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Income Tax Appellate Tribunal, AHMEDABAD “D” BENCH
Before: DR. BRR Kumar & Shri T. R. Senthil Kumar
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “D” BENCH Before: DR. BRR Kumar, Vice President And Shri T. R. Senthil Kumar, Judicial Member ITA No: 194/Ahd/2021 & ITA No: 190/Ahd/2024 Assessment Year: 2008-09 Biren Dhirajlal Shah Income Tax Officer, Plot No. 441-1, Sector-22 Ward-1, Nr. Police Chowkey, Vs Gandhinagar Gandhinagar-382021 PAN: ACSPS5653F (Appellant) (Respondent) Assessee Represented: Shri Chetan Agarwal, A.R. & Ms. Krupa Panchal, CA Revenue Represented: Shri Alpesh Parmar, Sr. D.R. Date of hearing : 19-03-2025 Date of pronouncement : 03-04-2025 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:-
These two appeals are filed by the Assessee as against two separate exparte appellate orders dated 06.03.2012 and 06-12- 2016 passed by the Commissioner of Income Tax (Appeals), Gandhinagar arising out of the exparte assessment orders passed under section 144 and penalty under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2008-09.
At the outset, Ld. Counsel appearing for the assessee submitted that the Co-ordinate Bench of this Tribunal in assessee’s own case for the Asst. Year 2011-12 in to 193/Ahd/2021 vide order dated 28/03/2024 condoned the delay of 1607 days on identical set of facts and the Tribunal order has become final, since the assessee had not received any notice from the High Court of Gujarat against the above Tribunal order.
Ld CIT DR though strongly opposed the huge delay in filing the appeals by the assessee and no sufficient cause made out by the assessee. Ld DR could not place on record any details of Revenue’s appeal before Gujarat High Court against the earlier order passed by the Co-ordinate Bench of this Tribunal. Therefore, it is appropriate to consider the decision passed by the Co-ordinate Bench of this Tribunal in assessee’s own case for the earlier asst. year which reads as follows:
“… 4.1. At the outset, we note that there was a delay of 1607 days in filing the appeal by the assessee. There were condonation petition and affidavits filed by the assessee. The reasons specified therein for the delay was ill health and bankruptcy eventually running away from the society and police which has created lot of stress upon the assessee. The assessee has also filed the affidavits vide dated 23rd July 2021 and 23rd January 2024 in support of his contentions. The assessee has also filed medical bills, reports, prescriptions, and other correspondence relating to his ill health and cheque bouncing case filed before the Magistrate Court upon him to justify the delay and seek condonation.
4.2 In view of above the Ld. AR for the assessee before us submitted that the delay in filing the appeal occurred due to unavoidable situations. Therefore, the delay in filing the appeal should be condoned.
5. On the other hand Ld. Sr. D.R. submitted that the delay is inordinate and therefore vehemently opposed to condone such a huge delay and relied upon Madras High Court Judgment in the case of Royal Stitches (P.) Ltd. Vs. DCIT reported in [2023] 156 taxmann.com 361 (Madras) wherein it is held that where assessee had not given ‘sufficient cause’ for condoning huge delay of 1072 days in filing appeal, delay could not be condoned.
We have perused the records and heard the rival submissions of both the sides. There was a delay of 1607 days in filing the appeal by the assessee before us. Certainly, the delay is significant. But length of the delay becomes insignificant if there was sufficient cause for such delay which prevented the assessee in filing the appeal. As such we need to consider the cause for the delay and not the length of the delay. Accordingly in our considered view when there was a reasonable cause, the period of delay may not be relevant factor. The Hon’ble Madras High Court in the case of CIT v. K.S.P. Shanmugavel Nadai and Ors reported in 153 ITR 596 held as under: “Since in this case the assessee had been prosecuting other remedies, the time taken by those proceedings should naturally be taken while determining the question whether the assessee had sufficient cause for not presenting the appeal in time. Therefore, the revenue was not right in submitting that the appeal filed under section 17 was an appeal against the original order of assessment under the Act, which was passed about 20 years ago, as it was evident that the appeal was against an order of rejection of relief by the assessing authority. Thus, though the Tribunal's view that there was no question of limitation in such cases, was not correct yet the AAC was right in condoning the delay and entertaining the appeal.” 6.1 From the above we note that the Hon’ble Madras High Court was pleased to condone the delay for 20 years approximately by holding that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation. Thus, the delay in the instant case is just of 1607 number of days which cannot be considered to be inordinate or excessive in comparison to the delay of 7330 days approximately. 6.2 The next controversy arises what is the sufficient cause, it has not been defined anywhere under the Act but refers to an occasion which is beyond the control of a normal person. What is beyond the control of a person, the test of reasonable approach under normal circumstances should be applied. As such no hard and fast rule can be applied to figure out the weather there was sufficient cause for the delay. It depends upon case-to-case basis. However, the Hon’ble Courts in the series of judgements have held that while condoning the delay the expression of sufficient cause should be construed for advancing substantial justice to the party concerned. For evaluating sufficiency of cause and then, for deciding condonation of delay, following principles laid down by Hon'ble Apex Court in the case of Mst. Katiji (167 ITR 471) should be kept in mind: (i) Ordinarily, a litigant does not stand to benefit by lodging an appeal late. (ii) 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. (iii) "Every day's delay must be explained" does not mean that a pedantic approach should be taken. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common-sense pragmatic manner. (iv) 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. (v) There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk.
(vi) It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so. 6.3 From the above judgment of the Hon’ble Apex Court, we note that the substantial justice deserves to be preferred rather than deciding the matter on the basis of technical defect. 6.4. It is trite law that where a case has been presented in the Court beyond limitation, the petitioner has to explain the Court as to what was the "sufficient cause" which means an adequate and enough reason which prevented him to approach the Court within limitation as held by Hon’ble Supreme Court in the following cases: (a) Basawaraj v. Land Acquisition Officer, (2013) 14 SCC 81: "9. Sufficient cause is the cause for which the defendant could not be blamed for his absence. The meaning of the word "sufficient" is "adequate" or "enough", inasmuch as may be necessary to answer the purpose intended. Therefore, the word "sufficient" embraces no more than that which provides a platitude, which when the act done suffices to accomplish the purpose intended in the facts and circumstances existing in a case, duly examined from the viewpoint of a reasonable standard of a cautious man. In this context, "sufficient cause" means that the party should not have acted in a negligent manner or there was a want of bona fide on its part in view of the facts and circumstances of a case or it cannot be alleged that the party has "not acted diligently" or "remained inactive". However, the facts and circumstances of each case must afford sufficient ground to enable the court concerned to exercise discretion for the reason that whenever the court exercises discretion, it has to be exercised judiciously. The applicant must satisfy the court that he was prevented by any "sufficient cause" from prosecuting his case, and unless a satisfactory explanation is furnished, the court should not allow the application for condonation of delay. The court has to examine whether the mistake is bona fide or was merely a device to cover an ulterior purpose. (See Manindra Land and Building Corpn. Ltd. v. Bhutnath Banerjee (AIR 1964 SC 1336 Mata Din v. A. Narayanan [(1969) 2 SCC 770), Parimal v. Veena [(2011) 3 SCC 545] and Moniben Devraj Shah v. Municipal Corpn. of Brihan Mumbai (2012) 5- SCC 157].)” (b) Ajay Dabre v. Pyare Ram 2023 SCC Online SC 92:
‘13. This Court in the case of Basawaraj v. Special Land Acquisition Officer while rejecting an application for condonation of delay for lack of sufficient cause has concluded in Paragraph 15 as follows: "15. The law on the issue can be summarised to the effect that where a case has been presented in the court beyond limitation, the applicant has to explain the court as to what was the "sufficient cause" which means an adequate and enough reason which prevented him to approach the court within limitation. In case a party is found to be negligent, or for want of bona fide on his part in the facts and circumstances of the case, or found to have not acted diligently or remained inactive, there cannot be a justified ground to condone the delay. No court could be justified in condoning such an inordinate delay by imposing any condition whatsoever. The application is to be decided only within the parameters laid down by this Court in regard to the condonation of delay. In case there was no sufficient cause to prevent a litigant to approach the court on time condoning the delay without any justification, putting any condition whatsoever, amounts to passing an order in violation of the statutory provisions and it tantamounts to showing utter disregard to the legislature."
Therefore, we are of the considered opinion that the High Court did not commit any mistake in dismissing the delay condonation application of the present appellant. 6.5. Thus, it is crystal clear from the above legal proposition that the discretion to condone the delay has to be exercised judiciously based on facts and circumstances of each case. 6.6 We also note that the Hon’ble Gujarat High Court in the case of Vareli textile industry versus CIT reported in 154 Taxman 33 has held as under: It is equally well-settled that where a cause is consciously abandoned (as in the present case) the party seeking condonation has to show by cogent evidence sufficient cause in support of its claim of condonation. The onus is greater. One of the propositions of settled legal position is to ensure that a meritorious case is not thrown out on the ground of limitation. Therefore, it is necessary to examine, at least prima facie, whether the assessee has or has not a case on merits.
6.7 From the above, it is transpired that a meritorious case of the assessee should not be thrown away due to negligence or on account of technical lapses. 6.8 In the light of the above stated discussion, we proceed to evaluate whether the delay in the present case needs to be condoned in the given facts and circumstances. From the medical details filed by the assessee, we find that the assessee was having one or the other medical issues right from the financial years 2008-09 to 2019-20 which may not be of serious concern, but the ill-health of the assessee cannot be ruled out. Likewise, the assessee in the affidavit has also submitted that he was under a lot of financial stress and was declared as an insolvent. Furthermore, he was running away from the police and society. There was also a case against the assessee of cheque bouncing as evident from the details available on record. If we aggregate all these factors, the fact that the assessee was having a stressful life cannot be ruled out and assessee was not in sound mind to take correct decisions on legal proceedings. 6.9 Besides the above, we note that all the credits in the form of cheque and cash deposits in the bank account of the assessee has been added to the total income of the assessee. The AO has done so in the absence of any cooperation from the side of the assessee despite the assessee being afforded several opportunities. However, what we find is this that there is no discussion in the assessment order as far as withdrawn from the banks is concerned. Thus, it is transpired that all the credits appearing in the bank has been treated as income of the assessee though the assessee during the assessment proceedings vide letter dated 22 January 2014 has submitted details with the request to tax the income under the provisions of section 44AF of the Act. As such, the reply submitted by the assessee vide letter dated 22 January 2014 was rejected by the AO stating that the detailed furnished was incomplete but how was it incomplete, the order of the AO is silent. It is the settled law that only the credit sides of the bank do not represent the income. The Hon’ble HIGH COURT OF GUJARAT in the case of Principal Commissioner of Income-tax v. Shitalben Saurabh Vora reported in 133 taxmann.com 441 has held as under:
9.2. We further note that, the Revenue has not brought anything on record suggesting that the assessee had so much of the income as computed by the AO. As such the AO was under the obligation to bring on record to demonstrate that the assessee has made some investment or incurred some expenses out of such income. But there is no such information available with the Revenue. Indeed, the assessee has certainly has violated the provisions of law by not maintaining the books of account, furnishing income tax return, providing sufficient details but that does not lead to reach the conclusion that the amount deposited in the bank represents the undisclosed income of the assessee. As such, the deposits in the bank cannot be treated as income on standalone basis without considering the withdrawal. Thus in the absence of any information demonstrating that the withdrawal from the bank has been utilized by the assessee either in the form of some investment or the same has been incurred as an expense, the deposits cannot be treated as income in the given facts and circumstances. Thus, in our considered view in such a situation the only option available to compute the income on some reasonable estimate. 6.10 The above view of the Hon’ble Gujarat High Court was subsequently affirmed by the Hon’ble Supreme Court reported in 133 taxmann.com 442. 6.11 In view of the above we are of the opinion that it is the fit case where the delay has to be condoned irrespective of the duration/period of the delay. In this case, the non-filing of an affidavit by the Revenue for opposing the condonation of delay itself is sufficient for condoning the delay of 1607 number of days. We also note that there is no allegation from the Revenue that the appeal was not filed by the assessee within the time deliberately. Therefore, we are inclined to prefer substantial justice rather than technicality in deciding the issue. We also find that if we reject the application of the assessee for condoning the delay then it would amount to legalise injustice on technical ground whereas the Tribunal is capable of removing injustice and to do justice. Thus, we condone the delay of 1607 days in filing the appeal and proceed to hear the appeal on merit for the adjudication.
There is no change in facts in filing this appeal belatedly like that of the earlier asst. years. Since the earlier order passed by the Co-ordinate Bench of this Tribunal is not been reversed by High Judicial forum, therefore we have no hesitation in following the earlier order passed by the Tribunal and we hereby condone the delay of 1607 days in filing the appeal. On merits of the case, present appeal is against the penalty levied u/s.271[1][c] of the Act, which is setaside to the file of AO to pass fresh order, since the quantum appeal in of 2024 is also setaside [in the foregoing paragraphs] to the file of Ld AO.
6. In the result the appeal filed by the assessee in of 2021 is allowed for statistical purposes. of 2024 for A.Y. 2008-09 [Quantum Appeal]
This appeal is filed by the assessee as against the exparte assessment order passed u/s.144 of the Act dated 15-12-2010 Originally assessee filed appeal in of 2024 as against the rectification order with a delay of 1607 days and the appeal was withdrawn on 08-05-2024 with permission to file fresh appeal against the exparte assessment order passed u/s.144 of the Act, which has resulted in additional delay of 906 days but in total delay of 2513 days. The additional [day to day] delay is explained by way of Notarised Affidavit as follows: AFFIDAVIT 1. That following appeals were filed before hon. ITAT by me and their status is as under:
ASST Against CIT(A ) Received Date of in days days YEARS Order on filing Date of from from order order receipt date date 2011-12 27- 1628 109 192/AHD u/s. 143(3) 23-02- 11-08- Set-aside to /2021 r.w.s 144 12-2016 2021 2021 LD.AO by condoning 2011-12 u/s. 1628 109 delay vide 193/AHD 27-12- 23-02- 11-08- /2021 2016 2021 2021 order dated 28.03.2024 2008-09 u/s. 154 1639 109 191/AHD 16-12- 23-02- 11-08- Withdrawn vide /2021 2016 2021 2021 order dated 08.05.2024 2008-09 u/s.271[1][C] 1639 109 Pending 194/AHD 16-12- 23-02- 11-08- /2021 2016 2021 2021 2008-09 u/s. 144 4291 1015 Pending 190/AHD 06-03- 23-02- 03-02- /2024 2012 2021 2024
That, I was under huge financial stress and got insolvent, in whole period of financial crunch I was absconding from creditors and police. Ultimately, hon. Court has declared me as insolvent and protected me from adversity of police and society. Due to all this stress, I got physical and mental ill and admitted to hospital for long time. Due to stressed financial position, I was not able to get good legal consultation to present my case before Id. AO and Id. CIT(A). In intervening period assessment proceeding got unattended resulting into ex-parte assessment order and delay in filing appeals before hon. CIT(A) as well as hon. Tribunal.
3. After that I have appointed consultant in February 2021 for filing appeal before hon.ITAT, since no records was available with me, I have applied to hon. CIT(A) to provide me copy of order on 23.02.2021 and according the appeals were filed before hon. ITAT as indicated in above table.
4. The hon.ITAT was pleased to condon delay and orders of assessing officer was set-aside for de-novo assessment in and but adjournment was and Ld.CIT(A) against order u/s. 144 passed by Ld. AO, which was filed on 03.02.2024 as on advice of CA. Chetan Agarwal who was appointed on 23.01.2024 to represent matter before hon.ITAT, since as per his opinion ITA No.191/AHD/2021 filed on 11.08.2021 in not maintainable which was filed against order passed rejecting application u/s. 154 for rectifying order passed by AO u/s.144 of the Act.
5. That further delay in filing appeal no. 190/AHD/2024 was occurred since CA. Chetan Agarwal was appointed to represent matter before Hon. ITAT on 23.01.2024 since Hon. ITAT at the time of hearing on 22.01.2024 was not pleased in granting further adjournment, on whose advice said appeal was filed.
6. CA. Chetan Agarwal was consulted at later stage of proceedings at the time of effective hearing of the matter. Since, after filing four appeals on 11.08.2021 on receipt of orders on 23.02.2021 hearings were not conducted before hon. ITAT as detailed hereunder: Date of hearing Adjourned to Remarks 21.07.2022 17.08.2022 Intimation of fixing first date of hearing 17-08-2022 26.09.2022 Bench was not functioning 26.09.2022 07.11.2022 Bench was not functioning 07.11.2022 19.12.2022 Bench was not functioning 19.12.2022 30.01.2023 Bench was not functioning 30.01.2023 06.03.2023 Bench was not functioning 06.03.2023 12.04.2023 Bench was not functioning 12.04.2023 18.05.2023 Bench was not functioning 18.05.2023 08.06.2023 Bench was not functioning 08.06.2023 24.07.2023 Adjournment by CA. Krupa Panchal 24.07.2023 22.08.2023 Bench was not functioning 22.08.2023 20.09.2023 Bench was not functioning 20.09.2023 01.11.2023 Bench was not functioning
Bench was not functioning 01.11.2023 20.11.2023 20.11.2023 20.12.2023 Adjournment by CA. Krupa Panchal 20.12.2023 22.01.2024 Adjournment by CA. Krupa Panchal 22.01.2024 24.01.2024 Adjournment by CA. Krupa Panchal 23.01.2024 23.01.2024 CA, Chetan Agarwal was consulted and appointed to represent matters 24.01.2024 12.02.2024 CA. Chetan Agarwal attended before hon. Bench Condonation application was filed, case adjourned by hon. Bench for filing of rebuttal by department
7. There was no ill motive behind not filing appeal in time. Only due to insolvency and medical condition and above stated facts appeals were filed late.
Since the additional delay of 906 days is explained by day to date, we hereby condone the delay since the orders passed by the lower authorities are exparte orders. Furthermore there was also delay in filing the appeal before the ITAT, which has been condoned in the preceding paragraph after giving detailed reasons. The same reasoning also be applied for non appearance of the assessee before the Revenue authorities, while restoring the issue to the file of Ld AO for fresh adjudication, as per the provisions of law. It is also directed the Assessee to extend full co-operation during the De-nova Assessment proceedings by filing necessary documents and evidences. Thus, the grounds of appeal filed by the assessee is allowed for statistical purposes.
In the result the appeal filed by the assessee in of 2024 is allowed for statistical purposes.
Order pronounced in the open court on 03-04-2025