Loading judgment…
Facts
The assessee appealed an order concerning the non-allowance of remuneration paid to a partner, resulting in a demand of Rs. 14,700/- for AY 2011-12. The assessee had initially filed a NIL income return, and the intimation was processed with an income of Rs. 41,843/-. The appeal was later withdrawn before the CIT(A) due to misunderstanding and misinformation.
Held
The Tribunal condoned the significant delay of 973 days in filing the appeal, acknowledging the assessee's senior citizen status, relocation, and the circumstances leading to the mistaken withdrawal. However, the Tribunal held that once an appeal is withdrawn, it is not maintainable, and consequently dismissed the present appeal.
Key Issues
Whether the delay in filing the appeal should be condoned considering the assessee's circumstances, and whether an appeal withdrawn due to misunderstanding is maintainable.
Sections Cited
143(1), 40A(2)(b), 154, 250, 5
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH MUMBAI
Before: HON’BLE SHRI SANDEEP GOSAIN
Date of Hearing 30.01.2025 Date of Pronouncement 17.02.2025 आदेश / ORDER
PER SANDEEP GOSAIN, JM:
The present appeal has been filed by the assessee challenging the impugned order 26.10.2021 passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre, Delhi (NFAC) for the assessment year 2011-12. The assessee has raised the following grounds of appeal:
1. On the facts of the case and in law, the Learned A.O. erred in not allowing Remuneration paid to the partner while processing Intimation u/s. 143(1) of the I. T Act. The appellant while filing ITR had shown NIL income in his computation of Income but Intimation u/s. 143(1) was processed wrongly with income of Rs.41,843/- and tax demand of Rs.14,700/- was raised which is contrary to the provisions of the Income Tax Act. The addition is bad in law and needs to be quashed.
2. On the facts of the case and in law, the Ld. Assessing Officer had erred in law and on the facts of the case in raising demand of Rs. 14,700/- for not enabling a deduction towards remuneration paid to the partner/s by way of statutory deduction u/s. 40A(2)(b) of the I.T. Act, 1961 as per Partnership Deed, and statement of account duly Audited. The addition made should be deleted.
3. On the facts of the case and in law, the Learned CIT(A) erred in dismissing the appeal as withdrawn without cross checking the letter on the basis of which the assessee had asked for withdrawal which is baffling and against the spirit of the law. As a layman, the assessee can make an error but it is not expected from the Learned CIT(A) The dismissal is made without proper application of mind and needs to be quashed.
4. The appellant craves leave to adduce, add, amend, alter or delete any of the above grounds of appeal before or at the time of hearing this appeal.
The appellant humbly seeks condonation of delay in filing of this appeal. (encl. Affidavit and an application for condonation of delay along with Form 36.
The appellant prays that for this technical lapse and misunderstanding, justice should not be denied and the delay be condoned.
The courts have consistently held that the expression "sufficient cause" employed by the legislature is adequately elastic to enable the courts to do substantial justice to parties by disposing of matters on merit.
At the very outset, I noticed that there is a delay of 973 days in filing the present appeal and in this regard Ld.AR has filed an application along with affidavit to support his contents for seeking condonation of delay.
On the other hand, Ld. DR argued that there is no sufficient cause for condoning the delay and even the appeal filed by the assessee is not maintainable on merits.
I have heard the counsels for both the parties and have perused the material placed on record, judgments cited before me and also the orders passed by the revenue authorities.
From the records I noticed that assessee has filed an application for seeking condonation of delay of 973 days in filing the present appeal, the contents of the same are reproduced herein below:
I, Shri Chandulal J. Kalaria a senior citizen and the partner of M/s. Khedut Oil Traders residing at D-403/ Godavari C.H.S. Ltd. Sir P. M. Road, Santacruz (West) Mumbai-400 054. humbly request your honour for condonation of delay of 973 days in filing appeal before ITAT concerning the dismissal of appeal by the Learned CIT(A). This request is made under exceptional circumstances as explained below; I am a 76 year old senior citizen and was carrying on business as partner in the firm namely M/s. Khedut Oil Depot. The firm had filed NIL income return for A.Y.2011-12 and had received an Intimation showing demand of Rs 14,700/- payable. Our business was closed since 2018 and thus used to file Nil Returns. After covid, I shifted to Rajkot which is our native place where I was not in touch with our representative nor looking after taxation matters and also not aware of the Income tax status of the firm.
That due to old age, I was forgetting things/getting confused and no one to guide me at home (as only two of us my wife and myself are there to support each other) further I was not aware that we had filed appeals for earlier years. I used to come to Mumbai once in a while in a couple of years. We had filed Appeal for 2 years A.Y.2010-11 & A.Y.2011-12 on the same issue i.e. Remuneration received by the partner in both the cases was not allowed in Intimation u/s. 143(1) of the 1. T Act. The ITR filed by the appellant shows NIL income but Intimation u/s. 143(1) shows income of Rs.41,843/- with Tax payable of Rs. 14,700/. Hence we had filed Rectification u/s 154 of the Act.
However, the appellant was not granted relief and aggrieved by the same we had filed Appeal before CIT(A).
The Ld. Assessing Officer had erred in law and on the facts of the case in raising demand of Rs. 14,700/- for not enabling a deduction towards remuneration paid to the partner/s by way of statutory deduction u/s. 40A(2)(b) of the 1.T. Act, 1961 as per Partnership Deed, and statement of account duly Audited.
That due to my misunderstanding and misinformation given to my representative J.G. Vora & Co., he in response to the notice from CIT (A) having DIN: ITBA/NFAC/F/APL_1/2021- 22/1036138101(1) Α.Υ. 2011-12. - Date of Hearing - 19/10/2021 replied vide his letter dtd. 11/10/2021 stating that the relevant appeal for A.Y.2011-12 has already been disposed of by CIT(A)-34 in his favour on 24/12/2018 vide order in Appeal No. CIT (A) Order No. CIT(A)- 34/ITO- 22(2)(1)/IT-226/16-17. However the said order was passed in response to manually filed appeal and thought the case is disposed of in our favour over and hence decided to withdraw.
That the Order was passed by CIT(A) having DIN & Order No: ITBA/NFAC/S/250/2021-22/1036566377(1) issued on 04-10- 2021, Mumbai vide his order dtd.26/10/2021 of Appeal No. CIT (A), Mumbai- 34/10601/2018-19 stating that since according to the appellant he has already received the appeal order with respect to the impugned order for the relevant assessment year and that now the appellant does not want to pursue the current appeal and requests for dropping the proceedings, the appeal is dismissed as withdrawn.
That I had also received CIT(A) Order for A.Y.2010-11 and it had also the same issue and was passed in my favour vide Order No. CIT(A)-57/ curr.240/2017-18 dtd. 16-02-2018.
Hence on receiving the above two Orders that made me confused and took wrong decision of withdrawing the appeal Further, the Learned CIT(A) also did not cross check the letter on the basis of which we had asked for withdrawal and he dismissed the appeal which is baffling and against the spirit of the law.
Your honour the appellant recently came to know this error of his wrongly withdrawing the appeal when he saw a demand outstanding on the I.T. portal of Rs. 14,700/- being outstanding demand for A.Y.2011-12.
Under the facts and circumstance of the case and in law we further inform your honour that the partner of the said firm Shri Chandulal J. Kalaria in his Return of Income filed for A.Y.2011- 12 on 28-03-2012 for the year under consideration has shown Income (Remuneration) of Rs.41,843/- The AO should have considered the same in the hands of the partner/s not the firm and also disallowance of the income (Remuneration) in the firm leads to double taxation which is bad in law and therefore it has to be accepted as the partner has already shown in his Return of income filed on 28/03-2012 vide Ack No.366680950280312.
Your honour, we had received the appeal Order but due to reasons mentioned above this appeal is being filed late by 973 days. The appellant humbly seeks condonation of delay in filing of this appeal.
I therefore pray that for this technical lapse and mistake, justice should not be denied and the delay be condoned.
The courts have consistently held that the expression "sufficient cause" employed by the legislature is adequately elastic to enable the courts to do substantial justice to parties by disposing of matters on merit.
Section 5 of The Limitation Act, 1963 states that "Any appeal or any application, other than an application under any Order XXI of the Code of Civil Procedure, 1908 (5 of 1908), may be of the provisions of admitted after the prescribed period, if the appellant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period." or the applicant SUFFICIENT CAUSE - The expression 'sufficient cause' employed by the legislature is adequately elastic to enable the Courts to apply law in a meaningful serves the ends of justice and to dispose matters on merits. manner which sub Collector, Land Acquisition v Katiji (Mst) (1987) 167 ITR 471 (SC)
When substantial justice and technical considerations are pitted against each other, the case of substantial justice deserves to be preferred.
CIT v.Gangadhar Gowd Rama Gowd & Co (1986) 158 ITR 75 (AP)
CIT (Addl) v Prem Kumar Rastogi (1978) 115 ITR 503 (All.)
Here, the appellant had sufficient cause as explained above. There have been cases wherein delay of more than 2000 days have also been condoned in the interest of justice.
The Supreme Court in Sita Ram v. State of U.P. held that the right of appeal is a matter of substance, and not of procedure and is paramount. The Court observed, "Appeal is a remedial right and if the remedy is reduced to a husk by procedural excess, the right became a casualty. That cannot be."
The condonation of delay serves as a pivotal mechanism to safeguard the fundamental tenets of access to justice and to avert the denial of relief based ☐ solely on procedural delays. It stands as a staunch guardian of the principles of fairness, equity, and the sacrosanct right to be heard. Here, the addition made is totally without merit wherein we have already gotten relief in the earlier year and thus liable to be quashed. If the delayill not condoned, then the principle of justice will not be followed and we will unnecessarily be meted with injustice due to a technical lapse and wrong belief. Your Honor are vested with the power to condone the delay in filing of the appeal caused due to the reasonable causes and therefore once again humbly request your honour to kindly condone the delay of about 973 days in filing the appeal in the interest of justice and oblige 6. In the above mentioned application the assessee has referred to his age and shifting to Rajkot. It has been specifically pointed out that the firm of the assessee has already been closed since 2018 and during the Covid Pandamic period, the assessee being a senior citizen had shifted to his native village and hence in this way he was not in touch with his representative in order to looking after matters relating to taxation. .
There is no rebuttal to the contentions raised by the assessee and no counter affidavit has been filed by the revenue, therefore considering the age of the assessee and other circumstances of his shifting to native place during the covid pandemic and then keeping in view the principles laid down by Hon’ble Supreme Court in the case of Land Acquisition Collector Vs. Mst. Katiji & Ors., [1987] AIR 1353 (SC). I am of the view that expression ‘sufficient cause’ employed by the legislature is adequately elastic to enable courts to do substantial justice to the parties by disposing the matters on merits. Further I am also of the view that when substantial justice and technical consideration pitted against each other, then in that eventuality the case of substantial justice deserves to be preferred. For this proposition I rely upon the decision in the case of CIT Vs. Gangadhar Gowd Rama Gowd & Co., [1986] 158 ITR 75(AP) and ACIT Vs. Prem Kumar Rastogi, [1978] 115 ITR 503 (All.). Since the condonation of delay serves as pivotal mechanism to safeguard the fundamental tenets of access to justice and to avert the denial of relief based solely on procedural delays. It stands as a staunch guardian of the principles of fairness, equity, and the sacrosanct right to be heard.
Therefore, keeping in view the above factual as well as legal proposition, I condone the delay in filing the present appeal and allow the application for seeking condonation of delay. consequently the appeal stands admitted for being decided on merits.
After having gone through the impugned order passed by Ld. CIT(A) and hearing the parties, I noticed that the same was withdrawn by the assessee himself, therefore now the question arises about the maintainability of the present appeal. In this regard Ld. AR submitted that the appeal was withdrawn because of misunderstanding and misinformation given to the authorized representative.
Be that as it may, I am of the view that once appeals stands withdrawn, then in that eventuality no appeal against the said order is maintainable. Even otherwise, assessee has taken specific stand that because of misunderstanding and misinformation the appeal was withdrawn, therefore the factum of withdrawn of appeal stands admitted.
Hence in these circumstances the present appeal stands dismissed as not maintainable and assessee is at liberty to adopt appropriate remedy under the provisions of law, if so advised.
Consequently appeal filed by the assessee stands dismissed. I ordered accordingly.
Order pronounced in the open court on 17.02.2025.