PALO ALTO NETWORKS (INDIA) TECHNOLOGIES PRIVATE LIMITED,BENGALURU vs. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-5(1)(1), BENGALURU

2. That on the facts and in circumstances of the case and in law, the Ld. CIT(A) erred in adjudicating on the grounds raised before the CIT(A) on claim of deduction under section 43B of the Act based on the disclosures made in the tax audit report, even though the appeal filed was not admitted for the delay. E. Consequential levy of interest under section 24B of the Act • i. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not allowing the Appellant's ground on erroneous interest of INR 14,39,520 being charged under section 234B of the Act in the intimation issued under section 143(1) of the Act. F. Incorrect levy of interest under section 234C of the Act i. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not allowing the Appellant's ground on erroneous interest of INR 6,71,283 being charged under section 234C of the Act in the intimation. The Appellant craves leave to add to and / or to alter, amend, rescind, modify the grounds herein above or produce further documents, facts, and evidence before or at the time of hearing of this appeal.”

9.1 Further, the assessee submitted that it was under the bona-fide belief that it cannot prefer an appeal against intimation u/s 143(1) of the Act.

9.2 At a later stage, the matter was brought to the attention of the company's consultant, who clarified that there was no certainty that the adjustments would be resolved during the assessment proceedings under section 143(3) of the Act. The consultant also informed the assessee that the option for filing an appeal before the learned CIT(A) was available. Based on consultant advice, the assessee proceeded to file an appeal before the learned CIT(A), accompanied by a request for the condonation of the delay.

9.3 However, the Ld. CIT(A) rejected the request of condonation of the assessee by observing that, as per the Hon’ble Supreme Court’s judgment in the case of CIT vs. Gujarat Electricity Board (260 ITR 84), any intimation issued under Section 143(1) of the Act does not survive once a notice under Section 143(2) of the Act has been issued. Furthermore, in the present case, the assessee, being a company well- . versed in income tax proceedings, including the filing of appeals against intimations or assessment orders, did not initially file an appeal against the intimation under Section 143(1) of the Act. Instead, it opted to pursue the alternative remedy of representing its case before the AO, CPC under Section 154 of the Act.

9.4 It is evident from the petition and the detailed chart provided by the assessee that the decision to file an appeal against the intimation under Section 143(1) of the Act was an afterthought. Additionally, the Learned CIT(A) relied on the various case laws in the context of Limitation Act where it was reiterated the importance of adhering to statutory limitation periods, which ensure legal certainty and fairness. While delays might occasionally seem unfair, courts cannot override statutory limits unless compelling reasons exist. The ruling emphasizes that although courts have the discretion to extend deadlines, such power must be exercised sparingly and only when strong justifications are presented. Hence, the ld. CIT-A dismissed the appeal of the assessee. Being aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us.

9.5 The learned AR before us filed a paper book running from pages 1 to 236 and contended that the assessee was pursuing the matter against the intimation passed under section 143(1) of the Act under the provisions of section 154 of the Act. Similarly, once, the case was selected under scrutiny, the assessee was under the bona-fide believe that the issue in dispute could have been addressed during the assessment proceedings. As such, the assessee was vigilant about the dispute on hand and therefore the assessee’s ground of appeal cannot . be rejected on technical ground on account of alleged negligent approach of the assessee. As such, the assessee has a strong case on merit and therefore the same should not be dismissed on account of alleged technical lapses.

Page 8 of 10 vide dated 16-03-2022 was passed by the CPC without considering the response of the assessee.

11.1 Thereafter, the assessee on 14-04-2023 has filed the rectification request u/s 154 of the Act against such adjustment. The assessee also filed the rectification application before the jurisdictional officer vide dated 14-04-2023. But the same was also rejected by the CPC by passing rectification order u/s 154 of the Act vide dated 18-07-2023. Meantime, the case was selected under scrutiny on 02-06-2023, and the assessee believed that the matter of adjustment may be resolved during the assessment proceedings under section 143(3) of the Act.

11.2 Thus, from the action of the assessee, it is transpired that delay was neither deliberate nor intentional but arose from a bona fide belief that the adjustments could be resolved during the assessment proceedings. In holding so, we also draw support and guidance from the judgment of Hon’ble Gujarat High Court in case of Gujarat Electricity Board reported in 36 taxmann.com 340 where it was held that the principle of substantial justice must prevail over technicalities. The relevant finding of the Hon’ble Gujarat High Court is extracted as under: 5. We are conscious that there was considerable delay in filing the appeal before the Tribunal. However, theCourts have been viewing delay, particularly when the same is well explained, rather liberally. When thecause of substantial justice is pitted against technicalities, the Courts are largely reluctant to terminate legalproceedings on technical grounds. In the present case, there was sufficient explanation rendered by theassessee for preferring the appeal before the Tribunal after some delay. In our view, such delay ought to havebeen condoned.

11.3 From the preceding discussion, we note that the assessee has demonstrated a bona- fide belief and consistent efforts to resolve the issue and the assessee’s conduct does not reflect negligence or mala- .

Page 9 of 10 fide intent but rather a bona-fide attempt to resolve the issue through appropriate forums.

11.4 Further, coming to the principles laid down by the Hon’ble Supreme Court in the case of CIT vs. Gujarat Electricity Board reported in 260 ITR 84 on which the Ld. CIT(A) placed reliance, in this regard, we note that the facts involved in the case of CIT vs. Gujarat Electricity Board are distinguishable from the facts involved in the present case. As such in the case of CIT vs. Gujarat Electricity Board (supra) the question of law was that whether the intimation u/s 143(1) of the Act be issued after issuance of the notice under section 143(2) of the Act. The relevant question of law framed by the Hon’ble Supreme Court is extracted as under: The short question which arises in these appeals is whether it is open to the Revenue to issue intimation under section 143(1)(a) of the Income-tax Act, after notice for regular assessment has been issued under section 143(2) of the Income-tax Act, 1961 ?

11.5 The Hon’ble Supreme Court in the context of above stated question of law held that intimation under section 143(1) of the Act cannot be issued once notice for regular assessment under section 143(2) of the Act is issued. Hence, in our considered opinion the principle laid down by the Hon’ble Supreme Court in the above stated case cannot be applied in the present case of the assessee. In view of the above detailed discussion, we hereby direct the learned CIT(A) to condone the delay in filing pf appeal and decide the issue a fresh on merit. Hence, the ground of appeal of the assessee is hereby allowed for statistical purposes.