BHIKHABHAI SOMABHAI PATEL,SABARKANTHA vs. THE ITO, WARD-1, HIMATNAGAR

We have gone through the orders of the authorities below. The orders reveal the assessee’s case to have been reopened for assessment, finding the assessee to have received interest on additional land compensation amounting to Rs.80,06,440/- and no return being filed by the assessee. The land of the assessee was acquired by the government for SUJLAM SUFLAM SPREADING CHANAL DIV NO 1, SABARKANTHA. All notices issued to the assessee remained unresponded and assessment accordingly was framed ex parte, without hearing the assessee, u/s. 144 of the Act. Tax demand including interest was raised on the assessee amounting to Rs.53,54,008/-.

The assessee, thereafter, filed appeal to the CIT(A) mentioning in its Statement of Facts that the interest added was not in consonance with that reflected in its TDS statement in Form 26AS wherein interest income of Rs.40,03,230/- was reflected while the AO had added Rs.80,06,440/-. He also stated therein that as per law he was entitled to deduction of 50% of the interest u/s 57(iv) of the Act.

He further explained non participation in the assessment proceedings being on account of his rural, illiterate background, being an agriculturist and hence not required to file return of income thus not being familiar with tax laws and also the fact & 2597/Ahd/2025 [Bhikhabhai Somabhai Pate vs. ITO] A.Y. 2018-19 - 4 – that he had no access to internet and was also not registered on the income tax portal. He also contended that since tax was already deducted on the interest he was under the Bonafide belief that he was not required to file any return of income. His explanation as above mentioned in the statement of facts is as under:

Similarly, he explained the delay in filing of appeal for the same reasons in Form No.35 as under;

Considering all the above, we find that the assessee had adduced sufficient cause for the delay in filing appeal. It is not denied that the assessee is an agriculturist whose land had been acquired for irrigation scheme of the government. The facts pleaded by him that he was never in the past required to file return of income and was not even registered on the portal of the Department has not been found to be false by the Ld.CIT(A). Nor the fact that he was an illiterate agriculturist residing in a village where there was no internet facility. The AO had conducted assessment proceedings electronically. The assesses contention therefore of unfamiliarity with tax laws and also that he never received the notices or for that matter the assessment order, appears to be plausible.

What weighs heavily in favour of condonation of delay is the fact that if the delay is not condoned the huge addition of Rs.80lacs made in the case of the assessee, who admittedly is a & 2597/Ahd/2025 [Bhikhabhai Somabhai Pate vs. ITO] A.Y. 2018-19 - 6 – poor agriculturist never having filed return in the past, would remain confirmed, that too without hearing the assessee at all and without even examining from the facts of the case whether the addition was justified as per law. The assessee would be burdened with tax liability exceeding Rs.50 lacs and similar amount of penalty would also be required to be paid by him. Thus, the assessee an agriculturist, who has always been protected from payment of taxes by the law makers, requiring no taxes to be paid on his meagre agricultural income, would be burdened with a tax liability of Rs.1 Cr., that too without the assessee being heard at all and without the issue at hand being examined in law as applicable to the facts of the case. Undoubtedly it is a classic case of gross injustice being meted out to the assessee by not condoning the delay in the filing of appeal to the Ld.CIT(A).

It is settled law that in matters of condonation of delay when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred. Courts have considered that ordinarily a litigant does not stand to benefit by lodging an appeal late and by refusing the condonation of delay it can result in a meritorious matter being thrown out at the very threshold, defeating the cause of justice. Courts have been unanimous in holding that the word ‘sufficient cause’ as per section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice and that merely because there is some lapse of the litigant concerned, that alone is not enough to shut the door of justice to him. That as & 2597/Ahd/2025 [Bhikhabhai Somabhai Pate vs. ITO] A.Y. 2018-19 - 7 – long as the explanation of the assessee does not smack of malafides or it is not put forth as part of a dilatory strategy, the court must show utmost consideration and when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time, then the court should lean against acceptance of the explanation. We make a reference in this regard to the following observations of the of Hon’ble Apex Court in the case of Collector Land Acquisition Vs. Mst. Katiji & Others, 1987 AIR 1353:

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 pragmatic manner.

When substantial justice and technical considerations are pitted against each other, 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.

It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.”

Similarly, we would like to make reference to authoritative pronouncement of Hon’ble Supreme Court in the case of N.Balakrishnan Vs. M. Krishnamurthy (supra). It reads as under:

Considering the judicial decisions as above and noting that In the present appeals before us the assessee has adduced sufficient cause for the delay in the filing of appeal to the Ld.CIT(A) and further noting that gross injustice would result to the assessee if the delay is not condoned, Therefore, we condone the delay in the filing of both the appeals before the Ld.CIT(A) and restore the matters back to the file of the Ld.CIT(A) to decide & 2597/Ahd/2025 [Bhikhabhai Somabhai Pate vs. ITO] A.Y. 2018-19 - 9 – both the appeals afresh after giving due opportunity of hearing to the assessee.

In the result, both appeals of the assessee are allowed for statistical purposes.