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Facts
The assessee's case for AY 2017-18 was selected for scrutiny due to large cash deposits during demonetization. Notices were issued, but the assessee failed to respond, leading to an ex-parte assessment under Section 144. The CIT(A)/NFAC also dismissed the assessee's appeal due to non-compliance.
Held
The Tribunal condoned the delay in filing the appeal, emphasizing substantial justice over technicalities. It then decided to remit the entire issue back to the Assessing Officer for a fresh adjudication, considering the assessee's failure to represent properly before the lower authorities.
Key Issues
Whether the delay in filing the appeal should be condoned and whether the case should be remitted to the Assessing Officer for fresh adjudication after the assessee failed to appear before lower authorities.
Sections Cited
144, 69A, 250, 44 AB, 253(5), 226(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B’’ BENCH: BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI KESHAV DUBEY
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 19.03.2024 vide DIN & Order No. ITBA/NFAC/S/250/2023-24/1062934244(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.
3. At the outset, the ld. A.R. submitted that taking into consideration the assessee became aware of the Order passed by the ld. CIT(A)/NFAC, there is only delay of 65 days in filing the appeal before this Tribunal. However, the Registry has noted the delay of 192 days in filing the appeal before this Tribunal. The ld. A.R. of the assessee also drew our attention to an affidavit dated 30.11.2024 which are reproduced below for ease of reference and record:
4. On going through the above affidavit for condonation, we find that the assessee could not explain the cause of delay sufficiently However during the course of hearing, the ld. Ld. AR of the assessee drawn our attention to the wedding Invitation card of the daughter of the assessee placed in the Stay application file & submitted that the assessee was not aware of the Order passed by the ld. CIT(A)/NFAC as he was busy with the daughter's wedding and had not logged into his portal. The Assessee has become aware of the said Order only upon being informed by his Bankers HDFC Bank, Shivaji Nagar Branch on 28/09/2024 with respect to Notice u/s 226(3) dated 23/09/2024 received by the Bank regarding Siddiq Husain Delvi, Bangalore Page 9 of 14 attachment of bank accounts of the Assessee. The Assessee upon becoming aware of the said Order has immediately started the process of instituting an Appeal. The ld. A.R. also 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 and submitted that the assessee is very callous in filing the appeal before the Tribunal.
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. We have gone through the reasons explained by the assessee in which the assessee submitted that he was busy in his daughter’s wedding and the assessee was completely unaware of the order passed by the ld.CIT(A). It is only after the attachment of the bank account, the assessee came to know that the order has already been passed by the ld. CIT(A) and thereafter he approached the present counsel to take necessary action.
Siddiq Husain Delvi, Bangalore Page 10 of 14 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. (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. 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 Siddiq Husain Delvi, Bangalore Page 11 of 14 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, 192 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, the delay of 192 days
The brief facts of the case are that the Assessee has filed his return of income for the A.Y.2017-18 on 17/01/2017 declaring total income of Rs.11,27,810/-. The Assessee’s case was selected under CASS for limited scrutiny to verify the large cash deposits during the demonetization period. Accordingly, the notices u/s 143(2) as well as 142(1) of the Act were issued but the assessee failed to respond the notices. As the Assessee had not submitted any reply the AO has proceeded to conclude the assessment ex- parte u/s144 by adding the entire amount of "cash deposited during demonetization period' as unexplained money u/s 69A amounting to Rs.50,25,000/-.
Aggrieved by the assessment completed u/s 144 of the Act, the assessee preferred an appeal before the ld. CIT(A) /NFAC.
The ld. CIT(A)/NFAC issued 5 notices for hearing but the Assessee even during the appellate proceedings also neither filed any submission nor made any request for adjournment and accordingly as the assessee failed to submit any submission or evidence in support of grounds of appeal & remained non- compliant, the ld. CIT(A)/NFAC constrained to uphold the order of the AO & dismissed the appeal of the assessee.
10. Aggrieved by the order of ld. CIT(A)/NFAC, the assessee has filed the present appeal before this Tribunal.
11. Before us, the ld. AR of the assessee submitted that the assessee could not represent its case before the ld. CIT(A)/NFAC. Further the ld.AR of the assessee submitted that the ld.
Siddiq Husain Delvi, Bangalore Page 13 of 14 CIT(A)/NFAC has also not decided the Grounds of appeal on merits and hence requested to remit the case to the file of AO fresh adjudication.
The Ld. DR on the other hand supported the order of the authority below and submitted that as the assessee is a habitual defaulter not only in filing the appeal but also in pursuing the case and accordingly prayed to dismiss the appeal in limine.
We have heard the rival submissions and perused the materials available on record. A perusal of the fact of the case shows that assessee could not represent his case before both the lower Authorities. On perusal of the order of ld. CIT(A)/NFAC, we also observe that the ld. CIT(A)/NFAC has also not adjudicated the issues on merits of the case. As per the provision contained in section 250(6) of the Act, the order of the ld. CIT(A)/NFAC disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision. During the course of hearing, the ld. Counsel for the assessee requested that the assessee may be provided one more opportunity to represent his case before the ld. AO. In view of the above, considering the prayer of the ld. A.R. of the assessee, as well as in the interest of justice and fair play, we deem it fit to remit the entire issues involved in the present appeal to the file of ld. AO for fresh adjudication 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 which shall be paid to the credit of the income tax department as “other fees” within one month from the date of receipt of this order and produce the copy of the Challan before the AO. With these terms, the appeal of the Siddiq Husain Delvi, Bangalore Page 14 of 14 assessee is restored to the file of AO for denovo adjudication 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 necessary documents/ evidences/ information in support of his claim and shall not seek unnecessary adjournments. In case of further default, the assessee shall not be entitled for any leniency. It is ordered accordingly.