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Facts
The assessee filed an appeal with a delay of 630 days. The delay was attributed to a former employee failing to inform the company about the CIT(A) order and the director's personal distress due to his wife's illness. The assessee's return for AY 2017-18 was selected for scrutiny, and the AO completed the assessment under Section 144, making additions for discrepancies in receipts and disallowing expenses.
Held
The Tribunal condoned the delay of 630 days, citing the principles laid down by the Apex Court in Collector, Land Acquisition v. Mst. Katiji and Ors., emphasizing substantial justice over technicality. The appeal was then remitted to the Assessing Officer for fresh adjudication, granting the assessee an opportunity to present its case.
Key Issues
The primary issue was whether to condone the significant delay in filing the appeal. Additionally, the matter involved substantial additions made by the AO due to non-compliance and the partial relief granted by the CIT(A).
Sections Cited
250, 144, 143(2), 142(1), 270A, 253(5)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B’’BENCH: BANGALORE
Before: SHRI PRASHANT MAHARISHI & SHRI KESHAV DUBEY
Assessment Year :2017-18 M/s. Rukmani Finance Pvt. Ltd. No.84, 5th Floor, Manish Tower ITO J.C. Road Vs. Ward 5(1)(4) Bengaluru 560 002 Bengaluru PAN NO : AAACR9552P APPELLANT RESPONDENT Appellant by : Sri T. Srinivasa, A.R. Respondent by : Sri Subramanian, D.R. Date of Hearing : 30.06.2025 Date of Pronouncement : 26.09.2025 O R D E R
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal at the instance of the assessee is directed against the order of the ld. CIT(A)/NFAC dated 31.05.2023 vide DIN & Order No. ITBA/NFAC/S/250/2023-24/1053354784(1) passed u/s. 250 of the Income Tax Act, 1961 (in short “the Act”) for the assessment year 2017-18.
The assessee has raised the following grounds of appeal:
At the outset, the ld. A.R. of the assessee submitted that there is a delay of 630 days in filing the appeal before this Tribunal. Further, the ld. A.R. of the assessee also drew our attention to an application for condonation of delay filed along with an affidavit dated 21/04/2025 stating the cause for such delay, which are reproduced below for ease of reference and record:
On going through the above application for condonation, we find that the assessee filed the appeal with an inordinate delay of 630 days for the reason that the assessee company’s erstwhile employee Mr. Bhavar Singh though received the order of ld. CIT(A) did not bring to its notice to any of the Director nor by the Company’s auditor and hence, being unaware of the same, the M/s. Rukmani Finance Pvt. Ltd., Bengaluru Page 6 of 11 necessary appeal before the ITAT could not be filed within the statutory time allowed. Moreover, the Director of the company Shri Ashok Mittal stated that he was personally mentally disturbed and pre-occupied with the treatment of his late wife Smt. Kavita Mittal who was suffering from LMD Cancer during October 2022 to August, 2024 and passed away on 22.8.2024. In these circumstances, the assessee could not file the appeal in time. The ld. A.R.submitted that the delay is unintentional and no benefit can be attributed to the assessee in filing the appeal belatedly. He thus prayed to condone the delay and requested to consider the issues raised by the assessee on merits.
On the contrary, the ld. D.R. vehemently objected for granting the condonation of delay.
We have perused the details filed by the assessee to justify the delay and we are satisfied that there is no malafide intention on the part of the assessee in filing the appeal belatedly before us. It is to be noted that u/s 253(5) of the Act, the Tribunal may admit the appeal filed beyond the period of limitation where it has established that there exists a sufficient cause on the part of the assessee for not presenting the appeal within the prescribed time. The explanation, therefore, becomes relevant to determine whether the same reflect sufficient and reasonable cause on the part of the assessee in not filing this appeal within the prescribed time.
6.1 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.
M/s. Rukmani Finance Pvt. Ltd., Bengaluru Page 7 of 11 (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 legalize 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. 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 legalize 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 legalizing 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 authorized by an authority of law. Therefore, if we refuse to condone the delay, that would amount to legalize an illegal and unconstitutional order passed by the lower authority.
6.3 Further, in the case of People Education & Economic Development Society Vs/ ITO reported in 100 ITD 87 (TM) (Chen), wherein 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”.
6.4 The next question may arise 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 filing the appeal. We have to see the cause for the delay. When there was a reasonable cause, the period of delay may not be relevant factor. In fact, the 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. Accordingly, the Madras High Court condoned nearly 21 years of delay in filing the appeal. When compared to 21 years, 630 days cannot be considered to be inordinate or excessive. Furthermore, the Chennai Tribunal by majority opinion in the case of People Education and Economic Development Society (PEEDS) v. ITO (100 ITD 87) (Chennai) (TM) condoned more than six hundred days delay. Therefore, in our opinion, by preferring the substantial justice, thisinordinate delay of 630 days has to be condoned and accordingly we condone the delay and admit the appeal for adjudication.
Brief facts of the case are that the assessee company filed its return of income on 29.3.2018 by declaring a total income of Rs.32,39,160/-.Thereafter, the case was selected for scrutiny under M/s. Rukmani Finance Pvt. Ltd., Bengaluru Page 9 of 11 CASS and accordingly notices u/143(2) as well as 142(1) of the Act were issued asking to furnish the relevant details. During the course of assessment proceedings, in spite of sending 11 notices under the Act, the assessee did not complywith any of the notices and accordingly, the AO completed the assessment u/s 144 of the Act to the best of his judgment. As there was a substantial difference in the receipts adopted by the assessee in P&L account and the receipts reflected in Form No.26AS, accordingly, the net difference of receipts amounting to Rs.32,00,129/- was added as income of the assessee. Further, vide notice dated 13.12.2019, the assessee was required to furnish the details of employee expenses and other expenses. However, as the assessee could not furnish the above details, 50% of such expenses amounting to Rs.36,79,983/- was disallowed and added as income of the assessee.
Aggrieved by the order of ld. AO, the assessee preferred an appeal before the ld. CIT(A)/NFAC. Ld. CIT(A)/NFA partly allowed the appeal of the assessee by considering the fact that assessee had not submitted any detail except the remuneration paid to one director of Rs.9 lakhs, and accordingly, the ld. CIT(A)/NFAC directed the AO to restrict the addition on account of employee benefit expenses to 50% of Rs.20,41,947/- (Rs.29,41,947 – Rs.9,00,000/-) being Rs.10,29,973/- and accordingly partly allowed the appeal of the assessee.
Again aggrieved by the order of ld. CIT(A)/NFAC, the assessee filed the present appeal before this Tribunal.
Before us, the ld. A.R. of the assessee vehemently submitted that assessee could not represent its case before both the authorities below and accordingly prayed that one more opportunity may be granted to the assessee to substantiate its claim.
We have heard the rival submissions and perused the materials available on record. It is an undisputed fact that despite serving 11 notices, the assessee neither appeared before AO nor furnished any details/information/documents/records in support of his claim and accordingly the AO completed the assessment u/s 144 of the Act to the best of his judgement. On going through the order of the ld. CIT(A)/NFAC, we take note of the fact that as the assessee could not submit any details except the remuneration paid to one director of Rs.9 lakhs, the rest of the addition was sustained by the ld. CIT(A)/NFAC.
12.1 Before us, ld. A.R. of the assessee vehemently submitted that the assessee could not represent his case before both the Authorities and prayed to grant one more opportunity before the AO to substantiate its claim. This being so, in the interest of justice and fair play and as requested by the ld. A.R. of the assessee, we deem it fit and proper to remit the entire issue in dispute to the file of the AO to decide afresh in accordance with law. Needless to say, a reasonable opportunity of being heard must be granted to the assessee. The assessee is also directed to produce all the documents/records/ financials/reports/information to substantiate its claim. We make it clear that in case of further default, the assessee shall not be entitled to any leniency. It is ordered accordingly.
In the result, the appeal filed by the assessee is partly allowed for statistical purposes.
Order pronounced in the open court on 26th Sept, 2025