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Facts
The assessee, a renowned Bank, filed multiple appeals against CIT(A) orders for assessment years 2013-14 to 2016-17 with significant delays (110 to 634 days). The delay was attributed to the non-prosecution of the litigation by their previous counsel. The primary issue in the appeals concerned the assessee being treated as in default for non-deduction of TDS on interest payments, with claims of Form 15H submissions by recipients and tax deposit in some cases.
Held
The Tribunal condoned the delay in filing the appeals, finding no deliberate attempt by the assessee to delay the proceedings, and noting correspondence with the defaulting previous counsel. However, it found that the Bank had not submitted complete details regarding TDS liability to the Assessing Officer originally. Therefore, the Tribunal set aside the impugned orders and remanded the issues back to the Assessing Officer for fresh examination to determine if any TDS liability truly existed.
Key Issues
1. Whether there was 'sufficient cause' to condone the delay in filing the appeals. 2. Whether the assessee was in default for non-deduction of TDS on interest payments and liable for interest.
Sections Cited
Section 253(5) of Income Tax Act, Section 249(3) of Income Tax Act, Section 5 of Indian Limitation Act, 1963, Section 201(1) of Income Tax Act, Section 201(1A) of Income Tax Act
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, 748,777 &778/CHD/2025 A.Y.2013-4 to 2016-17 2 of Income Tax (Appeals) [in short ‘the CIT (A)’] dated 16.09.2024, 26.05.2023, 26.05.2023 and 26.05.2023 passed for assessment years 2013-14 to 2016-17 respectively.
2. The Registry has pointed out that is time barred by 110 days whereas other appeals, namely, ITA 748, 777 and 778/CHD/2025 are time barred by 634 days.
3. The assessee has filed application for condonation of delay. According to the assessee, this delay happened on account of non-prosecution of litigation by the earlier counsel. We have directed the ld. counsel for the assessee to submit correspondence made with the earlier counsel for authorizing him to prosecute the litigation. He has produced some communication whereby Bank has submitted relevant documents to the counsel but he did not take proper steps. The ld. counsel for the assessee prayed that delay in filing the appeals be condoned and they be decided on merit.
3.1 The ld. DR, on the other hand submitted that assessee is a renowned Bank and it should be more vigilant about prosecuting its Income Tax litigation. There is no plausible , 748,777 &778/CHD/2025 A.Y.2013-4 to 2016-17 3 explanation given by the assessee for not filing the appeals in time.
Sub-section 5 of Section 253 contemplates that the Tribunal may admit an appeal or permit filing of memorandum of cross- objections after expiry of relevant period, if it is satisfied that there was a sufficient cause for not presenting it within that period. This expression sufficient cause employed in the section has also been used identically in sub- section 3 of section 249 of Income Tax Act, which provides powers to the ld. Commissioner to condone the delay in filing the appeal before the Commissioner. Similarly, it has been used in section 5 of Indian Limitation Act, 1963. Whenever interpretation and construction of this expression has fallen for consideration before Hon’ble High Court as well as before the Hon’ble Supreme Court, then, Hon’ble Court were unanimous in their conclusion that this expression is to be used liberally. We may make reference to the following observations of the Hon’ble Supreme court from the decision in the case of Collector Land Acquisition Vs. Mst. Katiji & Others, 1987 AIR 1353:
Ordinarily a litigant does not stand to benefit by lodging an 748,777 &778/CHD/2025 A.Y.2013-4 to 2016-17 4 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.
"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.
4. 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.
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 judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice , 748,777 &778/CHD/2025 A.Y.2013-4 to 2016-17 5 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 (1998) 7 SCC 123 dated 03.09.1998. It reads as under:
Rule of limitation are not meant to destroy the right of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. Law of limitation fixes a life-span for such legal remedy for the redress of the legal injury so suffered. Time is precious and the wasted time would never revisit. During efflux of time newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So a life span must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. Law of limitation is thus founded on public policy. It is enshrined in the maxim Interest reipublicae up sit finislitium (it is for the general welfare that a period be putt to litigation). Rules of limitation are not meant to destroy the right of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time. A court knows that refusal to condone delay would result foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is always deliberate. This Court has held that the words sufficient cause" under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shakuntala Devi lain Vs. Kuntal Kumari [AIR 1969 SC 575] and State of West Bengal Vs. The Administrator, Howrah Municipality [AIR 1972 SC 749]. It must be remembered that in every case of delay there can be some lapse on the part of the 748,777 &778/CHD/2025 A.Y.2013-4 to 2016-17 6 litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy the court must show utmost consideration to the suitor. But 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. While condoning delay the Could should not forget the opposite party altogether. It must be borne in mind that he is a looser and he too would have incurred quiet a large litigation expenses. It would be a salutary guideline that when courts condone the delay due to laches on the part of the applicant the court shall compensate the opposite party for his loss”.
In the light of above, if we peruse the record, then it emerges out that there was no deliberate attempt at the end of the assessee. They were making correspondence with Mr. Rana who has failed to file the appeals well in time. The correspondence has been made with him through e-mail, therefore, we are of the view that there is no deliberate attempt at the end of the assessee to adopt a strategy of delaying the proceedings while litigating with the Revenue. We allow all these applications and condone the delay in filing the appeals and proceed to decide them on merit.
The common issue involved in all these appeals is whether assessee deserves to be treated as assessee in default , 748,777 &778/CHD/2025 A.Y.2013-4 to 2016-17 7 u/s 201(1) and also liable to interest u/s 201(1A) of the Income Tax Act in all these assessment years.
The ld. counsels for the assessee have taken assessment year 2014-15 as a lead case. Shri Munish Sood, CA has pointed out that in this accounting year, AO has considered defaults for making payment of interest without deducting TDS qua 10 individuals but in all these payments, payments of Saving Bank interest are also involved. He took us through page No.1 of the impugned order passed by the AO. Thereafter, he took us to Annexure-II in the Paper Book wherein complete details of interest payment and as to why TDS was not required to be deducted, are there. According to him, Form 15H was submitted by the recipient and no TDS was required. In the case of Shri Jai Singh Verma, tax already deposited and sheet was produced before us. Similar charts have been filed for assessment year 2015-16 and 2016-17. However, with regard to assessment year 2013-14, Shri Thakur sought an adjournment, but we are not inclined to grant adjournment because common issue is involved in other three appeals.
, 748,777 &778/CHD/2025 A.Y.2013-4 to 2016-17 8
With the assistance of ld. Representative, we have gone through the record carefully. It emerges out that Bank did not submit complete details before the AO at the time of passing the impugned orders. The documents have been filed before the Tribunal without any verification whether these documents were filed before AO or not. Considering the above explanation of the assessee, we deem it appropriate that this issue deserves to be relegated to the file of AO for re- examination of these details and then finding out whether assessee has committed any default or not.
In view of the above, we allow all the appeals of the assessee and set aside the impugned orders. We restore all these issues to the file of AO for fresh examination, whether any TDS liability was upon the assessee or not while making payment of interest.