CLASSIC CLEARING & FORWARDING PRIVATE LIMITED,MUMBAI vs. COMMISSIONER OF INCOME TAX (A) NFAC, DELHI

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘the CIT(A) dated 20/04/2022 for the assessment year 2017-18.

Shri Himanshu Gandhi appearing on behalf of the assessee submitted at the outset that the CIT(A) has dismissed the appeal of assessee on the ground of limitation alone. Narrating sequence of events, the ld. Authorized Representative of the assessee submitted that the assessee had filed its return of income for the impugned assessment year on 25/10/2017. After repeated follow ups on E-Nivaran portal the return of income was processed u/s. 143(1) of the Income Tax Act, 1961 [ in short ‘ the Act’ ] on 29/03/2019. While processing the return of income the assessee was denied credit of tax deducted at source. The assessee was advised by its tax consultant to file rectification petition u/s. 154 of the Act. The assessee filed the said petition on 13/06/2019. The said application of the assessee was decided by the AO vide order dated 30/08/2019 rejecting assesee’s application. Thereafter, the assessee was unclear as to file appeal against the intimation u/s. 143(1) of the Act or to file appeal against order passed u/s. 154 of the Act. In the meantime the assessee was following up the issue for grant of TDS credit on E- Nivaran portal. The assessee thereafter approached another Chartered Accountant, Shri Jignesh R.Shah on 07/10/2020 who advised the assessee to file appeal against the intimation u/s. 143(1) of the Act before the CIT(A). The assessee immediately on 14/10/2020 filed an appeal before the CIT(A) against order passed u/s. 143(1) of the Act. The due date for filing appeal before CIT(A) was 29/04/2019. In the process of filing rectification application and availing other remedies the delay of 18 months occurred. The ld. Authorized Representative of the assessee contended that that some delay in filing appeal is also attributable to COVID-19 pandemic. The ld. Authorized Representative of the assessee submitted that the total period of delay included period of pandemic is 18 months. The ld. Authorized Representative of the assessee submitted that the CIT(A) dismissed the appeal of assessee inlimine on the ground of limitation without appreciating the facts and reason for delay. The CIT(A) further observed that since the assessee has also filed rectification petition u/s. 154 of the Act, the assessee should have filed appeal against the order of rectification. The ld. Authorized Representative of the assessee asserted that the assessee has prima-facie a good case in its favour . If an opportunity is granted to the assessee the assessee shall be able to make out a case on merits.

Per contra, Shri Ravinder Sindhu representing the Department vehemently defended the impugned order.

We have heard the submissions made by rival sides and have examined the orders of authorities below. A perusal of the impugned order reveals that the First Appellate Authority has taken a hyper technical and pedantic view in rejecting assessee’s explanation for delay in filing of the appeal. The Hon’ble Apex Court has time and again reiterated that acceptance of explanation furnished by the assessee for condoning delay should be the rule and refusal an exception. The assessee has explained that the delay in filing of the appeal is caused due to the fact that the assessee was availing the remedy of rectification u/s. 154 of the Act and thereafter was pursuing alternate remedies as advised by the tax Consultant/Chartered Accountant. The delay in filing of the appeal is further attributable to the COVID pandemic. It is not a case where the assessee was passive and no action was taken by it to seek remedy. The assessee was in action and availing remedies as advised by the Chartered Accountant/Consultant.

The Hon’ble Apex Court in the case of Ram Nath Sao & Ors Vs. Gobardhan Sao & Ors. 2002 (3) SCC 195 has held that by taking pedantic and hyper technical view of the matter the explanation furnished should not be rejected when stakes are high and/or arguable points of facts and law are involved in the case, causing enormous loss and irreparable injury to the party against whom lis terminates either by default or inaction and defeating valuable rights of such a party to have the decision on merit. The Hon’ble Apex Court further held that “sufficient cause” should receive liberal construction so as to advance justice when there is no inaction, negligence or lack of bonafide on the part of the party.

The Hon’ble Supreme Court of India, in the case of Collector, Land Acquisition vs. Mst. Katiji, 1987 taxamann.com 1072 has held that expression ‘sufficient cause’ is adequately elastic to apply the law in a meaningful manner which sub serves the ends of justice . When substantial justice and technical considerations 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 non-deliberate delay.

Thus, taking in view the facts of case and the law expounded by Hon’ble Supreme Court in dealing with application for condonation of delay, the delay in filing of appeal by the assessee before CIT(A) is condoned.

The CIT(A) while dismissing the appeal has also observed that since the assessee has availed remedy u/s. 154 of the Act, the assessee may file appeal against the order passed u/s. 154 of the Act. Here we would like to observe that even though the assessee has pursued the remedy u/s. 154 of the Act, it does not debar the assessee from filing appeal against order passed u/s. 143(1) of the Act. Remedy u/s. 154 is an independent cause, it does not create estoppels to pursue the remedy of appeal against the assessment order. The observations made by CIT(A) in this regard are superfluous. The impugned order is set-aside and the appeal by assessee is restored to the CIT(A) for deciding the issue on merits after affording reasonable opportunity of hearing / opportunity to make submissions to the assessee, in accordance with law.