SALIGRAMA RAJENDRA PRASAD RASHMI,MYSORE vs. INCOME TAX OFFICER, WARD-5(3)(5), BANGALORE

Land Acquisition v. Mst. Katiji & Ors, reported in 167 ITR 471, has held that ordinarily a litigant does not stand to benefit by lodging an appeal late and that refusing to condone delay may defeat the cause of substantial justice. Similarly, in the case of Rafiq v. Munshilal, AIR 1981 SC 1400, the Hon’ble Supreme Court observed that an innocent party should not suffer for the negligence of his advocate. It is also relevant to note the decision of the Hon’ble Supreme Court in N. Balakrishnan v. M. Krishnamurthy, AIR 1998, wherein it was held that the length of the delay is not material, but the acceptability of the explanation is the true test. Further, in the cases of Shakti Clearing Agency (P.) Ltd. v. ITO, 80 TTJ 668 (Rajkot) and Sreenivas Charitable Trust v. DCIT, 280 ITR 357 (Hon’ble Madras), the Courts have consistently held that a liberal approach should be adopted in considering applications for condonation of delay when no mala fide or deliberate negligence is attributable to the assessee.

6.1 In the facts before us, we find that the delay is primarily attributable to circumstances beyond the control and bona fide belief. The assessee cannot be denied his right of appeal merely because there was delay in filing of appeal. There is nothing on record to suggest that the delay was deliberate or intended to secure an undue advantage. On the contrary, the material shows that the assessee acted promptly and with diligence as soon as he became aware of the appellate order. Having regard to the overall facts and circumstances of the case, and in the larger interest of justice, we are of the considered view that the delay of 74 days deserves to be condoned in the interest of justice and equity.

“On the facts and in the circumstances of the case as well as the law on the subject, the learned AO has erred in making addition of Rs. 36,19,668/- on account of TRC not obtained when in fact the provisions of DTAA do not apply to the present case.

2. The appellant denies herself liable to be assessed on a total income of Rs. 36,19,6701- as against NIL/- returned by the appellant under the facts and circumstances of the case. a. That the Ld. Commissioner of Income Tax (Appeals) erred in law and on facts by refusing to condone the delay in filing the appeal without appreciating the reasonable cause for the delay, as provided under Section 249(3) of the Income Tax Act, 1961. b. That the Ld. CIT(A) failed to appreciate the bona fide nature of the delay, which was caused due to circumstances beyond the control of the Appellant, as detailed in the condonation application filed along with the appeal c. That the Ld. CIT(A) acted contrary to the principles of natural justice by not considering the supporting evidence and submissions made by the Appellant, thereby leading to an arbitrary and unjust conclusion. d. That the denial of condonation of delay has resulted in the dismissal of the appeal without affording the Appellant an opportunity to contest the merits of the intimation u/s, thereby causing grave prejudice to the Appellant. That in any event, the order passed by the Commissioner of Income- tax (Appeals), ADDL/JCIT(A), THANE is without jurisdiction and thus liable to be set aside.”

36,19,668/- in Singapore. The impugned salary income was inadvertently disclosed as income from other sources being interest income from foreign country in return of income under the Act and by mistake selected that no Tax Residency Certificate (TRC) is available. However, the assessee claimed that the impugned income as exempt income under the Act and DTAA. The CPC while processing the return of income under section 143(1) disallowed the claim of exempt income in the absence of TRC and raised the demand.

11.1 To her utter shock, when she accessed the income-tax portal in January 2024, found that the demand was still outstanding. She immediately approached a Chartered Accountant and, upon advice, filed an appeal before the learned Commissioner of Income Tax (Appeals) [CIT(A)] on 30.04.2024. The appeal was accompanied by an application . under section 5 of the Limitation Act, 1963, seeking condonation of delay.

11.2 The delay of about four years in filing the appeal occurred solely because of the bona fide belief that the rectification request was under consideration and the demand had been dropped. The assessee had no intention to jeopardize the interest of the Revenue by delaying the appeal. A sworn affidavit in support of the condonation petition has also been filed.

11.3 The assessee also places reliance on CBDT Circular No. 10/2021 dated 25.05.2021, wherein the Board clarified that the limitation for filing appeals stands extended pursuant to the orders of the Hon’ble Supreme Court of India in Suo Moto Writ Petition (Civil) No. 3 of 2020, vide order dated 27.04.2021. In these circumstances, the assessee prays that the delay be condoned in the interest of justice, and the appeal be admitted for adjudication on merits.

11.4 However, the learned CIT(A) held that the appeal was filed after a delay of 1627 days, whereas the statutory period for filing had expired on 16.11.2019, much before the Covid-19 relaxation period granted by the Hon’ble Supreme Court. It was observed that the benefit of the Hon’ble Supreme Court’s extension during the pandemic could not be applied to the appellant. The ld. CIT(A) further noted that the appellant failed to provide any sufficient or reasonable cause explaining the extraordinary delay. Referring to several Supreme Court rulings, it was emphasized that limitation laws must be applied strictly and cannot be . relaxed on equitable grounds. Since the delay was not condoned, the appeal itself was treated as non-est and dismissed in limine.

13.1 The AR submits that assessee has obtained the tax residency certificates for the relevant calendar years 2017 and 2018 and is ready to furnish them in support of her claim. She has also been consistently offering his salary income to tax in Singapore, as evident from the “Notices of Assessment” issued by the Revenue authorities of Singapore. Copies of these assessments for the years 2016 to 2020 are produced to substantiate the contention. Further, wherever she had taxable income in India, she has been diligently filing returns of income in India, and to prove her bona fides, she has filed returns for AYs 2019-20 to 2024-25 on a consistent basis.

13.2 The learned AR stated that the relevant documents, including TRCs and Singapore assessment orders, could not be produced earlier before the learned CIT(A) due to inadvertence and not with any mala fide intention. Once advised by counsel, she promptly sought to file the same as additional evidence since these documents are crucial for proper adjudication. He submits that the omission was bona fide, and there was no attempt to delay or mislead the proceedings.

13.3 The learned AR further submits that if the documents are not admitted as additional evidence, the assessee will suffer irreparable loss and injury, as her genuine claim under the DTAA will be denied. On the other hand, no prejudice or loss will be caused to the Revenue if the evidence is admitted and considered. The learned AR submitted that he has a strong prima facie case on merits and the addition made is more likely to be deleted once the supporting evidence is considered. Accordingly, the assessee prays that the Tribunal may kindly admit the additional evidence and allow the appeal in the interest of justice and equity.

14.1 We have heard the rival contentions of both the parties and perused the materials available on record. The relevant facts, as narrated, are not in dispute which is disused here at the cost of repetition. The assessee is an individual, a resident of Singapore since .

2015, regularly filing tax returns in Singapore and discharging tax obligations there. In India, she has been filing returns in respect of income arising in India. For the impugned year AY 2018-19, the assessee earned salary income of ₹36,19,668 in Singapore. While filing the return of income in India, she inadvertently disclosed this salary as “income from other sources” and mistakenly marked in Schedule OS that no TRC was available. Consequently, the CPC, while processing the return u/s 143(1), denied the DTAA benefit and raised the demand.

14.2 The assessee claims that the omission was inadvertent and bona fide. She promptly approached her tax consultant, who advised that rectification under section 154 would suffice, and under the bona fide belief that the rectification would be carried out, the assessee did not pursue the appeal remedy. Being a non-resident employed abroad, she did not receive departmental notices. To her shock, when she checked the portal in January 2024, she found the demand still subsisting. She immediately engaged counsel and filed an appeal before the ld. CIT(A) accompanied with a petition for condonation of delay along with a sworn affidavit.

16.1 Applying the above principles, in the present case, we find that the assessee acted on professional advice that the rectification petition would take care of the issue. She was a non-resident working abroad, had little occasion to interact with Indian proceedings, and assumed in good faith that the issue stood resolved. The moment she came to know of the outstanding demand, she acted promptly and filed the appeal. Further, her conduct of consistently filing returns in India and paying taxes on Indian-sourced income, as well as discharging tax obligations in Singapore, demonstrates bona fides. We also note that a sworn affidavit has been filed affirming the facts.

16.2 We also take note of CBDT Circular No. 10/2021 dated 25.05.2021 which clarified that limitation periods were to be extended in light of the Hon’ble Supreme Court’s suo motu orders. Though the ld. CIT(A) observed that the assessee’s limitation had expired before the Covid-19 period, in our considered view, the explanation offered by the . assessee for the delay is a reasonable and sufficient cause within the meaning of section 5 of the Limitation Act. The law is well-settled that “sufficient cause” should receive a liberal construction to advance justice rather than defeat it.

16.3 On merits also, the assessee has now produced TRCs for the relevant period and copies of Notices of Assessment issued by the Singapore Revenue authorities for AYs 2016–2020, evidencing taxation of salary income in Singapore. As per Article 15 of the India–Singapore DTAA, salary income is taxable only in the State of residence unless the employment is exercised in the source State. Since the assessee was employed in Singapore, the salary is not taxable in India. These documents, in our view, constitute crucial additional evidence necessary for proper adjudication. The omission to file them earlier appears inadvertent and not intentional. In the interest of justice, we admit the additional evidence under Rule 29 of the ITAT Rules.

16.4 Therefore, we are of the considered view that the delay in filing the appeal deserves to be condoned, as the assessee has shown sufficient cause supported by affidavit and consistent bona fide conduct. The additional evidence in the form of TRCs and Singapore tax assessments must be admitted. Since the learned ld. CIT(A) dismissed the appeal at the threshold without adjudicating the merits, the matter requires fresh consideration at his level.

16.5 Accordingly, we set aside the impugned order of the CIT(A) and restore the matter to his file with a direction to condone the delay, admit the additional evidence, and decide the appeal afresh on merits after . giving adequate opportunity to the assessee. It is made clear that the assessee shall cooperate in the proceedings and shall not seek unwarranted adjournments. Thus, the ground of appeal of the assessee is allowed for statistical purposes.