TAHERALI ZABUAWALA,VADODARA vs. DCIT, CIRCLE-2(1)(1), VADODARA

Aggrieved by the assessment order, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals). In the grounds of appeal, the assessee challenged the addition of Rs.2 crores on the ground that the documents found during the survey only indicated receipt and utilization of on-money and that no declaration or admission of income was ever made by the assessee. It was further contended that the alleged on-money receipts of Rs.10.50 crores had already been taxed on a gross basis in the hands of M/s Space Age Infracon Pvt. Ltd. and, therefore, only a telescoped amount, if any, could be considered in the hands of the assessee. The assessee also challenged the addition as being contrary to the material on record and settled principles of law.

The assessee is in appeal before us against the order passed by the Commissioner of Income-tax (Appeals) dismissing the appeal of the assessee.

During the course of hearing before us, the learned counsel for the assessee submitted that the Commissioner of Income-tax (Appeals) passed the impugned order without considering the merits of the case and without properly appreciating the cause for the delay of 70 days in filing the appeal before the first appellate authority. It was contended that the approach of the CIT(Appeals) was hyper-technical and contrary to the settled legal position that matters should ordinarily be decided on merits and that delay, if properly explained, ought to be condoned in the interest of substantial justice.

We have heard the rival contentions and perused the material available on record. It is an undisputed fact that the appeal before the Commissioner of Income-tax (Appeals) was filed with a delay of 70 days. The power to condone delay under section 249(3) of the Income-tax Act is a discretionary power which is required to be exercised in a judicious and liberal manner so as to advance the cause of substantial justice. The Hon’ble Supreme Court in Collector, Land Acquisition v. Mst. Katiji (1987) 167 ITR 471 (SC) has held that a pragmatic and justice-oriented approach should be adopted while dealing with matters relating to condonation of delay and that ordinarily a litigant does not stand to benefit by lodging an appeal late. Similarly, in N. Balakrishnan v. M. Krishnamurthy (1998) 7 SCC 123, the Hon’ble Supreme Court has held that the length of delay is not material and what is material is the acceptability of the explanation, and that refusal to condone delay can result in a meritorious matter being thrown out at the threshold.

In the present case, the delay is of 70 days, which cannot be said to be inordinate. The Commissioner of Income-tax (Appeals), in our considered view, ought to have adopted a liberal approach and condoned the delay so as to adjudicate the appeal on merits, particularly when the assessee had raised substantive grounds challenging an addition of Rs.2 crores. The dismissal of the appeal in limine has resulted in denial of an effective appellate remedy to the assessee. It is well settled that the appellate authority should, as far as Taherali Zabuawala vs. DCIT Asst. Year –2013-14 - 5– possible, decide the matter on merits rather than on technicalities, unless the conduct of the assessee is contumacious or mala fide, which is not apparent on the facts of the present case.

In view of the above discussion and in the interest of substantial justice, we set aside the order passed by the Commissioner of Income-tax (Appeals) dismissing the appeal in limine. We hold that the delay of 70 days in filing the appeal before the CIT(Appeals) deserves to be condoned especially looking into the quantum of additions made, no mala-fide intention on part of the assessee and in the interests of justice. Accordingly, the matter is restored to the file of the Commissioner of Income-tax (Appeals) for fresh adjudication of the appeal on merits, in accordance with law, after affording adequate opportunity of being heard to the assessee.

The appeal of the assessee is allowed for statistical purposes. This Order is pronounced in the Open Court on 20/02/2026