original return. Aggrieved, assessee went in appeal before the ld. CIT(A).
4. While the assessee filed the appeal before the ld. CIT(A), at the same time it pursued the matter by filing an application for rectification u/s.154 in respect of additions made by the ld. Assessing Officer. The said application u/s.154 remained pending. In Form 35 for filing appeal before the ld. CIT(A) at Sr.No.14, assessee mentioned that there is a delay in filing the appeal and at Sr.No.15, assessee furnished the reason for the delay. The same is extracted below:
“This has reference above I have to state that in our case the assessment was completed under section 143(3) where the AO has made an addition of Rs. 17,67,655 being depreciation and contribution to recognized PF. The Assessment has been completed and the assessment order and notice of demand under section 156 has been served to us, however we have filed the rectification under 154 of the Income Tax Act, 1961 with the Assessing Officer and order of which is awaiting since there is a time lag for rectification order not being passed the assessee has sought the alternative remedy to file this appeal. This resulted in delay in filing the appeal which is not attributed to any negligence or malafide. We sincerely request your good self to condone the delay as it may be and decide my appeal on merit.”
4.1. While adjudicating on the appeal, ld. CIT(A) noted that there is a delay of 100 days in filing the first appeal. He also noted that assessee has sought condonation of delay in filing the said appeal by citing disruptions caused by pandemic of covid 19 as well as prolonged wait for rectification application filed u/s.154. Disregarding the submissions made by the assessee in respect of condonation of delay, ld CIT(A) dismissed it on the grounds of delay though he observed that assessee may pursue rectification application u/s.154 for specific computation errors. In the order so passed by ld. CIT(A), there is no discussion on the merits of the case except for reference to section 249(3) which requires “sufficient cause” for condoning the delay in filing the appeal. Aggrieved, assessee is in appeal before the Tribunal.
5. Before us, ld. Counsel for the assessee at the outset prayed for affording one more opportunity to the assessee by restoring the matter back to the file of ld. CIT(A) for meritorious adjudication of the grounds raised
at the first appellate stage. He gave an assurance to comply with all the requirements by furnishing necessary details and documents to substantiate the claim of the assessee. He further, submitted that the delay at the first appellate stage was on account of waiting for the disposal of application filed u/s.154 whereby assessee was under bonafide belief that it is a mistake apparent from record which would not require taking up the matter under litigation. Since there was prolonged delay and matter remained pending, assessee chose to file appeal also to contest its claim by seeking condonation for the delay which is on a Bonafide ground. We note that the reasons for delay are on two accounts namely, period of pandemic of covid 19 and secondly assessee waiting for disposal of its application filed u/s.154, fact of which is also taken note of by ld. CIT(A) in his order, while dismissing the appeal merely on account of delay in filing. The impugned assessment order is dated 22.06.2020 for which the appeal was to be filed before the ld. CIT(A) within 30 days which in fact was filed on 30.10.2020, resulting in a delay of 100 days. It is important to note that these dates fall within the period of pandemic of covid
19. Delay caused during this period was waived by Hon'ble Supreme Court in its Suo Moto Writ Petition (C)No. 3 of 2020, dated 10.01.2022. Further, pendency of application filed by assessee u/s.154 is also uncontroverted.
5.1. To address the issue in hand before us, we need to delve into the understanding of the expression “sufficient cause”. Sub-section 3 of Section 249 contemplates that the CIT(A) may admit an appeal after expiry of relevant period, if he is satisfied that there was a “sufficient cause” for not presenting it within that period. Similarly, it has been used in section 5 of Indian Limitation Act, 1963. Whenever interpretation and construction of this expression has fallen for consideration before Hon'ble High Court as well as before the Hon'ble Supreme Court, then, Hon'ble Court were unanimous in their conclusion that this expression is to be used liberally.
5.2. We may make reference to the following observations of the Hon'ble Supreme Court from the decision in the case of Collector Land Acquisition Vs. Mst. Katiji & Others, 1987 AIR 1353:
"1. 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. 3. "Every day's delay must be explained" does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common sense pragmatic manner.
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.
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.
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."
5.3. Similarly, we would like to make reference to authoritative pronouncement of Hon'ble Supreme Court in the case of N.Balakrishnan Vs. M. Krishnamurthy (supra). It reads as under:
"Rule of limitation are not meant to destroy the right of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. Law of limitation fixes a life-span for such legal remedy for the redress of the legal injury so suffered. Time is precious and the wasted time would never revisit. During efflux of time newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So a life span must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. Law of limitation is thus founded on public policy. It is enshrined in the maxim Interest reipublicae up sit finis litium (it is for the general welfare that a period be putt to litigation). Rules of limitation are not meant to destroy the right of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time. A court knows that refusal to condone delay would result foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is always deliberate. This Court has held that the words "sufficient cause" under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shakuntala Devi lain Vs. Kuntal Kumari [AIR 1969 SC 575] and State of West Bengal Vs. The Administrator, Howrah Municipality [AIR 1972 SC 749]. It must be remembered that in every case of delay there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy the court must show utmost consideration to the suitor. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time then the court should lean against acceptance of the explanation. While condoning delay the Could should not forget the opposite party altogether. It must be borne in mind that he is a looser and he too would have incurred quiet a large litigation expenses. It would be a salutary guideline that when courts condone the delay due to laches on the part of the applicant the court shall compensate the opposite party for his loss."
5.4. We do not deem it necessary to re-cite or recapitulate the proposition laid down in other decisions. It is suffice, to say that the Hon'ble Courts are unanimous in their approach to propound that whenever the reasons assigned by an applicant for explaining the delay, then such reasons are to be construed with a justice-oriented approach.
5.5. In light of the above, if we examine the facts then it would reveal that there is a delay of 100 days in filing of the first appeal by the assessee before the ld. CIT(A). In its submissions as considered in the order of ld. CIT(A), assessee has explained the reasons which prevented him in filing the appeal withing the prescribed limitation. Therefore, for the just decision of the controversy, it is incumbent upon us to condone the delay. Considering the said explanation of the assessee, we condone the same and direct the ld. CIT(A) to admit the appeal for its meritorious adjudication.
6. Since merits of the case have not been adjudicated upon at the first appellate stage and taking into consideration, prayer made by the ld. Counsel for the assessee, we find it appropriate to remit the matter back to the file of ld. CIT(A) for denovo meritorious adjudication of the grounds taken by the first appellate stage by passing a speaking order. Needless to say, that assessee be given reasonable opportunity of being heard and make his submissions to substantiate the claims. We also direct the assessee to be diligent in attending the hearing proceedings and not to seek adjournments unless warranted by compelling reasons so as to expedite the disposal. Accordingly, grounds taken by the assessee are allowed for statistical purposes.
In the result, appeal of the assessee is allowed for statistical purposes.
Order is pronounced in the open court on 30 April, 2025.