VASAVI CLUB,HYDERABAD vs. INCOME TAX OFFICER, WARD-11(1), HYDERABAD

The Ld. CIT(A), after considering the petition for condonation of delay and the submissions made by the assessee, and after taking note of the directions of the Hon’ble Supreme Court in the case of Cognizance for Extension of Limitation, In re [2022] 134 taxmann.com 307 (SC), held that, even after excluding the Covid- 19 period, there was an effective delay of 526 days in filing the appeal. The Ld. CIT(A) further held that the reasons given by the assessee were vague and unsupported by any evidence and that no affidavit of the tax consultant was filed. The Ld. CIT(A) held 4 Vasavi Club, Hyderabad that the assessee has not shown sufficient cause within the meaning of Section 249(3) of the Act and accordingly dismissed the appeal in limine as barred by limitation without going into the merits of the case. The relevant findings of the Ld. CIT(A) are as under:

Aggrieved by the order of the Ld. CIT(A), the assessee is now in appeal before the Tribunal.

The learned counsel for the assessee, Shri R. Mohan Kumar, Advocate, submitted that, the Ld. CIT(A) erred in dismissing the appeal in ‘limine’ without condoning the delay. The learned counsel submitted that, the assessee is a charitable institution and the delay occurred due to the mistake of the tax consultant and non-communication of the assessment proceedings. It was further submitted that, the assessee was not aware of the assessment order and came to know about the same only when the department officials contacted the assessee for recovery of tax. Therefore, it was submitted that, the delay was not intentional 6 Vasavi Club, Hyderabad and the Ld. CIT(A) ought to have condoned the delay in the interest of justice.

The learned Senior A.R. for the Revenue, on the other hand, supported the order of the Ld. CIT(A) and submitted that, there is an inordinate delay of 810 days in filing the appeal and even after excluding the Covid-19 period, there is a delay of 526 days. It was submitted that, the assessee failed to explain the delay with sufficient reasons and no supporting evidence was filed. Therefore, the Ld. CIT(A) has rightly dismissed the appeal in ‘limine’.

We have heard both parties, perused the material available on record and had gone through the orders of the authorities below. We have considered the reasons recorded by the Ld. CIT(A) for dismissal of the appeal in ‘limine’. We find that, the assessment order was passed on 20.04.2021 and the appeal before the Ld. CIT(A) was filed on 08.08.2023. Even after excluding the Covid-19 period as per the directions of the Hon’ble Supreme Court, there is a delay of 526 days in filing the appeal. We find that, the assessee has attributed the delay to the mistake of the tax consultant and lack of awareness of the assessment proceedings. However, no affidavit of the tax consultant or any supporting evidence has been 7 Vasavi Club, Hyderabad filed to substantiate the claim. Even assuming that the assessee came to know about the assessment order only when the department officials contacted the assessee, there is no proper explanation for the delay thereafter in filing the appeal before the Ld. CIT(A). Further, it is well settled principle of law by the decision of various Courts, including the decision of hon'ble Supreme Court in the case of Collector, Land Acquisition Vs. Mst. Katiji [1987] 167 ITR 471 (SC), when technicalities and merits of the case are pitted against each other, then the merits of the case alone deserves to be considered, because, if you thrown out a case on technical grounds, a meritorious case may be gone out of the judicial scrutiny. The hon'ble Supreme Court further held that, the Courts must have liberal approach while condoning the delay, because if you consider a case on merits, the other party gets a chance or opportunity to explain its case. Further, the hon'ble Supreme Court in the very same case had also reiterated that, it is the duty of the assessee to explain each and every day delay with a ‘sufficient cause’. Once the assessee or litigant explains the ‘sufficient cause’, then it is the discretion of the Courts to condone the delay considering the merits of the case and not the 8 Vasavi Club, Hyderabad technicalities involved in the appeal filed by the assessee. Therefore, one must consider the facts of the case and explanation furnished by the assessee to explain the delay in filing the appeal to the satisfaction of the Court or Tribunal which considers the application filed by the assessee. In the present case, going by the facts available on record, including the conduct of the assessee right from the assessment proceedings and appellate stages, the assessee is not serious, negligent and not cooperating to the proceedings, which is evident from the ex parte assessment order by the A.O. The said negligence even considered before the Ld. CIT(A) which is evident from the appeal filed by the assessee where the appeal has been filed with a delay of 810 days. The Ld. CIT(A) recorded a categorical finding that, even after excluding the COVID-19 period, still there is a delay of 526 days, which was not explained by the assessee with ‘sufficient and reasonable cause’. Therefore, in our considered view, the reasons given by the Ld. CIT(A) to dismiss the appeal in ‘limine’ without condoning the delay is on sound footing and does not require any interference.

At this stage, it is relevant to consider the Judgment of Hon’ble Supreme Court in the case of Pathapati Subbareddy (died) reptd. by his L.Rs & Ors. vs., The Special Deputy Collector-(LA) in Special Leave Petition (Civil) No.31248 of 2018 vide order dated 08.04.2024 wherein the Hon’ble Supreme Court after considering the provisions of sec.3(1) Secs.4 to 24 of the Limitation Act has refused to condone the delay and dismissed the SLP filed by the assessee and uphold the order of the Hon’ble High Court Andhra Pradesh in dismissing the appeal on account of delay. The Hon’ble Supreme Court while dismissing the SLP, after considering the various judicial precedents on the subject matter of condonation of delay, noted that, “where a litigant could not explain the ‘sufficient cause’ which means adequate, enough reasons which prevented him to approach the Court within the period of limitation and could not properly, satisfactorily and convincingly explain the delay to the Court/Tribunal, Court’s has no power to condone such delays. The Hon’ble Supreme Court further noted that, “the statutory provisions under Limitation Act may cause hardship or inconvenience to a particular party, but, the Court has no choice, but, to enforce it giving full effect to the same by 10 Vasavi Club, Hyderabad quoting the legal maxim dura lex sed lex which means “the law is hard but it is the law", stands attracted when there were negligence/failure to exercise due diligence etc., and accordingly dismissed the SLP of the appellants in the aforesaid case.

Further, the Hon’ble Supreme Court yet in an another case Balwant Singh (Dead) vs., Jagdish Singh & Ors. in Civil Appeal No.1166/2006 reported in [2010] 8 SCC 685 in para-16 very clearly held as under :

In the present case, it appears that the reasons given for delay in filing of the appeal before the Ld. CIT(A) in the affidavit 11 Vasavi Club, Hyderabad are not bona fide. Further, going by the facts available on record, the assessee is careless and negligent during the entire proceedings before the authorities, which is evident from the ex parte assessment order passed by the A.O. under Section 144 r.w.s. 144B of the Act. Further, the assessee, despite being aware of its obligation to comply with the statutory notices issued under the Act, failed to do so within the prescribed time. From the above conduct of the assessee, it appears that the assessee is negligent and careless about the tax matters and is not seriously pursuing its case with clean hands before the authorities. Therefore, in our considered view, for the negligence and casual approach of the assessee, the delay in filing of the appeal cannot be condoned. As we have already stated in the earlier part of this order, the Hon’ble Supreme Court in the case of Balwant Singh (Dead) vs. Jagdish Singh & Ors. (supra) has clearly held that, the Court must also take into account the conduct of the parties, bona fide reasons for condonation of delay, and whether such delay could have been avoided by the applicant acting with normal care and caution. In the present case, going by the facts available on record, the assessee could have avoided the delay in filing of the appeal had it 12 Vasavi Club, Hyderabad shown a little care and caution in tax matters. Since the assessee has shown a casual approach and negligence in pursuing its case before the Ld. CIT(A), in our considered view, the reasons given by the assessee for delay in filing of the appeal cannot be condoned.

It is well settled law by the decision of the Hon’ble Supreme Court in the case of O/o. Chief Post Master General & Ors. vs. Living Media India Ltd. & Anr. [2012] 348 ITR 7 (SC) that the law of limitation has to be applied with all its rigour and liberal approach cannot be extended to cases of gross negligence or inaction. In this view of the matter, and considering the facts and circumstances of the case, we find that, the assessee has failed to explain the delay and the circumstances beyond its control for not filing the appeal before the Ld. CIT(A) within the prescribed period with sufficient and reasonable cause. Therefore, by respectfully following the judgments of the Hon’ble Supreme Court in the cases of Pathapati Subbareddy (died) represented by his L.Rs. & Ors. vs. The Special Deputy Collector-(LA) (supra); Balwant Singh (Dead) vs. Jagdish Singh & Ors. (supra); and O/o. Chief Post Master General & Ors. vs. Living Media India Ltd. & Anr. (supra), we are disinclined to condone the delay in filing of the appeal 13 Vasavi Club, Hyderabad before the Ld. CIT(A), and accordingly, the appeal of the assessee is dismissed.

In the result, the appeal of the assessee is dismissed.