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Facts
The assessee filed an appeal before the Tribunal with a delay of 968 days. The assessee attributed the delay to a change in management following a scheme of arrangement and inadvertent omission by the former representatives.
Held
The Tribunal condoned the significant delay in filing the appeal, emphasizing the principle of substantial justice over technicalities. The Tribunal found that the delay was not deliberate and that the assessee had a reasonable cause. On merits, the issue was remitted to the CIT(A) for a detailed order.
Key Issues
Whether the delay in filing the appeal is condonable due to a change in management and inadvertent omissions, and whether substantial justice should prevail over technicalities.
Sections Cited
80IB
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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: SMT. BEENA PILLAI & SHRI GIRISH AGRAWAL
The Present appeal filed by the assessee arise out of order dated 22/09/2021 for assessment year 2016-17 passed by Ld.CIT(A) 54, Mumbai.
Brief facts of the case are as under:
2. At the outset, the Ld.AR submitted that there is a delay of 968 days in filing present appeal before this Tribunal. In support of the application seeking condonation of delay stating as under: “Sub: Filing of Application for condonation of delay. Dear Sir, Please find enclosed two copies of the Application for condonation of delay, along with affidavit, in the abovementioned matter. Please acknowledge the same. A separate copy of the said application is being filed with the Departmental Representative.” 2.1 The Ld. AR submitted that, the impugned order was passed on 22/09/2021 during COVID period. He submitted that the assessee was to file the present appeal on or before 21/11/2021. He submitted that Hon’ble Supreme Court suspended all limitations that fell during COVID Period till 30/05/2022. He thus submitted that the delay will further reduce to approximately 100 days if the said period till 30/05/2022 id excluded.
2.2 Be that as it may the Ld.AR vehemently submitted that assessee is not benefitted in any manner what s ever by not filing the present appeal within the period of limitation. He submitted that due to Scheme of arrangement passed by NCLT Chennai, on 03/03/2020, the management of the assessee underwent a A.Y. 2016-17 India Land and Properties Limited complete revamping. He submitted that the erstwhile employees and Directors left the organisation and new members joined after change in the management.
2.3 He submitted that the new management was therefore not aware of the impugned order being passed. It is only when assessee received notice under section 226 of the Act, the management took cognizance of the situation and the appeal came to be filed. The Ld.AR prayed for the delay to be condoned, as the assessee has a good case on merits. In support he placed reliance on following decisions:
The Applicant relies on the decision of the Apex Court in the case 167 ITR 471 (SC) Collector, Land Acquisition Vs. Katiji.
On the contrary, the Ld.DR vehemently opposed the condonation petition. He submitted that the assessee did not take necessary steps to file appeal even after it came to the knowledge subsequently upon receipt of notice under section 226 of the Act.
We have perused the submissions advanced by both sides in the light of records placed before us.
We note that the assessment orders were received by the assessee in the mail Id mentioned in Form 35 to be NIPUN.J@ Indiabulls.com. On perusal of Form 36 it is noted that the mail ID is different. The Submission of the assessee in the condonation petition is that, the erstwhile employees and management left the company post the Scheme of Arrangement being approved by NCLT Chennai. It is but natural that all the communication details automatically changed. And the impugned order was sent to assessee based on information available on the portal in so far as the present assessee is concerned. However, it was only when the assessee received the recovery notice that the mistake not having filed the appeal came into light. The new management took time to collate the details as the assessee at the time when 226 notice was received was existing in a different name. 4.1 Having regard to the submissions by the assessee, we refer to the decision of Hon’ble Cochin Bench of this Tribunal in the case of Midas Polymer Compounds Pvt. Ltd. dated 25.6.2018, condoned the delay of 2819 days by observing as follows: “6. We have heard the rival submissions and perused the record. There was a delay of 2819 days in filing the appeal before the Tribunal. The assessee has stated the reasons in the condonation petition accompanied by an affidavit which has been cited in the earlier para. The assessee filed an affidavit explaining the reasons and prayed for condonation of delay. The reason stated by the assessee is due to inadvertent omission on the part of Shri Unnikrishnan Nair N, CA in taking appropriate action to file the appeal. He had a mistaken belief that the appeal for this year was filed by the assessee as there was separate Counsel to take steps to file this appeal before the ITAT. Therefore, we have to consider whether the Counsel’s failure is sufficient cause for condoning the delay. The Madras High Court considered an identical issue in the case of Sreenivas Charitable Trust v. Dy. CIT (280 ITR 357) and held that mixing up of papers with other papers are sufficient cause for not filing the appeal in time. The Madras High Court further observed that the expression "sufficient cause" should be interpreted to advance substantial justice. Therefore, advancement of substantial justice is the prime factor while considering the reasons for condoning the delay.
6.1 On merit the issue is in favour of the assessee. But there is a technical defect in the appeal since the appeal was not filed within the period of limitation. The assessee filed an affidavit saying that the appeal was not filed because of the Counsel’s inability to file the appeal. The Revenue has not filed any counteraffidavit to deny the allegation made by the assessee. While considering a similar issue the Apex Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) laid down six principles. For the purpose of convenience, the principles laid down by the Apex Court are reproduced hereunder: (1) Ordinarily, a litigant does not stand to benefit by lodging an appeal late (2) Refusing to condone delay can result in a meritorious matter being thrown 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, commonsense and pragmatic manner. (4) When substantial justice and technical consideration are pitted against each other, the 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 nondeliberate 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 the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
6.2 When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of nondeliberate delay. In the case on our hand, the issue on merit regarding allowability of deduction u/s. 80IB of the Act was covered in favour of the assessee by the binding Judgment of the jurisdictional High Court. Moreover, no counter-affidavit was filed by the Revenue denying the allegation made by the assessee. It is not the A.Y. 2016-17 India Land and Properties Limited case of the Revenue that the appeal was not filed deliberately. Therefore, we have to prefer substantial justice rather than technicality in deciding the issue. As observed by Apex Court, if the application of the assessee for condoning the delay is rejected, it would amount to legalise injustice on technical ground when the Tribunal is capable of removing injustice and to do justice. Therefore, this Tribunal is bound to remove the injustice by condoning the delay on technicalities. If the delay is not condoned, it would amount to legalising an illegal order which would result in unjust enrichment on the part of the State by retaining the tax relatable thereto. Under the scheme of Constitution, the Government cannot retain even a single pie of the individual citizen as tax, when it is not authorised by an authority of law. Therefore, if we refuse to condone the delay, that would amount to legalise an illegal and unconstitutional order passed by the lower authority. Therefore, in our opinion, by preferring the substantial justice, the delay of 2819 days has to be condoned.” 4.2 In the present facts, we have to examine whether the reason stated by the assessee to seek condonation of delay before this Tribunal is sufficient to condone the delay and whether, there exists sufficient cause for not presenting the appeal before this Tribunal within the period of limitation. The assessee must show that, it was diligent in taking appropriate steps and the delay was caused notwithstanding with its due diligence. It is for the party concerned to explain the reasons for delay and it is not the function of concerned authorities often to find cause for delay. The Court/authority has to examine whether the sufficient cause has been shown by the party for condoning the delay, and whether such cause is reasonable or not. In the present case in hand, the assessee explained the delay in filing the appeals before this Tribunal was on the reason that due to change in the management, the representatives failed to take note of the pending/ongoing litigations. However it was only on receipt of the recovery notice that the lapse by assessee realized. This A.Y. 2016-17 India Land and Properties Limited being the position, it constitutes sufficient cause for filing the appeal belatedly. We note that the delay is due to the careless approach of the professionals who failed to do necessary updating and also failed to take charge of the.
Further, on perusal of cause that leads to delay, we note that it was the bounden duty of the taxation team of the assessee to take note of the pending/ongoing litigation in a situation like in the present case. In any case, the assessee is not benefitted with the delay caused in filing appeal before this Tribunal, and the lapse occurred on behalf of the representatives which cannot be attributed to the assessee, for which assessee could be punished. 5.1 In case of People Education & Economic Development Society Vs. ITO reported in 100 ITD 87 (TM) (Chen), it was held that; “when substantial justice and technical consultation are pitted against each other, the cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of non-deliberate delay”.
The next question that arises is, whether delay was excessive or inordinate. There is no question of any excessive or inordinate when the reason stated by the assessee was a reasonable cause for not able to file the appeals within the period of limitation. The cause for the delay therefore deserves to be considered, when there exist a reasonable cause, and therefore, the period of delay may not be relevant factor. In support, we rely on the decision of Hon’ble Madras High Court in the case of CIT vs. K.S.P. Shanmugavel Nadai and Ors. (153 ITR 596) considered the condonation of delay and held that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation. Hon’ble A.Y. 2016-17 India Land and Properties Limited Madras High Court thus condoned nearly 21 years of delay in filing the appeal. As compared to 21 years, delay of about 1000 to 2000 days cannot be considered to be inordinate or excessive. 6.1 Hon’ble Madras High Court in the case of Sreenivas Charitable Trust reported in 280 ITR 357 held that, no hard and fast rule can be laid down in the matter of condonation of delay and the Court should adopt a pragmatic approach and the Court should exercise their discretion on the facts of each case keeping in mind that in construing the expression "sufficient cause" the principle of advancing substantial justice is of prime importance and the expression "sufficient cause" should receive a liberal construction. Therefore, this Judgment of the Hon’ble Madras High Court (supra) clearly says that in order to advance substantial justice which is of prime importance, the expression "sufficient cause" should receive a liberal construction. Therefore, for the purpose of advancing substantial justice which is of prime importance in the administration of justice, the expression "sufficient cause" should receive a liberal construction. In opinion of this Tribunal, this decision of Hon’ble Madras High Court is applicable to the present facts of the case. A similar view was taken by Hon’ble Madras High Court in the case of Venkatadri Traders Ltd. v. CIT (2001) 168 CTR (Mad) 81 : (2001) 118 Taxman 622 (Mad). 6.2 We also refer to the decision of Hon’ble Mumbai Bench of this Tribunal in the case of Bajaj Hindusthan Ltd. v. Jt. CIT (AT) reported in 277 ITR 1 condoned the delay of 180 days when, the appeal was filed after the pronouncement of the Judgment of A.Y. 2016-17 India Land and Properties Limited the Hon’ble Supreme Court. It is also to be noted that the Revenue has not filed any counter-affidavit opposing the application of the assessee for condonation of delay. Hon’ble Supreme Court in the case of Mrs. Sandhya Rani Sarkar vs. Smt. Sudha Rani Debi reported in AIR 1978 SC 537 held that, non-filing of affidavit in opposition to an application for condonation of delay may be a sufficient cause for condonation of delay. In this case, the Revenue has not filed any counter- affidavit opposing the application of the assessee, therefore, as held by Hon’ble Supreme Court, there is sufficient cause for condonation of delay. Hon’ble Supreme Court also observed that; “It does not mean that when the delay was for longer period, the delay should not be condoned even though there was sufficient cause. Condonation of delay is the discretion of the Court/Tribunal. Therefore, it would depend upon the facts of each case. In our opinion, when there is sufficient cause for not filing the appeal within the period of limitation, the delay deserves to be condoned, irrespective of the duration/period.” 6.3 At this juncture, we also take assistance and support from the observations of Justice Krishna Iyer as he has quoted at various occasion while dealing with technicalities that “any interpretation that alludes substantive justice is not to be followed and that substantive justice must always prevail over procedural technicalities”. Even Hon’ble Supreme Court in case of Collector Land Acquisition Vs. Mst. Katiji & Ors., reported in (1987) 167 ITR 471 has laid down a ratio of similar principles.
We therefore feel that the reasons assigned by the assessee to present the appeal within time before this Tribunal deserves consideration, based on the principles laid down by Hon'ble Supreme Court in case of Collector Land Acquisition Vs. Mst. Katiji & Ors., reported in (1987) 167 ITR 471. 7.1 Reliance is placed on following observations by Hon’ble Supreme Court in case of Collector Land Acquisition Vs. Mst. Katiji & Ors., reported in (1987) 167 ITR 471 wherein, Hon’ble Court observed as under:- “The Legislature has conferred the power to condone delay by enacting section 51 of the Limitation Act of 1963 in order to enable the courts to do substantial justice to parties by disposing of matters on de merits". The expression “sufficient cause” employed by the Legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice that being the life-purpose of the existence of the institution of courts. It is common knowledge that this court has been making a justifiably liberal approach in matters instituted in this court. But the message does not appear to have percolated down to all the other courts in the hierarchy.
And such a liberal approach is adopted on principle as it is realized that :
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. ......................................................1.Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period.” Considering the above facts, the delay of about 980 days in filing the present appeal before this Tribunal for A.Y. 2016- 17 stands condoned.
A.Y. 2016-17 India Land and Properties Limited 8. On merits of the case, we note that Ld.CIT(A) without considering the submission of the assessee. The Ld.AR submitted that the issue is covered by the order of coordinate bench of this Tribunal for assessment year 2015-16. Accordingly we remit this appeal back to Ld.CIT(A), to pass a detailed order on merits after verifying the submissions of the assessee. The assessee is directed to furnish all necessary evidences/documents in support of its claim. Needless to say that proper opportunity of being heard must be granted to assessee. Accordingly, the grounds raised by assessee in all the appeals stands partly allowed for statistical purposes. In the result, all the appeals filed by the assessee stands partly allowed for statistical purposes. In the interest of justice, the appeals are remitted back to the Ld.CIT(A).
Order pronounced in the open court on 05/03/2025