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Facts
The assessee, a NRI nurse working in Kuwait, did not file her return for AY 2016-17. Information revealed she purchased property worth Rs. 73,64,000, source unexplained. The AO treated it as unexplained investment under Section 69 and assessed income under Section 147.
Held
The Tribunal held that the delay of 117 days in filing the appeal before the CIT(A)/NFAC should be condoned, preferring substantial justice over technicality. The case was remitted back to the CIT(A)/NFAC to decide on merits after condoning the delay.
Key Issues
Whether the delay in filing the appeal before the CIT(A)/NFAC was to be condoned, and if so, whether the assessment on merits should be adjudicated.
Sections Cited
250, 148, 147, 151, 69, 249(2), 148A, 144B, 144
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Income Tax Appellate Tribunal, “C’’BENCH: BANGALORE
Before: SHRI PRASHANT MAHARISHI & SHRI KESHAV DUBEY
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal at the instance of the assessee is directed against the Order of learned CIT(A)/NFAC vide DIN & Order No ITBA/ NFAC/S/ 250/2024-25/1069259428(1) dated 30.09.2024 for the Assessment Year 2016-17 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’).
The assessee has raised the following grounds of appeal:
Brief facts of the case are that the assessee is a NRI and 3. working as a Nurse in Kuwait Oil Company (K.O.C.) since 1996. The assessee had not filed her return of Income for the Asst. year 2016- 17. There was information available with the Department that the assessee had purchased immovable property worth Rs.73,64,000/- during the year under consideration, the source of which remained unexplained in the wake of the fact that even after availing several opportunities to submit the explanation in respect of source of purchase of immovable property, the assessee never bothered to submit an iota of information. As the assessee in the present case could not explain the source of investment made in the immovable property by submitting any documentary evidences and also failed to give any proper explanation about the nature and source towards purchase of immovable property worth Rs.73,64,000/-, the AO accordingly treated the same as unexplained investment under section 69 of the Act and assessed on a total income of Rs.73,64,000/- under section 147 r.w.s. 144 of the Act.
4. Aggrieved by the assessment completed under section 147 r.w.s. 144 of the Act, dated 01.03.2024, the assessee preferred an appeal before the learned CIT(A)/NFAC.
The learned CIT(A)/NFAC, during the course of appellate proceedings, noted that against the Assessment order dated 01/03/2024, the appeal was filed on 27.07.2024 in Form No. 35 with the delay of almost 4 months which implies the assessee’s attitude and deliberate inaction on the part of the assessee. Considering the above fact, the learned CIT(A)/NFAC is of the opinion that appeal filed is not in conformity with the provisions of section 249(2) of the Act and there is no sufficient cause for condonation of the delay in filing of the appeal and accordingly,
Aggrieved by the Order of the learned CIT(A)/NFAC, the assessee has filed the present appeal before the Tribunal. The assessee has also filed a paper book comprising 62 pages enclosing therein copies of notices, Order under section 148A(d) of the Act, assessee’s submission filed before the NFAC, bank statements, Details of payment made to Plama Developers, property purchase agreement along with passport copy and immigration details. The assessee has also submitted employment letter of Kuwait Oil Company as well as salary letter of Kuwait Oil Company.
Before us, learned AR of the assessee submitted that learned CIT(A)/NFAC without considering the details submitted on 10.09.2024 passed an Order rejecting the appeal of the assessee without condoning the delay in filing the appeal of 117 days. Further, learned AR of the assessee submitted that the assessee has filed application for condonation of delay before the learned CIT(A)/NFAC along with an affidavit which was not considered by the learned CIT(A).
Learned DR on the other hand supported the Order of the authority below and submitted that the assessee failed to submit the sufficient and reasonable cause during the appellate proceeding for the delayed filing of the appeal. Further the assessee failed to submit the affidavit of the Tax Consultant. Accordingly, learned CIT(A)/NFAC has rightly dismissed the appeal as not maintainable.
We have heard the rival submission and perused the material on record. It is an undisputed fact that the learned CIT(A)/NFAC Irene Pereira, Udupi Page 6 of 10 dismissed the appeal on the sole ground that there is no sufficient & reasonable cause for condonation of delay in filing the appeal. Further, we also take a note of the fact that the ld. CIT(A)/NFAC on the one hand as observed in Para-4 of his Order that no reason has been made during the appellate proceeding for the delayed filing of appeal and on the other hand in para 6.1 of his Order had observed that in this case in the appeal memo reason has been given & the ld. CIT(A)/NFAC after carefully gone through the reason held that the assessee failed to submit the sufficient and reasonable cause for late filing of appeal. We also take a note of the fact that during the course of assessment proceeding also, assessee could not substantiate her claim. During the course of first appellate proceeding, we find that the assessee has submitted various documents / records / information on 10.09.2024 which were also not considered by the CIT(A)/NFAC and dismissed the appeal as not maintainable on the sole ground of delay of almost four months. On going through the copy of Passport, Immigration details, Salary Certificate as well as Employer’s Certificate DATED 12/08/2024, we find that the assessee is employed with Kuwait Oil Company since 06/09/1996. In the present case, the assessee is a NRI. Before us, the assessee has filed an affidavit in original dated 20/11/2024 sworn before the Notary Public on 21/11/2024 stating therein as under- “ 2. I say that Shri Satish T Naik, an earlier chartered accountant was looked after my income tax matter. I have received the reassessment proceeding notices on my email id. The same was immediately handed over to my chartered accountant. However, the chartered accountant did not file any submission before A.O. Subsequently, I was received the reassessment order u/s. 147 r.w.s. 144B on 01/03/2024. The same was immediately handed over to my chartered accountant Shri Satish Naik. However, the tax consultant did not file appeal within the time before NFAC and same was filed after the delay of 117 days.
I, say that, I am a ‘Non-Resident’ individual, working as Nurse in Kuwait Oil Company, Kuwait. since 1996. On 20.09.2024. I learned about the fact that the appeal was filed after the delay of 117 days before NFAC, when I received a recovey of demand notice on 19/07/2024 by email that time, I thereupon inquired with the chartered accountant about the status of my income tax matter and learned that the appeal was filed after the dealy of 117 days before NFAC. Then, I discontinued the earlier chartered accountant Shri Satish Naik. and appointed a new chartered accountant Shri Jeevan Kumar Shetty.
I say that, it was the first time I got involved in tax litigations, due to a lack of clarity on tax laws and my ‘Non-resident’ status, I was under the impression that my case was properly represented by the earlier chartered accountant but due to some inadvertent events the filing of the appeal was delayed by 117 days.
On going through the explanation given above, we find that the explanation is bonafide and it is a good and sufficient reason to condone the delay in filing the appeal before the ld. CIT (A) / NFAC. It is noted that there is no malafide intention on behalf of the assessee in not filing the appeal within time before the ld. CIT (A) / NFAC. Under these circumstances, it cannot be said that assessee is very callous in her approach in filing the appeal before the ld. CIT (A) / NFAC.
9.1 At this juncture, it is appropriate to mention the judgement of Hon’ble Supreme 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 Irene Pereira, Udupi Page 8 of 10 (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 non-deliberate 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 legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
9.2 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 non-deliberate delay. Moreover, no counter-affidavit was filed by the Revenue denying the allegation made by the assessee. It is not the case of the Revenue that the delayed appeal was filed deliberately. Therefore, we have to prefer substantial justice rather than technicality in deciding the issue.
9.3 Further, in the case of People Education & Economic Development Society Vs/ ITO reported in 100 ITD 87 (TM) (Chen), Irene Pereira, Udupi Page 9 of 10 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 have vested right in injustice being done because of non-deliberate delay”. 9.4 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. 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. 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.
9.5 The Madras High Court in the case of Sreenivas Charitable Trust (280 ITR 357) (Mad.) held that no hard and fast rule can be laid down in the matter of condonation of delay and the Court should adopt a pragmatic approach and the Court should exercise their discretion on the facts of each case keeping in mind that in construing the expression "sufficient cause" the principle of advancing substantial justice is of prime importance and the expression "sufficient cause" should receive a liberal construction. Therefore, this Judgment of the Madras High Court (supra) clearly says that in order to advance substantial justice which is of prime importance, the expression "sufficient cause" should receive a liberal construction.
Irene Pereira, Udupi Page 10 of 10 10. In view of the above deliberations, we are of the opinion that, by preferring the substantial justice, the delay of 117 days has to be condoned and accordingly we are remitting back the Order of the ld. CIT(A)/NFAC with a direction to condone the delay of 117 days in filing appeal before him. Further, as the ld. CIT(A)/NFAC has not adjudicated the case on merits on the ground that the delay was not condoned, we also direct to adjudicate the case on merits in accordance with the law after giving reasonable opportunity of being heard to the assessee. The assessee is also directed to submit all the relevant documents/records/Information/details as called for in order to substantiate her claim. The assessee is also directed to update her contact No., email ID & address as well as add her Chartered Accountant/AR on the Income Tax Portal. It is ordered accordingly.