Loading judgment…
Facts
The assessee filed appeals against the orders of the CIT(A) for AY 2009-10 and 2017-18, which were dismissed due to delay in filing. The assessee claimed the delay was due to non-receipt of intimations and departmental lapses, while the department argued it was an inordinate delay. The core issue is whether the delay should be condoned based on the facts presented.
Held
The Tribunal held that the delay in filing the appeals for both assessment years should be condoned, considering the genuine hardship and the Department's failure to serve the intimations properly. The appeals were set aside, and the matters were remanded to the Assessing Officer for fresh adjudication on merits.
Key Issues
Whether the delay in filing the appeals should be condoned, and if so, whether the matters should be decided on merits or technical grounds.
Sections Cited
143(1), 244A, 246A, 154, 156, 282, 139
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘ SM-A ‘ Bench, Hyderabad
Before: Shri Vijay Pal Rao, Vice-Shri Madhusudan Sawdia
Per Vijay Pal Rao, Vice President These 2 appeals by the assessee are directed against the separate orders, both dated 08/01/2025 of the learned CIT (A)-NFAC Delhi, for the A.Ys. 2009-10 & 2017-18 respectively.
The assessee has raised the following grounds of appeal:
Page 1 of 28 – A.Y 2009-10 Page 2 of 28 Page 3 of 28 Page 4 of 28 Page 5 of 28 Page 6 of 28 Page 7 of 28 Page 8 of 28 Page 9 of 28 Page 10 of 28 Page 11 of 28 – A.Y 2009-10 3. The assessee is an individual and deriving salary income from M/s. Cushman & Wakefield India Pvt. Ltd. The assessee has filed his return of income for the A.Y 2009-10 electronically on 18/07/2009 declaring income from salary at Rs.8,93,294/- and loss from house property at Rs.1,50,000/-.The return of income was processed u/s 143(1) of the Act by CPC on 11/07/2010 at a total income of Rs.43,66,470/-. Against the said order of the CPC, the assessee filed an appeal before the learned CIT (A) on 06/11/2024 i.,e. after a delay of almost 14 years. Though the assessee has explained the cause of the delay before the learned CIT (A), however, the learned CIT (A) declined to Page 12 of 28 condone the delay of 5201 days in filing the appeal and dismissed the same in limine without going into the merits of the case.
Before the Tribunal, the learned Counsel for the assessee has submitted that while processing the return of income, the salary income of the assessee has been added thrice under various heads including income from capital gain and other sources which has resulted the total income assessed at Rs.43,66,470/- as against the salary income declared by the assessee at Rs.8,93,294/-. The learned Counsel for the assessee has submitted that due to system bug and glitches in the Portal of the Department, the salary income has ben shows as short term capital gain and income from other sources as well as interest income and rental income. The assessee was never served with the said intimation issued u/s 143(1) of the Act. The learned Counsel for the assessee has filed the petition for condonation of delay in filing the appeal before the learned CIT (A) and also filed the affidavit of the assessee to explain the reasons for the delay in filing the appeal. Thus, he has submitted that the assessee being an individual and salaried person was completely dependent on the Tax Consultant in the matter of income tax and therefore, in the absence of service of the intimation u/s 143(1) of the Act, the assessee was not aware about the adjustment/ addition made by the CPC in the total income of the assessee. He has submitted that non-deciding the appeal of the assessee on merits by the learned CIT (A) has resulted a gross injustice as non-existing Page 13 of 28 income has been assessed in the hand of the assessee. He has referred to the reasons explained by the assessee and submitted that the intimation u/s 143(1) of the Act was not available at that point of time in online e-filing portal and no communication in this regard was also sent to the assessee. The learned Counsel for the assessee has pointed out that the screenshot of the proof of the said intimation u/s 143(1) shows not sent by SMS/Email or speed post. The assessee has duly responded to the letters issued by the Department regarding the demand and explained that the entire income was already declared in the return of income and therefore, once the assessee paid the due tax at the time of filing the return of income and also in the form of TDS deducted by the Employer on monthly basis, then the demand raised by the Department was not justified. After the initial correspondence in the year 2014, there was no further correspondence from the Department up to 07/09/2022 when the assessee received a phone call from the Department regarding an outstanding tax demand which was also replied by the assessee. Only in the month of February, 2023, the assessee found that the intimation u/s 143(1) of the Act is available on e-filing portal where it is assessed capital gain of Rs.8,93,294/- and income from other sources of Rs.26,79,882/-. The learned Counsel for the assessee has submitted that the assessment of said income is also not matching with Form 26AS showing the actual income received by the assessee during the year and therefore, the arbitrary additions made by the CPC while processing the return has resulted gross Page 14 of 28 injustice. The assessee filed repeated replies and representations to the Assessing Officer for rectification of this mistake. However, nothing was done and thereafter, finally the assessee filed the appeal before the learned CIT (A). Thus, the learned Counsel for the assessee has submitted that the delay in filing the appeal before the learned CIT (A) may be condoned and the appeal of the assessee be admitted for adjudication on merits.
On the other hand, the learned DR has vehemently opposed to the condonation of delay in filing the appeal before the learned CIT (A) and submitted that it is a case of inordinate delay of 14 years/5201 days. The learned DR has also filed a report of the Assessing Officer regarding intimation issued to the assessee well within the time as prescribed and therefore, the assessee has failed to explain a reasonable cause for such an inordinate delay in filing the appeal.
We have considered the rival contentions as well as the relevant material available on record. The assessee is aggrieved by the impugned order of the learned CIT (A) whereby the appeal of the assessee was dismissed as not maintainable due to the reason that there was a delay of 5201 days in filing the appeal. The assessee has explained the cause of delay that prior to the month of February 2023, the assessee was not having the intimation u/s 143(1) of the Act, dated 11/07/2010. The assessee has also filed a Page 15 of 28 petition for condonation of delay as well as affidavit of the assessee which reads as under:
Page 16 of 28 Page 17 of 28 Page 18 of 28 Page 19 of 28
We further note that the assessee is a salaried person deriving salary from his employer M/s. Cushman & Wakefield India Pvt. Ltd which was subjected to the TDS. The assessee has filed Form 16 which is not disputed by the Department. In the return of income, the assessee has declared salary income of Rs. Rs.8,93,294/- and loss from house property at Rs.1,50,000/-. The return of income was processed by the CPC vide order dated 11/07/2010 as under:
Page 20 of 28 Page 21 of 28
Thus, it is apparent from the order of the CPC u/s 143(1), the salary income of Rs.8,93,294 was enhanced to total income of Rs.44,66,470/- and after the deduction under Chapter VI-A, the total income was assessed at Rs.43,66,470/-. The said figure of salary income of Rs.8,93,294/- is repeated as income from capital gain and 3 times added to the income from other Page 22 of 28 sources. Thus, the addition of 4 times of the salary income was made by taking the same figure under the head income from capital gain, income from interest, income from rent and income from other sources. It is apparent from the record that there was some technical glitches or bug in the system of e-filing wherein the salary income was also picked up by the system as capital gains and 3 times under the head income from other sources resulting the total income of the assessee was assessed at 5 times of the salary income. This fact is not disputed by the Department that the amount of salary income repeated under various heads either due to some technical glitches or bug in the system or mistake at the time of filing the return of income. It is also not in dispute that the assessee is deriving only the salary income which was subjected to TDS apart from some loss from house property. It is pertinent to note that the assessment of income in the hand of the assessee while processing the return of income at 5 times of the real income is nothing but a highly arbitrary and unjustified demand of tax on the part of the Department. Thus, not deciding the case of the assessee on merits would definitely amount to miscarriage of justice to the assessee who is a salaried person.
8.1 Though the delay in filing the appeal before the learned CIT (A) is an inordinate delay however, having regard to the facts and circumstances of the case that the assessee is sincerely filing his regular return of income within the stipulated time and declared the correct income having no other source than Page 23 of 28 the salary income, then not considering this crucial aspect of the matter while deciding the appeal by the learned CIT (A), in our view, has resulted a gross injustice to the assessee. It is settled proposition that when it is apparent from the record that not deciding the matter on merits but on technicalities would result a miscarriage of justice, then a pragmatic and lenient approach has to be taken for condonation of delay. It is also a matter of record that the Department has not filed any record to show that the intimation was served upon the assessee except the learned DR has filed a report of the Assessing Officer as under:
The Assessing Officer has given only the details of filing of the return of income and processing of the same u/s 143(1) but nothing has been produced to show that the said intimation dated 11/07/2010 was served upon the assessee through any of the mode prescribed u/s 282 of the Act. In the year 2010, the Department was not sending any intimation in digital form, but it used to send physically and that too rarely. Therefore, we find merits in the reasons explained by the assessee that prior to February 2023, the assessee was not having intimation dated 11/07/2010 and hence, there was a delay of filing the appeal before the learned CIT (A). Having considered the facts and circumstances of the case and particularly the excess income assessed in the hand of the assessee due to some technical glitches or system bug, the case of the assessee is required to be decided on merits instead of dismissing the same on technicalities of delay in filing the appeal. Accordingly, having regard to the peculiar facts and circumstances of the case, we condone the delay of 5201 days in filing the appeal before the learned CIT (A).
The learned CIT (A) has not decided the appeal of the assessee on merits and there is no assessment in the case of the assessee as the return of income was only processed u/s 143(1) of the Act whereby apparently the income of the assessee was wrongly assessed to 5 times than the actual income from salary. Hence, in the facts and circumstances of the case, the controversy Page 25 of 28 in the matter was not considered and decided at any stage by the lower authorities, then in the interest of justice, we set aside the impugned order of the learned CIT (A) and the matter is remanded to the record of the Assessing Officer for fresh adjudication to determine the correct income of the assessee as per law. Needless to say, the assessee be given an appropriate opportunity of hearing before passing the fresh order.
In the result, appeal in is allowed for statistical purposes.
For the A.Y 2017-18, the facts are identical to the assessment year 2009-10 except the period of delay in filing the appeal before the learned CIT (A) was 2224 days. The assessee has explained the cause of delay as intimation u/s 143(1) was not received by the assessee till the communication of outstanding demand was made in the month of Sept/October, 2022 and in response to the same, the assessee filed the rectification letter under the bonafide belief that there should be some factual or computational errors resulting the demand. Thus, the assessee has explained the identical reasons for the delay in filing the appeal before the learned CIT (A) for the A.Y 2017-18. The assessee has also filed a petition for condonation of delay as well as an affidavit explaining the reasons that the assessee was under Page 26 of 28 bonafide impression that since there was no concealment or under reporting of income and the error, if any, was either factual or computational in nature, the Department would correct in the proceedings u/s 154 of the Act. In view of our decision on the condonation of delay for the A.Y 2009-10, we find that when the cause of substantial justice and technicalities are pitted against each other, then the Courts should prefer the cause of substantial justice instead of deciding the matter on technicalities. Accordingly, the delay of 2224 days in filing the appeal before the learned CIT (A) stands condoned.
Since the learned CIT (A) has dismissed the appeal of the assessee in limine on the ground of delay in filing the appeal and not decided the issue on merits and further there was no assessment order, but only the return of income was processed u/s 143(1) of the Act, therefore, the matter has not been examined at any stage either in the assessment proceedings or in the first appellate proceedings. The controversy, therefore, is required to be considered and decided after verification and examination of the relevant record and facts. Therefore, in the interest of justice, we set aside the impugned order of the learned CIT (A) and the matter is remanded to the record of the Assessing Officer for fresh adjudication to determine the correct income of the assessee as per law. Needless to say, the assessee shall be given an appropriate opportunity of hearing before passing the fresh order.
In the result, both the appeals filed by the assessee are allowed for statistical purposes.