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Facts
The assessee filed appeals against the CIT(A)'s orders for A.Y. 2012-13 and 2013-14, which confirmed an addition to book profit under Section 115JB and dismissed the appeals due to a delay of 4404 days. The assessee argued the delay was caused by misguidance from a previous Chartered Accountant and their persistent, but unaddressed, pursuit of rectification applications with the Income Tax Department.
Held
The Tribunal, applying principles from the Supreme Court and High Courts regarding condonation of delay, found that the assessee had sufficient cause for the delay. It ruled that substantial justice should prevail over procedural technicalities and that the assessee showed no malafide intention or negligence. Consequently, the delay was condoned, and the case was remanded to the CIT(A) for a de-novo adjudication on the merits of the appeal.
Key Issues
The key legal issues were the condonation of a 4404-day delay in filing the appeal before the CIT(A) and the validity of the addition to book profit under Section 115JB.
Sections Cited
Section 115JB, Section 143(1), Section 250, Section 249(2), Section 249(3), Section 154, Section 154(7)
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Income Tax Appellate Tribunal, PUNE BENCHES “SMC” :: PUNE
Before: DR.DIPAK P. RIPOTE & SHRI VINAY BHAMORE
ORDER PER DR. DIPAK P. RIPOTE, AM: These two appeals filed by the Assessee against the separate orders of ld.Commissioner of Income Tax(Appeal)[NFAC], passed under section 250 of the Income Tax Act, 1961 for the A.Y.2012-13 and A.Y.2013-14 dated 23.09.2025 and 09.06.2025 respectively emanating from the separate Assessment Orders passed under section 143(1) of the Act, dated 24.03.2013 and 26.09.2014
1. The ADIT, CPC (hereinafter referred as Learned AO) erred in law and on facts in assessing and the ADDL/ICIT (A)-1 Chennai (hereinafter referred as Learned CIT(A)) erred in law and on facts in confirming book profit u/s 115JB of the ITA, 1961 of the appellant as Rs.42,55,991 instead of Rs.25,84,052 as computed by the appellant and thereby making addition of Rs.16,71,939 in the book profit u/s 115JB of the ITA, 1961.
2. Learned AO erred in law and on facts in making double addition of Rs.16,71.939 on account of provision for deferred tax in spite of the fact that, it was already added back by appellant though in the other limb of section 115JB of the ITA, 1961. Appellant contends that the correct book profit u/s 115JB amounts to Rs.25,84,052 and not Rs.42,55,991 as computed by the learned AO.
3. Learned CIT(A) erred in law and on facts in not condoning the delay of 4404 days in filing appeal alleging that appellant could not demonstrate sufficient cause in spite of establishing that the said delay had caused because of appellant's previous counsel and without appellant's knowledge.
4. Appellant contends that learned AO erred in law and on facts in making addition to the book profit u/s 115JB of the appellant and learned CIT(A) erred in sustaining the same without appreciating that the mistake in the Income Tax Return was caused due to professional negligence by the erstwhile Chartered Accountant.
5. Appellant contends that it was prevented by sufficient cause from 2 making the correct and complete disclosure in the return of income due & 1890/PUN/2025 [A] to the misguidance and mishandling of the case by the previous Chartered Accountant, for which the appellant should not be penalized.
Appellant contends that delay of 4404 days in filing appeal before learned CIT(A) occurred was beyond appellant's control and due to the misguidance and mishandling of the case by the previous Chartered Accountant.
Appellant contends that learned IT authorities erred in not accepting appellant's plea and making addition in the book profit u/s 115JB of the ITA, 1961 solely on the basis of incorrect disclosure/misreporting in the ITR, without affording due consideration to the documentary evidence filed on record.”
Submission of ld.AR : 2. Ld.AuthorisedRepresentative(ld.AR) for the Assessee filed paper book. Ld.AR submitted that after receipt of order u/s 143(1) of the Act, the Assessee was advised by its consultant CA to file rectification application. Accordingly the Assessee filed Rectification application 0n 26.03.2015. Till date the Department has not decided the said Rectification application. Then again the CA advised assessee to file Rectification Application. Hence Assessee filed Rectification application on 13.07.2023. Income Tax Department has not yet decided these Rectification applications.
Assessee was under bonafide belief that since the mistake as 3 advised by CA was rectifiable, the Income Tax department will & 1890/PUN/2025 [A] rectify the Order u/s 143(1). Ld.AR filed duly acknowledged copies of these rectification applications in the paper book. Ultimately it filed appeal before Ld.CIT(A) but CIT(A) failed to consider the reasons for delay and dismissed appeal on account of delay. Ld.AR submitted that there was sufficient cause for delay. Ld.AR relied on following decisions : Vijay VishinMeghani Vs. DCIT 398 ITR 250 (Bom) Balaji Landmarks LLP Vs.CBDT[2025] 307 Taxman 498 (Bombay)[14-10-2025] EBR Enterprises Vs.Union of India Prasanna Patankar Vs.ITO ITA No.1693/PUN/2025
4. Ld.Authorised Representative(ld.AR) for the Assessee invited our attention to the Return of Income filed by the assessee , the order u/s 143(1) of the Act and the rectification application. Ld.AR read out the First paragraph of the Rectification Application which is as under : Quote, “Assessee company had filed its return of income on 29/09/2012, declaring Book Profit u/s 115JB amounting to Rs. 25,84,052/- .While filing the Return of Income , the Assessing Company considered Profit Before Tax of Rs.25,99,695/- as a starting point and arrived at a Book Profit u/s 115JB of Rs.25,84,052/-instead of considering Profit After Tax and adding Income tax and deferred tax expenses…..” Unquote. 4 & 1890/PUN/2025 [A] 4.1 Ld.AR submitted that it was a mistake which could have been rectified but since department had not rectified it assessee ultimately had to file appeal before ld.CIT(A) which was delayed due to sufficient cause.
Submission of ld.DR : 5. Ld.Departmental Representative(ld.DR) for the Revenue supported the order of ld.CIT(A). Ld.DR submitted that there was no sufficient reason hence ld.CIT(A) was right in dismissing the appeal.
Findings and Analysis : 6. We have heard both the parties and perused the records.
6.1) Assessee filed Return of Income for A.Y.2012-13 on 29/09/2012. The Return of Income was processed and an order u/s 143(1) was passed on 24/03/2013 deciding the Gross tax Liability at Rs.8,10,979/- instead of Rs.Nil shown in the Return of Income by the assessee. Assessee has filed Rectification applications,copies of the same have been filed in the paper book. We have also noted the acknowledgement stamp of the office of Dy.Commissioner of Income Tax Circle 7 Pune. Thus it is fact that Assessee was 5 pursuing alternate remedy in the form of rectification application.
& 1890/PUN/2025 [A] 6.2) It is also noted that the rectification application has not yet been decided by the Assessing Officer.
6.3) The Assessee then filed appeal against the Order u/s.143(1) before ld.CIT(A).The Ld.CIT(A) dismissed the appeal on account of delay, the Ld.CIT(A) held that there was no sufficient cause for delay.
6.4) Aggrieved by the Order of Ld.CIT(A) the Assessee filed appeal before Tribunal.
6.5) It is a fact the Assessee filed the Appeal before ld.CIT(A) beyond the time allowed u/s.249(2) of the Act. The Section 249(3) permit ld.CIT(A) to admit delayed appeal if he is satisfied that there was sufficient cause for delay.
7) In these facts, lets understand the principles explained by Hon’ble Supreme Court and Hon’ble High Court for condonation of delay.
8) The Hon’ble Supreme Court in the case of Esha Bhattacharjee Vs. Managing Committee of Raghunathpur Nafar Academy and others Civil Appeal Nos.8183-8184 of 2013 vide order dated 6 & 1890/PUN/2025 [A] 13/09/2013 has laid down following principles for deciding Condonation Application: Quote, “15. From the aforesaid authorities the principles that can broadly be culled out are: i) There should be a liberal, pragmatic, justice-oriented 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 encapsule 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 7 & 1890/PUN/2025 [A] 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. 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. ” Unquote.
8.1) Thus, the legal position discernible from the aforesaid decisions that the substantial justice is paramount consideration and pivotal. The Hon’ble Supreme Court observed that there shall not be failure of justice.
9) The Hon’ble Bombay High Court in the case of Vijay Vishin Meghani Vs. DCIT [2017] 398 ITR 250 (Bombay) while condoning 8 the delay of 2984 days observed as under :
& 1890/PUN/2025 [A] Quote, “21. We find from paragraph 13 of the order, but for this relevant factors and tests, everything else has been brought into the adjudication by the Tribunal. The Tribunal though aware of these principles but possibly carried away by the fact that the delay of 2984 days is incapable of condonation. That is not how a matter of this nature should be approached. In the process the Tribunal went about blaming the assessee and the professionals and equally the Department. To our mind, therefore, the Tribunal's order does not meet the requirement set out in law. The Tribunal has completely misdirected itself and has taken into account factors, tests and considerations which have no bearing or nexus with the issue at hand. The Tribunal, therefore, has erred in law and on facts in refusing to condone the delay. The explanation placed on affidavit was not contested nor we find that from such explanation can we arrive at the conclusion that the assessee was at fault, he intentionally and deliberately delayed thematter and has no bona fide or reasonable explanation for the delay in filing the proceedings. The position is quite otherwise.
In the light of the above discussion, we allow both the appeals. We condone the delay of 2984 days in filing the appeals but on the condition of payment of costs, quantified totally at Rs.50,000/-. Meaning thereby, Rs.25,000/- plus Rs.25,000/- in both appeals. The costs to be paid in one set to the respondents within a period of eight weeks from today. On proof of payment of costs, the Tribunal shall restore the appeals of the assessee to its file for adjudication and disposal on merits. We clarify that all contentions as far as merits of the claim are kept open. We have not expressed any opinion on the same.”Unquote.(emphasis supplied)
9.1) Thus, in the above referred case, Hon’ble Jurisdictional High Court has condoned the delay of 2984 days. The Hon’ble High 9 & 1890/PUN/2025 [A] Court has categorically observed that there was no intentional and deliberate delay and hence, Hon’ble High Court condoned the delay.
9.2) Hon’ble Bombay High Court in the case of EBR Enterprises Vs. Union of India, [2018] 89 taxmann.com 194 (Bombay) has referred to the decision of the Hon’ble Supreme Court and held as under : Quote, “11. Coming back to the impugned Order, the Commissioner has observed there are binding decisions which require each and every day's delay to be explained. The Commissioner has made a reference to a decision of the Apex Court in the case of Collector, Land Acquisition v. Mst. Katiji[1987] 167 ITR 471 (SC). However, the Commissioner has ignored the ratio of the said decision. In paragraph 4 of the said decision, the Apex Court has held thus : "4. And such a liberal approach is adopted on principle as it is realized that : 1. Ordinarily, a litigant does not stand to benefit by lodging an appeal late.
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, 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 and pragmatic manner.
When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be 10 & 1890/PUN/2025 [A] preferred, for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay.
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." (underlines supplied)UNQUOTE 10) In the case of the assessee the Assessee was pursuing alternate remedy on the advice of the CA. The Assessee has explained before the Ld.CIT(A) the reason for delay.The assessee filed Rectification application and was waiting for the Rectification Order, as advised by the CA. It has been submitted by the Ld.AR that till date the Income Tax Department had not decided the Rectification Application. The Ld.DR has not disputed this fact. Income tax Department has Neither rejected the Rectification Application u/s.154 of the Act NOR allowed the Rectification application. Section 154(7) has specified the time limit to pass the order u/s.154. The Section is reproduced here as under : 154 (7) Save as otherwise provided in section 155 or sub-section (4) of section 186 no amendment under this section shall be made after the expiry of four years 8[from the end of the financial year in which the order9 sought to be amended was passed.] 10.1) However, it is fact not disputed by the Ld.DR that the AO has not yet decided the rectification application. Income Tax 11 Department has not decided the Assessee’s Rectification though a & 1890/PUN/2025 [A] period of almost 9-10 years have lapsed, even after the Assessee has reminded by filling another rectification application.
10.2) In these facts when we analyzed the peculiar facts, petition of the assessee, we are of the opinion that there was sufficient cause for delay in filling appeal before the Ld.CIT(A).
10.3) It is not the case of the Ld.DR that assessee has delayed filling appeal with any malafide intention or negligence. On analyzing the facts we are of the opinion that there was no negligence on the part of the assessee. Ultimately, as held by Hon’ble Supreme Court and Hon’ble Bombay High Court, substantial justice is more important than the procedural delay. By deciding the appeal on merits there will not be any prejudice cause to the department.
10.4) In these facts and circumstances, we are convinced that there was sufficient cause for delay in filling appeal before the Ld.CIT(A). Hence, we direct Ld.CIT(A) to condone the delay and decide the appeal on merits. Accordingly we set aside the Order of Ld.CIT(A) to Ld.CIT(A) for de-novo adjudication. The Ld.CIT(A) shall provide opportunity of hearing to the assessee. Assessee shall be permitted to file necessary documents before Ld.CIT(A). 12 & 1890/PUN/2025 [A] 10.5) Accordingly, the Ground No.3 raised by the Assessee is allowed for statistical purpose.
10.6) Since we have set aside the order of Ld.CIT(A) to Ld.CIT(A) for de-novo adjudication , we are not deciding the other ground of appeal, accordingly, the other grounds are dismissed as unadjudicated. is allowed for statistical purpose.