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Facts
The assessee, a cooperative society, filed a NIL return for AY 2018-19, claiming deduction under Section 80P, which was disallowed by the AO, leading to an assessment under Section 143(3). Subsequently, a penalty of Rs. 5,72,116/- was levied under Section 270A for under-reporting income, as the assessee failed to respond to show-cause notices. The assessee filed an appeal to the CIT(A) with a delay of 223 days, which was dismissed in limine without condoning the delay or providing a hearing opportunity.
Held
The Tribunal found that the CIT(A) erred by dismissing the appeal without providing a hearing or condoning the delay. Citing the Supreme Court's precedent in Mst. Katiji, the Tribunal held that substantial justice should prevail, and the delay was not malafide. Therefore, the Tribunal condoned the delay of 223 days and remanded the matter back to the CIT(A) to decide the appeal on merits, but only after the pending quantum appeal is disposed of.
Key Issues
Whether the CIT(A) erred in dismissing the appeal without condoning the 223-day delay and without providing a hearing opportunity, and whether the delay in filing the appeal should be condoned.
Sections Cited
80P, 270A, 143(3), 249(2), Section 5 of Limitation Act
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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI R.K. PANDA & MS. ASTHA CHANDRA
The appeal filed by the assessee is directed against the order dated 29.06.2024 of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi [“CIT(A)”] pertaining to Assessment Year (“AY”) 2018-19.
The assessee has raised the following grounds of appeal :-
1. Under the facts and circumstances of the case and in law, CIT(A)/NFAC has erred in not providing opportunity to present the case. Without issuing hearing notice, Ld. CIT(A)/NFAC dismissed the appeal.
2. Under the facts and circumstances of the case and in law, Ld. Assessing Officer has erred In levying penalty u/s 270A of Rs.5,72,116/-.
3. Under the facts and circumstances of the case and in law, Ld. Assessing Officer has recorded inadequate satisfaction for levy of penalty. Hence, penalty needs to be dropped.
4. Under the facts and circumstances of the case, since the assessee has filed the appeal against Quantum Assessment Order which is not yet disposed this penalty proceeding needs to be kept in abeyance or dropped.
5. The appellant craves the permission to add, amend, modify, alter, revise, substitute, delete any or all grounds of appeal if deemed necessary at the time of hearing of the appeal.”
3. Briefly stated, the facts of the case are that the assessee is a society engaged in the business of banking/providing credit/loan facilities to its members. It filed its return of income for AY 2018-19 on 07.09.2018 declaring a total income of Rs. Nil. The case was selected for scrutiny under CASS. During the assessment proceedings, the Ld. Assessing Officer (“AO”) found that the assessee has claimed deduction u/s 80P of the Income Tax Act, 1961 (the “Act”) for an amount of Rs.37,13,018/-. The assessee was asked to furnish the explanation with reasoned facts, however, the assessee failed to furnish any explanation thereof. Consequently, the assessment was completed u/s 143(3) of the Act vide order dated 15.03.2021 disallowing the claim of deduction u/s 80P of the Act. The penalty proceedings u/s 270A of the Act was initiated simultaneously for under reporting of income. Pursuant thereto, show cause penalty notice(s) were issued on the e-mail of the assessee along with service through designated verification unit, which was duly delivered. The assessee failed to offer any explanation in response to the said show cause penalty notice(s). Due to the non-compliance of the said notice(s), the Ld. AO inferred that the assessee has nothing to say in its penalty matter and determined the quantum of penalty for under reporting of income u/s 270A of the Act @ 50% of tax payable on the amount of under reported income amounting to Rs.5,72,116/- vide his order dated 15.09.2021.
Aggrieved, the assessee filed appeal before the Ld. CIT(A). The appeal was filed with a delay of 223 days. The assessee filed an application for condonation of the said delay but without any affidavit in support thereof. The assessee stated in Form 35 that the affidavit for condonation will be submitted at the time of hearing. The Ld. CIT(A) did not condone the delay and dismissed the appeal of the assessee without deciding the issues on merits on the ground that the assessee has not provided a plausible explanation for the said delay. The relevant observations and findings of the Ld. CIT(A) are produced below : “3. I have gone through the impugned order and grounds taken for condonation of delay. The appeal in the present case has been filed late by 223 days and the appellant has requested for condonation of delay in filing of appeal. The appellant has requested for id for condonation of delay in filing of appeal on following grounds – (1) Affidavit for delay condonation will be submitted at the time of hearing. I have gone through the impugned order of the AO, 'Statement of Facts', "Grounds of Appeal', and application for condonation of delay. The appeal in the present case has been filed late by 223 days and the appellant has requested for condonation of delay in filing of appeal.
The case of the assessee could not be taken for adjudication due to following reasons:--
1. 1. The appeal is barred by limitation of time as per the provision of section 249 (2) of Income Tax Act, 1961.
2. Substantial Delay: There is a significant delay of 223 days in filing the appeal.
3. The appellant's request to adjudicate a time-barred appeal cannot be entertained, as condonation of delay is a prerequisite for proceeding with the appeal. The Hon'ble Supreme Court of India in case of Pathapati Subba Reddy (Died) By Lrs And... vs Special Deputy Collector (La) held as under:- "(1) the appeal which is preferred after the expiry of the limitation is liable to be dismissed. The use of the word 'shall' in the aforesaid provision connotes that the dismissal is mandatory subject to the exceptions. Section 3 of the Act is peremptory and had to be given effect to even though no objection regarding limitation is taken by the other side or referred to in the pleadings. In other words, it casts an obligation upon the court to dismiss an appeal which is presented beyond limitation. This is the general law of limitation. The exceptions are carved out under Sections 4 to 24 (inclusive) of the Limitation Act but we are concerned only with the exception contained in Section 5 which empowers the courts to admit an appeal even if it is preferred after the prescribed period provided the proposed appellant gives 'sufficient cause' for not preferring the appeal within the period prescribed. In other words, the courts are conferred with discretionary powers to admit an appeal even after the expiry of the prescribed period provided the proposed appellant is able to establish 'sufficient cause' for not filing it within time. The said power to condone the delay or to admit the appeal preferred after the expiry of time is discretionary in nature and may not be exercised even if sufficient cause is shown based upon host of other factors such as negligence, failure to exercise due diligence etc. (II) Courts are empowered to exercise discretion to condone the delay if sufficient cause had been explained, but that exercise of power is discretionary in nature and may not be exercised even if sufficient cause is established for various factors such as, where there is inordinate delay, negligence and want of due diligence; (III) Merely some persons obtained relief in similar matter, it does not mean that others are also entitled to the same benefit if the court is not satisfied with the cause shown for the delay in filing the appeal; (IV) Merits of the case are not required to be considered in condoning the delay; and (V) Delay condonation application has to be decided on the parameters laid down for condoning the delay and condoning the delay for the reason that the conditions have been imposed, tantamounts to disregarding the statutory provision." Considering the reasons for the delay and the facts of the case, the appellant has not provided a plausible explanation for the delay. Therefore, the delay in filing the appeal is not excused. Based on the above discussion, I am convinced that this case does not merit condonation of the delay. Consequently, the delay is not condoned, and the appeal is dismissed without addressing the merits of the grounds for appeal.”
Dissatisfied with such order of the Ld. CIT(A)/NFAC, the assessee is in appeal before the Tribunal and all the grounds of appeal relate thereto.
The Ld. Counsel for the assessee reiterating the reasons stated in the affidavit of the Manager of the assessee trust filed before the Tribunal submitted that there was an election in the society in May, 2022. The term of old body of the society was completed in March, 2022 and new body took over the charge of the society. However, while taking over the charge, old body did not inform about the penalty order. When the assessee saw the Income Tax Portal, they came to know about the penalty order passed by the Ld. AO and thereafter filed an appeal before the Ld. CIT(A) on 06.01.2023. This led to delay of 223 days (excluding the Covid-19 period) in filing of the appeal before the Ld. CIT(A). He therefore submitted that there was no malafide intention for the delay caused in filing of the appeal before the Ld. CIT(A). Relying on the decisions in the case of: :-(i) Collector, Land Acquisition Vs. MST. Katiji & Ors., 167 ITR 471 (SC); (ii) Sitaldas K. Motwani Vs. Director General of Income Tax (International Taxation) & Ors., 323 ITR 223 (Bom); (iii) IIFL Samasta Finance Limited Vs. DCIT in and (iv) Principal Commissioner of Income Tax Vs. Quest Investment Advisors (P) Ltd., 409 ITR 545 (Bom), he submitted that the delay in filing of the appeal should have been condoned by the Ld. CIT(A)/NFAC.
6.1 He further submitted that the assessee has a strong case on merits. He brought to our attention that the assessee has filed an appeal before the Ld. CIT(A) against the quantum assessment completed on 15.03.2021 u/s 143(3) of the Act which is still pending for adjudication. He accordingly submitted that the appeal may be restored to the file of the Ld. CIT(A)/NFAC with a direction to condone the delay by the Ld. CIT(A)/NFAC and decide the issue on merits once the quantum appeal is decided by him.
The Ld. DR, on the other hand heavily relied on the orders of the Ld. CIT(A)/NFAC.
We have heard the Ld. Representatives of the parties and perused the material on record and paper book filed on behalf of the assessee. We have also considered the various decisions cited by the Ld. AR before us. It is an admitted fact that the appeal was filed with a delay of 223 days before the Ld. CIT(A)/NFAC who dismissed the appeal of the assessee on account of non-condonation of delay in filing of the appeal without considering the merits of the case. It is the submission of the Ld. Counsel for the assessee that the delay in filing of the appeal has occurred due to the reasons stated above which is mainly due to the term of old body of the society being completed and the new body remaining uninformed about the impugned penalty order. Therefore, there was no intentional delay in filing of the appeal before the Ld. CIT(A). It is also an admitted fact that the assessee did not file an affidavit in support of its application for seeking condonation of delay which the assessee had stated in Form 35 to be filed at the time of hearing. However, we observe that the Ld. CIT(A)/NFAC has passed the impugned order without issuing any notice of hearing to the assessee and therefore has not afforded any opportunity to the assessee to substantiate its case before him. The Ld. Counsel for the assessee has submitted that given an opportunity the assessee is in position to substantiate its case before the Ld. CIT(A) by filing the requisite details.
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.
Having given our thoughtful consideration to the submissions made by the Ld. Counsel for the assessee and the facts of the case, we are of the opinion that larger interest of justice has to be taken into consideration while adjudicating the matters. 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 bonafides. Further, the assessee would not have gained anything in filing the appeal with delay. Therefore, the delay of 223 days occurred before the Ld. CIT(A) is condoned in light of various decisions including that of decision of Hon’ble Supreme Court in the case of Collector Land Acquisition Vs. MST Katiji & Ors. (supra).
Now, coming to the merits of the case, the Ld. AR has brought to our attention that the assessee’s quantum appeal against the assessment order dated 15.03.2021 is pending for adjudication before the Ld. CIT(A). The Ld. CIT(A) has dismissed the penalty appeal of the assessee in limine without condoning the delay. Considering the totality of facts and in the circumstances of the case and in the interest of natural justice, we are of the opinion that the matter be restored to the file of the Ld. CIT(A)/NFAC, with a direction to condone the delay in filing of the appeal before him and decide the appeal afresh on merits once the quantum appeal of the assessee is disposed of, after giving due opportunity of hearing to the assessee. The assessee is also directed to remain vigilant and not to take adjournment unless otherwise required for reasonable cause, failing which the Ld. CIT(A)/NFAC shall be free to proceed in accordance with law. The order of the Ld. CIT(A)/NFAC is hereby set aside and grounds of appeal raised by the assessee are allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 20th March, 2025.