INFRASRUCTURE SERVICES ,MUMBAI vs. ASSESSING OFFICER 33(1)(5), MUMBAI

Per: Smt. Beena Pillai, J.M.: The Present appeal filed by the assessee arise out of order dated 07/06/2024 passed by Ld.CIT(A)-5 Kolkotta, for assessment year 2016-17 on following grounds of appeal:

1. Addition of Rs. 8,01,000/- as unexplained investment:

On the basis of facts and circumstances of the case, the Learned Commissioner of Income Tax (ADDL/JCIT) (A)-5, National Faceless Appeal Centre, Kolkata ("CIT (A)") erred in confirming the action of the Assessing Officer ward 33(1)(5) Mumbai ("AO") of making addition of Rs. 8,01,000/- for not submitting purchase bills of fixed asset added in the financial year 2015-16 relevant to assessment year 2016-17 without giving sufficient time as your appellant has submitted invoices for Rs. 68 lacs out of total addition of Rs. 76 Lacs whereas the complete statement of Fixed Assets are available with assessee. The Hon'b CIT (Appeal) has confirmed the Appeal on ex-parte basis without providing with the proper opportunity of being heard. The notice issued was not served to the Assessee and Lrnd. CIT(A) has passed order only on assumption that the notice sent on registered email id must have been received however the Lrnd. CIT(A) has not taken any onus to send a notice physically or sent an intimation on the registered mobile number via sms no efforts have been taken to inform the assessee about the notices issued and therefore it can be said that the notice has been served to the Assessee and therefore the proper opportunity of being heard is not given.

On the basis of facts and circumstances of the case, the Learned CIT (A) erred in confirming action of AO of disallowing depreciation in view of non-submission of purchase invoices of Rs. 8,01,000/- for financial year 2015-16 and Rs. 2.65,545/- without appreciating the fact that said assets have been used in the business and income generated using this Fixed Assets have been offered to tax. The Lrnd. AO has considered the purchase of Asset as unexplained Asset and has also disallowed the depreciation on the same.

On the basis of facts and circumstances of the case, Learned CIT (A) erred in confirming action of AO of disallowing on ad-hoc basis genuine business expenditure of salary and wages of Rs. 44,219/-@ 25% of total salary and wages and sundry expenses of Rs. 9,018/- @50% of A.Y. 2016-17 M/s. Infrasructure Services total sundry expenses for non-submission of vouchers without appreciating that expenses were incurred wholly and exclusively for business purpose and also failed to pinpoint specific issue in the expenses incurred.

On the basis of facts and the circumstances of the case, the Learned CIT (A) erred in confirming action of the AO in initiating Penalty proceedings u/s 271(1)(b) of the Income-tax Act, 1961 in spite of furnishing complete and accurate particulars and not concealing any income in whatsoever manner.

We beg to pray before your honour to kindly consider our humble submission and decide the matter considering the merit in the case as submitted as above.

Your Appellant craves leave to add to, amend and / or alter or any of the above Grounds of Appeal.”

2. At the outset the Ld.AR submitted that, there is delay of about 48 days in filing appeal before this Tribunal. The Ld.AR submitted that, the assessee never received any notice on email or even any message on registered mobile regarding the hearing dates before the Ld.CIT(A). It is submitted that the delay was unintentional and in bonafide circumstances. 2.1 The Ld.AR thus submitted that there was sufficient reason in filing the appeal before this Tribunal belatedly and prayed for the delay to be condoned. It is submitted that the assessee has good case on merit and may be granted an opportunity to present its case before On the contrary the Ld.DR relied on orders passed by authorities below.

3. It is submitted in the application seeking condonation delay that, the notice of hearing and the impugned order passed by Ld.CIT(A) was not received on email to the assessee. The Partner of assessee has filed application along with affidavit in support of the same. Having regard to the submissions by the assessee as well as affidavit of its Partner, I 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.

A.Y. 2016-17 M/s. Infrasructure Services Moreover, no counter-affidavit was filed by the Revenue denying the allegation made by the assessee. It is not the 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.”

3.1 In the present facts, I have examined the reason stated by the partner of the assessee to seek condonation of delay before this Tribunal is whether sufficient and whether, there exists sufficient and reasonable cause for not presenting the appeal within the period of limitation under the statute. In the present case in hand, the assessee explained the delay in filing the appeals before this Tribunal is due to non receipt of notices of hearing and impugned order on the registered mail id. This being the position, it constitutes sufficient cause for filing the appeals belatedly. In any case, the assessee is not benefitted with the delay caused in filing appeal before Ld.CIT(A), the lapse that occurred on behalf of the representative cannot be attributed to the assessee for which assessee could be punished.

A.Y. 2016-17 M/s. Infrasructure Services 3.2 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”. 3.3 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 Madras High Court thus condoned nearly 21 years of delay in filing the appeal. As compared to 21 years, delay of about 48 days cannot be considered to be inordinate or excessive. 3.4 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.Y. 2016-17 M/s. Infrasructure Services 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. 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). 3.5 I also refer to the decision of Coordinate 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 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. 3.6 In this case, the Revenue did not file 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 A.Y. 2016-17 M/s. Infrasructure Services 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.” I am therefore of the opinion that, reason assigned by the partner of assessee to file present appeal 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. 3.7 Reliance is also 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 :

1. 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 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.

A.Y. 2016-17 M/s. Infrasructure Services ......................................................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.” Based on the discussions, I condone the delay in filing the appeal before the Ld. CIT(A).

4. As the issues were not decided by Ld.CIT(A) on merits. The appeal is remitted to the Ld.CIT(A). The Ld.CIT(A) is directed to pass detailed order on merits after considering the evidence filed by the assessee. Needless to say the proper opportunity of being heard must be granted to the assessee.

Accordingly the grounds raised by the assessee stands allowed for statistical purposes.

In the result, appeal filed by the assessee stands allowed for statistical purposes.

Order pronounced in the open court on 28/02/2025