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Income Tax Appellate Tribunal, ‘’ SMC’’ BENCH, AHMEDABAD
Before: SHRI WASEEM AHMED & SHRI SIDDHARTHA NAUTIYAL
आदेश/O R D E R
PER WASEEM AHMED, ACCOUNTANT MEMBER:
The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax (Appeals)-3, Ahmedabad, dated 23/01/2017 arising in the matter of assessment order passed under s. 143(3) of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2012-2013.
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At the outset we note that there was a delay of 389 days in filing the appeal by the assessee. There was condonation petition, on the stamp paper, filed by the assessee dated 12-06-2019. In the condonation petition, it was submitted that the delay in filing the appeal has mainly occurred due to the communication gap between the assessee and the counsel of the assessee. As such, the assessee was under the impression that the appeal against the order of the learned CIT-A has been preferred by the counsel whereas the learned counsel was waiting for the instruction from the assessee for filing the appeal. As a result, the delay occurred in filing the appeal by the assessee. In view of above the Ld. AR for the assessee before us submitted that the delay in filing the appeal occurred due to unavoidable situation. Therefore the delay in filing the appeal should be condoned.
On the other hand the ld. DR opposed to condone such inordinate delay.
We have perused the records and heard the rival submissions of both the sides. There was a delay of 389 days in filing the appeal by the assessee before us. In the condonation petition it was explained that the delay has occurred due to some confusion between the assessee and the learned counsel for the assessee. Now the controversy arises for our adjudication whether the confusion between the assessee and the learned counsel of the assessee is reasonable and sufficient cause for condoning the delay. In this regard we note that the Hon’ble Madras High Court in the case of Sreenivas Charitable Trust v. Dy. CIT reported in 280 ITR 357 has held that :
“3. The Supreme Court in Vedabai v. Shantaram Baburao Patil [2002] 253 ITR 798 held 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)
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The Calcutta High Court in CIT v. Orissa Concrete & Allied Industries Ltd. [2003] 264 ITR 186 held as under : ". . .what is really indicated in the various decisions cited and in section 5 of the Limitation Act itself, is that a litigant would be required to explain why the appeal and/or application could not be filed within the period prescribed by limitation and explain the delay for such period for the purpose of linking up the circumstances which had caused the delay during the period of limitation and thereafter." (p. 192)
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.
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.”
4.1 From the above it is clear that the expression "sufficient cause" should be interpreted to advance substantial justice. Therefore, advancement of substantial justice is the prime factor while considering the reasons for condoning the delay.
4.2 We also note that the assessee in the condonation petition has strongly submitted that the case on merit is in favour of him (the assessee). But there is a technical defect in the appeal since the appeal was not filed within the period of limitation. 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.
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(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.
4.3 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. We also note that there is no allegation from the Revenue that the appeal was not filed within the deliberately. Therefore, we are inclined to prefer substantial justice rather than technicality in deciding the issue. 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 389 number of days. Thus, we condone the delay of 389 days in filing the appeal and proceed to hear the appeal on merit for the adjudication.
The assessee has raised the following grounds of appeal:
Whether the ITO was legally correct in arbitrarily issuing the summons in contravention of S. 26 and 0.2 R.2, 0.5 R,2 and 0.9 R.2 of the CPC read with corresponding S. 136 rws 120 of Income Tax Act and by forgoing the stipulated conditions as laid down in 5.143(2) of the Act? Also whether the ITO was legally empowered to bereave the fundamental rights of the assessee under Art. 22 rw Art. 21 rw Art. 19(l)(g) of the Indian Constitution? 2. Whether the ITO, being a judicial officer within the meaning of s. 136 rws 120 of the Income Tax Act and corresponding s. 26 of the CPC, was legally empowered to suo-motu conduct an inquiry and investigation upon the appellant without having any jurisdiction to frame charges?
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Whether the ITO, being a judicial officer, was legally empowered to suo-motu frame and pass the judicial order in absence of any pre-assessment order passed by a designated revenue officer under the law as well as in absence of any dispute regarding income/ expense/ tax or a related subject matte,' which is prejudicial to the interests of revenue? 4. Whether the ITO was legally correct to detriment the fundamental rights of the appellant by hiding the reasons recorded on or before the judicial trial in accordance with the s. 143? 5. Whether the ITO was legally empowered to arbitrarily disallow the bona fide interest expenses of Rs 6,62,073 by invoking s, 36(l)(iii] of the Income Tax Act by bereaving the fundamental rights as enshrined under Art. 19(l)(g), 20(3) and 21 of the Constitution and without having any cogent and admissible documents but merely on his own assumptions, presumptions, conjectures and surmises basis? 6. Whether the ITO was legally correct in its tainted jurisdiction to arbitrarily add Rs. 1,43,359 by invoking section 68 of the Income Tax Act without having adverse finding and by overruling the fundamental rights as enshrined in Art. 20(3) of the Constitution and which was based not on a cogent and admissible document merely on his own assumption, presumption, conjecture and surmises? 7. Whether the ITO was legally empowered and within its jurisdiction in arbitrarily making the addition of Rs. 4,20,000 being cash deposit by invoking s. 69A of the Income "lax Act without having adverse finding which was contrary to the facts on the records and by overruling the fundamental rights as enshrined in Art. 19(l)(g] & 20(3) of the Constitution and without having any cogent and admissible documents but merely on his own assumption, presumption, conjecture and surmises basis? 8. Whether the ITO was legally empowered and was within its jurisdiction in arbitrarily making the addition of Rs. 2,989 being unpaid ESIC by invoking s. 43B of the Income Tax Act without having adverse finding or by overruling the facts on records? Whether the ITO was correct in law in overruling the fundamental rights of the appellant as enshrined in Art. 20(3) of the Constitution without having any cogent and admissible documents but merely on his own assumption, presumption, conjecture? and surmises basis? 9. Whether the ITO was legally empowered and was within its jurisdiction in disallowing the interest paid on late deposit of TDS amounting to Rs. 10,546 without having any such provision under the act and by overruling the facts on the records? Whether the ITO was legally correct in overruling the fundamental rights as enshrined in Art. 19(l)(g) & 20(3] of the Constitution by disallowing the business expenses without having any cogent and admissible documents merely on his own assumption, presumption, conjecture and surmises basis? 10. Whether the ITO has legally empowered and was within its jurisdiction to pass a judicial order u/s 143(3) where no dispute was raised by the revenue and no pre-assessment was made by any designated jurisdictional assessing officer of the revenue? 11. Whether the ITO has legally empowered and was within its jurisdiction to direct to revenue authority to initiate a penalty proceeding u/s 271 (1) (c } of the Act in his judicial order framed u/s 143(3)? 12. Whether the ITO was legally empowered and was within its jurisdiction to direct to the revenue authority the charge interest on suo-motu incremental tax where no such interest pleaded by the revenue? 13. Whether the ITO was legally empowered to bereave the appellant from his fundamental rights by initiating the judicial trial without having any cause and by breaching his power
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assigned to him as lower grade of the administrative/ judicial system under Art. 53 as well as Art. 124/214 rws 3 and 15 of the CPC, 1908? 14. Whether the CIT(A) was legally empowered to dismiss the appeal merely on the basis of the unscrupulous and non-specific order passed by the non-jurisdictional ITO and failing to call for the records of judicial proceedings and without verifying the jurisdiction of the ITO to make any non-jurisdictional addition/ disallowance to the returned income? 15. The Honorable Bench of the ITAT be pleased to accept the above grounds of appeal in the best interest of justice to the aggrieved and bereaved appellant and pass an order to set aside the impugned order of the ITO. 16. The Honorable Bench of the ITAT must pass the order with cost and award a compensation to the appellant for infringement and deprivation of the fundamental rights, abuse of process of law and abuse of the power granted to the ITO and for the harassment suffered by the appellant on above grounds of appeal. Further the costs and the compensation must be imposed upon the ITO for unscrupulously framing the order in violation of law.
At the outset, it was perceived from the order of Ld. CIT(A) that the several notices were issued and served upon the assessee for fixing the date of the hearing and last date of hearing of the appeal was fixed on 18.01.2017 but in none of the occasion, anybody appeared on behalf of assessee. Therefore, the Ld. CIT(A) passed an ex parte order due to non-appearance of the assessee by confirming the order of the AO. Against the impugned ex parte order of Ld. CIT(A), the assessee filed an appeal before us and pleaded that the impugned order has been passed without giving opportunity to the assessee. Accordingly, the ld. AR prayed before us to set aside the appeal to the learned CIT (A) for fresh adjudication as per the law. The ld. AR also assured that the assessee shall extend the full co-operation during the appellate proceedings.
On perusal of appellate order, we find that Ld. CIT(A) affirmed the action of Assessing Officer ex parte without mentioning any reason for confirming the same on merits. The provisions of Section 250(6) of the Act require the Commissioner (Appeal) to dispose of the appeal in writing with reasoning. But we find from the impugned order of Ld. CIT(A), who confirmed the order of AO, that the appeal was dismissed without deciding the same on merit.
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We also find that the assessee appeared/ co-operated before the AO and filed the necessary submission during the proceedings before him. Thus, the Ld. CIT-A should have called for the assessment records for considering the submission made by the assessee before the AO before upholding the order of the AO. But the Ld. CIT-A failed to do so.
We further find that the principle of audi alteram partem is the basic concept of natural justice. The expression “audi alteram partem” implies that a person must be given an opportunity to defend himself. This principle is sine qua non of every civilized society.
Indeed, the assessee after filing the appeal should be vigilant enough for pursing it before the authorities but for this, if the assessee fails to pursue the appeal, the assessee cannot be penalized by confirming such huge addition without hearing his points of contentions. The mistake committed by the assesse and punishment given to him (the assessee) by sustaining the addition is not commensurate to each other in the given facts and circumstances. But the negligent/dilly-dally approach of the assessee before the Ld.CIT(A) cannot be neglected/ignored. Therefore, we are inclined to levy a cost of Rs. 5,000/- upon the assessee for adopting the negligent approach in the appeal proceedings before the Ld.CIT(A). Accordingly, we direct the assessee to deposit a sum of Rs. 5,000/- to the Income Tax Department prior to the commencement of hearing before the Ld. CIT(A).
In view of the, we are of the view that the assessee must be given one more opportunity of hearing to represent its case. Therefore, in exercise of power conferred under Rule 28 of Tribunal Rules, we restore this appeal to the file of Ld. CIT (A) for reconsideration all grounds of appeal after allowing proper opportunity of being heard in accordance with law.
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Nevertheless, the assessee is aware of the case set up against him, accordingly it is directed to prepare his submission and cooperate in the appeal proceedings and its failure will entail confirmation of the impugned addition made by the AO. Hence, this ground of assessee’s appeal stands allowed for statistical purpose.
In the result, for statistical purpose, the appeal of assessee is treated as allowed.
Order pronounced in the Court on 15/06/2022 at Ahmedabad.
Sd/- Sd/- (SIDDHARTHA NAUTIYAL) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 15/06/2022 Manish