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Facts
The assessee, a cooperative society, filed an appeal before the CIT(A) after a delay of 183 days. The CIT(A) dismissed the appeal for not condoning the delay, citing insufficient cause. The assessee claimed the delay was due to the assessment order going into the spam folder, and they became aware of it only upon receiving a penalty notice.
Held
The Tribunal held that the reason for the delay, i.e., the assessment order going into the spam folder, constituted a sufficient cause. Citing Supreme Court and High Court judgments, the Tribunal emphasized that substantial justice should be preferred over technical considerations and that a liberal approach should be taken for condoning delays. Therefore, the Tribunal condoned the delay and directed the CIT(A) to decide the appeal on merits.
Key Issues
Whether the delay in filing the appeal before the CIT(A) was sufficiently explained and should be condoned to allow the appeal to be decided on merits.
Sections Cited
250, 143(3), 80P, 139(1), 143(2), 80P(2)(a)(i), 80P(2)(c), 80P(2)(d), 249(3), 249(2)
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Income Tax Appellate Tribunal, PUNE BENCHES “SMC” :: PUNE
Before: DR.DIPAK P. RIPOTE & SHRI VINAY BHAMORE
ORDER
PER DR. DIPAK P. RIPOTE, AM:
This is an appeal filed by the assessee directed against the order of ld.Commissioner of Income Tax(Appeal)[NFAC], Delhi under section 250 of the Income Tax Act, 1961 dated 25.02.2025 for the A.Y.2021-22. The Assessee has raised the following grounds of appeal :
“1. On the facts and in the circumstances of the case and in law the learned CIT(A) has erred in not condoning the delay caused in failing an appeal before CIT(A).
On the facts and in the circumstances of the case and in law the learned CIT(A) is not justified in rejecting assessee's appeal by denying request to condone the delay and not on the merits on the case.
On the facts and in the circumstances of the case and in law the learned CIT(A) has not appreciated the fact that the issue of disallowance of deduction claimed u/s 80P of the Act on interest earned from deposits with Co-operative / Scheduled banks has been already covered in favor of the assessee by numerous decisions of jurisdictional Income Tax Appellate Tribunal, Pune.
On the facts and in the circumstances of the case and in law the deduction u/s 80P of the Act shall be granted to the assessee on interest earned from deposits with Co-operative / Scheduled banks amounting to Rs. 13,95,795/-.”
Submission of ld.AR : 2. At the outset of hearing, no one appeared on behalf of the assessee. However, the relevant paragraphs of statement of facts are reproduced as under : “1) Our society viz. FCL Gahu Kamgar Sahakari Patsanstha Maryadit is a co-operative society registered under Maharashtra Co-op Societies Act, 1960 & Rules, 1961. 2) Nature of business: Our society is engaged in providing credit facilities to our members only. Our main activity is providing credit to our members. Thus the main source of income of our society is interest earned from the loans granted to our members only. As and when funds of the society are ideal as well as, as per Maharashtra Co-op Societies Act, 25% of our profits are to be kept with District Central Co-op Bank as stipulated in section 70 of Maharashtra Co-op Societies Act, 1960. 3) Books of accounts maintained & Audit of books of accounts :-Our society has maintained regular books of accounts during the course of business of the society such as cash book, ledger, bank book, loan register, loan recovery register, expenditure bills /vouchers which are duly signed by the payees & the same books of accounts are audited by certified Auditor u/s.81(5-b) of Maharashtra Co-op Societies Act, 1960. 4) Return of income u/s.139(1) was filed on 27/2/2023 declaring total income of Rs.NIL after claiming deduction u/s.80P at Rs.33,91,997/-. 5) Our case was selected for scrutiny under CASS by issue of notice u/s.143(2) dated 28/6/2022. 6) During the year under consideration our society has earned interest income, details of which are as follows:- Sr.No. Sources from which interest is Amount of interest earned 1 Interest on loans given to members 38,95,816.00 of society 2 Interest earned from employees on 14,964.00 loan given to them who are also our nominal members 3 Interest earned from deposit of 9,37,470.00 reserve funds kept with Nashik District Central Co-op Bank Ltd. 4 Interest earned on fixed deposits 4,58,325.00 kept with Nashik Dist. Central Co- op Bank Ltd. 5 Total:- 53,06,575.00 7) In the computation of income for the year under consideration our society has claimed deduction u/s.80P(2)(a)(i), 80P(2)(c) & 80P(2)(d) i.e. interest earned on credit facilities provided to our members and nominal members, interest earned on loans granted to the employees and interest earned on deposits kept with co-operative bank i.e. Nashik District Central Co-op Bank Ltd. respectively. 8) Assessing Officer has disallowed deduction u/s.80P(2)(d) of Rs.13,95,795/- in respect of interest earned from deposits kept with The Nashik District Central Co-op Bank Ltd. by assigning the following reasons :-
Submission of ld.DR : 3. Ld.DR for the Revenue relied on the order of Assessing Officer and ld.CIT(A).
Findings & Analysis : 4. We have heard ld.DR for the Revenue and perused the records. It is observed that Assessee had filed appeal before ld.CIT(A) against the order u/s.143(3) of the Act, dated 26.12.2022 for A.Y.2021-22 with the delay of 183 days. Ld.CIT(A) dismissed appeal as under : “6. In view of the above facts and circumstances, the reasons advanced by the assessee for delay in filing the appeal are held to be insufficient, unsubstantiated, unreasonable and hence unacceptable. The appellant has failed to demonstrate reasonable cause or exceptional circumstances to warrant condoning the delay. Therefore, the condonation of delay in filing the appeal is denied in the interest of justice, equity, and procedural discipline.
Having regard to above discussion and legal position, the delay of 183 days in filing of appeal in this case is not condoned as no "sufficient cause" has been shown u/s 249(3) of the Income Tax Act, 1961 for the appellant's failure to file the appeal within the prescribed period of limitation u/s 249(2) of the Income Tax Act, 1961r.w.s.5 of Limitation Act and hence the appeal sought to be instituted belatedly is hereby rejected.
In the result, as delay in filing of appeal is not condoned, the appeal is not admitted and is rejected accordingly.”
4.1. However, it is observed from the order of ld.CIT(A) wherein, ld.CIT(A) has reproduced Assessee’s submission that the delay was because of the reason that the assessment order went into spam folder of the email. Therefore, Assessee was not aware of it. The Assessee got to know about the order when penalty notice was received. We are of the opinion that there was sufficient reason for delay.
4.2 The Hon’ble Supreme Court in the case of Esha Bhattacharjee Vs. Managing Committee of Raghunathpur Nafar Academy and others Civil Appeal Nos.8183-8184 of 2013 vide order dated 13/09/2013 has laid down following principles for deciding Condonation Application: Quote, “ 15. From the aforesaid authorities the principles that can broadly be culled out are: i) There should be a liberal, pragmatic, justice-oriented pedantic approach while dealing with an application for condonation of delay, for the courts are not supposed to legalise injustice but are obliged to remove injustice. ii) The terms “sufficient cause” should be understood in their proper spirit, philosophy and purpose regard being had to the fact that these terms are basically elastic and are to be applied in proper perspective to the obtaining fact- situation. iii) Substantial justice being paramount and pivotal the technical considerations should not be given undue and uncalled for emphasis. iv) No presumption can be attached to deliberate causation of delay but, gross negligence on the part of the counsel or litigant is to be taken note of.
4.3 The Hon’ble Bombay High Court in the case of EBR Vs. UOI [2018] 89 taxmann.com 194 (Bombay)[06-11-2017] has observed as under while condoning the delay in that case : Quote ,“ 12. In view of the law laid down by the Apex Court, it was not necessary for the petitioner to have explained each and every day's delay. On the contrary, the Apex Court held that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice is to be preferred. The Apex Court also held there is no presumption that delay is intentional and deliberate, as normally a litigant does not stand to benefit by resorting to delay” Unquote.
In these facts and circumstances of the case, we are convinced that grave injustice is caused to the assessee by not condoning the delay, by ld.CIT(A). Substantial justice is more important than procedural delay. Therefore, we direct ld.CIT(A) to condone the [A] delay. Accordingly, we set aside the order of ld.CIT(A) to ld.CIT(A) for denovo adjudication. Accordingly, we direct ld.CIT(A) to condone the delay and decided the appeal of the assessee on merits. Assessee shall file all details before the ld.CIT(A). The ld.CIT(A) shall provide opportunity of hearing to the assessee. Accordingly, grounds of appeal raised by the assessee are allowed for statistical purpose.