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Facts
The assessee, an individual engaged in manufacturing corrugated boxes, filed an appeal against the assessment order for AY 2012-13, which included several additions/disallowances. The appeal was filed before the Ld. CIT(A)/NFAC with a significant delay of 34.5 months, which the assessee attributed to a business downturn, loans becoming NPA, and mental disturbance. The Ld. CIT(A)/NFAC dismissed the appeal solely on the ground of delay, without condoning it or examining the merits.
Held
The Income Tax Appellate Tribunal (ITAT), citing Supreme Court precedents on condonation of delay, held that the Ld. CIT(A)/NFAC should have adopted a liberal approach and condoned the delay. The Tribunal set aside the CIT(A)'s order and restored the matter, directing the CIT(A)/NFAC to condone the delay and decide the appeal on its merits after giving the assessee due opportunity of being heard.
Key Issues
Whether the CIT(A)/NFAC was justified in not condoning the significant delay in filing the appeal, thereby dismissing it, or if the delay should have been condoned based on the principle of sufficient cause and for justice to be served.
Sections Cited
143(2), 142(1), 143(3), 14A, 249(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI R. K. PANDA & SHRI VINAY BHAMORE
This appeal filed by the assessee is directed against the order dated 22.11.2024 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2012-13.
Although a number of grounds have been raised by the assessee, however, these all relate to the order of the Ld. CIT(A) / NFAC in not condoning the delay in filing of the appeal and thereby dismissing the appeal and thereby sustaining the various additions made by the Assessing Officer.
3. Facts of the case, in brief, are that the assessee is an individual and engaged in business of manufacturing of corrugated boxes. He filed his return of income on 27.09.2012 declaring total income of Rs.30,29,722/-. 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 AR of the assessee appeared from time to time and filed the requisite details. The Assessing Officer completed the assessment u/s 143(3) of the Act on 27.03.2015 determining the total income of the assessee at Rs.68,88,090/- wherein he made the following additions / disallowances: (a) Disallowance of proportionate expenditure Rs.36,88,783/- (b) Disallowance u/s 14A Rs. 20,550/- (c) Disallowance of wages and labour charges Rs. 1,48,985/- Rs.38,58,318/- Total
4. Since the assessee filed the appeal before the Ld. CIT(A) / NFAC with a delay of 34 and ½ months from the service of the assessment order, the Ld. CIT(A)/NFAC dismissed the appeal for want of delay by observing as under: “DECISION 4.1 The appellant in its appeal has assailed the AO for making addition to its returned income. On perusal of Form 35 it is seen that the assessment order in this case was passed on 27.03.2015 and the same was served on the same day. The appeal should had been filed by the appellant within 30 days of the receipt of the assessment order however the appeal in this case has been filed on 07.02.2018 which is almost a period of 2 years and 10 & half months (approx) from the service of the assessment order. 4.2 The appellant has stated that he could not file appeal in time because of complete downturn in the business of the appellant since 2015. All the loans of bank became NPA and bank started recovery proceeding Due to this reason, the appellant could not file appeal in time. 4.2.1 The appellant has also made a prayer for condonation of delay in filing of appeal. The power to condone the delay in filing of appeal has been conferred on CIT (A) by the provisions of Section 249(3) which states
"The Commissioner (Appeals) may admit an appeal after the expiration of the said period if he is satisfied that the appellant had sufficient cause for not presenting it within that period.” 4.2.2 For condonation of delay u/s 249(3) of the Act, the assessee has to satisfy the Commissioner (Appeals) by explaining the sufficient cause for the delay. The term sufficient cause has not been defined in the Act but the meaning of the same has been explained in various judgments. The meaning of the same as derived from the perusal of the various judgments is that sufficient cause means a cause which is beyond the control of the party due to which he was prevented from approaching the court within time. In doing so it is the test of reasonable man in normal circumstances which has to be applied. The test whether or not a cause is sufficient is to see whether it could have been avoided by the party by the exercise of due care and attention. Some of the judgments which explain the meaning of sufficient cause 1. Kvaerner Boving Construction Ltd. vs. Dy. CIT [1996] 54 TTJ 429 (Delhi-Trib.) 2. Encon Furnaces (P) Ltd. vs. Asstt. Commissioner [1996] 56 ITD 14 (Delhi Trib.)
Shakti Clearing Agency (P) Ltd. vs. ITO [2003] 127 Taxman 49 (Rajkot- Trib.)
J.K. Chaturvedi vs. Asstt. CIT [2004] 3 SOT 456 (Ahd. - Trib.)
5. Prashant Projects Ltd. vs. Dy. CIT [2013] 37 Taxman.com 137/145 ITD 202 (Mum) 4.2.3 It is trite that the delay can be condoned only if there is no gross negligence or deliberate inaction or lack of bona fide. The Hon'ble Supreme Court has in the case of P.K. Ramachandran vs. State of Kerala, AIR 1998 SC 2276 held as under. "Law of limitation may harshly affect a particular party but it has to be applied with all its rigour when the statute so prescribes and the courts have no power to extend the period of limitation on equitable grounds." In the case of Vinay Extraction (P) Ltd. vs. Vijay Khanna [2004] 271 ITR 450 (Guj), it was held by the Hon'ble High Court as under: "It is true that the apex court has held that the court should adopt a liberal approach in considering the application for condonation of delay and that substantial justice deserves to be preferred over technical considerations However, it is equally well settled that a person invoking the discretion of the appellate or revisional authority beyond the prescribed period of limitation is required to show sufficient cause which would include showing that the petitioner/appellant was either bona fide pursuing his remedies or was prevented by sufficient cause from pursuing his remedies. Whether sufficient cause is made out or not is always a question of fact depending upon the facts and circumstances of each case and has to be established on record. An application seeking condonation of delay has also to establish that there was no negligence or inaction or want of bona fides and that the right granted under law to challenge the order was not abandoned. It cannot be overlooked that on expiry of the period of limitation prescribed for seeking legal remedy, a corresponding right accrues in favour of the other party and the same should not be lightly interfered with." The Hon'ble Madhya Pradesh High Court in the case of Nihalkaran vs. CWT [1989] 175 ITR 14 has held as under: "The burden is on the party claiming condonation of delay to place before the Court, in clear and explicit terms, all facts on which the party relies, so that the Court can come to the conclusion that it is not a case of want of diligence or inaction on the part of the applicant. In the instant case, the applicant has failed to place on record all these facts. Inaction or want of diligence on the part of the applicant would not entitle the applicant to the benefit of the provisions of section 5 of the Limitation Act. In our opinion, therefore, the applicant has failed to make out a case that there was sufficient cause for delay in filing the application under section 27(3) of the Act. The application for condonation of delay is, accordingly, rejected. As the application under section 27(3) of the Act is barred by limitation, it deserves to be rejected on this ground alone.” In Madhu Dadha vs. The Assistant Commissioner, Hon'ble Madras High Court in their decision dated 23.6.2009 in TC (A). No. 421 of 2009 while referring to the aforesaid decision of the Hon'ble Apex Court in P.K. RAMACHANDRAN v. State Of Kerala observed that "At this juncture, we have to be guided by the judgment reported in [1990] 1 LLN 457 in the case of T.N.M. BANK LTD. v. APP, AUTY, SHOPS ACT. In that particular case, the Division Bench of this court has held that. We are of the view that the question of limitation is not merely a technical consideration. Rules of limitation are based on principles of sound policy and principles of equity Is a litigant liable to have a Damocles' sword hanging over his head indefinitely for a period to be determined at the whims and fancies of the opponent?" In that decision, this Court has held that the delay of 285 days in preferring the appeal could not be condoned. It was held that the condonation of delay was not justified on facts and evidence of the case. As rightly pointed out that the Rules of limitation are based on principles of sound public policy and principles of equity. Though there is no presumption that the delay is occasioned deliberately or on account of culpable negligence, if the admitted facts in that case are taken note of, there is no doubt that the delay on the part of the appellant is deliberate and the appellant is clearly guilty of culpable negligence. Such negligent attitude of the appellant was not taken care to preserve the right of appeal and having been slept over for more than 558 days and not explained the delay without any reasonable doubt, the appellant cannot avail sympathy or discretion of this Court.”
In the case of CIT vs. Ram Mohan Kabra, 257 ITR 773 (Punjab & Haryana), it was observed by the Hon'ble Court as under: "The provisions relating to prescription of limitation in every statute must not be construed so liberally that it would have the effect of taking away the benefit accruing to the other party in a mechanical manner. Where the Legislature spells out a period of limitation and provides for power to condone the delay as well, there such delay can be condoned only for sufficient and good reasons supported by cogent and proper evidence. Now it is a settled principle of law that the provisions relating to specified period of limitation must be applied with their rigour and effective consequences." The Hon'ble Supreme Court of India in the case of G Ramegowda Major vs. Special Land Acquisition 1988 AIR 897, 1988 SCR (3) 198 has held that: “There is, it is true, no general principle saving the party from all mistakes of its counsel. If there is negligence, deliberate or gross inaction or lack of bona fides on the part of the party or its counsel there is no reason why the opposite side should be exposed to a time-barred appeal." In the case of J.B. Advani & Co. (P.) Ltd. v. CIT [1969] 72 ITR 395, the Hon'ble Supreme Court has held that "Explanation of delay for the entire period is necessary. What is expected of the appellant in such matters is to show that delay was occasioned due to some sufficient cause. The cause pleaded must fit in the facts and circumstances of the given case and the explanation offered regarding the delay occasioned by such cause should appeal to reasons so as to get judicial approval" 4.2.4 in view of above judicial decisions, it is noted that adopting a liberal view in condoning delay is one of the guiding principles in the realm of belated appeals, but liberal approach cannot be equated with a license to file appeals at will disregarding the time limits fixed by the statutes. 4.2.5 In the instant case, the appellant has been clearly negligent by not taking the necessary steps for filing the appeal within the time prescribed by the statute. He has not given any sufficient cause to explain the late filing of appeal which could make him eligible for the condonation of the delay. In granting the indulgence and condoning the delay, it must be proved beyond the shadow of doubt that the assessee was diligent and was not guilty of negligence whatsoever. The appellant has failed to prove his bonafide in filing belated appeal. The conduct of the appellant in the act of filing of appeal has been found to be wanting as far as reasonableness is concerned. The various Hon'ble Courts have ruled that the expression sufficient cause should receive liberal construction but the same is not applicable in the case of appellant as it is found wanting in due diligence. It is not the scene that the appellant was not aware about the proceedings. The filing of appeal after a period of more than 2 years and 10 months looks more like an afterthought and the ground taken by the appellant for condonation of delay is a mere concocted story. 4.2.6 So, after considering the circumstances involved in filing the appeal and the appellant being unable to give a reasonable cause explaining the delay in filing of the appeal the condonation of delay cannot be granted in this case. 4.3 In view of the overall discussion, the appeal is dismissed being not maintainable.
In the result, the appeal is dismissed.”
5. 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 copies of assessment orders for assessment years 2015-16 to 2018-19, copies of which are placed at pages 1 to 160 of the paper book and submitted that the assessee for assessment year 2015-16 has filed the return of income with a loss of Rs.54,47,033/-. Similarly, for assessment year 2016-17 the assessee filed the return of income declaring loss of Rs.38,43,065/-. Referring to the copy of return for assessment year 2017-18 he submitted that the assessee has filed the return of income declaring a loss of Rs.31,29,120/-. Similarly, for assessment year 2018-19 the assessee has filed his return of income by declaring a loss of Rs.39,40,532/-. Referring to the copy of notice issued by Bank of Maharashtra on 14.08.2017, he submitted that the bank has recalled the cash credit loan of Rs.3,46,43,557/- and the term loan of Rs.21,44,898/-. He submitted that due to continuous loss in the business, the assessee was disturbed and was not in a position to contact the lawyers to file the appeal in time.
Referring to the decision of the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji & Ors. reported in 167 ITR 471 (SC) and Inder Singh Vs. The State of Madhya Pradesh reported in 2025 LiveLaw (SC) 339, he submitted that the delay in filing of the appeal before Ld. CIT(A) / NFAC should have been condoned and the appeal should have been decided on merit. He submitted that despite all those were brought to the notice of the Ld. CIT(A) / NFAC, however, he did not consider the same and dismissed the appeal on account of delay which is not justified. He accordingly submitted that the matter may be restored to the file of the Ld. CIT(A) / NFAC with a direction to condone the delay and decide the appeal on merit.
The Ld. DR on the other hand heavily relied on the order of the Ld. CIT(A) / NFAC in dismissing the appeal on account of delay. He submitted that the reasons given by the assessee in the condonation application before the Ld. CIT(A) / NFAC are not reasonable and sufficient to condone the delay. He accordingly submitted that the order of the Ld. CIT(A) / NFAC being justified should be upheld and the grounds raised by the assessee be dismissed.
We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered various decisions cited before us. It is an admitted fact that the assessee filed the appeal before the Ld. CIT(A) / NFAC with a delay of 34 and ½ months from the date of service of the assessment order. It is also an admitted fact that the assessee was incurring losses from assessment year 2015-16 to 2018-19, copies of which are filed in the paper book at pages 1 to 160. It is also an admitted fact that due to non payment of dues, Bank of Maharashtra has recalled the cash credit and the term loan of the assessee and has also threatened to take coercive action in absence of repayment of the outstanding loans. Under these circumstances, we are of the considered opinion that there was a reasonable cause on the part of the assessee for not filing the appeal before the Ld. CIT(A) / NFAC in time since he was mentally disturbed.
We find the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji & Ors. (supra) 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.”
Following the decisions of Hon'ble Supreme Court cited (supra) and considering the totality of the facts of the case and in the interest of justice, we are of the considered opinion that the Ld. CIT(A) / NFAC should have condoned the delay and decided the issue on merit. We, therefore, set aside the order of the Ld. CIT(A) / NFAC and restore the issue back to his file with a direction to condone the delay in filing of the appeal by the assessee and decide the appeal on merit as per fact and law after giving due opportunity of being heard to the assessee. The assessee is also hereby directed to participate in the appeal proceedings and submit the requisite details before the Ld. CIT(A) / NFAC on the appointed date without seeking any adjournment under any pretext, failing which the Ld. CIT(A) / NFAC is at liberty to pass appropriate order as per law. 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 29th May, 2025.