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Facts
The assessee claimed TDS credit of ₹12,55,111 in its return, but the CPC disallowed ₹10,25,602. The assessee filed an appeal with the CIT-A after a delay of 58 days, explaining it as a bona fide belief that the issue would be resolved during scrutiny, which was the practice in prior years. The CIT-A dismissed the appeal due to the delay.
Held
The Tribunal held that the delay of 58 days was supported by a reasonable cause, as it was due to a genuine belief and not negligence. The CIT-A's approach of dismissing the appeal on technical grounds without examining merits was not in line with principles of natural justice.
Key Issues
Whether the delay in filing the appeal before the CIT-A can be condoned based on a reasonable cause, and if the CIT-A erred in dismissing the appeal solely on technical grounds without considering the merits of the case.
Sections Cited
143(1), 249(3)
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Income Tax Appellate Tribunal, ‘SMC’ BENCH, BANGALORE
Before: SHRI WASEEM AHMEDAND
PER WASEEM AHMED, ACCOUNTANT MEMBER:
This is an appeal filed by the assessee against the order passed by the Addl/JCIT(A), Bhubaneswar dated 25/10/2024 in for the assessment year 2023-24.
The present appeal has been filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals) [CIT-A], wherein the CIT-A dismissed the appeal on the ground of delay of 58 days in filing, without condoning the said delay.
The assessee, in its return of income, claimed a TDS credit of ₹12,55,111.00 only. However, during the processing of the return under Section 143(1) of the Income Tax Act, 1961, the Centralized Processing Centre (CPC) disallowed ₹10,25,602, granting only ₹2,29,509.00 only.
The assessee subsequently filed an appeal before the ld. CIT-A but with a delay of 58 days. The delay was explained by the assessee as being due to the belief that the discrepancy in TDS credit would be resolved during the scrutiny assessment process, which had been the case in earlier years. When scrutiny assessment was not initiated in the relevant assessment year, and on the advice of the tax consultant, the assessee proceeded to file an appeal, albeit belatedly. The CIT-A, however, refused to condone the delay and dismissed the appeal as non-maintainable.
Aggrieved by this order, the assessee has approached this Tribunal.
During the hearing before us, the ld. AR repeated the arguments made earlier and also submitted an affidavit. He further explained that the taxpayer's income was not taxable based on certain legal principles of mutuality, which had been accepted in previous tax assessments. Therefore, the has a strong case on merit. Accordingly, the same should not be rejected just because of a technical delay.
On the other hand, the ld. department’s representative (DR) strongly supported the previous decision, agreeing with the authorities who had dismissed the appeal.
We have heard the rival contentions of both the parties and perused the materials available on record. The law provides that an appeal must be filed within the prescribed time limit; however, Section 249(3) of the Income Tax Act, 1961 grants the CIT-A the power to condone the delay if the appellant demonstrates a reasonable cause for such delay.
8.1 The term "reasonable cause" has not been defined under the Act but has been interpreted by various judicial precedents. The Hon’ble Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji & Others [1987] 167 ITR 471 (SC) has held that: • Ordinarily, a litigant does not stand to benefit by resorting to delay.
• When substantial justice and technical considerations are pitted against each other, cause of substantial justice should prevail.
• The courts should adopt a liberal approach in condoning delays caused due to a genuine and bona-fide mistake.
8.2 In the present case, the assessee has given a plausible explanation that it was under the bona fide belief that the issue of TDS credit would be resolved during the scrutiny assessment process, as had been the practice in previous years. Further, upon receiving professional advice, the assessee promptly filed the appeal. Such a delay does not . reflect negligence or mala fide intent but a genuine cause beyond the control of the assessee.
8.3 The Hon’ble Supreme Court in N. Balakrishnan v. M. Krishnamurthy [1998] 7 SCC 123 held that: • Length of delay is not as material as the acceptability of the explanation for such delay. • If the explanation is reasonable and does not indicate deliberate negligence, delay should be condoned. 8.4 Considering these legal principles, the approach of the CIT-A in dismissing the appeal purely on technical grounds without examining the merits of the case is not in accordance with the principles of natural justice. In light of the above discussion and in the interest of substantial justice, we hold that the delay of 58 days is supported by a reasonable cause. The CIT-A should have condoned the delay and proceeded to hear the appeal on merits. Accordingly, we set aside the order of the CIT-A and direct the CIT-A to condone the delay and adjudicate the appeal on merits. In view of the foregoing, the appeal of the assessee is allowed for statistical purposes with a direction to the CIT-A to condone the delay and adjudicate the matter on merits in accordance with the law.