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Facts
The assessee filed an appeal with a significant delay of 1337 days. The delay was attributed to the assessee receiving incorrect advice from their Chartered Accountant regarding filing an appeal against a lower tax demand. Upon realizing the higher demand through a garnishee notice, the assessee sought to file an appeal.
Held
The Tribunal held that the delay in filing the appeal should be condoned, considering the wrong advice given by the Chartered Accountant and the principle of substantial justice. The case was restored to the CIT(A)/NFAC to decide the appeal on its merits after condoning the delay.
Key Issues
Whether the delay in filing the appeal can be condoned on the grounds of wrong professional advice, prioritizing substantial justice over technical limitations.
Sections Cited
143(2), 142(1), 143(3), 226(3)
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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI R. K. PANDA & MS. ASTHA CHANDRA
This appeal filed by the assessee is directed against the order dated 28.03.2025 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2018-19 dismissing the appeal of the assessee on account of delay in filing of the same by 1337 days.
Facts of the case, in brief, are that the assessee is an individual and filed his return of income on 27.10.2018 declaring total income of Nil. The case was selected for scrutiny and statutory notices u/s 143(2) and 142(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) were issued and served on the assessee, in response to which the assessee filed the requisite details.
During the course of assessment proceedings the Assessing Officer noted that the assessee has paid an amount of Rs.9 lakhs being interest @ 18% on sarafi loan from Satav Landmarks LLP, paid interest @ 15% on loan of Rs.76,62,742/- to Pandharpur Bank. However, the assessee has advanced interest free loans and advances to other parties amounting to Rs.6,12,30,240/- out of the booking advances received. Rejecting the various explanations given by the assessee and observing that the assessee is not charging any interest on advances whereas paying huge interest on borrowed loans the Assessing Officer applied interest @ 15% on the amounts advanced free of interest and made addition of Rs.91,84,536/-. The Assessing Officer accordingly determined the total income of the assessee at Rs.1,06,78,630/- by passing the order u/s 143(3) on 19.04.2021.
The assessee filed an appeal before the Ld. CIT(A) / NFAC on 16.12.2024. Since there was a delay in filing of the appeal by 1337 days, the Ld. CIT(A) / NFAC observing that there was no sufficient reason given by the assessee for filing of the said appeal and relying on various decisions dismissed the same being barred by limitation.
Aggrieved with such order of the Ld. CIT(A) / NFAC, the assessee is in appeal before the Tribunal.
The Ld. Counsel for the assessee at the outset drew the attention of the Bench to the reasons given for such delay which is due to wrong advice given by the Chartered Accountant. He submitted that if the number of days falling during the period of Covid-19 is excluded as per the decisions of the Hon'ble Supreme Court in the case of Miscellaneous Application No.21 of 2022 in Miscellaneous Application No.665 of 2021 in Suo Motu Writ Petition (C) No.3 of 2020 in Re : Cognizance for Extension of Limitation with Miscellaneous Application No.29 of 2022 in Miscellaneous Application No.665 of 2021 in Suo Motu Writ Petition (C) No.3 of 2020, order dated 10.01.2022, the number of days of delay is only 931 days and not 1337 days as mentioned by the Ld. CIT(A) / NFAC.
Referring to the demand notice, he submitted that initially the Assessing Officer in the order passed u/s 143(3) has raised a demand of Rs.6,72,477/- only for which the concerned Chartered Accountant advised the assessee not to file any appeal before the Ld. CIT(A) / NFAC. However, when the assessee received notice u/s 226(3) dated 11.11.2024, the assessee came to know of the huge demand for which he consulted another Chartered Accountant who advised him to file the appeal immediately.
Referring to the decision of Hon’ble Bombay High Court in the case of Vijay Vishin Meghani vs. DCIT (2017) 398 ITR 250 (Bom), he submitted that the Hon’ble Bombay High Court in the said decision has held that where the assessee filed appeal before the Tribunal with a delay of 2984 days by taking a plea that he was wrongly advised by his Chartered Accountant earlier not to file appeal, such delay has to be condoned. Accordingly the order of the Tribunal refusing to condone the delay was reversed and the appeal filed by the assessee was allowed.
Referring to the decision of the Mumbai Bench of the Tribunal in the case of Nawany Corporation (I) Pvt. Ltd. vs. DCIT vide order dated 06.04.2023 for assessment year 2014-15, he submitted that the Tribunal in the said decision, relying on various decisions, has condoned the delay of 944 days in filing of the appeal.
Referring to the recent decision of Hon'ble Supreme Court in the case of Inder Singh Vs. The State of Madhya Pradesh reported in 2025 LiveLaw (SC) 339, he submitted that the Ld. CIT(A) / NFAC should have condoned the delay in filing of the appeal and should have decided the same on merit. He also relied on the following decisions: i) Collector, Land Acquisition vs. Mst. Katiji & Ors. reported in 167 ITR 471 (SC) ii) N. Balkrishnan vs. M. Krishnamurthy (1998) 7 SCC 123 iii) State of Nagaland vs. Lipuk A.O. 2005 (183) E.L.T. 337 (SC) iv) Earthmetal Electricals (P.) Ltd. vs. ITO (2005) 4 SOT 484 (Mum) v) Bombay Mercantile Co-op. Bank vs. CBDT vi) Vijay V. Megahni vs. DCIT vide of 2015 and 508 of 2015, order dated 19.09.2017
He accordingly submitted that the Ld. CIT(A) / NFAC should have condoned the delay and decided the appeal on merit.
The Ld. DR on the other hand strongly objected to the arguments advanced by the Ld. Counsel for the assessee. Referring to the order of the Ld. CIT(A) / NFAC the Ld. DR submitted that the Ld. CIT(A) / NFAC has given justifiable reasons while dismissing the appeal on account of delay in filing of the same since the assessee could not explain sufficient reason for filing of the appeal belatedly. He accordingly submitted that the grounds raised by the assessee be dismissed and the order of the Ld. CIT(A) / NFAC be upheld.
We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. It is an admitted fact that the Assessing Officer passed the order on 19.04.2021 which was served on the assessee on the very same day. Accordingly the due date for filing of the appeal against the same was 12.05.2023 whereas the appeal has been filed on 16.12.2024. In the light of the decision of Hon'ble Supreme Court in the case of Miscellaneous Application No.21 of 2022 in Miscellaneous Application No.665 of 2021 in Suo Motu Writ Petition (C) No.3 of 2020 in Re : Cognizance for Extension of Limitation with Miscellaneous Application No.29 of 2022 in Miscellaneous Application No.665 of 2021 in Suo Motu Writ Petition (C) No.3 of 2020, order dated 10.01.2022, the period from 18.05.2021 to 01.03.2022 has to be excluded. Therefore, the delay after exclusion of Covid-19 period is only 931 days which is as under:
Actual date of filing appeal: 16.12.2024 Delay in filing the appeal: 1308 Days Exclusion of Covid Period: 18.05.2021 to 28.02.2022: 287 Days Additional period from 01.03.2022: 90 Days Total Covid Exclusion Days: 377 Days Delay after exclusion of COVID period: 931 Days
A perusal of the demand notice issued by the Assessing Officer shows that the demand was wrongly computed determining the tax liability of Rs.6,72,477/- which is also mentioned by the Ld. CIT(A) / NFAC at page 1 of the body of the order. We, therefore, find some merit in the arguments of the Ld. Counsel for the assessee that due to low tax liability the concerned Chartered Accountant wrongly advised not to file the appeal for this year. Only after the receipt of garnishee notice u/s 226(3) dated 11.11.2024 the assessee discovered that no appeal had been filed for other years also and that the earlier advice not to challenge the assessment was grossly incorrect.
We find the Hon’ble Bombay High Court under somewhat similar circumstances in the case of Vijay Vishin Meghani vs. DCIT (supra) has reversed the decision of the Tribunal refusing to condone the delay of 2984 days where the assessee filed the appeal with a delay of 2984 days by taking a plea that he was wrongly advised by his Chartered Accountant earlier not to file appeal.
We find the Mumbai Bench of the Tribunal in the case of Nawany Corporation (I) Pvt. Ltd. vs. DCIT (supra) has condoned the delay of 944 days on the ground that the delay in filing of the appeal was on account of wrong advice given by the CA.
We find the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji & Ors. reported in 167 ITR 471 (SC) has held that when substantial justice and technical considerations are pitted against each other, 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. Refusing to condone delay can result in a meritorious matter being thrown out 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.
We find recently the Hon’ble Supreme Court in the case of Inder Singh Vs. The State of Madhya Pradesh reported in 2025 LiveLaw (SC) 339 has held as under: “14. There can be no quarrel on the settled principle of law that delay cannot be condoned without sufficient cause, but a major aspect which has to be kept in mind is that, if in a particular case, the merits have to be examined, it should not be scuttled merely on the basis of limitation.”
In the light of the above discussion and relying on the decisions cited (supra), we deem it proper to restore the issue to the file of the Ld. CIT(A) / NFAC with a direction to condone the delay and decide the appeal on merit and in accordance with law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 4th September, 2025.
Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 4th September, 2025 GCVSR आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: अपीलार्थी / The Appellant; 1. 2. प्रत्यर्थी / The Respondent 3. The concerned Pr.CIT, Pune 4. DR, ITAT, ‘B’ Bench, Pune 5. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune
S.No. Details Date Initials Designation 1 Draft dictated on 01.09.2025 Sr. PS/PS 2 Draft placed before author 03.09.2025 Sr. PS/PS Draft proposed & placed before the 3 JM/AM Second Member Draft discussed/approved by Second 4 AM/AM Member 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS Date on which the file goes to the Head 9 Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order