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Facts
The assessee filed an appeal against the order of the CIT(A) which dismissed the appeal due to delay. The assessee sought condonation of delay, explaining that they had first filed a rectification application which was not decided by the AO, and subsequently filed the appeal with a significant delay.
Held
The Tribunal, following precedents from the Bombay High Court, condoned the delay of 2984 days, directing the CIT(A) to decide the appeal on merits after providing an opportunity to the assessee. The delay was attributed to pursuing an alternate remedy and the Assessing Officer's inaction.
Key Issues
Whether the delay in filing the appeal should be condoned based on the facts and circumstances, including the pursuit of an alternate remedy. Whether Section 40(a)(ia) is applicable to the assessee trust for disallowance of interest and contract payments.
Sections Cited
147, 148, 143(3), 250, 40(a)(ia), 154, 12A, 11
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Income Tax Appellate Tribunal, PUNE BENCHES “SMC” :: PUNE
Before: DR.DIPAK P. RIPOTE & SHRI VINAY BHAMORE
आदेश/ ORDER
PER DR. DIPAK P. RIPOTE, AM:
This appeal filed by the assessee is directed against the order of ld.Addl./Joint Commissioner of Income Tax(Appeal)-3, Ahmedabad[NFAC] under section 250 of the Income Tax Act, 1961 dated 13.03.2025 for the A.Y.2010-11. The Assessee has raised the following grounds of appeal :
“1. On the facts and the circumstances of the case and in law, lower authorities erred in not condoning the delay in filing the appeal without appreciating the facts of the case. Your appellant prays for condonation of delay and granting an opportunity of hearing before lower authorities. Without prejudice to the above grounds of appeal
, following grounds are also taken on merit,
1. On the facts and in the circumstances of the case in law the Learned A.O. erred in making the disallowance of Rs.27,87,710 u/s.40(a)(ia) out of Interest payments and Rs.31,19,116/- u/s.40(a)(ia) out of contract payment, same may kindly be deleted.
2. On the facts and in the circumstances of the case in law the Learned A.O. erred in making the disallowance of Rs.27,87,710 u/s.40(a)(ia) out of Interest payments and Rs.31,19,116/- u/s.40(a)(ia) out of Contract payment without considering the fact that provisions of Section 40(a)(ia) are not applicable to trust, and same falls under the head Business income. Your appellant prays for deletion entire addition. Your appellant craves for to add, alter amend, modify, delete any or all grounds of appeal before or during the course of hearing in the interest of natural justice.” Submission of ld.AR :
2. Ld.AR filed a paper book. Ld.AR took us through the Affidavit of Dr.Anita Hirachand Dhobale, Trustee of the Assessee Trust. Ld.AR explained us that in the assessment order, Assessing Officer has made disallowance u/s.40(a)(ia) of Rs.59,06,826/-. However, Section 40(a)(ia) is not applicable in the case of the Trust. Therefore, Assessee’s erstwhile Tax Practitioner advised assessee to file a rectification application, accordingly, Assessee filed a rectification application on 01.01.2013, the date of assessment order is 24.12.2012. Thus, the rectification application was filed within 15 days. Then, Assessee filed various reminders before the Assessing Officer, but till date Assessing Officer has not decided the rectification application. Subsequently, since the assessing officer started recovery proceedings, the assessee’s Tax Practitioner advised assessee to file an appeal. Accordingly, Assessee filed an appeal before the ld.CIT(A) with the delay of 2046 days including Covid- 19 period. If we exclude the Covid-19 period, then the Delay will be around 1000 days. Ld.AR explained that ld.CIT(A) has dismissed the appeal on account of delay without discussing merits of the case. Hence, ld.AR requested that the delay may be condoned.
2.1 Ld.AR submitted that as per Hon’ble Bombay High Court’s decision in the case of Bombay Stock Exchange Ltd., vs. DDIT(Exemption) 52 taxmann.com 29 (Bombay), the Section 40(a)(ia) is not applicable in the case of the assessee. Ld.AR submitted that Assessee Trust is running various educational institutions and it is duly registered u/s.12A of the Act and therefore, Assessee’s income is exempt u/s.11 of the Act.
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 both the parties and perused the records. It is observed that ld.CIT(A) has dismissed the appeal of the assessee on account of delay. We have perused the Affidavit filed by Dr.Anita Hirachand Dhobale-Trustee of the Assessee. It is a fact that Assessee was pursuing alternate remedy in the form of rectification application u/s.154 of the Act. It is also a fact that the Assessing Officer has not decided the rectification application. In these facts and circumstances of the case, we are convinced that there was sufficient and reasonable cause.
4.1 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. 4.2 The Hon’ble Bombay High Court in the case of Vijay Vishin Meghani Vs. DCIT [2017] 398 ITR 250 (Bombay) while condoning the delay of 2984 days observed as under : Quote, “ 14. The assessee did not rest here. He supported this application with an affidavit of one Chandrashekhar, son of S.A. Yogeshwar, a practicing Chartered Accountant and Managing Partner of M/s. Rajesh Rajeev & Associates. The affidavit of the said Chandrashekhar confirmed that the assessee indeed was a client of this Chartered Accountancy firm from 1997 to 2006. From paragraphs 3 to 6 of the affidavit dated 22-8-2013, filed by this Chartered Accountant, it is confirmed that the advice as aforesaid was given and professionally to the assessee. The assessee acting on the same did not file the appeal but the rectification application. It is that endorsement from the assessee's then Chartered Accountants which, according to the assessee, enabled him to seek condonation of delay. …………………………… 19. Way back in the year 1979, in a decision reported in Concord of India Insurance Co. Ltd. v. Smt. Nirmala Devi AIR 1979 SC 1666 , the Hon'ble Supreme Court has held that a legal advice tendered by a professional and the litigant acting upon it one way or the other could be a sufficient cause to seek condonation of delay and coupled with the other circumstances and factors for applying liberal principles and then said delay can be condoned. Eventually, an overall view in the larger interest of justice has to be taken. None should be deprived of an adjudication on merits unless the Court of law or the Tribunal/Appellate Authority finds that the litigant has deliberately and intentionally delayed filing of the appeal, that he is careless, negligent and his conduct is lacking in bona fides. These are, therefore, some of the relevant factors. Those factors should therefore necessarily go into an adjudication of the present nature. …………………………… 21. We find from paragraph 13 of the order, but for this relevant factors and tests, everything else has been brought into the adjudication by the Tribunal. The Tribunal though aware of these principles but possibly carried away by the fact that the delay of 2984 days is incapable of condonation. That is not how a matter of this nature should be approached. In the process the Tribunal went about blaming the assessee and the professionals and equally the Department. To our mind, therefore, the Tribunal's order does not meet the requirement set out in law. The Tribunal has completely misdirected itself and has taken into account factors, tests and considerations which have no bearing or nexus with the issue at hand. The Tribunal, therefore, has erred in law and on facts in refusing to condone the delay. The explanation placed on affidavit was not contested nor we find that from such explanation can we arrive at the conclusion that the assessee was at fault, he intentionally and deliberately delayed the matter and has no bona fide or reasonable explanation for the delay in filing the proceedings. The position is quite otherwise.
In the light of the above discussion, we allow both the appeals. We condone the delay of 2984 days in filing the appeals but on the condition of payment of costs, quantified totally at Rs.50,000/-. Meaning thereby, Rs.25,000/- plus Rs.25,000/- in both appeals. The costs to be paid in one set to the respondents within a period of eight weeks from today. On proof of payment of costs, the Tribunal shall restore the appeals of the assessee to its file for adjudication and disposal on merits. We clarify that all contentions as far as merits of the claim are kept open. We have not expressed any opinion on the same.” Unquote. 4.3 In these facts and circumstances of the case, since there was sufficient cause, respectfully following the Hon’ble Jurisdictional High Court, we direct ld.CIT(A) to condone the delay. We set-aside the order of ld.CIT(A) to ld.CIT(A) for denovo adjudication. The ld.CTI(A) shall provide opportunity to the assessee. Assessee shall file necessary documents before the ld.CIT(A). Accordingly, Grounds of appeal raised by the assessee are allowed for statistical purpose.
In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the open Court on 22 May, 2025.