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Facts
The assessee filed multiple appeals challenging the rejection of their appeals by the NFAC/CIT(A) due to delay in filing Form 35. The primary issue was the condonation of this significant delay.
Held
The Tribunal condoned the delay of 852 days, considering the facts and judicial precedents, and admitted the appeals. The matters were remanded to the Ld. CIT(A) to be adjudicated de novo on merits after providing an adequate opportunity of being heard.
Key Issues
Whether the delay in filing the appeal before the CIT(A) was to be condoned considering the reasons provided by the assessee and the judicial pronouncements on the subject.
Sections Cited
148, 270A, 271AAC, 69A, 44AD, 249(2), 249(3), 144
AI-generated summary — verify with the full judgment below
Before: Dr. Mitha Lal Meena, Hon’ble, & Dr. S. Seethalakshmi, Hon’ble
Dr. Mitha Lal Meena, A.M.:
This bunch of appeal is filed by the assessee against the separate orders passed by National Faceless Appeal Centre (hereinafter referred to as the Ld.
NFAC/CIT (A) challenging the rejection of appeals without appreciating the sufficient reasons for the delay.
The appeal wise grounds are reproduced hereunder:
1 That the Id CIT(A)-NFAC have erred in law as well in facts of the case is dismissing the appeal owing to delay in filing form 35, without appreciating reasonable & sufficient cause put forth by the appellant. 2 That both the lower authorities have erred in law as well in facts of the case in imposing / sustaining penalty of Rs. 93260/- u/s 270A of the Income Tax Act. 3 That the appellant reserves his right to add, amend, alter or withdraw any ground of appeal on or before hearing of this appeal.
Grounds of Appeal ITA No. 423/JPR/2025
1 That the Id CIT(A)-NFAC have erred in law as well in facts of the case is dismissing the appeal owing to delay in filing form 35, without appreciating reasonable & sufficient cause put forth by the appellant. 2 That both the lower authorities have erred in law as well in facts of the case in imposing / sustaining penalty of Rs. 313077/-u/s 271 AAC of the Income Tax Act. 3 That the appellant reserves his right to add, amend, alter or withdraw any ground of appeal on or before hearing of this appeal.
Grounds of Appeal ITA No. 424/JPR/2025
That the Id CIT(A)-NFAC have erred in law as well in facts of the case 1. is dismissing the appeal owing to delay in filing form 35, without appreciating reasonable & sufficient cause put forth by the appellant. That both the lower authorities have erred in law as well in facts of 2. the case in imposing / sustaining penalty of Rs. 35484/- u/s 270A of the Income Tax Act. That the appellant reserves his right to add, amend, alter or 3. withdraw any ground of appeal on or before hearing of this appeal.
Grounds of Appeal
& others (Assessment Year 2017-18 and 2018-19)
1. That both the lower authorities have erred in law as well in facts of the case in assuming jurisdiction u/s 148 of the Income Tax Act.
2. That the Id CIT(A)-NFAC have erred in law as well in facts of the case is dismissing the appeal owing to delay in filing form 35, without appreciating reasonable & sufficient cause put forth by the appellant.
3. That the Id CIT(A) have erred in law as well in facts of the case in deciding the issue of admissibility of appeal not at the threshold but at the fag end i.e. after calling for submission from the appellant on the ground of appeal raised in form 35.
4. That both the lower authorities have erred in law as well in facts of the case in making/confirming addition of Rs. 4656410/-.
5. That both the lower authorities have erred in law as well in facts of the case in in making addition of Rs. 40,52,790/- by considering cash deposit during demonetization to be income from undisclosed sources u/s 69A.
6. That both the lower authorities have erred in law as well in facts of the case in making double addition of same income i.e. on one side addition was made of entire cash deposit during demonetization and on another side estimated Income on those cash deposit, thereby violated cardinal principle of taxation.
7. That both the lower authorities have erred in law as well in facts in estimating income on cash deposits (sales) by applying net profit rate of 2% which is unreasonable & inconsiderate of nature of business.
8. That the appellant reserves his right to add, amend, alter or withdraw any ground of appeal on or before hearing of this appeal.
1 That both the lower authorities have erred in law as well in facts of the case in assuming jurisdiction u/s 148 of the Income Tax Act. 2 That the Id CIT(A)-NFAC have erred in law as well in facts of the case is dismissing the appeal owing to delay in filing form 35, without appreciating reasonable & sufficient cause put forth by the appellant. 3 That the Id CIT(A) have erred in law as well in facts of the case in deciding the issue of admissibility of appeal not at the threshold but & others (Assessment Year 2017-18 and 2018-19) at the fag end i.e. after calling for submission from the appellant on the ground of appeal raised in form 35.
4. That both the lower authorities have erred in law as well in facts of the case in .making whopping addition of Rs.4,80,35,820/- by considering cash deposit into bank account (Current Account) to be Unexplained Money u/s 69A without appreciating that same emanated out of sale proceeds of business and only Income component ought to have brought to taxation and that too under head of Income from Business and Profession.
5. That both the lower authorities have erred in law as well in facts of the case in making addition of entire contract receipts to the tune of Rs.718698/- as Business Income without appreciating legal position that only Income component in undeclared receipts can be brought to taxation and also overlooked applicability of presumptive schente or taxation u/s 44,AD of the ACL to the undeclared contract receipts.
6. That both the lower authorities have erred in law as well in facts of the case in making/confirming addition of Rs. 48772895.
7. That the appellant reserves his right to add, amend, alter or withdraw any ground of appeal on or before hearing of this appeal.
There was a sole issue involved on identical facts in all these cases, pertaining 4. to dismissing of the appeals owing to delay in filing form 35, without appreciating reasonable & sufficient cause put forth by the appellant and hence all these 5 appeals of the assessee were clubbed together in Bench ‘A’ at the request of the assessee and heard and adjudicated simultaneously for the sake of convenience and brevity.
There was a short delay of 21 days in filing these appeals before the Tribunal. 5.
The AR explained the genuine and sufficient cause for the short delay in filing theses appeals with the support of notarised affidavit. The Ld. DR has no the short delay of 21 days is condoned, and these appeals are admitted.
At the outset, the ld. counsel for the appellant submitted that ITA 562/JP/ 6.
/2025 may be taken as lead case for discussion of facts where the Ld. NFAC has dismissed all these appeals by rejecting the application for condonation of delay in filing form 35, without appreciating reasonable & sufficient cause put forth by the appellant by observing as under:
2.1 In this regard, the appellant, in column 15 of the Form 35 has stated the grounds for condonation of delay and submitted an affidavit in support of condonation of delay. The grounds for condonation of delay are reproduced as under: "That there is delay of 1480 days in filing Form 35 which is solely due to sudden arrest of the appellant consequent to family dispute where in deponent was behind the bars from the period 16.01.2020 to 15.01.2021. Further after the release of the deponent on 15.01.2021, the deponent could not contact the counsel as the life of the deponent became miserable & debt ridden. The appellant sooner after release got shifted to District Faloudi and worked there as construction supervisor so as to avoid financial creditors who were making hue and cry at village residence. Moreover the factum of pending appeal submission got out of mind due to oversight. The appellant was struggling to straighten the track of business & bring things to normal, which took considerable time. The appellant request your honour to kindly condone the delay considering the huge whopping demand of Rs. 5148110/- which appellant cannot imagine of paying in present financial condition. The issue involved is very meritorious & the deponent has 100 percent chance of success and any such denial of admission of appeal will ruin the life of appellant which after considerable time of 3 years is coming back to normal. The affidavit in support of condonation is enclosed along with supporting documents. The quantum of demand involved is very huge which appellant cannot imagine to pay in his life time. Kindly condone the delay and admit the appeal and oblige."
& others (Assessment Year 2017-18 and 2018-19) 2.20 The facts on record in this case clearly discloses inaction on the part of the appellant in filing appeal within the prescribed time. The assessee had also failed to come forth with any plausible explanation as regards the sufficient reasons leading to the said inordinate delay of 1477 days. Having regard to the period of delay and on account of inaction on the part of the appellant as discussed above, I am of the considered view that the causes given by the appellant lack substance, is devoid of merit, insufficient and unsatisfactory for condoning the inordinate delay and therefore, this is not a fit case in which inordinate delay of 1477 days in filing appeal deserves to be condoned. There appears to be no reason to adopt a liberal view and condone the same. 2.21 In view of the above facts and discussion, the inordinate delay in filing of appeal in this case is not condoned as no "sufficient cause" has been shown u/s. 249(3) of the Act for the appellant's failure to file the appeal within the prescribed period of limitation u/s. 249(2) of the Income Tax Act, 1961 r.w.s. 5 of Limitation Act and hence the appeal sought to be instituted belatedly is hereby rejected.
In the result, the appellant's appeal is DISMISSED in-limine.
The Ld. AR explained that during the course of scrutiny, all the communications with 7. regard to the assessment proceedings including the Show Cause Notice as well as assessment order were not received by the assessee and assessment order were passed exparte qua the assessee. The Ld. AR submitted that as none of the notices by the AO and the Ld. CIT(A)/NFAC have never been served to the assessee, hence, the assessee was not able to file his detailed replies during the course of either assessment or appellate proceedings and therefore, the assessee did not even know that the assessment as well as appeal in the case of the assessee has been concluded. days in filing Form 35 which is solely due to sudden arrest of the appellant consequent to family dispute where the deponent was behind the bars from the period 16.01.2020 to 15.01.2021. Further after the release of the deponent on 15.01.2021, the deponent could not contact the counsel as the life of the deponent became miserable & debt ridden. The appellant sooner after release got shifted to District Faloudi and worked there as construction supervisor so as to avoid financial creditors who were making hue and cry at village residence. Moreover, the factum of pending appeal submission got out of mind due to oversight. The appellant was struggling to straighten the track of business & bring things to normal, which took considerable time. The appellant requested the NFAC to kindly condone the delay considering the huge whopping demand of Rs. 5148110/- which appellant cannot imagine of paying in present financial condition. The issue involved is very meritorious & the deponent has 100 percent chance of success and any such denial of admission of appeal will ruin the life of appellant which after considerable time of 3 years is coming back to normal. The affidavit in support of condonation is enclosed along with supporting documents. The quantum of demand involved is very huge which appellant cannot imagine paying in his lifetime. The Ld. NFAC with out taking assessee rebuttal by granting opportunity of being heard rejected the condonation application by mentioning inordinate delay without appreciating the sufficient cause mention in the appeal on merits. Thus, the NFAC has dismissed the appeal in limine, as inadmissible.
The AR explained with the support of a notary affidavit that the delay in filing 9. form 36 was primarily due to unforeseen and family disturbances and later solely owing to the financial condition of the appellant as appellant was under acute financial crisis and did not have funds to meet bare necessities of life and all his bank accounts are attached by the Income Tax Department. Moreover, the business of Amul Dairy Booth have also closed and there was no business at present.
AR placed reliance on the judgment of Hon’ble Apex Court in Suo Moto Writ 10.
Petition (C) No. 3 of 2020 wherein, considering the Covid and lockdown, the period of limitation shall be excluded in all case from 15.03.2020 to 14.03.2021 and thereafter, vide Miscellaneous Application No. 665 of 2021 dated 23.09.2021, the Hon’ble Apex
Court has extended the time limit from 14.03.2021 to 02.10.2021.
As per section 249(2) of the Act, the appeal should have been filed within 30 days 11. from the date of service of order i.e. latest by 18.01 .2020, however, the appeal was filed electronically on 03.02.2024. Thus, there was a delay of 1477 days. However, after reducing the extended period of limitation in filing appeal by Hon’ble Apex Court has extended the time limit from 15.03.2020 to 14.03.2021 and further from 14.03.2021 to 02.10.2021, the net delay in filing the appeal before the Ld. NFAC was 852 days as against
1477 days wromgly computed by the Ld. CIT(A)/NFAC.
The Ahmedabad Bench of ITAT in the case of Shri Ramji Mandir Trust Akhaj in 12. wherein, the Hon’ble Bench has condoned the delay of 852 days (total delay 1588 days) in filing the appeal after leaving aside the period of limitation owing to the COVID Pandemic.
In the case of Rarefield Engineers (P.) Ltd. vs. Assistant Commissioner of 13.
Income-tax [2023] 156 taxmann.com 643 (Madras) laid down following principles that delay in filling appeal was to be condoned and matter was to be remanded to decide issue on merit vide para 7 and 8 as under:
At this juncture, it is pertinent to refer to the following decisions, in regard to the 14. condonation of delay: 15. (i) N. Balakrishnan v. M. Krishnamurthy [(1998) (7) SCC 123], wherein, it was observed by the Hon'ble Supreme Court as follows: 16. "The primary function of a court is to adjudicate the dispute between the parties and 17. to advance substantial justice. The time-limit fixed for approaching the Court in different situations is not because on the expiry of such time a bad cause would transform into a good cause. Rules of limitation are not meant to destroy the rights of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. The law of limitation fixes a lifespan for such legal remedy for the redress of the legal injury so suffered. The law of limitation is thus founded on public policy. It is enshrined in the maxim interest reipublicae up sit finis litium (it is for the general welfare that a period be put to litigation). Rules of limitation are not meant to destroy the rights of the parties. They are meant to see that parties do not meant to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time. Condonation of delay is a matter of discretion of the Court. Section 5 of the Limitation Act does not say that such discretion can be exercised only if the delay is within a certain limit. Length of delay is no matter, acceptability of the explanation is the only criterion. Sometimes delay of the shortest range may be uncondonable due to a want of acceptable explanation whereas in certain other case, delay of a very long range can be condoned as the explanation thereof is satisfactory. In every case of delay, there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy, the court must show utmost consideration to the suitor. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time, then the court should lean against acceptance of the explanation. A court knows that refusal to condone delay would result in foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is always deliberate. The words 'sufficient cause" under section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice." (ii)In Esha Bhattacharjee v. Raghunathpur Nafar Academy [(2013) (12) SCC 649], the 18. Hon'ble Supreme Court has culled out the principles applicable to an application for condonation of delay and the same are profitably reproduced hereunder:
"(i) There should be a liberal, pragmatic, justice-oriented, non- pedantic approach while dealing with an application for condonation of delay, for the courts are not supposed to legalise injustice but are obliged to remove injustice.
(ii) The terms "sufficient cause" should be understood in their proper spirit, philosophy and purpose regard being had to the fact that these terms are basically elastic and are to be applied in proper perspective to the obtaining fact- situation.
(iii) Substantial justice being paramount and pivotal the technical considerations should not be given undue and uncalled for emphasis. (iv) No presumption can be attached to deliberate causation of delay but, gross negligence on the part of the counsel or litigant is to be taken note of.
(v) Lack of bona fides imputable to a party seeking condonation of delay is a significant and relevant fact.
(vi) It is to be kept in mind that adherence to strict proof should not affect public justice and cause public mischief because the courts are required to be vigilant so that in the ultimate eventuate there is no real failure of justice.
(vii) The concept of liberal approach has to encapsule the conception of reasonableness and it cannot be allowed a totally unfettered free play. (viii) There is a distinction between inordinate delay and a delay of short duration or few days, for to the former doctrine of prejudice is attracted whereas to the latter it may not be attracted. That apart, the first one warrants strict approach whereas the second calls for a liberal delineation. (ix) The conduct, behaviour and attitude of a party relating to its inaction or negligence are relevant factors to be taken into consideration. It is so as the fundamental principle is that the courts are required to weigh the scale of balance of justice in respect of both parties and the said principle cannot be given a total go by in the name of liberal approach.
(x) If the explanation offered is concocted or the grounds urged in the application are fanciful, the courts should be vigilant not to expose the other side unnecessarily to face such a litigation.
(xi) It is to be borne in mind that no one gets away with fraud, misrepresentation or interpolation by taking recourse to the technicalities of law of limitation.
(xii) The entire gamut of facts are to be carefully scrutinized and the approach should be based on the paradigm of judicial discretion which is founded on objective reasoning and not on individual perception. (xiii) The State or a public body or an entity representing a collective cause should be given some acceptable latitude."
(iii) It is also useful to extract paragraph Nos.14 and 17 of the judgment of this court 19. in Tamilnadu Mercantile Bank Ltd. v. Appellate Authority [(1990) 1 LLN 457], which read as under: "14. We are unable to agree with the reasoning of the learned Judge that no litigant 20. ordinarily stands to benefit by instituting a proceeding beyond time. It is common knowledge that by delaying a matter, evidence relating to the matter in dispute may disappear and very often the party concerned may think that preserving the relevant records would be unnecessary in view of the fact that there was no further proceeding. If a litigant chooses to approach the Court long after the time prescribed under the relevant provisions of the law, he cannot say that no prejudice would be caused to the other side by the delay being condoned. The other side would have in all probability destroyed the records thinking that the records would not be relevant as there was no further proceeding in the matter. Hence to view a matter of condonation of delay with a presupposition that no prejudice will be caused by the condonation of delay to the respondent in that application will be fallacious. In our view, each case has to be decided on the facts and circumstances of the case. Length of the delay is a relevant matter to be taken into account while considering whether the delay should be condoned or not. It is not open to any litigant to fix his own period of limitation for instituting proceedings for which law has prescribed period of limitation." "17.... Once it is held that a party has lost his right to have the matter considered on 21. merits because of his own inaction for a long time, it cannot be presumed to be non- deliberate delay, and in such circumstances of the case, he cannot be heard to plead that substantial justice deserved to be preferred as against technical considerations. 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 public policy and principles of equity. It is a litigant liable & others (Assessment Year 2017-18 and 2018-19) to have a Damocles' sword hanging over his head indefinitely for a period to be determined at the whims and fancies of the opponent." Thus, the legal position discernible from the aforesaid decisions is that the question 22. of limitation is not based on technical consideration, but is on the principles of public policy and equity; and the substantial justice is paramount consideration and pivotal.
Therefore, considering the facts and circumstances of the case and taking note of 23. the submissions made by the learned counsel on either side, the order dated 19-10-2022 passed by the Income-tax Appellate Tribunal, Chennai, is set aside and the delay in filing the appeal is condoned. Consequently, the matter is remanded to the Tribunal, which shall entertain the appeal and decide the same, on merits and in accordance with law. The appellant shall place all the materials for consideration before the Tribunal within a period of four weeks from the date of receipt of a copy of this judgment, failing which, the Tribunal shall decide the matter on the basis of available materials, without granting further adjournments. 14 The ld. AR contended that there was a delay of only 852 days in the present case case of the assessee may be condoned, and the case of the assessee may kindly be admitted and restored to the file of the Worthy CIT(A)/NFAC to be adjudicated de novo. The appellant assures that due compliance will be made during the appellate proceedings.
The Ld. CIT DR has no objection to the request of the assesee, however he pleaded that directions may be issued to the authorities below to proceed under the benami property act, against the real transacting parties while adjudicating the present appeal.
Heard both the sides, perused the material on record, impugned order, written submission and case law cited before us. Admittedly, none of the notices issued and even Assessment order passed by the AO have been served and received by the assessee in time as also evident from the fact that an exparte assessment order passed detailed replies during the course of assessment proceedings and therefore, the assessee did not know that the assessment in the case of the assessee has been completed, and assessment order has been passed.
From the record, It is evident that the appellant had only come to know about the assessment when the recovery of demand pressed for the concluded assessment and then, the assessee filed an appeal against the said assessment order on 03.02.2024 i.e. with a net delay of 852 days. We appreciate the contention of the Ld. AR that it was only because the assessee did not know about the assessment order passed so as to enable him to file appeal before the CIT(A) who has dismissed the appeal of the assessee only on account that there was a delay in filing of appeal without considering the fact that the Ld. AO did not communicate the assessee about the assessment proceedings ignoring the fact mentioned in the assessees application for condonation of delay being duly filed with the request letter and an affidavit for said delay along with FORM-35.
Without prejudice to the above, the Ld. AO passed the assessment order on 09.12.2019 and in the month of March 2020, COVID-19 broke out with lockdown in succession. Resultantly, the net delay in filing the appeal before the Ld. CIT(A) was counted to 852 days only. appropriate to condone the net delay of only 852 days in the case of the assessee.
Accordingly, the appeal of the assessee is admitted and restored to the file of the Ld. CIT(A) to be adjudicated de novo on merits of the case after affording adequate opportunity of being heard. The appellant undertakes that due compliance will be made during the appellate proceedings.
The issue and facts in to 424 and 563/JP/2025 are similar to the and therefore our observation and finding shall apply to the appeal in to 424 and 563/JP/2025 in mutatis mutandis, ordered accordingly.
In the result, these appeals filed by the assessee are allowed for statistical purposes.
Orders pronounced on 11/09/2025 under Rule 34(4) of Income Tax (Appellate Tribunal) Rules, 1963.