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Income Tax Appellate Tribunal, MUMBAI BENCH “E”, MUMBAI
ORDER PER GAGAN GOYAL, A.M: This appeal by the assessee is directed against the order of National Faceless Appeal Centre (for short ‘NFAC’), Delhi dated 06.04.2022 under section 254 of the Income Tax Act, 1961 (for short ‘the Act’) for A.Y. 2012-13. The assessee has raised the following grounds of appeal:
1. The Honourable Commissioner of Income Tax- (Appeal), NFAC, Delhi, [Hon. CIT- (A)] has erred on the fact and in the circumstances of the case and in the law declining to condone the delay in filing the appeal.
Park Co-opp. Housing Society Ltd.
Hon. CIT-(A) has erred on the fact and in the circumstances of the case and in the law in denying the deduction under section 80P(2)(d) of the Income Tax Act 1961 ("The Act") in respect of bank interest earned from co-operative banks.
The Hon. CIT-(A) has erred on the fact and in the circumstances of the case by dismissing the appeal without deliberating the main issue. 4. The Hon. CIT-(A) on the fact and in the circumstances of the case erred in ignoring the merits of the assessee's case. It is submitted that the assessee was entitled to the deduction under section 80P(2)(d) of the Act. 5. The Hon. CIT-(A) failed to appreciate that in the fact and the circumstances of the case, there cannot be a situation where the assessee is not serious, particularly when it substantially hits the appellant financially where the tax liability quantified was Rs. 6,59,946/-.” 2. Brief facts of the case are that the assessee is a Housing Co-operative Society registered under the Maharashtra Co-operative Housing Societies Act, 1960. The assessee regularly files the return. The return of income for the Assessment Year (AY) 2012-13 was filed declaring the total income at Rs. Nil after claiming deduction under section 80P(2)(d) of the Act. The return of income was processed under section 143(1) of the Act dated 15.03.2014. 3. As per the intimation, CPC, Bangalore made disallowance under section 80P amounting to Rs. 16,72,470/-. As per section 249(2) the due date for filing of appeal against the intimation under section 143(1) was 13.04.2014. However assessee filed the appeal only on 29.03.2019 after a period of 1810 days of delay. We have gone through the order of Ld. CIT(A) and the submissions of assessee along with affidavit before the Ld. CIT(A) for condonation of delay. 4. As per our observation following facts emerged out of the submissions of assessee and the order of the Ld. CIT(A) as under: (i) Assessee earned interest by virtue of money lying in the Fixed Deposit A/c in a Co-operative Bank.
Park Co-opp. Housing Society Ltd.
(ii) Prima-facie assessee was entitled to have deduction under section 80P(2)(d) of the Act. (iii) The disallowance of deduction made by CPC, Bangalore requires a detailed deliberation and further information to decide the issue, hence, cannot be processed against the assessee as provided in section 143(1)(a) of the Act, still as a matter of practice we observed that even on disputed issues or the issues on which detailed submissions are required they do so which is beyond the law. (iv) The registration on the Portal of the Income Tax Department was in the name of the Consultant of assessee, the details of Tax Consultant is furnished vide affidavit dated 18.08.2022 before the Ld. CIT(A). (v) Assessee filed its return every year electronically and the status of the demand for all the years is available on the e-filing portal of the Department [as per Ld. CIT(A)]. It is also noted by the Ld. CIT(A) that the return of the appellant was scrutinized for A.Y. 2016-17 and 2017-18 also. Therefore, as per Ld. CIT(A) the assessee definitely had occasion to examine its affairs in detail (vi) It is also noticed by the Ld. CIT(A) that the appellant had filed the appeals for the A.Ys. 2015-16, 2016-17 and 2017-18. All these appeals were filed after the stipulated time as per the Act. The appeal against the intimation for A.Y. 2015-16 is filed after a delay of 1337 days. (vii) All these delays as per Ld. CIT(A) are deliberate in action/negligence on the part of the appellant whereas assessee through affidavit claimed that Park Co-opp. Housing Society Ltd. the work of audit and compliances in tax matters were outsourced to a Chartered Accountant (details of C.A. furnished as per affidavit dated 18.08.2022).
We have considered the relevant facts emerged out of the order of Ld. CIT(A) and the submissions of assessee. Prima facie we are convinced with the contention of assessee that usually in the case of Co-operative Housing Societies they outsourced their accounting, auditing and tax related matters to C.A. firms and heavily rely upon them for all these activities. They seldom participate actively in these activities, hence, any ignorance /delay /negligence on the part of Consultant usually come to the knowledge of Management Committee after a substantial gap when something big or exceptional event occurs. Further in its affidavit assessee furnished the complete details of its Chartered Accountant and further submitted that login Id. and password was in the name of said Chartered Accountant only. Either Ld. CIT(A) should have rely on this affidavit of assessee or after getting the information about the Consultant he could have been cross check the facts as narrated by assessee in absence of this process one has to assume the contents of the affidavit as true and correct.
Ld. CIT(A) himself noted in his order that all the activities like filing of ITR, filing of appals and visit to the Portal was being done by assessee (actually by the C.A. of assessee), it confirms that this statement of fact by the Ld. CIT(A) read with affidavit of assessee, it is amply clear that assessee was relying solely on its Consultant and was not aware of the developments taking place in favour/against the assessee.
Park Co-opp. Housing Society Ltd.
Assessee submitted screen-shot taken from the system of Department reflecting demand due for the year under consideration. It shows that up-till assessee does not have access to its login Id. on the Portal. These facts are nowhere under challenge. We further observed that by delaying in filing of appeal there is no intention to jeopardize the interest of the Revenue rather it is hampering the interest of assessee itself. Even on merits, the action of CPC, Bangalore is not sustainable but that is not a question before us right now.
While deciding the issue of condonation of delay it is well settled legal principles that the expression sufficient cause should receive liberal consideration so as to advance the cause of justice may be taken note of for the purpose of reference. "The words "sufficient cause", as appearing in Section 5 of Limitation Act, should receive a liberal construction when the delay is not on account of any dilatory tactics, want of bona fides, deliberate inaction or negligence on the part of the applicant/appellant, in order to advance substantial justice. The words "sufficient cause” for not making the application within the period of limitation should be understood and applied in a reasonable, pragmatic, practical and liberal manner depending upon the facts and circumstances of the case. The decisive factor in condonation of delay is not the length of delay but sufficiency of a satisfactory explanation. 9. It is pertinent to note that the delay may be condoned, and the appeal may be admitted u/s. 249(3) only if the appellant could successfully demonstrate that it had sufficient cause for not presenting the appeal within the period of 30 days. The exercise of discretion in condonation of delay in matters of limitation, such as in the present case u/s 249(3) of the Income Tax Act, 1961 has to be Park Co-opp. Housing Society Ltd.
carried out within the meaning of "Sufficient Cause" as envisaged in Section 5 of Limitation Act. Hence, the general rule of law of limitation is that an extension shall not be granted under Section 5 of Limitation Act if there is no sufficient cause or cogent ground for the condonation of delay, the onus of proving which lies on the PARTMENT appellant/applicant as clearly laid down in the judicial pronouncements by the Highest Courts of Law. In the case of Perumon Bhagvathy Devaswom, Perinadu Village v. Bhargavi Amma (Dead) by LRS, (2008)8 SCC 321, the Hon'ble SC had enunciated certain principles in which are applicable while considering applications for Condonation of delay under Section 5 which may be summarized as follows: - The words "sufficient cause", as appearing in Section 5 of Limitation Act, should receive a liberal construction when the delay is not on account of any dilatory tactics, want of bona fides, deliberate inaction or negligence on the part of the applicant/appellant, in order to advance substantial justice. The words sufficient cause for not making the application within the period of limitation should be understood and applied in a reasonable, pragmatic, practical and liberal manner, depending upon the facts and circumstances of the case. - The decisive factor in condonation of delay is not the length of delay but sufficiency of a satisfactory explanation. - The degree of leniency to be shown by a court depends on the nature of application and facts and circumstances of the case. For example, court's view delays in making applications in a pending appeal more leniently than delays in the institution of an appeal. The court view applications relating to lawyer's lapses more leniently than applications relating to litigant's lapses. - Want of 'diligence' or 'inaction' can be attributed to an applicant/appellant only when something, required to be done by him, is not done. When nothing is Park Co-opp. Housing Society Ltd. required to be done, courts do not expect the applicant/appellant to be diligent. Where an appeal is admitted by the High Court and is not expected to be listed for final hearing for a few years, an appellant is not expected to visit the court regularly to ascertain the current position but await information from his counsel about the listing of the appeal.
The Division bench of the Hon’ble Bombay High Court in Ornate Traders Private Limited v. The Income Tax Officer, Mumbai emphasized the need for reasonableness and hence, the actions which can be condoned by the court should fall within the scope of normal human conduct or normal conduct of a litigant. The Hon'ble Bombay HC further observed that while Section 5 of the Limitation Act is being interpreted liberally, it cannot be so liberally that it is without any justification, since condonation of delay in a mechanical or routine manner will jeopardize the legislative intent behind Section 5.
In N. Balakrishnan v. M. Krishnamurthy [1998] 7 SCC 123 the Hon'ble Supreme Court has held that as long as the conduct of the applicant does not, on the whole, warrant to castigate him as an irresponsible litigant, generally, the delay can be condoned. The Hon'ble Supreme Court has observed that during these days when everybody is fully occupied with his avocation of life an omission to adopt such extra vigilance need not be used as a ground to depict him as a litigant not aware of his responsibilities and to visit him with drastic consequences. The Hon'ble Supreme Court has reasoned that the primary function of the Court is to adjudicate the dispute between the parties and to advance substantial justice. The time limit fixed for approaching the Court in different situations is not because on the expiry of such time a bad cause would transform into a good cause. Rules of limitation are not meant to destroy the Park Co-opp. Housing Society Ltd. right of parties but they are meant to see that parties do not resort to dilatory tactics. The Hon'ble Supreme Court has also held that in every case of delay there can be some lapse on the part of the litigant concerned. However, that alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of malafides or it is not put forth as part of a dilatory strategy the Court must show utmost consideration to the suitor.
We have noted that in the Hon'ble Supreme Court in B. Madhuri Goud v. B. Damodar Reddy (2012) 12 SCC 693, by referring various earlier decisions of Superior Courts and held that the following principal must be kept in mind while considering the application for condonation of delay: (i) There should be a liberal, pragmatic, justice oriented, non-pedantic approach while dealing with an application for condonation of delay, for the courts are not supposed to legalise injustice but are obliged to remove injustice. (ii) The terms "sufficient cause" should be understood in their proper spirit, philosophy and purpose regard being had to the fact that these terms are basically elastic and are to be applied in proper perspective to the obtaining fact- situation. (iii) Substantial justice being paramount and pivotal the technical considerations should not be given undue and uncalled for emphasis. (iv) No presumption can be attached to deliberate cause of delay but, gross negligence on the part of the counsel or litigant is to be taken note of. (V) Lack of bona fides imputable to a party seeking condonation of delay is a significant and relevant fact.
Park Co-opp. Housing Society Ltd.
(vi) It is to be kept in mind that adherence to strict proof should not affect public justice and cause public mischief because the courts are required to be vigilant so that in the ultimate eventuate there is no real failure of justice. (vii) The concept of liberal approach has to encapsulate the conception of reasonableness and it cannot be allowed a totally unfettered free play. (viii) There is a distinction between inordinate delay and a delay of short duration or few days, for to the former doctrine of prejudice is attracted whereas to the latter it may not be attracted. That apart, the first one warrants strict approach whereas the second calls for a liberal delineation. (ix) The conduct, behaviour and attitude of a party relating to its inaction or negligence are relevant factors to be taken into consideration. It is so as the fundamental principle is that the courts are required to weigh the scale of balance of justice in respect of both parties and the said principle cannot be given a total go by in the name of liberal approach. (x) If the explanation offered is concocted or the grounds urged in the application are fanciful, the courts should be vigilant not to expose the other side unnecessarily to face such litigation. (xi) It is to be borne in mind that no one gets away with fraud, is representation or interpolation by taking recourse to the technicalities of law of limitation. (xii) The entire gamut of facts are to be carefully scrutinized and the approach should be based on the paradigm of judicial discretion which is founded on objective reasoning and not on individual perception. (xiii) The State or a public body or an entity representing a collective cause should be given some acceptable latitude."
Park Co-opp. Housing Society Ltd.
Considering the facts of the case observed and respectfully following the directions of Hon’ble Apex Court mentioned (supra), we deem it fit to remit the matter to the file of the Ld. CIT(A) for a fresh consideration. Therefore, without going into the merits of the case, the Ld. CIT(A) is directed to condone the delay of 1810 days, admit the appeal and then adjudicate the matter on merits after providing reasonable opportunity to the assessee.
In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 29th day of November, 2022.