LALITA DEVI SHARMA,JAIPUR vs. ITO, WARD-7(1), JAIPUR, JAIPUR

5. The Ld.CIT(A) has erred in dismissing the appeal of the assessee and not considering that the commission expenses were genuine and stood duly recorded and corroborated.

6. The appellant craves his right to add, amend or alter any of the grounds on or before the hearing.

b) The case of the assessee for the assessment year 2020-21 was selected for complete scrutiny assessment through CASS

(Computer Assisted scrutiny Selection). income compared to large commission receipts. d) Accordingly, statutory notices were issued u/s 143(2) of the Act, was issued on 29/06/2021, which was duly served upon the assessee through e-mail. Subsequently, notice u/s 142(1) of the I.T. Act, along with questionnaire was issued on 25/10/2021 for compliance on or before 08/11/2021. No compliance made by assessee. e) On perusal of Income & Expenditure A/c of the assessee it has been noticed that the gross receipt of the assessee by commission of Rs.1,30,16,271/-, out of these receipts assessee has claimed expenses of Rs. 1,09,08,383/- under the head commission paid during the year consideration. f) In this regard the assessee was provided many opportunities through notices issued from this office time-to-time. But assessee failed to make any compliance against these notices. However, the notices were served to the assessee by DVU through Insight portal.

In absence of explanation of the assessee as well as relevant documents of expenses it has been presumed that the assessee has no valid explanation and relevant supporting documents. Therefore, the amount of Rs. 1,09,08,383/- claimed under the head commission the year under consideration and accordingly a final show cause notice was issued to the assessee in the form of draft assessment order thereby proposing the disallowance of claim of Rs.

1,09,08,383/-. g) The said show-cause notice was issued on 15/03/2022 along with the draft assessment order [as above] through ITBA/ e-mail, requiring the assessee to explain as to why the assessment in his case should not be completed as per the Draft. Assessment Order.

The assessee was also required to submit his written. reply/explanation/ objection/ response etc. [through his registered e- filing account at w.w.w. incometax.gov.in] against the proposed addition, if any, by 19/03/2022. h) In response to the show cause notice dated 15/03/2022 the assessee has filed written submission along with commission expense summary on 24/03/2022, thereafter a notice u/s 142(1) of I.T. Act, 1961 dated 26/07/2022 issued along with questionnaire for compliance on 02/08/2022. i) On perusal of commission expenses the assessee has paid Rs.

43,17,046/- to banks and Rs. 65,91,337/- to different persons and Act, 1961 on a person whose total commission exceeds Rs.15,000/- and deposited in central government account. It also confirms from the submitted 3CB part 34 (a) & (b) wherein whether the assessee is required to deduct or collect tax as per the provisions of Chapter

XVII-B or Chapter XVII-BB. In this paragraph the assessee mentioned no or nil. The assessee has filed her audit report u/s 44AB of the Income-tax Act, 1961. j) Finally, out of Rs. 1,09,08,383/- claimed by the assessee ld. AO added a sum of Rs. 65,91,337/- the total income of the assessee for the year under consideration. k) Accordingly, against the returned income of Rs. 5,90,940/- the assessed income was determined at Rs. 71,82,277/-.

4. Aggrieved from the order of Assessing Officer, assessee preferred an appeal before the ld. CIT(A)/NFAC. That appeal so filed was belated by 96 days. Appellate order shows the submission of the assessee on condonation petition, submission of the assessee, prayer for admission of additional evidence etc. Having considered those submission ld. CIT(A) considered that the prayer for condonation has not merits and therefore, the for condonation of delay or more then 96 days.

5. Feeling dissatisfied with that order of the ld. CIT(A) the assessee is in appeal before this tribunal. The ld. AR of the assessee submitted that the assessee has placed all the details even though the without the fault of the assessee her appeal was not decided on merit and that is why the present is filed, to support the contention ld. AR of the assessee submitted following written submission:

“Brief facts of the case : Briefly stated the facts of the case are that the assessee earns income from Commission by facilitating loans from Banks/Financial institutions. Her main head of expenditure is Commission paid. Entire payment of commission is made through banking channel. During the year, the assessee paid total commission of Rs.1,09,08,383/- to banks and private parties. The Ld.AO disallowed the entire commission of Rs.65,91,337/- paid to private parties holding the same to be bogus on the basis of non-deduction of TDS on the such commission payments. It may be emphasized that the assessee was not under an obligation to deduct TDS, as it was her first year of audit u/s 44AB. The assessee filed appeal before the CIT(A) which was delayed. However, the assessee filed the reasons for the delay in filing the appeal. The Ld.CIT(A) dismissed the appeal in limine holding - There exists no sufficient or good reason for condoning inordinate delays of more than 96 days in filing appeal. This appeal is dismissed as barred by limitation. Submission on the grounds of apeal 1. Ground No. 1-4 The Ld.CIT(A) has erred in not deciding the appeal of the assessee on merits and dismissing it as inadmissible on account of delay in filing it. The Ld.CIT(A) has erred in dismissing the appeal of the assessee ignoring the fact that the assessment order was never served on the assessee and the she came to know about the same only in the last week of December, 2022, after which the appeal was filed on 09.01.2023. The Ld.CIT(A) has erred in dismissing the appeal of the assessee for default on the part of her CA, ignoring the favorable Lalita Devi Sharma vs. ITO decisions by various judicial forums holding lapse on the part of the lawyer to be a sufficient cause for condoning the delay in filing of appeal. The Ld.CIT(A) has erred in dismissing the appeal of the assessee by misrepresenting that the delay petition was not accompanied by any documentary proof, whereas the Wedding card of the CA being one of the reasons of delay, was attached there with.

After collecting the assessment order from the Assessing officer in the last week of December, 2022, appeal was filed on 09.01.2023. In Form-35, the assessee had briefly stated the reasons for delay in filing of the appeal, which are being reproduced hereunder-

The assessee not being very literate and computer savvy, all the correspondence relating to her assessment was handled by her AR. It so happened that the AR became busy with the audit work and later in his own marriage and skipped to file the appeal. On persuasion of demand by the department, the assessee came to know about the appeal not having been filed. After that she asked another advocate to file appeal against the order and hence the delay. The reasons given by the CIT(A) for not condoning the delay are- There exists no sufficient or good reason for condoning inordinate delays of more than 96 days in filing appeal. Accordingly, this appeal is dismissed as barred by limitation. At this juncture, it would be appropriate to mention that pursuant to filing of the appeal on 09.01.2023, the first correspondence on the portal was received on 01.03.2024, with the remarks-Enablement of Communication window. In response to this notice, the assessee immediately filed his submission on the grounds of appeal along with supporting papers. The second correspondence was made on 28.10.2024, which was a Hearing notice u/s 250 of the Income Tax Act, 1961, requiring the assessee to furnish written submission on the grounds of appeal along with supporting documentary evidence. The Annexure to this notice stated –

1. Please furnish a formal condonation petition for delay in filing the appeal along with reasons and evidences/proofs substantiating the reasons for delay and please state how the reasons of delay can be fit into the “sufficient cause” as per Sec 249(3) of I.T. Act, 1961.

2. Please furnish ground-wise written submissions along with documentary evidence, if any, in support of each ground of appeal as per appeal memorandum The above information/details should be submitted on or before 01- 11-2024. The assessee, however, made compliance of this notice on 10.11.2011 enclosing the Delay condonation petition along with supporting evidence. Thereafter, another notice was issued on 12.11.2024 stating- As seen from the records, it is observed that you have already filed certain written submissions/details in support of late filing of appeal. In view of this, it is proposed to dispose of the appeal based on the grounds of appeal, statement of facts and written submissions/details filed. However, before disposal of the appeal as proposed above, by following the principles of natural justice you are hereby Lalita Devi Sharma vs. ITO offered one more opportunity to file further submissions, if any, in support of the grounds of appeal on or before 19-11- 2024. In compliance to this notice, the assessee once again filed the written submission along with supporting documents. Your Honors, the letter sent by the CIT(A) clearly showed his intent to decide the appeal based on the grounds of appeal, statement of facts and written submissions/details filed. When the Appellate authority seeks submission on the grounds of appeal, it is a general legal presumption that the appeal has been admitted and it would be decided on merits. The Ld.CIT(A) has reproduced the written submission of the assessee in his order. Thereafter, he took a U-turn and instead of adjudicating on the grounds of appeal, started discussing Condonation of delay, and finally went on to dismiss the appeal in limine, holding it to be barred by limitation. If the Ld.CIT(A) had any clarifications to seek with regard to delay in filing of appeal, he could have very well mentioned the same in the notice issued by him on 12.11.2024. But, in this notice, he kept silent on the issue of delay making the assessee believe that he is satisfied with the reasons/evidence filed by the assessee. Therefore, without affording an opportunity to explain the delay in filing of appeal, with further supporting evidence in the form of Filing of affidavits, etc. he decided the issue to the disadvantage of the assessee. As had been stated in Form-35, the order and demand notice not having been served on the assessee or his representatives, there was no knowledge of any assessment order having been passed and demand having been raised against the assessee. It is only when copy of assessment order was obtained from the AO, the appeal was filed. Thus, the delay on the part of the appellant in filing the appeal is neither willful nor wanton, but, purely owing to unforeseen circumstances, therefore, the CIT(A) before rejecting the application ought to have taken into consideration of all the aforesaid aspects. In this context, it is observed that it can never be that technicality and rigidity of rules of law would not recognize genuine human problems of such nature, which may prevent a person from achieving certain compliance. It is to cater to such situations that the legislature has made a provision conferring a power to condone the delay. These are all human issues which prevented the assessee, who was otherwise diligent, in filing the appeal within the prescribed time. It is contended, inter alia, that dismissing the statutory appeal in limine by refusing to condone the delay is arbitrary and illegal and that the appellate authority went wrong in relying on judgments which are irrelevant and not applicable to the facts of the case. It is also contended that the appellate order has been passed in total disregard to the principles of natural justice. Rejection of appeal on technical grounds amounts to violation of principles of natural justice. The Ld.CIT(A) finally dismissed the appeal stating - There exists no sufficient or good reason for condoning inordinate delays of more than 96 days in filing appeal. The expression sufficient or good reason or sufficient cause implies the presence of legal and adequate reasons. The sufficient cause should be such as it would persuade the court, in exercise of its judicial discretion, to treat the delay as an excusable one. The party should show that besides acting bona fide, it had taken Lalita Devi Sharma vs. ITO all possible steps within its power and control and had approached the court without any unnecessary delay. The test is whether or not a cause is sufficient to see whether it could have been avoided by the party by the exercise of due care and attention. (See Balwant Singh v. Jagdish Singh (2010)

8. SCC 685.) The expression "sufficient cause" necessarily implies an element of sincerity, bona fide and reasonableness. (See Sankaran Pillai v. V.P. Venuguduswami (1999)

6. SCC 396.) The Supreme Court in the matter of Basawaraj v. Land Acquisition Officer (2013)

14. SCC 81 held that sufficient cause means a cause for which a party could not be blamed for his absence. A party should not have acted with negligence or lack of bona fides. Degree of proof is less in case of good cause whereas it is higher in case of sufficient cause. In the matter of Ramlal v. Rewa Coalfields Ltd. AIR 1962 SC 361, their Lordships of the Supreme Court have held that if the party who has applied for extension of period shows that the delay was due to any of the facts mentioned in the explanation that would be treated as sufficient cause, and after it is treated as sufficient cause, the question may then arise whether discretion should be exercised in favour of the party or not. Likewise, in the matter of Shakuntala Devi Jain v. Kuntal Kumari AIR 1969 SC 575, the Supreme Court has held that Section 5 of the Limitation Act gives the courts a discretion which in respect of jurisdiction is to be exercised in the way in which judicial power and discretion ought to be exercised upon principles which are well understood; the words 'sufficient cause' receiving a liberal construction so as to advance substantial justice when no negligence nor inaction nor want of bona fides is imputable to the appellant. In Collector, Land Acquisition, Anantnag (supra)1, the Supreme Court has held that the legislature has conferred the power to condone delay by enacting Section 5 of the Indian Limitation Act of 1963 in order to enable the courts to do substantial justice to parties by disposing of matters on 'merits'. In paragraph 3 of the report it has been held as under: - "

3. The legislature has conferred the power to condone delay by enacting Section 5 of the Indian Limitation Act of 1963 in order to enable the courts to do substantial justice to parties by disposing of matters on 'merits'. The expression "sufficient cause" employed by the legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice—that being the life-purpose for the existence of the institution of courts. It is common knowledge that this Court has been making a justifiably liberal approach in matters instituted in this Court. But the message does not appear to have percolated down to all the other courts in the hierarchy. And such a liberal approach is adopted on principle as it is realized that:

1. 1. Ordinarily a litigant does not stand to benefit by lodging an appeal late.

2. 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 Lalita Devi Sharma vs. ITO when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties. 3. "Every day's delay must be explained" does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common sense pragmatic manner.

4. 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.

such as, where there is inordinate delay, negligence and want of due diligence; (vi) 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; (vii) Merits of the case are not required to be considered in condoning the delay; and (viii) 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."

Thereafter, in the matter of N. Balakrishnan v. M. Krishnamurthy (1998) 7 SCC 123, their Lordships of the Supreme Court have held that 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. Reiterating the principles of law laid down in Shakuntala Devi Jain (supra) and State of W.B. vs. Administrator, Howrah Municipality (1972) 1 SCC 366, their Lordships observed as under: “9. It is axiomatic that 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 cases, delay of a very long range can be condoned as the explanation thereof is satisfactory. Once the court accepts the explanation as sufficient, it is the result of positive exercise of discretion and normally the superior court should not disturb such finding, much less in revisional jurisdiction, unless the exercise of discretion was on wholly untenable grounds or arbitrary or perverse. But it is a different matter when the first court refuses to condone the delay. In such cases, the superior court would be free to consider the cause shown for the delay afresh and it is open to such superior court to come to its own finding even untrammelled by the conclusion of the lower court.

10. The reason for such a different stance is thus: The primary function of a court is to adjudicate the dispute between the parties and 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.

Lalita Devi Sharma vs. ITO 11. 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. Time is precious and wasted time would never revisit. During efflux of time newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So a lifespan must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. 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 resort 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.

Lalita Devi Sharma vs. ITO In the matter of Esha Bhattacharjee v. Managing Committee of Raghunathpur Nafar Academy and others (2013) 12 SCC 649, their Lordships of the Supreme Court laid down the guidelines summarising the obligation of the court while dealing with application for condonation of delay and approach to be adopted while considering grounds for condonation, which are as under: - "21. From the aforesaid authorities the principles that can broadly be culled out are: (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 encapsulate 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.

Lalita Devi Sharma vs. ITO (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. Thereafter, in the matter of Manoharan vs. Sivarajan and others (2014) 4 SCC 163, the Supreme Court followed the principle of law laid down in Collector, Land Acquisition, Anantnag (supra). A conspectus of the aforesaid judgments noticed herein-above (supra) would show that their Lordships of the Supreme Court have clearly indicated that a liberal approach in considering the application for condonation of delay construing sufficient cause has to be adopted and appeal has to be decided on merits unless the case is hopelessly without merit. Therefore, "Sufficient cause" within the meaning of Section 250 of the IT Act has to be construed liberally so as to advance substantial justice especially when the delay is not deliberate and outcome of mala fide. Reverting to the facts of the present case, in the present case, appeal preferred by the appellant was delayed , for which cause much less sufficient cause has to be shown and the appellant has explained that on account of the order passed u/s 143(3) not having been served and the assessee and a copy of the order and demand notice having been obtained from the concerned AO on becoming aware of the demand and the AR of the assessee having failed to inform the assessee about the passing of the assessment order due to his marriage, etc. that is how the delay in filing the appeal has taken place. As such, the cause shown for delay in filing the appeal remains uncontroverted and it would constitute "sufficient cause" within the meaning of Section 250 r.w.s. 251 of the IT Act. The CIT(A) ought to have condoned the delay in preferring the appeal as there is no allegation that delay in filing the appeal is mala fide or it is deliberate, rather it is bona fide based on reasons beyond the control of the assessee. It is further submitted that an assessee can not be penalized for inaction on the part of his AR. It is the AR who delayed the filing of the appeal firstly owing to his priority to tax audits and thereafter his involvement in his marriage. It may be mentioned that the email-id as well as the contact number in the assessee’s profile was that of the AR and for that reason, the assessee did not come to know about the assessment order timely. Moreover, the assessee could not access her e-filing portal as she did not posses even the basic computer knowledge. She was totally dependent on her AR. Therefore, no negligence, inaction, or want of bona fide is imputable to the assessee. Thus, the mistake of the lawyer or accountant may be a good reason for condoning delay as held by Hon’ble ITAT, Surat in the case of Chirag P. Thummar vs. PCIT - [2024] 159 taxmann.com 1628 (Surat-Trib.) In the case of Mukesh Jesangbhai Patel vs. ITO (2013) 213 Taxman 37 (Mag.) (Guj) (HC) held as under:

"S.253: Appellate Tribunal - Appeal - Condonation of delay - High Court condoned the delay of more than one year due to negligence of lawyer. Assessee running a tuition centre, an assessment order was passed. Against said order, assessee filed an appeal before Tribunal with a delay of over one year. Tribunal dismissed appeal being barred by limitation. On appeal, it was noted that on account of negligence of assessee's lawyer, appeal could not be filed within prescribed time. Further, sickness of mother was also a contributing factor as assessee was engaged in attending to her. The Court held on facts, cause shown by assessee for delay in filing appeal was genuine and bona fide, therefore, impugned order was to be set aside and, matter was to be remanded back for disposal on merits.

The Ld.CIT(A) has reproduced the submission of the assessee on the merits of the case (Page 5-7) It may be stated that the AO was not sure as to for what reason to disallow the commission payment. He issued SCN alleging that no TDS has been deducted on payment of commission. Finally, he disallowed the expenses holding them to be bogus. It may be stated that the commission stood duly recorded in the books of the assessee and the entire payment was made through banking channel, as is evident from the ledger of respective parties and the bank account(s) of the assessee, which had been adduced before the CIT(A). The same are again being produced before the Hon’ble. It is therefore, prayed that the order passed by the CIT(A) may be quashed and the appeal be decided on merits for which the submission had been filed before the CIT(A) and which has been reproduced by the CIT(A) in his order from page 5 to page-7.”

6. To support the contention so raised in the written submission reliance was placed on the following evidence / records :

S. No. Particulars Page No. 1. Notice of hearing dated 12.11.2024 issued by CIT(A) 1 2. Evidence of having filed condonation petition with supporting papers 2-6 3. Notice of hearing dated 04.11.2024 issued by CIT(A) 7 4. Response sheet of having filed complete submission with supporting 8 documents 5. Copy of Form-3CD 9-16

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 28/04/2025.

Lalita Devi Sharma vs. ITO Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 28/04/2025 *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Lalita Devi Sharma, Jaipur izR;FkhZ@ The Respondent- ITO, Ward-7(1), Jaipur 2. vk;dj vk;qDr@ The ld CIT 3. 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत xkMZ QkbZy@ Guard File (ITA No. 1410/JP/2024) 6. vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत