SCHNEIDER ELECTRIC IT BUSINESS INDIA PRIVATE LIMITED(FORMERLY KNOWN AS AMERICAN POWER CONVERSION (INDIA) PVT LTD.),BANGALORE vs. JOINT COMMISSIONER OF INCOME TAX, LARGE TAX PAYERS, , BANGALORE

PER WASEEM AHMED, ACCOUNTANT MEMBER:

6. In response, the assessee’s Authorized Representative (AR) stated that the assessee was under the impression that the transfer pricing adjustment issue would be handled by the Jurisdictional ld. CIT(A) and not the NFAC. The ld. AR further argued that the transfer of the appeal from the Jurisdictional CIT(A) to the NFAC was legally incorrect. Consequently, the assessee expected to receive a notice from the Jurisdictional CIT(A), not the NFAC.

7.1 The Hon’ble Madras High Court, in CIT v. K.S.P. Shanmugavel Nadai and Ors (153 ITR 596), held that if a taxpayer is pursuing other . legal remedies, the time taken for those proceedings should be considered when deciding whether the delay in filing an appeal is justified. In that case, the Hon’ble Court condoned a delay of approximately 20 years, recognizing the taxpayer’s valid reasons.

7.2 The term “sufficient cause” is not explicitly defined in the Act. It generally refers to circumstances beyond a person’s control that prevented them from taking timely action. The Hon’ble Courts have repeatedly held that a liberal approach should be taken in condoning delays when justice is at stake. The Hon’ble Supreme Court, in Collector, Land Acquisition v. Mst. Katiji (167 ITR 471), established key principles for condoning delays: 1. A litigant does not benefit from filing an appeal late.

2. Denying condonation of delay may result in the rejection of a valid case without being heard on its merits.

3. Delay should not be examined with an overly rigid approach but in a practical and reasonable manner.

4. Substantial justice should take precedence over technical formalities.

5. There is no presumption that a delay is deliberate or caused by negligence.

7.3 Additionally, in Basawaraj v. Land Acquisition Officer (2013) 14 SCC 81, the Hon’ble Supreme Court ruled that sufficient cause must be an adequate and justifiable reason preventing the petitioner from . approaching the Hon’ble Court within the prescribed time. If negligence or lack of diligence is found, delay should not be condoned.

7.4 The assessee’s argument that it only discovered the NFAC’s decision after three years of statutory audits is unconvincing. Given the company’s professional support and annual audits, it should have identified the mistake much earlier. The delay of over three years is excessive, and the explanation provided is not fully satisfactory.

7.5 However, a review of the NFAC’s order indicates that it relied on the ITBA portal’s information, which incorrectly suggested that the assessee had opted for the VSV scheme. The NFAC dismissed the appeal without directly confirming this with the assessee. This was an error on the NFAC’s part.

7.6 At the same time, the assessee also failed to monitor the status of its appeal diligently. While it is surprising that the assessee did not receive formal communication from the NFAC regarding the dismissal, no evidence was presented to prove that such communication was never sent. However, the impression of the assessee that the impugned appeal shall be dealt by the jurisdictional CIT-A cannot be faulted in view of the CBDT order dated 13-08-2020 having reference to F.No. 187/3/2020- ITA-I.

7.7. However, we note that both the NFAC and the assessee bear responsibility for the dismissal of the appeal. The NFAC’s error contributed to the confusion, while the assessee’s lack of vigilance resulted in the significant delay.

7.8 Before parting, it is also necessary to note that the part of the delay in filing the appeal by the assessee is also attributable to the covid period. As such, the Hon’ble Supreme Court of India, in the case of In Re: Cognizance for Extension of Limitation (Miscellaneous Application No. 665/2021 in SMW(C) No. 3/2020), provided a blanket extension of limitation periods for all judicial, quasi-judicial, and administrative proceedings due to COVID-19. The Hon’ble Court ruled that the limitation period from March 15, 2020, to February 28, 2022, shall be excluded for all legal proceedings. Accordingly, we are of the view that the assessee should also get some benefit of the Covid Period regarding the Delay in Filing the Appeal by (it) the Assessee.

7.9 In view of the above and to ensure fairness to both parties, we are inclined to condone the delay on the condition that the assessee pays ₹50,000 to the Prime Minister’s Relief Fund. With this condition met, we proceed to adjudicate the appeal on its merits.

7.10 Since the NFAC dismissed the appeal based on the incorrect assumption of facts that the issue was resolved under the VSV scheme, justice requires that the matter be reconsidered. We, therefore, remand the case back to the NFAC for fresh adjudication, ensuring compliance with legal provisions and allowing the assessee a fair opportunity to present its case. Accordingly, the appeal of the assessee is allowed for statistical purposes.