SYED NAZEER SYED FAYAZ,ERODE vs. ITO, WARD-2(1), ERODE

The assessee is an individual and filed a return of income for A.Y 2017-18 on 29.03.2018 admitting an income of Rs.3,20,150/-. The case was selected for scrutiny and statutory notices were duly served on the assessee. The A.O during the course of assessment noticed that the assessee has deposited cash during the course of demonetization period in Specified Bank Notes (SBNs) to the tune of Rs. 8,99,500/-. The assessee submitted before the A.O that sales arising from trading activities are the source for cash deposited and in this regard submitted the sales extract. The A.O however rejected the submissions stating that as per the notification of the Central Government Rs. 500/- and Rs. 1,000/- seized to be legal tender and therefore the cash deposited by the assessee in SBNs is to be treated as unexplained. The A.O accordingly made an addition in the hands of the assessee. Aggrieved, the assessee filed further before the FAA. Syed Nazeer Syed Fayaz :- 3 -:

There is a delay 1123 days in filing the appeal before the FAA. The assessee filed an affidavit before the FAA stating that the assessee was pursuing the alternate remedy against the order of A.O and hence the delay. The copy of the relevant submissions made by the assessee before the FAA is extracted hereunder: Syed Nazeer Syed Fayaz :- 4 -: Syed Nazeer Syed Fayaz :- 5 -:

The FAA however did not accept the submissions of the assessee and dismissed the appeal stating that there was no sufficient cause demonstrated by the assessee to condone the delay. The assessee is in appeal before the Tribunal against the order of the FAA.

We have heard the parties and perused the materials available on record. From the perusal of the condonation petition filed by the assessee before the FAA, we notice that the assessee filed a rectification petition before the AO and has proceeded to pursue the issue based on the rejection of rectification by the AO up to Tribunal level. It is further noticed that the assessee was subsequently advised that the appeal against the order of the AO passed u/s.143(3) needs to be appealed separately and filed the appeal before FAA accordingly. From the perusal of these facts, we see merit in the contention that the assessee was exploring alternate remedy and was not advised properly that the appeal is to be filed against the assessment order and rectification order separately. Before proceeding further, we will look at some of the legal dictum laid down with regard to the issue of condonation of delay. The Hon'ble Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) while considering the issue of condonation of delay, laid down certain principles as reproduced here under :- “(1) Ordinarily, a litigant does not stand to benefit by lodging an appeal late.

In the present case, as already mentioned the assessee has pursued the appeal against the rectification order up to Tribunal level, and therefore there is no reason for the assessee to not to file appeal against the order of the AO before the FAA. Therefore in our view the assessee has no reason to delay the filing of appeal before FAA except the bonafide belief that the there is no requirement to file a separate appeal against the order of assessment when the order of rectification of the assessment order is appeal against. This fact is substantiated by the details furnished in the affidavit.

Now the next question is whether the delay of 1123 days which as per the contentions of the revenue is inordinate and excessive, can not be condoned. We have to examine delay as excessive or inordinate based on whether there is a reasonable cause for not filing the appeal on time by the assessee and in our view when there is a reasonable cause, the period of delay may not be relevant factor. The Madras High Court in the case of CIT v. K.S.P. Shanmugavel Nadai and Ors. (153 ITR 596) 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 Syed Nazeer Syed Fayaz :- 7 -:

Considering the above judicial precedence and the facts peculiar to the assessee, we are of the view that the delay in filing the appeal before the FAA is not deliberate and that the bonafide belief of the assessee is sufficient cause for not filing the appeal within the prescribed time limit. Accordingly we direct the FAA to condone the delay in filing the appeal before FAA and admit the appeal for adjudication. The FAA has dismissed appeal on the ground of delay and has not examined the impugned issue on merits. Therefore we deem it to remit the appeal back to the FAA with further direction to examine the impugned issue on merits by calling for relevant details as required to decide the issue in accordance with law. It is ordered accordingly.

In the result, the appeal of assessee is allowed for statistical purposes.