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Facts
The assessee filed its return for AY 2022-23 declaring income and tax, which was accepted by CPC. However, the TDS credit was reduced, leading to a demand. The assessee appealed the intimation belatedly to CIT(A)/NFAC, which dismissed the appeal in limine for being filed beyond time without sufficient cause.
Held
The Tribunal held that the CIT(A) erred in not condoning the delay, emphasizing that substantial justice should be preferred over technical considerations. The Tribunal condoned the delay and remitted the case back to the CIT(A) for fresh adjudication on merits.
Key Issues
Whether the Commissioner (Appeals) was justified in dismissing the appeal in limine without condoning the delay, and if the delay should have been condoned on the grounds of substantial justice.
Sections Cited
250, 143(1), 249, 251, 154, 199, 194A, 194H, 194Q, 234A, 234B, 234C
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Income Tax Appellate Tribunal, “B’’ BENCH: BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI KESHAV DUBEY
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal at the instance of assessee is directed against the order of ld. Addl/JCIT(A), Jodhpur dated 08.11.2024 vide DIN & Order No. ITBA/APL/S/250/2024-25/1070213328(1) passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”) for the assessment year 2022-23. The assessee has raised the following grounds of appeal:
M/s. Udaya Ravi Arecanut Company, Shivamogga Page 4 of 9 2. Brief facts of the case are that the assessee firm filed its Return of income for the Asst. year 2022-23 on 26.9.2022 by declaring total income of Rs.35,59,589/- and the tax payable thereon amounting to Rs.11,05,295/- were covered by way of total TDS/TCS amounting to Rs.11,34,672/- and accordingly the assessee claimed refund of Rs.29,380/- along with Interest U/s 244A thereon. Thereafter, while passing the intimation u/s 143(1) of the Act on 17.2.2023, the ld. Deputy Director of Income Tax, CPC, Bengaluru although accepted the total income of Rs.35,59,590/- as declared by the assessee in its return of Income but reduced the TDS to Rs.1,58,111/- from Rs.11, 18,382/- of total TDS as claimed in the return and thereby raised the total demand of Rs.10,80,290/- by disallowing total TDS credit of Rs.9,60,271/-
Aggrieved by the aforesaid Intimation passed u/s 143(1) of the Act dated 17/02/2023, the assessee preferred an appeal before the CIT(A)/NFAC belatedly along with the petition for condoning the delay in filing appeal.
The ld. Addl/JCIT(A) dismissed the appeal of the assessee in limine by holding that the assessee’s appeal is not maintainable as the same is filed beyond the time limit permitted u/s 249 of the Act for filing of appeal and there is no sufficient cause for delay in filing of appeal, which can be condoned and accordingly dismissed the appeal u/s 250 r.w.s. 251 of the Act without considering the merits of the appeal.
Again, being aggrieved by the Order of the ld. Addl/JCIT(A), the assessee has filed the present appeal before this Tribunal. The assessee has also filed two paper books comprised of 47 pages.
Before us, the ld. A.R. for the assessee vehemently submitted that the ld. Addl/JCIT(A) grossly erred in not condoning the delay in filing the appeal before him as there was sufficient cause in filing the appeal belatedly. The ld. AR of the assessee further submitted that since the income declared in the return was accepted by the CPC & the demand was raised by not allowing the TDS credit which was also reflecting in Form 26AS & accordingly the assessee sought for rectification of mistake as per the provision contained in section 154 of the Act. The assessee was under an honest & bonafide belief that the outcome of the rectification would address the discrepancies & prima facie there is no need to file appeal for the mistakes which were apparent on the face of the record which resulted in delay filing of appeal. On merits the ld. AR of the assessee submitted that the Gross receipts reflected in Form 26AS on which TDS credit was claimed in the Return of Income are higher than the total receipts declared in the Return as the assessee is a commission agent selling goods on behalf of agriculturists. Further, the AR of the assessee submitted that the purchasers have made TDS U/s 194Q by treating the assessee firm as seller of goods whereas the assessee being an commission agent sold the goods on behalf of principal agriculturists and the assessee firm has declared entire commission & Interest as income in its Return of Income. Lastly ld. AR requested to remit back the file to the ld. Addl/JCIT(A) for fresh consideration as the ld. Addl/JCIT(A) has not adjudicated the case on merits by condoning the delay.
Per contra, ld. DR submitted that the ld. Addl/JCIT(A) rightly dismissed the assessee’s appeal in limine without condoning the delay in filing the appeal as the delay was substantial without being the sufficient cause for Delay. The delay was only due to the negligence of the assessee firm.
We have heard the rival submissions & perused the materials available on record. It is undisputed fact that the Income declared by the assessee in its return of Income is accepted by the CPC while passing the Intimation u/s 143(1) of the Act. The solitary issue in the present case is non-granting of TDS Credit amounting to Rs. 9,60,271/- while passing intimation u/s 143(1) of the Act. On going through the internal page No.13 of the Intimation passed u/s 143(1) of the Act dated 17/02/2023, we find that the mismatch between the Tax credits claimed and allowed as reported by the CPC is NIL. Therefore, there is no variation in the Total TDS reflected as per 26AS & as claimed by the assessee. Further the CPC, Bengaluru while passing the intimation u/s 143(1) of the Act has also not given any reason for the disallowance of TDS credit. On going through the Form 26AS (Placed at page 4-16 of PB), we also take note of the fact that the TDS have been deducted u/s 194A i.e. on Interest on security deposits, U/s 194H i.e. on Commission or brokerage & u/s 194Q i.e. on payment of certain sum for purchase of goods. Therefore, we find force in the argument of the ld. AR of the assessee that the assessee is a commission agent selling goods on behalf of agriculturists & accounted for the commission in its books of Account. The purchasers have made TDS U/s 194Q by treating the assessee firm as seller of goods whereas the assessee being an commission agent sold the goods on behalf of principal agriculturists and the assessee firm has declared entire commission & Interest as income in its Return of Income. We are of the considered opinion that without considering all these merits of the appeal the ld. Addl/JCIT(A) dismiss the appeal as the same is filed beyond the time limit permitted u/s 249 of the Act.
8.1 We have also gone through the reasons explained by the assessee for filing the appeal belatedly before the ld. ADDL/JCIT(A).
M/s. Udaya Ravi Arecanut Company, Shivamogga Page 7 of 9 The main reason as stated by the assessee in filing the appeal belatedly before the ld. ADDL/JCIT(A) is that since the income declared in the return was accepted by the CPC & the demand was raised by not allowing the TDS credit only which was also reflecting in Form 26AS & accordingly the assessee sought for rectification of mistake as per the provision contained in section 154 of the Act. The assessee was under an honest & bonafide belief that the outcome of the rectification would address the discrepancies & prima facie there is no need to file appeal for the mistakes which were apparent on the face of the record which resulted in delay filing of appeal. It is not the case that the assessee has not cited any reasonable cause for filing appeal belatedly. The ld. ADDL/JCIT(A) on the ground that the reasons stated by the appellant not found tenable as the appellant has failed to demonstrate sufficient cause or any other hardship for delay, has not condoned the delay in filing appeal. On going through the facts of the case, we find force in the assessee’s contention that on an honest & bonafide belief that that the outcome of the rectification would address the discrepancies & prima facie there is no need to file appeal for the mistakes which were apparent on the face of the record which resulted in delay filing of appeal. In our opinion, it cannot be said that assessee is very callous in its approach in filing the appeal belatedly before the ld. ADDL/JCIT(A). Being so, 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 non-deliberate delay.
8.2 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:
(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.
8.3 Thus we are of the opinion that If the delay is not condoned, it would amount to legalising 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 authorised by an authority of law. Therefore, if we refuse to condone the delay, that would amount to legalise an illegal and unconstitutional order passed by the lower authority. Therefore, in our opinion, by preferring the substantial justice, the delay of in filing the appeal before ld. Addl/JCIT(A) has to be condoned.
8.4 In view of the above, we are condoning the delay in filing the appeal before the ld. Addl./JCIT(A) belatedly and accordingly remit the entire issues in dispute to the file of ld. Addl./JCIT(A) with the above observations. The ld. Addl./JCIT(A) will decide the issue
In the result, appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in the open court on 21st Mar, 2025