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Income Tax Appellate Tribunal, “C” BENCH MUMBAI
Before: SMT. BEENA PILLAI & SHRI GIRISH AGRAWAL
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal filed by the Assessee is against the order of Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, vide order no. ITBA/NFAC/S/250/2024-25/1070425809(1), dated 18.11.2024, passed against the assessment order by Assistant Commissioner of Income-tax, Circle 6(2)(1), Mumbai, u/s. 143(3) of the Income-tax Act (hereinafter referred to as the “Act”), dated 28.05.2019 for Assessment Year 2017-18.
2. Grounds taken by the assessee are reproduced as under:
“1. On the facts and in the circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals), NFAC, Delhi ["CIT(A)"] vide order dated November 18, 2024 erred in rejecting dismissing the Assessee's Appeal against the Onder dated 28 May, 2019 passed under Section 143(3) of the Income Tax Act, 1961 ("Act") by the Learned Assistant Commissioner of Income, Circle 6(2)(1), Mumbai ("AO"), by holding that the Assessee failed to demonstrate any "sufficient and reasonable cause".
The Appellant prays that the order dated November 18, 2024 be set aside.
2. On the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in upholding confirming an Addition of Rs. 1,34,45,978/- to the Assessee's Returned Total Income under Section 14A of the Act read with Rule SD of the Income Tax Rules, 1962 ("Rules"),:
(a) without discussing going into the merits of the case at all in the impugned order;
(b) without recording any objective satisfaction by the AO as mandated under Section 144(2) of the Act.
(c) by invoking erstwhile Rule SD(2) of the Rules by the AO, which was not on the statute books,
(d) considering Investments that have not yielded any exempt income for the purpose of calculating disallowance under Rule 8D(2) of the Rules by the AO,
(e) without restricting the disallowance under Section 14A of the Act to exempt income earned by the Assessee by the AO.
The Appellant prays that the addition under section 14A of the Act be deleted
Without prejudice to the above, the Appellant prays that only those investments that have yielded exempted income ought to be considered for the purpose of making a disallowance under section 14A of the Act.
Without prejudice to the above, the Appellant prays that the disallowance be restricted to exempt income earned by the Appellant.
3. On the facts and circumstances of the case and in law, the Learned CIT(A) erred in upholding/confirming an Addition of Rs. 1,34,45,978/-, being the disallowance under Section 14A of the Act read with Rule 8D of the Rules in the impugned order, to the Book Profits of the Assessee, by importing the provisions of sub-section 14A(2) and (3) of the Act into Clause (f) below Explanation to Section 115JB of the Act. The Appellant prays that the addition made under section 115JB of the Act be deleted.
4. Each of the above grounds or sub-grounds is without prejudice to one another.”
Through ground no.1 in this appeal, assessee has contested that ld. CIT(A) has erred in dismissing the appeal of assessee by holding that assessee failed to demonstrate a sufficient and reasonable cause for delay in filing the appeal at the first appellate stage. In this respect, from the perusal of the order of ld. CIT(A), it is noted that there was a delay of 212 days in filing the appeal in Form 35. Assessee furnished application of delay, content of which are produced in para-5 of the order of ld. CIT(A). From the perusal of the same, it is noted that the impugned assessment proceedings were conducted in the calendar year 2019. Ld. Assessing Officer issued notice u/s.143(2) which was received physically by the assessee. Thereafter notice u/s.142(1) was issued which was also received physically by the assessee. Assessee furnished its partial response by stating that if there are any further requirement, same shall be submitted as and when called for. Assessee was under a bonafide belief that since notices are issued in a physical mode, the assessment shall also be completed in physical mode. It therefore, did not check any updates on the Income-tax portal. Assessment for the year under consideration was due by 31.12.2019. Since, assessee had not received any update on its assessment proceedings upto the last day of limitation for completion the said assessment, i.e. 31.12.2019, it accessed the Income-tax portal to discover that the impugned order has already been passed u/s.143(3), dated 28.05.201. The said order was downloaded on the same date and steps were taken to file the present appeal with a petition for condonation of delay by bringing all these stated facts on record. In respect of registered email address of the assessee, it was submitted that it had been discontinued and therefore assessee could not receive any update digitally. On the strength of these submissions, assessee prayed for condonation of delay and admission of the appeal for its meritorious adjudication. However, ld. CIT(A) did not find it appropriate to condone as this did not amount to sufficient and reasonable cause as required u/s.249(3) of the Act.
3.1. 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.
3.2. 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.
5. 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.
6. 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. 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."
3.4 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.
3.5. In light of the above, if we examine the facts, then it would reveal that there is a delay of 212 days in filing of the first appeal by the assessee before the ld. CIT(A). In its submissions as reproduced in the order of ld. CIT(A), assessee has explained the reasons which prevented it 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.
4. Since, the first appeal has not been adjudicated on the merits of the case, ld. Counsel for the assessee prayed for its restoration to the file of ld. Assessing Officer, pointing out that the ground involved in merits of the case are towards disallowance of Rs.1,34,45,978/- u/s. 14A r.w.r. 8D of the Act. Contention of assessee is that disallowance has been made without recording any objective satisfaction by ld. Assessing Officer as mandated u/s. 14A(2). Further, provisions contained in the erstwhile Rule 8D(2) have been applied which got amended and are not applicable for the year under consideration. Also, investments which have not yielded any exempt income, have been taken into consideration for calculating the disallowance made u/r. 8D(2) which is contrary to the view taken by Hon'ble Special Bench in the case of Vireet Investments Pvt. Ltd. [2017] 82 taxmann.com 415. Since, there are multiple issues which are raised on the disallowance, assessee submitted that it would be appropriate to remit the matter back to the file of ld. Assessing Officer, where it shall comply with all the requirements to meet the grounds so raised. However, ld. Sr. DR submitted to remit the matter back to the file of ld. CIT(A), since ld. Assessing Officer has already made the disallowance after considering the submissions made by assessee.
We have perused the orders of the authorities below and also the paper book placed on record containing 73 pages. Considering the issues raised by the assessee on the merits of the case, in the interest of justice and fair play, we find it appropriate to remit the matter back to the file of ld. Assessing Officer for meritorious adjudication of the issue in the present appeal after considering the submissions made by the assessee. Needless to say, assessee be given reasonable opportunity of being heard and to make any further submissions, if so desired.
Assessee is also directed to be diligent in attending the hearing proceedings. 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 11 March, 2025