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Facts
The assessee trust filed a return of income declaring Nil income, which was processed u/s 143(1) resulting in a demand of Rs.84,41,730/-. The assessee filed a rectification application, which was rejected. The appeal filed against the original intimation order was delayed by 280 days, which the CIT(A) refused to condone.
Held
The Tribunal held that the delay in filing the appeal was due to availing of an alternative remedy (rectification) and there was no malafide or recklessness. Relying on judicial precedents, the Tribunal condoned the delay and set aside the order of the CIT(A).
Key Issues
Whether the delay in filing the appeal before the CIT(A) can be condoned when the assessee was seeking an alternative remedy, and whether the CIT(A) was justified in rejecting the appeal solely on the ground of delay.
Sections Cited
143(1), 154, 249(2), 249(3)
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Income Tax Appellate Tribunal, MUMBAI BENCH “F” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI RAJ KUMAR CHAUHAN
This appeal by the assessee is directed against order dated 12.08.2024 passed by the Additional Commissioner of Income-tax (Appeals) – 1, Chandigarh [in short ‘the Ld. CIT(A)’] for assessment year 2014-15 rejecting the appeal on the ground of delay in filing for more than 280 days.
Briefly stated, facts of the case are that the assessee is a Briefly stated, facts of the case are that the assessee is a Briefly stated, facts of the case are that the assessee is a private specific trust wherein the shares private specific trust wherein the shares of beneficiaries beneficiaries are specific. It is stated on behalf of the Trust that income was offered to tax in It is stated on behalf of the Trust that income was offered to tax in It is stated on behalf of the Trust that income was offered to tax in the hands of the bene the hands of the beneficiaries at the rate applicable to the applicable to the beneficiaries, hence no tax was payable by the Trust. The return of hence no tax was payable by the Trust. The return of hence no tax was payable by the Trust. The return of income declaring Nil income declaring Nil income filed by the Trust was processed u/s filed by the Trust was processed u/s 143(1) of the Income 143(1) of the Income-tax Act, 1961 (in short ‘the Act’) and tax Act, 1961 (in short ‘the Act’) and intimation order was is was issued on 08.07.2015, wherein demand of wherein demand of Rs.84,41,730/- was determined treating the total income of the was determined treating the total income of the was determined treating the total income of the Trust as taxable in the hands of the Trust. The assessee filed Trust as taxable in the hands of the Trust. The assessee filed Trust as taxable in the hands of the Trust. The assessee filed rectification application application against the intimation on 18.08.2015 against the intimation on 18.08.2015. The said rectification appli said rectification application was decided by the Central Processing was decided by the Central Processing Centre (CPC) on 16.02.2016 Centre (CPC) on 16.02.2016, which is claimed to have have been received by the assessee on 03.05.2016 on 03.05.2016. After rejection of rectification . After rejection of rectification application, the assessee chose to file appeal against the intimation application, the assessee chose to file appeal against the intimation application, the assessee chose to file appeal against the intimation order before the Ld. CIT(A) on re the Ld. CIT(A) on 30.05.2016. According to the Ld. . According to the Ld. CIT(A), the intimation order u/s 143(1) of the Act was passed on CIT(A), the intimation order u/s 143(1) of the Act was passed on CIT(A), the intimation order u/s 143(1) of the Act was passed on 08.07.2015 which was served upon the assessee on 25.07.2015 and 08.07.2015 which was served upon the assessee on 08.07.2015 which was served upon the assessee on therefore, the appeal against said order was therefore, the appeal against said order was to be filed to be filed within 30 days from the date of receipt of of receipt of order, whereas the appeal was filed the appeal was filed on 30.05.2016 i.e. after a delay of 280 days. on 30.05.2016 i.e. after a delay of 280 days. The Ld. CIT(A) has un The Ld. CIT(A) has un- admitted the appeal of the assessee stating that there was a delay of admitted the appeal of the assessee stating that there was a delay of admitted the appeal of the assessee stating that there was a delay of more than 280 days. The Ld. CIT(A) has more than 280 days. The Ld. CIT(A) has rejected mainly on the rejected mainly on the three grounds. Firstly Firstly, there is no provision for exclusion of the there is no provision for exclusion of the period during which the assessee was seeking alternative remedy period during which the assessee was seeking alternative remedy period during which the assessee was seeking alternative remedy under the Act. Secondly Secondly, there was no evidence to prove , there was no evidence to prove that order .05.2016. Thirdly, the u/s 154 of the Act was served on 03 u/s 154 of the Act was served on 03.05.2016. quantum of the addition of the demand raised cannot be a ground quantum of the addition of the demand raised cannot be quantum of the addition of the demand raised cannot be for condonation of the delay. for condonation of the delay.
We have heard rival submissions of the parties and perused We have heard rival submissions of the parties and perused We have heard rival submissions of the parties and perused the relevant material on record. The limitation period for filing the the relevant material on record. The limitation period for filing the the relevant material on record. The limitation period for filing the appeal before the ld CIT(A) ld CIT(A) u/s 249(2) of the Act is of 30 days but u/s 249(2) of the Act is of 30 days but the section 249(3) of the Act empowers the Ld. CIT(A) to condone the section 249(3) of the Act empowers the Ld. CIT(A) to the section 249(3) of the Act empowers the Ld. CIT(A) to the delay if he satisfied that assessee had sufficient cause for not the delay if he satisfied that assessee had sufficient cause for not the delay if he satisfied that assessee had sufficient cause for not presenting the appeal within the limitation period. For evaluating presenting the appeal within the limitation period. For evaluating presenting the appeal within the limitation period. For evaluating sufficient cause for condonation of the delay the Hon’ble Supreme sufficient cause for condonation of the delay the Hon’ble Supreme sufficient cause for condonation of the delay the Hon’ble Supreme Court in the case of Court in the case of Collector of Land Acquisition v. Katiji AIR on v. Katiji AIR (1987) 167 ITR 471 (SC) (1987) 167 ITR 471 (SC) has laid down following six principles: has laid down following six principles:
(i) Ordinarily, a litigant does not stand to benefit by lodging an appeal Ordinarily, a litigant does not stand to benefit by lodging an appeal Ordinarily, a litigant does not stand to benefit by lodging an appeal late. (ii) Refusing to condone delay can result in a meritorious matter being Refusing to condone delay can result in a meritorious matter being Refusing to condone delay can result in a meritorious matter being thrown out at the thrown out at the very threshold and cause of justice being defeated. very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is As against this when delay is condoned the highest that can happen is 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. that a cause would be decided on merits after hearing the parties. that a cause would be decided on merits after hearing the parties. (iii) "Every day's delay must be explained" does not mean that "Every day's delay must be explained" does not mean that "Every day's delay must be explained" does not mean that a pedantic approach should be taken. Why not every hour's delay, every second's approach should be taken. Why not every hour's delay, every second's approach should be taken. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common delay? The doctrine must be applied in a rational common delay? The doctrine must be applied in a rational common-sense pragmatic manner. pragmatic manner. (iv) When substantial justice and technical considerations are pitted When substantial justice and technical considerations are pitted When substantial justice and technical considerations are pitted against each other, against each other, cause of substantial justice deserves to be cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in preferred for the other side cannot claim to have vested right in preferred for the other side cannot claim to have vested right in injustice being done because of a non injustice being done because of a non-deliberate delay. deliberate delay.
(v) There is no presumption that delay is occasioned deliberately, or on There is no presumption that delay is occasioned deliberately, or on There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant pable negligence, or on account of mala fides. A litigant pable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a does not stand to benefit by resorting to delay. In fact, he runs a does not stand to benefit by resorting to delay. In fact, he runs a serious risk. (vi) It must be grasped that judiciary is respected not on account of its It must be grasped that judiciary is respected not on account of its It must be grasped that judiciary is respected not on account of its power to legalize injustice on technica power to legalize injustice on technical grounds but because it is l grounds but because it is capable of removing injustice and is expected to do so." capable of removing injustice and is expected to do so." capable of removing injustice and is expected to do so."
3.1 We find that before us, the assessee has explained the reason We find that before us, the assessee has explained the reason We find that before us, the assessee has explained the reason for the delay due to for the delay due to availing of alternative remedy of rectification. alternative remedy of rectification. ourt in the case of Sreenivas We find that Hon’ble Madras High C We find that Hon’ble Madras High Court in the case of Charitable Trust v Dy. CIT Charitable Trust v Dy. CIT [2006] 154 Taxman 377/280 ITR [2006] 154 Taxman 377/280 ITR 357 held that in order to advance held that in order to advance substantial justice which is of substantial justice which is of prime importance, the expression "sufficient cause" should receive a prime importance, the expression "sufficient cause" should receive prime importance, the expression "sufficient cause" should receive The Hon’ble Supreme Court in the case of OP liberal interpretation. . The Hon’ble Supreme Court in the case of Kathpaliya v. Lakhmir Singh AIR 1984 SC 1744 has held that Kathpaliya v. Lakhmir Singh AIR 1984 SC 1744 Kathpaliya v. Lakhmir Singh AIR 1984 SC 1744 refusal to condone the delay results in grave miscarriage of justice, refusal to condone the delay results in grave miscarriage of justice, refusal to condone the delay results in grave miscarriage of justice, thus it would be a ground to condoning the delay. The Hon’ble thus it would be a ground to condoning the delay. The Hon’ble thus it would be a ground to condoning the delay. The Hon’ble court in the case of Ornate Traders (P.) Ltd. v. ITO (2008) Ornate Traders (P.) Ltd. v. ITO (2008) Bombay court in the case of 312 ITR 193 (Bombay) 312 ITR 193 (Bombay) held that expression 'sufficient cause' will 'sufficient cause' will always have relevancy to reasonableness and actions, which can be always have relevancy to reasonableness and actions, which can be always have relevancy to reasonableness and actions, which can be condoned by Court and it should fall within realm of normal human condoned by Court and it should fall within realm of normal human condoned by Court and it should fall within realm of normal human . In the case of Concord of conduct or normal conduct of a litigant conduct or normal conduct of a litigant. In the case of India Insurance Co. Ltd. v. Smt. India Insurance Co. Ltd. v. Smt. Nirmala Devi (1979) 118 ITR Nirmala Devi (1979) 118 ITR 507 (SC) Hon’ble Supreme Court held that what is to be looked into Hon’ble Supreme Court held that what is to be looked into Hon’ble Supreme Court held that what is to be looked into is whether there is any taint of mala ther there is any taint of malafide or element of recklessness fide or element of recklessness or ruse and if neither is present, legal advice honestly sought and or ruse and if neither is present, legal advice honestly sought and or ruse and if neither is present, legal advice honestly sought and actually given, must be actually given, must be treated as ‘sufficient cause sufficient cause’ for condoning The Hon’ble Supreme Court in the case of Ram Nath Sao the delay. The Hon’ble Supreme Court in the case of The Hon’ble Supreme Court in the case of v. Gobardhan Sao, AIR 2002 SC 1201 v. Gobardhan Sao, AIR 2002 SC 1201 held that by held that by taking a pedantic or hyper-technical view, technical view, the explanation furnished by the the explanation furnished by the assessee for condonatio assessee for condonation of delay should not be rejected n of delay should not be rejected particularly where assessee had particularly where assessee had arguable points of law on merits arguable points of law on merits and refusal for condonation of delay will cause erroneous loss and condonation of delay will cause erroneous loss and condonation of delay will cause erroneous loss and irreparable injury to the aggrieved party by terminating lis at the irreparable injury to the aggrieved party by terminating irreparable injury to the aggrieved party by terminating inception. We find tha . We find that in the instant case, the assessee preferred to t in the instant case, the assessee preferred to file appeal against intimation order u/s 143(1) of the Act after file appeal against intimation order u/s 143(1) of the Act after file appeal against intimation order u/s 143(1) of the Act after availing the remedy of the rectification against the said intimation the remedy of the rectification against the said intimation the remedy of the rectification against the said intimation order. In our opinion, there is no element order. In our opinion, there is no element of any malafide or any malafide or recklessness or ruse in the cause explained by the assessee for s or ruse in the cause explained by the assessee for s or ruse in the cause explained by the assessee for delay. The delay falls under the normal The delay falls under the normal human conduct of litigant. conduct of litigant.
3.2 The object of prescribing the time period for filing the appeal The object of prescribing the time period for filing the appeal The object of prescribing the time period for filing the appeal to expedite and advance cause for the sufficient justice. In view of the expedite and advance cause for the sufficient justice. In view of the expedite and advance cause for the sufficient justice. In view of the ratio of the decisions referred above, we feel it appropriate to ratio of the decisions referred above, we feel it appropriate to ratio of the decisions referred above, we feel it appropriate to condone the delay in filing the appeal before the Ld. First Appellate condone the delay in filing the appeal before the Ld. First Appellate condone the delay in filing the appeal before the Ld. First Appellate Authority. Since the Ld. CIT(A) has not adjudicated on merit and Authority. Since the Ld. CIT(A) has not adjudicated Authority. Since the Ld. CIT(A) has not adjudicated therefore we restrain ourselves restrain ourselves giving any finding on any finding on merit of the case. We accordingly, set aside the order of the Ld. CIT(A) and case. We accordingly, set aside the order of the Ld. CIT(A) and case. We accordingly, set aside the order of the Ld. CIT(A) and matter is restored back to him for adjudicating on merit in matter is restored back to him for adjudicating on merit in matter is restored back to him for adjudicating on merit in accordance with law. Needless to mention that the Ld. First accordance with law. Needless to mention that the L accordance with law. Needless to mention that the L Appellate Authority shall insure adequate opportunity of being Appellate Authority shall insure adequate opportunity of being Appellate Authority shall insure adequate opportunity of being heard to the assessee. heard to the assessee.
In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on nounced in the open Court on 13/01/2025. /01/2025.