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Facts
The assessee failed to file a return of income for assessment year 2017-18 and did not respond to notices. The Assessing Officer (AO) made an ex-parte assessment under Section 144. The CIT(A) also dismissed the appeal ex-parte due to non-compliance. The assessee filed an appeal before the Tribunal after a delay of 224 days, citing lack of technical knowledge and ignorance of proceedings.
Held
The Tribunal condoned the delay of 224 days, finding no malafide intention and a reasonable cause for the delay, prioritizing substantial justice. The Tribunal remitted the entire issue to the file of the AO for de-novo adjudication, imposing a token cost of Rs. 5,000/- on the assessee.
Key Issues
Whether the delay in filing the appeal is liable to be condoned, and if so, whether the matter should be remitted to the Assessing Officer for fresh adjudication.
Sections Cited
144, 142(1), 69A, 115BBE, 139, 250, 271AAC, 253(5)
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Income Tax Appellate Tribunal, “A’’BENCH: BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal at the instance of the assessee is directed against the order of ld. CIT(A)/NFAC dated 31.8.2024 vide DIN & Order No. ITBA/NFAC/S/250/2024-25/1068229901(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, there is a delay of 224 days in filing the appeal before this Tribunal. The ld. A.R. of the assessee drew our attention to an affidavit filed for condonation for delay mentioning the reasons for the delay which are reproduced below for ease of reference & convenience:
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 appeals 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.
4.1 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.
(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.
4.2 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 K.N. Dileep, Bangalore Page 7 of 11 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.
4.3 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”.
4.4 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, 224 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)
K.N. Dileep, Bangalore Page 8 of 11 condoned more than six hundred days delay. Therefore, in our opinion, by preferring the substantial justice, the delay of 224 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 is trading in Garnets and also having income from agricultural activities. The assessee had not filed his return of income for the assessment year 2017-18. A notice u/s 142(1) of the Act was issued calling on the assessee to prepare true and correct return. However, the assessee did not file any return of income for the assessment year 2017-18. The assessee had also not responded to any of the notices including show cause notice during the course of assessment proceedings. The AO completed the assessment on a total income of Rs.1,00,62,955/- as detailed below:
Unexplained deemed income u/s 69A to be Rs.95,91,810/- taxed at special rates u/s 115BBE Business income Rs.4,40,834/- Income from other sources Rs.30,311/- Total income Rs.1,00,62,955/-
Aggrieved by the assessment completed u/s 144 of the Act dated 23.9.2019, the assessee preferred an appeal before the ld. CIT(A)/NFAC.
The ld. CIT(A)/NFAC dismissed the appeal of the assessee on the ground of total non-compliance on the part of the assessee during the appellate proceedings. The ld. CIT(A)/NFAC relying on the decision of Hon’ble Apex Court in the case of Kale khan Mohammed Hanif V. CIT (1963) 50 ITR 1 (SC) concluded that the assessee had not discharged the statutory onus cast upon him and accordingly dismissed the appeal of the assessee.
Aggrieved by the order of ld. CIT(A)/NFAC dated 31.8.2024, the assessee has filed the present appeal before this Tribunal.
Before us, ld. A.R. of the assessee vehemently submitted that the AO erred in treating the entire cash deposit in bank account aggregating Rs.95,91,810/- as unexplained money u/s 69A of the Act apart from computing presumptive business income and interest income and assessed on a total income of Rs.1,00,62,955/- and thus raised a demand of Rs.1,15,45,431/-. Further, ld. A.R. of the assessee submitted that the assessee was unaware of the notices of the Authorities below as all the communications were served through e-mails and the assessee is not a tech savvy. Further, ld. A.R. of the assessee submitted that before the AO also, the assessee could not represent his case and the AO has passed order u/s 144 of the Act to the best of his judgement and accordingly prayed that one more opportunity may be granted to represent his case before AO.
Ld. D.R. on the other hand strongly opposed in condoning the delay in filing the appeal before this Tribunal as well as on merits by submitting that assessee is very callous in its approach in proceeding before both the authorities below.
We have heard the rival submissions and perused the materials available on record. It is an undisputed fact that the AO has passed an order u/s 144 of the Act to the best of his judgement & assessed on a total income of Rs.1,00,62,955/- and determined the net tax payable of Rs.1,15,45,431/-. It is also an undisputed fact that the assessee had neither filed his return of income u/s 139 of the Act nor in response to notice u/s 142(1) of the Act. We also observe that even during the course of appellate proceedings, K.N. Dileep, Bangalore Page 10 of 11 the assessee squarely failed to discharge his onus statutorily cast upon him in spite of providing several opportunities and there has been absolutely no response from the assessee and accordingly due to the non-compliances, the ld. CIT(A)/NFAC dismissed the appeal of the assessee.
11.1 This being so, in the interest of justice and fair play and as requested by the ld. A.R. of the assessee, the entire issue in dispute is remitted to the file of AO to decide afresh in accordance with law. While remitting the matter to the file of AO, we also consider it necessary to impose a token cost of Rs.5,000/- to the assessee in aggregate owing to continued negligence shown to the statutory notices at both the levels. The assessee shall deposit the cost warranted in favour of the Prime Minister’s Relief Fund and the receipt thereof shall be furnished before the AO within 2 weeks from the date of service of this order. With these terms, the appeal of the assessee is restored to the file of AO for de-novo adjudication in accordance with law. The assessee is also directed to produce all the necessary documents/records/ financials/information as may be called for by the AO for proper adjudication of the case. We make it clear that in case of further default, the assessee shall not be entitled for any leniency. It is ordered accordingly.