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Income Tax Appellate Tribunal, “A” BENCH : BANGALORE
Before: SHRI N.V. VASUDEVAN & SHRI JASON P. BOAZ
Date of hearing : 18.12.2018 Date of Pronouncement : 04.01.2019 O R D E R
Per N.V. Vasudevan, Vice President
This appeal by the assessee is against the order dated 05.01.2018 of the CIT(Appeals)-7, Bengaluru relating to assessment year 2013-14.
The assessee is a company which is a subsidiary of Wipro Enterprises Ltd. An order of assessment dated 28.03.2016 for AY 2013-14 was passed by the AO u/s. 143(3) of the Income-Tax Act, 1961 [“the Act”]. Aggrieved by the addition made in the aforesaid order of assessment, the assessee preferred appeal before the CIT(Appeals). The appeal before the CIT(Appeals) ought to have been filed by the assessee on 10.03.2017.
There was a delay of about 309 days in filing the appeal before the CIT(Appeals). The assessee filed an application for condonation of delay before the CIT(Appeals), but the same was not accepted the CIT(A). The reasons given by the assessee before the CIT(Appeals) was that pursuant to a scheme of arrangement ("the Scheme') under Section 391 to 394 of the Companies Act, 1956, Wipro Limited had demerged its non IT business comprising consumer care and lighting, infrastructure engineering and other non IT business segments into Wipro Enterprises Limited (the holding company of the Assessee). The Assessee was being supported for a short period by an employee of Wipro Limited, as a part of the transition measure. However, the person assisting the Assessee (from Wipro Limited) had submitted his resignation in March 2016 and was relieved thereafter. It was only in September 2016 that a person was appointed to oversee the tax function. The person appointed to oversee tax matters, took a short while to file the appeal since he had to (i) acquaint himself with the diverse business and the relevant facts and (b) clear the back-log in work accumulated over a period. While reviewing past orders, the tax manager happened to stumble on the assessment order passed by the learned AO and immediately thereafter took steps filing the appeal. The Assessee also submitted that the delay was only because of the demerger and the need to build a separate team. It was also submitted that the delay is not occasioned deliberately, or on account of mala fides and that the Assessee does not stand to benefit by resorting to delay. It was further submitted that interest expenses that was disallowed was offered to tax by the holding company. The Assessee had borrowed loans for acquisition of brand “Chandrika” and paid interest on such loan. The interest expense was disallowed for the reason that the Assessee did not earn any income from use of the brand. It was submitted by the Assessee that the fact that such interest income has been offered to tax in the books of the Holding Company supports the case of the Assessee.
The CIT(A) however did not accept the aforesaid plea of the assessee for the following reasons:-
“4.7 In the instant case the "sufficient cause as stated by the applicant is that the employee responsible for tax matters resigned and his substitute was put in place after a gap who further took time to acquaint himself with facts and clear the backlog of pending matters. No evidence is brought on record to support this claim by the appellant. Further, the appellant is a company of a well known group being managed professionally by competent executives and managers. It is beyond comprehension as to how departure of one employee created such a disruption in the management of taxation matters that filing of appeal was forgotten for nearly a year. Hence, this explanation cannot be accepted as a sufficient reason for the failure on the part of the appellant to file appeal in time because accepting this kind of explanation to condone the delay will trivialize the very purpose of the provision prescribing such a stipulation for filing appeal. And also such an explanation of negligence, if accepted, can explain any delay in filing the appeal leading to defeat of the very purpose and rationale of the provision. In view of the above, I am of the considered opinion that the appellant has failed to give the sufficient reason for the delay of filing of appeal and hence, the delay in filing the appeal cannot be condoned. Consequently, the appeal of the appellant is treated as invalid.
Aggrieved by the order of CIT(Appeals), the assessee has filed the present appeal before the Tribunal.
We have heard the rival submissions. An affidavit has been filed before us by the Authorised Signatory of the assessee giving the same reasons as were given before the CIT(Appeals). The ld. counsel for the assessee while reiterating the contentions of the affidavit, and made a statement across the bar that on 27.04.2016, the person looking after the tax affairs of assessee resigned. The new person in charge of tax affairs joined the service in August, 2016 and it took some time for him to file the appeal and an appeal was filed ultimately in the month of March, 2017. The ld. counsel for the assessee submitted that there is no willful or intentional delay and relied on the decisions which were cited before the CIT(Appeals). It was submitted by him that a liberal approach should be adopted in the matter of condonation of delay in which regard, he relied on the judgment of the Hon’ble Supreme Court in the case of N. Balakrishnan v. M. Krishnamurthy dated 03.09.1998. The ld. DR relied on the order of CIT(Appeals).
At the outset, we observe that the Hon’ble Supreme Court, in the case of Collector, Land Acquisition v. Mst. Katiji & Ors. (1987) 167 ITR 471 and also in the case of Concord of India Insurance Co. Ltd. v. Smt. Nirmala Devi and Ors. 118 ITR 507.Mst. Katiji (supra), has explained the principles that need to be kept in mind while considering an application for condonation of delay. The Hon’ble Apex Court has emphasized that substantial justice should prevail over technical considerations. The Court has also explained that a litigant does not stand to benefit by lodging the appeal late. The Court has also explained that every day’s delay must be explained does not mean that a pedantic approach should be taken. The doctrine must be applied in a rational common sense and pragmatic manner. Keeping in mind the aforesaid judicial pronouncement, I am of the view that the delay in filing the appeal should be condoned. The circumstances explained in the affidavit shows that there has been no extraneous reasons for filing the appeal belatedly. As explained by the Hon’ble Supreme Court in the case of M.Krishnamurthy (supra), lack of extra vigilance should be a ground to depict a litigant irresponsible. We therefore direct that the delay in filing appeal before CIT(A) be condoned. Since the CIT(A) has not decided the appeal on merits, we remand the grounds raised by the Assessee on merits before CIT(A) for consideration by CIT(A) on merits after affording Assessee opportunity of being heard.
The appeal is treated as allowed for statistical purpose.
Pronounced in the open court on this 04th day of January, 2019.