M/S ICON INFOTECH PVT LTD.,MUMBAI vs. DCIT 5(1)(1), MUMBAI

ORDER PER RAVISH SOOD, J.M:

The present appeal filed by the assessee is directed against the order passed by the CIT(A)-10, Mumbai, dated 02.12.2019, which in turn arises from the order passed by the A.O u/s 143(3) of the Income Tax Act, 1961 (for short „Act‟), dated 26.02.2016 for A.Y. 2013-14. The assessee has assailed the impugned order on the following grounds before us: “1. On the facts and circumstances of the case and in law, the ld. CIT erred in summarily dismissing the appeal filed by the appellant on the grounds that the same was filed manually and not electronically as required in terms of revised Rule 45 substituted vide notification No. SO 637 (E) dated 01.03.2016.

2. On the facts and circumstances of the case and in law, the ld. CIT erred in not appreciating that the appeal was otherwise filed within the prescribed time limit

2 M/s Icon Infotech Pvt. Ltd. Vs. DCIT-5(1)(1) and that there was only a procedural lapse on the part of the appellant in filing the appeal manually rather than electronically.

.”

2. Briefly stated, the assessee company had e-filed its return of income for A.Y. 2013-14 on 30.09.2013, declaring a total income of Rs.61,33,960/-. The return of income filed by the assessee company was initially processed as such u/s 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment u/s 143(2) of the Act.

3. Assessment order was framed by the A.O wherein the income of the assesee was assessed at Rs.63,37,320/-, after making the following additions/disallowances:

Sr. No. Particulars Amount 1. AIR mismatch Rs.5,775/- 2. Addition of dividend received from Co-operative bank Rs.20,400/- 3. Addition of late delivery charges Rs.1,77,180/- 4. Aggrieved, the assessee assailed the impugned assessment by manually filing an appeal before the CIT(A). It was observed by the CIT(A) that the CBDT vide notification No. SO 637(E) [No.11/2016 (F.No.14/150/2015-TPL)], dated 01.03.2016 had substituted Rule 45 of the Income Tax Rules, 1962, and therein made it compulsory for e-filing of appeals before the Commissioner of Income Tax (appeals) w.e.f 01.03.2016 in respect of persons who were required to file returns of income electronically. It was further noticed by the CIT(A) that the CBDT taking cognizance of the fact that as in some cases the tax payers who were required to e-file „Form 35‟ were unable to do so due to lack of knowledge

3 M/s Icon Infotech Pvt. Ltd. Vs. DCIT-5(1)(1) about e-filing procedure and/or technical issues, thus, had vide its Circular No. 20/2016 [F.No.279/MISC/M-54/2016/ITJ], dated 26.05.2016 deferred the EVC functionality for verification of e-appeals and made the same operational from 12.05.2016 for individuals and from 19.05.2016 for other persons. Backed by the aforesaid facts, the CIT(A) was of the view that the assessee in question being a person who was required to have filed his appeal in electronic form latest by 15.06.2016, had however, failed to do so, therefore, the appeal filed by him manually was to be treated as invalid ab-initio as per Sec. 249(1) of the Act. The aforesaid facts were brought to the notice of the assessee‟s representative during the course of appellate proceedings, who is stated to have admitted that the appeal so filed was not as per the procedure prescribed under the Act, and thus, was not a valid appeal. In the backdrop of the aforesaid facts, the CIT(A) dismissed the appeal that was manually filed by the assessee, as not maintainable, but at the same time observed that the dismissal of the appeal would not cause any prejudice to the appeal that may subsequently be filed electronically.

5. The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. It was submitted by the ld. Authorized Representative (for short „A.R‟) for the assessee that the appeal had been dismissed in limine, for the reason, that the same was not filed as per the procedure contemplated in law. It was submitted by the ld. A.R that as the change in the procedure for e- filing of the appeals was at its nascent stage, therefore, there was an inadvertent mistake on the part of the assessee in filing the same as per the old procedure. On a specific query by the bench as to whether the appeal was electronically filed when the aforesaid mistake was brought to the assessee‟s notice, the ld. A.R fairly admitted that the same was so filed only after the order of the CIT(A) dismissing the appeal for the aforesaid technical default was received by the assessee. In the backdrop of the aforesaid facts, it was submitted by the ld. A.R

4 M/s Icon Infotech Pvt. Ltd. Vs. DCIT-5(1)(1) that as the mistake in not filing the appeal as per the prescribed procedure was for bonafide reasons, therefore, in all fairness, the matter may be restored to the file of the CIT(A) for fresh adjudication.

7. We have heard the ld. Authorized Representatives for both the parties, perused the orders of the lower authorities and the material available on record. On a perusal of the order of the CIT(A), we find that the appeal of the assessee was dismissed, for the reason, that the same not having been filed electronically, was thus, not in conformity with the procedure contemplated in Rule 12(3) of the Income Tax Rules, 1962. We have deliberated at length on the issue under consideration and find that the issue herein involved is squarely covered by an order of a coordinate bench of the Tribunal in the case of All India Federation of Tax Practitioner, Mumbai, Vs. ITO (E)-1(2), Mumbai [ITA No. 7134/Mum/2017, dated 04.05.2018]. In the aforementioned case, it was observed by the Tribunal that as the default on the part of an assessee in filing the appeal in „paper form‟ was merely a technical defect which could not be allowed to overshadow the cause of substantial justice, therefore, it had set-aside the order of the CIT(A), with a direction to him to consider the appeal filed electronically by the assessee, observing as under:

“6. We have heard the counsels for both the parties and we have also perused the material placed on record as well as orders passed by the revenue authorities. From the records we noticed that electronically filing of the appeals was introduced for the first time vide rule 45 of I.T. Rules 1962, mandating compulsory e-filing of appeals before appellate Commissioner with effect from 1stMarch 2016. We noticed that in this respect, there is no corresponding amendment in any of the provisions of the substantive law i.e I.T. Act, 1961. As per the facts of the present case, the assessment in the above case was completed u/s 143(3) of the I.T. Act 1961. However the assessee has filed appeal before Ld. CIT(A) in paper form as prescribed under the provisions of I.T. Act 1961 within the prescribed period of limitation. But the same was dismissed

5 M/s Icon Infotech Pvt. Ltd. Vs. DCIT-5(1)(1) by Ld. CIT(A) by holding that assessee had not filed appeal through electronic form, which is mandatory as per I.T. Rules 1962. After having considered the entire factual position, we find that Hon‟ble Supreme Court in the case of „State of Punjab Vs. Shyamalal Murari and others reported in AIR 1976 (SC) 1177’ has categorically held that courts should not go strictly by the rulebook to deny justice to the deserving litigant as it would lead to miscarriage of justice. It has been reiterated by the Hon‟ble Supreme Court that all the rules of procedure are handmaid of Justice. The language employed by the draftsman of procedural law may be liberal or stringent, but the fact remains that the object of prescribing procedure is to advance the cause of Justice. The Hon‟ble Apex Court has said in an „adversarial‟ system, no party should ordinarily be denied the opportunity of participating in the process of Justice dispensation.

The Hon‟ble Supreme Court in its judgement reported as AIR 2005 (SC) 3304 in the case of „Rani Kusum Vrs. Kanchan Devi,’ reiterated that, a procedural law should not ordinarily be construed as mandatory, as it is always subservient to and is in aid of Justice. Any interpretation, which eludes or frustrates the recipient of Justice, is not to be followed. From the facts of the present case, we gathered that the assessee had already filed the appeal in paper form, however only the e-filing of appeal has not been done by the assessee and according to us, the same is only a technical consideration. In this respect, we rely upon the judgement of Hon‟ble Supreme Court, wherein the Hon‟ble Supreme Court has reiterated that if in a given circumstances, the technical consideration and substantial Justice are pitted against each other, then in that eventuality the cause of substantial Justice deserves to be preferred and cannot be overshadowed or negative by such technical considerations. Apart from above we have also noticed that the Coordinate Bench of Hon‟ble ITAT Delhi Bench in appeal in case titled Gurinder Singh Dhillon Vrs. ITO had restored the matter to the file of Ld. CIT(a) under identical circumstances with a direction do decide appeal afresh on merit, after condoning the delay, if any. Since in the present case, we find that appeal in the paper form was already with Ld. CIT(A), therefore in that eventuality the Ld. CIT(A) ought not to have dismissed the appeal solely on the ground that the assessee has not filed the appeal electronically before the appellate Commissioner.

6 M/s Icon Infotech Pvt. Ltd. Vs. DCIT-5(1)(1)

Keeping in view the facts and circumstances as well as the case laws discussed and relied upon above, we are of the considered view that the cause of Justice would be served in case, we set aside the orders of Ld. CIT(A) & allow the present appeal. While seeking the compliance, we direct the assessee to file the appeal electronically within 10 days from the date of receipt of this order. In case, the directions are followed then in that eventuality, the delay in e-filing the appeal shall stand condoned. Ld. CIT(A) is further directed to consider the appeal filed by the assessee on merits by passing a speaking order. Resultantly, we allow the appeal filed by the assessee.

Order pronounced in the open court on 02.09.2021