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Facts
The assessee, Bangalore Stock Exchange Customer Protection Fund, filed appeals for AY 2016-17 and 2017-18 with a delay of 270 and 229 days, respectively. The assessee sought condonation of delay citing reasons related to the restructuring of SEBI offices and missed communication. The CIT(A)/NFAC had dismissed the appeals for non-compliance.
Held
The Tribunal condoned the delay in filing the appeals, finding sufficient cause and no malafide intention. The Tribunal held that substantial justice should be preferred over technicalities. The appeals were then remitted back to the CIT(A)/NFAC for fresh adjudication after providing a reasonable opportunity of hearing.
Key Issues
Whether the delay in filing the appeals should be condoned, and whether the appeals should be remitted back to the CIT(A)/NFAC for fresh adjudication on merits.
Sections Cited
250, 5, 253(5), 11, 11(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A’’BENCH: BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
PER KESHAV DUBEY, JUDICIAL MEMBER:
1. These appeals at the instance of the assessee are directed against the order of the ld. CIT(A)/NFAC dated 28.12.2023 vide DIN & Order No. ITBA/NFAC/S/250/2023-24/1059153151(1) passed u/s 250 of the Income Tax Act, 1961 (in short “the Act”) for the assessment year 2016-17 and dated 07.02.2024 vide DIN & Order No. ITBA/NFAC/S/250/2023-24/1060608554(1) for the AY 2017- 18.
Since the issues in both these appeals of the same assessee are common, these are clubbed together, heard together and disposed of by this common order for the sake of convenience.
Bangalore Stock Exchange Customer Protection Fund, Chennai Page 2 of 17 3. At the outset, the ld. A.R. of the assessee submitted that there is a delay of 270 days in filing the appeal for the AY 2016-17 and 229 days in filing the appeal for the AY 2017-18 before this Tribunal. The ld. A.R. of the assessee also drew our attention on applications for condonation of delay separately filed for the AYs 2016-17 & 2017-18 along with the affidavits in original dated 20/11/2024 sworn before the notary public which are reproduced below for ease of reference and record:
Further AR of the assessee submitted that the assessee could not file the appeals in time due to the aforesaid bonafide cause and the delay was not deliberate or intentional and no benefit can be attributed to the assessee in filing the appeals belatedly. She 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 in filing the appeal but could not controvert the reasons as advanced by the assessee by way of affidavits.
We have perused the details filed by the assessee to justify the delay. On going through both the applications as well as affidavits for condonation of delay, wherein the detailed explanation was given for delay in filing the appeal, we find that there are sufficient cause for delay in filing both the appeals. Further we find 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 these appeals 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.
(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.
Bangalore Stock Exchange Customer Protection Fund, Chennai Page 12 of 17 (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 the 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 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, The delays of 270 days & 229 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 270 days for the AY 2016-17 & 229 days for the AY 2017- 18 have to be condoned and accordingly we condone the delay and admit both the appeals for adjudication.
The impugned order passed by the Commissioner of Income Tax Appeals ("CIT(A)") are based on incorrect appreciation of facts of the case and incorrect interpretation of law and therefore, are bad in law and are liable to be quashed.
2. That the Assessing Officer ("AO")/CIT(A) erred in denying the exemption available to the Appellant under Section 11 of the Bangalore Stock Exchange Customer Protection Fund, Chennai Page 14 of 17 Income Tax Act, 1961 on the basis that the Appellant has not furnished Form 10.
That the AO/ CIT (A) failed to appreciate that the objects of the Appellant are charitable in nature and that the CIT(A), in the previous years has held the Appellant to be a charitable trust.
4. That the CIT(A) disposed of the appeal after observing that the appellant failed to make any submissions in support of grounds of appeal and held that the Appellant "had nothing more to submit except for raising the ground' and proceeded to pass the order on merits. However, the CIT (A) has not dealt with all the grounds raised by the Appellant.
5. That the CIT(A) has merely concurred with the views of the Assessing Officer. Therefore, the order passed by the CIT(A) is not a speaking order.
6. That the CIT(A) has failed to appreciate the relevant judicial pronouncements which state that an appeal cannot be dismissed for want of prosecution and in the event the CIT (A) proceeds with deciding an appeal, it is incumbent upon the CIT(A) to deal with the grounds on merits even in an ex parte order. 7. That the order passed by the CIT(A) is not a speaking order and is passed without an effective opportunity of hearing 8. The CIT(A) failed to deal with the ground raised in appeal regarding the levy of interest has not been considered.
8. Brief facts of the case are that the assessee is a Charitable Trust set up by the Bangalore Stock Exchange for the protection and benefit of members of the public who invest and deal in securities through the members of the said stock exchange. The main object of the Trust is to compensate members of the public in respect of their claims against defaulting members of the stock exchange and to educate investors through various investor education programmes. The assessee itself was set up in terms of a notification issued by the Securities Exchange Board of India (SEBI) which is a statutory body incorporated for the protection of investor’s interests and regulate the securities market which stipulated setting up of investor protection funds by the stock exchanges and the assessee has absolutely no profit motive. The Bangalore Stock Exchange Customer Protection Fund, Chennai Page 15 of 17 sources of income for the assessee are contributions received from the members of the stock exchange the contributions by the stock exchange and the interest income received on approved investments. The trust has been granted registration under Section 12A of the Act vide order no. TRUST 718 1OA VOL.I B-667 2000- 01 CIT-II dated 24.01.2001 with effect from 09.05.1995 in the status of others. The assessee claimed exemption under section 11(2) of the Act in its return of income as in the earlier years. The same was rejected by the AO on the ground that the assessee is not eligible to claim exemption under section 11 of the Act. Further Form 10 under Rule 17 of the Income Tax Rules 1962 was not filed within due date. Lastly the reason setout in the said form for accumulation is general in nature.
9. Aggrieved by the assessment order, the assessee preferred an appeal before the ld. CIT(A)/NFAC.
Before the ld. CIT(A)/NFAC, the assessee was requested repeatedly to file reply by way of providing several opportunities. However, no submissions were made during the entire appellate proceedings. As the assessee during the appellate proceedings did not comply with the notices and made no submission in support of grounds of appeal therefore the ld. CIT(A)/NFAC held that the assessee has nothing more to submit except for raising the ground and hence the ld. CIT(A)/NFAC decided to adjudicate the issue on merits of the case. The ld. CIT(A)/NFAC observed that the assessee has not e-filed form 10 claiming exemption u/s 11(2) of the Act and also not replied to the show cause notice issued by the AO. Accordingly, the ld. CIT(A/NFAC) held that the AO has rightly denied the claim of exemption and therefore, the addition made by the AO was confirmed by the ld. CIT(A) by dismissing the appeal of the assessee.
11. Aggrieved by the order of ld. CIT(A)/NFAC, the assessee is in appeal before us.
12. Before us, ld. A.R. of the assessee submitted that order of ld. CIT(A)/NFAC was not a speaking order and is passed without an effective opportunity of being heard. Further, the ld. A.R. submitted that the ld. CIT(A)/NFAC erred in not considering the Form 10 filed by the assessee during the course of assessment proceedings and requested to grant one more opportunity before the ld. CIT(A)/NFAC & remit back the matter to the ld. CIT(A)/NFAC for fresh consideration and pass the order on merit of the case in accordance with law.
Ld. D.R. on the other hand, relied on the order of authorities below.
We have heard the rival submissions and perused the materials on record. On going through the order of ld. CIT(A)/NFAC, we take a note of the fact that in spite of granting several opportunities, to file reply/submission on several occasions, the assessee did not make any submission during the entire appellate proceedings. Therefore, the ld. ld. CIT(A)/NFAC assumed that assessee had nothing more to submit except for raising the ground. Further, as the assessee failed to make any submission in support of the grounds of appeal, the ld. CIT(A)/NFAC held that the action of AO is correct and accordingly dismissed the appeal of the assessee. Before us, ld. A.R. of the assessee vehemently submitted that one more opportunity may be granted before the ld. CIT(A)/NFAC to file submission/ documents/evidence/information to substantiate their claims. Further, on going through the order of the ld. CIT(A)/NFAC, we find Bangalore Stock Exchange Customer Protection Fund, Chennai Page 17 of 17 that the appeal of the assessee is also not adjudicated on the grounds of appeal as raised by the assessee. This being so, in the interest of justice and fair play and as requested by the ld. A.R. of the assessee, we remit the entire issue in dispute of both the appeals to the file of ld. CIT(A)/NFAC for fresh consideration and to decide the same 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/submit all the requisite documents/ evidence/information in support of their claim and should not take unnecessary adjournment. We make it clear that in case of further default, the assessee shall not be entitled for any leniency. It is ordered accordingly.
In the result, both the appeals filed by the assessee are partly allowed for statistical purposes.