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Facts
The assessee, who is the wife of an Indian Armed Force officer with no independent taxable income, incurred losses from trading in futures and options, leading to an assessment order with an addition based on assumed turnover. The assessee claimed delayed receipt of the assessment order, resulting in a 1677-day delay in filing the appeal before the Ld. CIT(A). The Ld. CIT(A) dismissed the appeal in limine without considering the reasons for the delay or granting an opportunity of being heard.
Held
The Tribunal remitted the appeal back to the Ld. CIT(A), directing them to reconsider the condonation petition with necessary evidence and pass orders in accordance with law, ensuring a proper opportunity of being heard to the assessee. It emphasized the principle of prioritizing substantial justice over technicalities in matters of delay condonation, citing various judicial precedents.
Key Issues
Whether the Ld. CIT(A) was justified in dismissing the appeal in limine due to a significant delay in filing without properly evaluating the 'sufficient cause' for condonation, and the application of judicial principles prioritizing substantial justice.
Sections Cited
80IB, Section 5 of the Limitation Act, 1963, Order XXI of the Code of Civil Procedure, 1908
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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SMT. BEENA PILLAI
Per: Smt. Beena Pillai, J.M.: The Present appeal is filed by the assessee against order dated 22/10/2024 passed by NFAC Delhi, of assessment 2011- 12.
2. At the outset the Ld.AR submitted that there was delay of 1677 days in filing appeal before the Ld.CIT(A). The Ld.AR A.Y. 2011-12 Minakshi Singh submitted that assessee is wife of an Indian Armed Force officer and has no independent taxable income. Hence no return were filed by the assessee during the year under consideration. However it is submitted that during the year assessee indulged herself into trading of future and option with a small capital and booked losses due to lack of knowledge, and at the end, took exit from the market by bearing losses from the market. 2.1 The Ld.AR submitted that, assessee only invested Rs. 1,50,000/- in the future and option of trading with stock exchange in key net finance company limited and Relegate Services Ltd. through proper banking channel. The Ld.AO passed assessment order making addition in the hands of the assessee at 1% of net margin money of assumed turnover of Rs.16,86,30,200/- . 2.2 It is submitted that, the assessee neither received any notices of hearing by before the assessment officer not received the assessment order in time. It is submitted that the assessee received the assessment order to me on 07/08/2023 though the assessment orders dated 18/12/2018. 2.3 The Ld.AR submitted that, it was under such circumstances that the appeal was filed before Ld. CIT(A) with the delay of 1677 days. It is submitted that the Ld. CIT(A) without considering the reason or even without granting an opportunity to the assessee to furnish a detailed explanation for the delay, passed the impugned order by dismissing the appeal in limine without condoning the delay.
The Ld.AR submitted that, this caused great injustice and prejudice to the assessee, as the delay in filing the appeal before A.Y. 2011-12 Minakshi Singh the Ld. CIT(A) was absolutely unintentional and that the assessee never received the assessment order in time. 3.1 On the contrary the Ld.DR relied on the orders passed by authorities below.
It is noted that the assessment orders were received by the assessee in the year 2023 though the assessment order is dated 18/12/2018. It is further noted that, the Ld.CIT(A) did not consider the submissions of the assessee or even investigate as to why or how the assessment order dated 18/12/2018 was received by the assessee on 07/08 2023. 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 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 A.Y. 2011-12 Minakshi Singh 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 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, it needs to examined whether the reason stated by the assessee to seek condonation of delay before Ld.CIT(A) are sufficient to condone the delay and whether, there exists sufficient cause for not presenting the appeal before Ld.CIT(A) within the period of limitation under the statute, 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 A.Y. 2011-12 Minakshi Singh condoning the delay, and whether such cause is reasonable or not. 4.3 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”. 4.4 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 1000 to 2000 days cannot be considered to be inordinate or excessive. 4.5 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 A.Y. 2011-12 Minakshi Singh 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). 4.6 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 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 A.Y. 2011-12 Minakshi Singh 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.” 4.7 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. 4.8 We therefore feel that the reasons assigned by the assessee inability to present the appeal within time before Ld.CIT(A) 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. 4.9 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 A.Y. 2011-12 Minakshi Singh 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. 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.”
4.10 However, it is noted that the assessee could not substantiate the delay caused in filing the appeals before the Ld.CIT(A) in accordance with law and the Ld.CIT(A) dismissed the appeal for in limine.
In the interest of justice, the appeal is remitted back to the Ld.CIT(A). The assessee is directed to file condonation petition before the Ld.CIT(A) along with necessary evidences in support. The Ld.CIT(A) shall consider the cause that lead to delay and pass necessary orders in accordance with law. Needless to say that proper opportunity of being heard must be granted to assessee.
A.Y. 2011-12 Minakshi Singh 5.1 On merits of the case, we note that nothing has been decided by the Ld.CIT(A) to consider the claim in accordance with law having regards to the evidences filed by 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. Order pronounced in the open court on 21/02/2025