SHRI PRAVINKUMAR HIRALAL VORA,AHMEDABAD vs. THE DCIT, CIRCLE-2, AHMEDABAD

4. The learned AR for the assessee, at the outset, submitted that the additional ground raised by the assessee vide letter dated 12-06-2022 goes to the root of the matter and all the facts related to the additional ground are available on the record. Therefore, the same needs to be admitted in view of the judgment of the Hon’ble Supreme Court in the case of NTPC Ltd. reported in 229 ITR 383 where it was held as under: Under section 254, the Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The power of the Tribunal in dealing with appeals is thus expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, there is no reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of that item. There is no reason to restrict the power of the Tribunal under section 254 only to decide the grounds which arise from the order of the Commissioner (Appeals). Both the assessee as well as the department have a right to file an appeal/cross objections before the Tribunal. There is no reason why the. Tribunal should be prevented from considering questions of law arising in assessment proceedings although not raised earlier. The view that the Tribunal is confined only to issues arising out of the appeal before the Commissioner (Appeals) takes too narrow a view of the powers of the Tribunal. Undoubtedly, the Tribunal will have the discretion to allow or not allow a new ground to be raised. But where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings there is no reason why such a question should

not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. In the instant case, therefore, the Tribunal had jurisdiction to examine a question of law which arose from the facts as found by the lower authorities and having a bearing on the tax liability of the assessee.

“3. The Supreme Court in Vedabai v. Shantaram Baburao Patil [2002] 253 ITR 798held as under "In exercising discretion under section 5 of the Limitation Act the Courts should adopt a pragmatic approach. A distinction must be made between a case where the delay is inordinate and a case where the delay is of a few days. Whereas in the former case the consideration of prejudice to the other side will be a relevant factor so the case calls for a more cautious approach but in the latter case no such consideration may arise and such a case deserves a liberal approach. No hard and fast rule can be laid down in this regard. The Court has to exercise the discretion on the facts of each case keeping in mind that in construing the expression ‘sufficient cause’, the principle of advancing substantial justice is of prime importance." (p. 799)

5. Recently, the Allahabad High Court in Ganga Sahai Ram Swarup v. ITAT [2004] 271 ITR 512 has taken the view that liberal view ought to have been taken by the authority as the delay was only of a very short period and the appellant was not going to gain anything from it.

6. Applying the ratio laid down by the Apex Court as well as various High Courts, we find, it is stated in the petition filed by the assessee for condonation of delay that the order copy was misplaced and thereafter it was found and sent to counsel for preparing the appeal and then, the appeal was prepared and filed before the Tribunal and in that process, the delay of 38 days occurred. As held by the Apex Court, no hard and fast rule can be laid down in the matter of condonation of delay and the Courts should adopt a pragmatic approach and the Courts should exercise their discretion on the facts of each case keeping in mind that in construing the expression "sufficient cause" the principle of advancing substantial justice is of prime importance and the expression "sufficient cause" should receive a liberal construction. We are, therefore, of the opinion that the Appellate Tribunal ought to have condoned the delay in filing the appeal, considering the reasons given by the assessee for the delay.”

9.1 It is also important to note that Hon’ble Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) laid down certain principles for considering the condonation petition for filing the appeal which are reproduced hereunder: (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 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. (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, commonsense and pragmatic manner. (4) When substantial justice and technical consideration are pitted against each other, the 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. (5) 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. (6) It must be grasped that the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so.

9.2 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.

9.3 We also note that there is no allegation from the Revenue that the appeal was not filed within the time deliberately. The Revenue has not filed any counter- affidavit to deny the submission made by the assessee. Therefore, we are inclined to prefer substantial justice rather than technicality in deciding the issue.

9.4 The next controversy arises whether the delay of 1442 days was excessive or inordinate. There is no question of any excessive or inordinate when there was reasonable cause 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. We find support from the judgment of the Hon’ble Madras High Court in the case of CIT v. K.S.P. Shanmugavel Nadai and Ors reported in 153 ITR 596 wherein it was 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.”

9.5 From the above, we note that the Hon’ble Madras High Court in the above case was pleased to condone 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. The delay in the instant case is just of 1442 number of days which cannot be considered to be inordinate or excessive in comparison to the delay of 7330 days approximately.

9.6 In view of the above we are of the opinion that when there is sufficient cause for not filing the appeal within the period of limitation, 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 1442 number of days. Thus, we condone the delay of 1442 days in filing the appeal and proceed to hear the appeal on merit for the adjudication.

10. The assessee in the 1st and additional ground of appeal has challenged the validity of the assessment framed under section 143(3) of the Act.

12.1 The learned AR also contended that there was no order in writing under the provisions of section 127 of the Act to transfer the file from the ITO ward 2(1) to the DCIT Cirle-2(1) of the Income Tax Department for framing the assessment.

12.2 It was also pointed out by the learned AR that even the defect in the notice issued under section 143(2) of the Act cannot be cured under the provisions of section 292BB of the Act.

14. The learned AR in support of his contention has relied on the order of the Tribunals as detailed below:

15. On the other hand, the learned DR contended that the notice under section 143(2) of the Act was issued by the ITO which was subsequently transferred to the DCIT who was under the same range. Therefore there was no requirement for making any reference to the provisions of under section 127 of the Act. The learned DR also contended that the assessee cannot question the jurisdiction of the assessing officer after the expiry of the time specified under section 124(3) of the Act. The learned DR vehemently supported the order of the authorities below.

shall be Ahmedabad, Bangalore, Chennai, Delhi, Kolkata,Hyderabad, Mumbai and Pune. The above instructions are issued in supersession of the earlier instructions and shall be applicable with effect from 1-4-2011.

16.1 There is no dispute to the fact that above instruction was issued by the Board in terms of the power granted under the statute in pursuance to the provisions of section 119 of the Act. Thus, there cannot be any question with respect to the validity of impugned instruction which is binding on all the income tax authorities. 15.2 Admittedly the assessee has declared income over and above the sum of ₹30 lakhs and therefore the jurisdiction over the assessee is vested with the DCIT who was authorised to issue the notice under section 143(2) of the Act.

16.2 With respect to the provisions of section 124(3) of the Act and PAN based jurisdiction, we find that the ITAT Kolkata in the of M/s Balaji Enterprise Vs. ACIT in vide order dated 13-11-2020 has held as under: 9. Coming to the contention of the Ld. CIT, DR that since the assessee did not question the territorial jurisdiction of the ITO, Ward-1, Shillong after he received the statutory notice from him and, therefore, the assessee is estopped/shut out from doing so as stipulated by sub- section 3 of section 124 of the Act. In this regard, it is noted that sub-section (3) of section 124 of the Act will come into play only when the question arises as to as to whether an AO has jurisdiction to assess any person u/s. 124 of the Act and the AO derives his powers from the direction or order issued by CBDT and/or authorities under sub-section (1) or (2) of sec. 120 of the Act respectively. It is true that when a question of jurisdiction arises in the event an AO assumes jurisdiction u/s. 124 of the Act by virtue of the jurisdiction vested by direction or order issued by CBDT and/or other authorities under sub-section (1) or (2) of sec. 120 of the Act respectively, then assessee is estopped from raising an objection to the jurisdiction, after the time period prescribed under sub-section (3) of sec. 124 of the Act lapses. This however is not the fact of the appellant's case. Admittedly the AO at Gauhati had enjoyed jurisdiction u/s. 124 of the Act since its place of business was at Ulubari at Gauhati and the Shillong Assessing Officer did not enjoy jurisdiction u/s 124 or u/s 127 of the Act. Therefore, in our opinion as far as in the appellant's case is concerned, the provision of section 124(3) does not come into play since the Shillong Assessing Officer never had jurisdiction u/s 124 of the Act. In my considered opinion section 124(3) of the Act does not in any way help the Department to justify the action of AO at Shillong in issuing notice under section 143(2) to the assessee, which is an action done by him without jurisdiction. So the challenge raised by the Ld, Sr. DR against the legal issue raised by assessee fails. Therefore, I do not find any merit in the contention of the Ld. CIT, DR on this score. Admittedly, the ITO, Shillong had no territorial jurisdiction over the assessee since the assessee's principle placed of business was situated at Ulubari, Guwahati, therefore, sub-section 3 of section 124 of the Act will not come into play.

etc) and has not recognized PAN jurisdiction, question of addressing this legal issue on PAN jurisdiction does not arise.

16.3 We also note that the certificate honourable Chhattisgarh High Court in similar facts and circumstances has decided the issue in favour of the assessee in the case of CIT versus Sony thus winless Ltd reported in 330 ITR 491 wherein it was held as under: 13. In the matter of Smt. Nayana P. Dedhia's case (supra), the Andhra Pradesh Court held that these guidelines issued by the Board in exercise of powers in terms of section 119 of the Act relaxing the rigours of law are binding on all the officers responsible for implementation of the Act and, therefore, bound to follow and observe any such orders, instructions and directions of the Board.

16. For the aforesaid reasons, we decide the substantial question of law in favour of the assessee and against the Revenue. Accordingly, the appeal is dismissed.

16.4 In view of the above, we hold that the notice under section 143(2) of the Act has not been issued by the AO having valid jurisdiction over the assessee and therefore the assessment framed by the DCIT circle 1(2) of the Income Tax Department is void-ab-initio. Accordingly, we quash the assessment framed under section 143(3) of the Act. Hence the ground No. 1 and additional ground of appeal of the assessee is allowed.

16.5 As we have decided the technical issue in favour of the assessee, we refrain ourselves from giving our finding on the issue raised by the assessee on merit. As such the issue raised by the assessee on merit becomes infructuous. Thus we dismiss the same.

Order pronounced in the Court on 16/09/2022 at Ahmedabad.