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Facts
The assessee, a retired Defence personnel, appealed an order from the CIT(A)/NFAC that dismissed his appeal due to a 298-day delay. The assessee claimed the delay was due to relocation after retirement, lack of digital literacy, and his tax consultant's inadvertent error, leading to non-receipt of notices. The CIT(A)/NFAC rejected the appeal without considering the merits.
Held
The Tribunal held that the delay in filing the appeal was unintentional and due to circumstances beyond the assessee's control. Citing Apex Court judgments, the Tribunal emphasized that substantial justice should be preferred over technicalities, especially when the delay is not deliberate. The Tribunal condoned the delay.
Key Issues
Whether the delay in filing the appeal before the CIT(A)/NFAC should be condoned, and whether the disallowances and additions made by the AO are justified.
Sections Cited
10(10), 10(10A), 69A, 148, 250, 115BBE, 147, 143(2), 142(1), 144, 133(6), 139, 249(3)
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Income Tax Appellate Tribunal, “SMC’’BENCH: BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal at the instance of the assessee is directed against the order of the ld. CIT(A)/NFAC dated 31.07.2025 vide DIN & Order No.ITBA/NFAC/S/250/2025-26/1079136020(1) passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”) for the Assessment Year 2019-20.
The assessee has raised the following grounds of appeal:
Biju Pappachan, Kollam Page 3 of 14 3. At the outset, the ld. A.R. of the assessee submitted that there was a delay of 298 days in filing the appeal before the ld. CIT(A)/NFAC and accordingly the ld. CIT(A)/NFAC dismissed the appeal in limine by not condoning the delay. Before us, the ld. A.R. of the assessee drew our attention on an affidavit dated 13.11.2025 sworn before the notary publicstating therein the reasons for the delay which is reproduced below for ease of reference and convenience:-
On going through the above affidavit, we find that the assessee could not file the appeal within the prescribed period for the reason that the assessee being a retired Defense personnel shifted from Bangalore to his native place after the retirement in 2018.All the notices were returned undelivered on his old premise at Bengaluru as he was already vacated that premise after his retirement and he was completely unaware of the ongoing reassessment proceedings and the demand raised therein. Being a retired person with limited knowledge of digital procedures & online tax portals, he was completely dependent on a local tax consultant for filing his return & related compliance. The assessee came to know of the reassessment order only upon receiving intimation from the Department at his Kerala residential address. Upon becoming aware, he immediately approached another consultant & took steps to file the appeal before the ld. CIT(A)/NFAC. The ld. A.R. also submitted that the delay is unintentional and no benefit can be attributed to the assessee in filing the appeal belatedly. He thus prayed to condone the delay and requested to consider the issues raised by the assessee on merits.
On the contrary the ld. D.R. vehemently objected for granting the condonation of delay in filing the appeal before the ld. CIT(A)/NFAC and submitted that the assessee also neither appeared before the AO nor before the ld. CIT(A)/NFAC which clearly demonstrate the careless attitude of the assessee.
We have perused the details filed by the assessee to justify the delay and we are satisfied that there is no malafide intention on the part of the assessee in filing the appeal belatedly before the ld. CIT(A)/NFAC & also there is sufficient cause in filing the appeal belatedly before the ld.CIT(A)/NFAC.
6.1 While considering a similar issue the Apex Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) laid down six principles. For the purpose of convenience, the principles laid down by the Apex Court 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 nondeliberate 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.
6.2 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 for injustice being done because of nondeliberate delay. Therefore, we have to prefer substantial justice rather than technicality in deciding the issue. As observed by Apex Court, if the application of the assessee for condoning the delay is rejected, it would amount to legalize injustice on technical ground when the Tribunal is capable of removing injustice and to do justice. Therefore, this Biju Pappachan, Kollam Page 9 of 14 Tribunal is bound to remove the injustice by condoning the delay on technicalities. If the delay is not condoned, it would amount to legalizing an illegal order which would result in unjust enrichment on the part of the State by retaining the tax relatable thereto. Under the scheme of Constitution, the Government cannot retain even a single pie of the individual citizen as tax, when it is not authorized by an authority of law. Therefore, if we refuse to condone the delay, that would amount to legalize an illegal and unconstitutional order passed by the lower authority.
6.3 Further, in the case of People Education & Economic Development Society Vs/ ITO reported in 100 ITD 87 (TM) (Chen), wherein held that “when substantial justice and technical consultation 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 non-deliberate delay”.
6.4 The next question may arise whether delay was excessive or inordinate. There is no question of any excessive or inordinate when the reason stated by the assessee was a reasonable cause for not filing the appeal. We have to see the cause for the delay. When there was a reasonable cause, the period of delay may not be relevant factor. In fact, the Madras High Court in the case of CIT vs. K.S.P. Shanmugavel Nadai and Ors. (153 ITR 596) considered the condonation of delay and held that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation. Accordingly, the Madras High Court condoned nearly 21 years of delay in filing the appeal. When compared to 21 years, 298 days cannot be considered to be inordinate or excessive. Furthermore, the Chennai Tribunal by majority opinion in the case of People Education and Economic Biju Pappachan, Kollam Page 10 of 14 Development Society (PEEDS) v. ITO (100 ITD 87) (Chennai) (TM) condoned more than six hundred days delay. Therefore, in our opinion, by preferring the substantial justice, the delay of 298 days has to be condoned and accordingly we condone the delay that occurred in filing the appeal before the ld. CIT(A)/NFAC.
The assessee in the present case had served as a Defence personnel(Indian Air Force), drawing pension and retirement benefits which are either subjected to TDS or exempted under the Act. Upon retirement, the assessee received gratuity of Rs.7,19,063/- which the assessee claimed to be exempt u/s 10(10) of the Act and also received Commuted pension of Rs.15,25,689/- from the employer i.e. the Central Government which is claimed to be exempt u/s 10(10A) of the Act. The case of the assessee was re- opened by issuing the notice u/s 148 of the Act on the ground that assessee had not filed his return of income u/s 139 of the Act for the assessment year 2019-20 however, the assessee had received the salary from the employer along with the interest from Bank. In response to the said notice, the assessee filed his return of income on 25/04/2023 declaring total income of Rs. 3,63,840/-. Accordingly, notices u/s 143(2) as well as 142(1) of the Act along with SCN u/s 144 of the Act was issued. During the course of assessment proceedings, the assessee did not submit any reply and accordingly, the AO drawn an inference that the assessee has nothing to say in this regard and has agreed to the variation proposed in SCN.
7.1 The AO noted that the assessee had declared the gross salary of Rs. 26,96,413/- and claimed deduction of Rs. 7,19,063/- u/s 10(10) of the Act on account of death cum retirement Gratuity and Rs. 15,25,689/- u/s 10(10A) of the Act on account of commuted Biju Pappachan, Kollam Page 11 of 14 value of pension received. However, as the assessee had neither furnished any reply nor documentary evidences in respect of deductions claimed in the ITR and therefore the AO treated the same as unexplained and added under the head “Salary” amounting to Rs. 22,44,752/-(7,19,063 + 15,25,689). The AO also invoked the provisions of 115BBE by stating that it is applied to the aforesaid additions.
7.2 As per the information, the AO also noticed that the assessee made time deposit of Rs. 3,84,000/- with SBI. However, as regards the source of investment in time deposits, as the assessee had not furnished any reply during the entire reassessment proceedings, the source of investment of Rs. 3,84,000/- remains unexplained and accordingly added to the total income as unexplained money u/s 69A of the Act r.w.s 115BBE of the Act.
7.3 Thus, the AO completed the assessment proceedings on a total assessed income of Rs.29,92,592/- u/s 147/144 of the Act. The ld. CIT(A)/NFAC dismissed the appeal of the assessee in limine by not condoning the delay of 298 days. Now having condoned the delay in filing the appeal before the ld. CIT(A)/NFAC, we proceed to adjudicate the issues involved in the present appeal instead of remitting the matter back to the file of ld. CIT(A)/NFAC for consideration.
On going through the reassessment order passed by the AO, we take note of the fact that the assessee is retired Defence personnel and received pension and post retirements benefits during the year under consideration. During the course of the assessment proceedings, the AO issued notices u/s 133(6) of the Act to the SBI as well as to Air Force as the assessee did not furnish the copies of the Form 16/16A. In response thereof, the copy of Biju Pappachan, Kollam Page 12 of 14 salary certificate in Form 16 was received from the Air Force, but SBI did not make any compliances. Therefore, we are of the considered opinion that the assessee had correctly filed his return of income u/s 148 of the Act by declaring his source of income from salary/Pension which is also accepted by the AO.The source of income is also confirmed by the Air force Authority by sending the Form No.16 in response to notice u/s 133(6) of the Act. We noticed that the assessee had declared the Gross salary at Rs. 26,95,413/- and claimed the alleged deductions of Rs. 7,19,063/- u/s 10(10) of the Act on account of death cum retirement Gratuity and Rs. 15,25,689/- u/s 10(10A) of the Act on account of commuted value of pension received. We are of the considered opinion that the AO in spite of getting the salary certificate in Form 16 from the Air Force affirmed that in the absence of necessary documentary evidences, the aforesaid deduction of Rs. 22,44,752/- claimed by the assessee on account of death cum retirement gratuity and commuted value of pension remains unexplained. We could not understand when the salary certificate in form 16 is already received by the AO, then what sort of necessary documentary evidences was required by the AO. When the AO himself noted that the assessee is claiming deduction of Rs. 22,44,752/- on account of death cum retirement gratuity and commuted value of pension, then the AO should have by taking into consideration the salary certificate in form 16 issued by the Air Force treated the same as exempt u/s 10 of the Act & should have excluded the same from the Gross salary. The AO was completely unjustified in disallowing the exemptions claimed by the assessee & added again to salary especially when it is in fact completely exempt from the income Tax. We are also surprised to note that on the one hand the AO himself disallowed the deduction & adding the same under head salary and on the other hand, invoked the provision of section 115BBE of the Act which is completely unacceptable. Section 115BBE can only be invoked in Biju Pappachan, Kollam Page 13 of 14 case of tax on income referred to in section 68 or section 69 or section 69A or section 69B or section 69C OR section 69D & not in the case of additions under the head “Salary”. Under the facts & circumstances discussed above, we accept the contention of the AR of the assessee that Rs. 7,19,063/- is exempted u/s 10(10) of the Act on account of death cum retirement Gratuity received and Rs. 15,25,689/- is exempted u/s 10(10A) of the Act on account of commuted value of pension received & it should not be form part of the Net Taxable Salary & therefore the disallowance of the alleged deduction does not arise in the case of the assessee as the same are completely exempted. Accordingly, we are inclined to delete the additions of Rs. 22,44,752/- as made under the head ‘Salary’.
8.1 Now, with regard to addition u/s 69A of the Act amounting to Rs.3,84,000/-, the AR of the assessee submitted that the declared salary income alone far exceeds the fixed deposit amount & thus the assessee had sufficient legitimate funds available during the year to make deposit. We take a note of the fact that the assessee had already declared the interest earned from these fixed deposits amounting to Rs. 24,179/- under the head income from other sources. Further, we having accepted the source of income being pension & post retirement benefits are also inclined to accept the same as the source of investment in time deposits which is very meager in comparison to the amount of Pension & post retirement benefit received by the assessee. The addition was made merely based on surmise, suspicion, or conjecture. Further, we are also of the opinion that the assessee being a retired Defence personnel does not require to maintain any books of account and also the assessee was also not found to be the owner of any money, bullion, jewellery or other valuable article & therefore the question of addition u/s 69A of the Act as unexplained money does not arise in Biju Pappachan, Kollam Page 14 of 14 the case of the assessee & accordingly we also delete the addition of Rs.3,84,000/-as made u/s 69A of the Act.
In the result, the appeal filed by the assessee is allowed.