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Income Tax Appellate Tribunal, BANGALORE BENCH C
Before: SHRI VIJAYPAL RAO & SHRI JASON P BOAZ
PER SHRI JASON P BOAZ, ACCOUNTANT MEMBER:
This appeal by the assessee is directed against the order of the Commissioner of Income-tax (Appeals) -5, Bengaluru dated 31/1/2017 for asst. year 2010-11.
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Briefly stated, the facts relevant for the disposal of this appeal are as under:-
2.1 The assessee, employed with M/s Logica Pvt. Ltd., as an IT consultant, filed his return of income for asst. year 2010-11 on 26/4/2011 declaring income of Rs.18,67,220/-. The return was processed u/s 143(1) of the Income-tax Act 1961 (in short ‘the Act’) and the case was subsequently taken up for scrutiny. The assessment was completed u/s 143(3) of the Act vide order dated 15/3/2013, wherein the assesse’s income was determined at Rs.51,73,610/- as against the returned income of Rs.18,67,220/- in view of the following additions/disallowances:-
(i) Disallowance of claim of deduction u/s 80C - Rs.1,00,000/- (ii) Disallowance of interest on housing Loan repayment u/s 24(6) - Rs.1,50,000/- (iii) Addition on account of difference in Gross receipts as per 26AS - Rs.11,98,062/- (iv) Unexplained cash deposits - Rs.14,40,130/- (v) Unexplained credit card payments - Rs.4,18,200/-
2.2 Aggrieved by the order of assessment dated 15/3/2013 for asst. year 2010-11, the assessee preferred an appeal before the CIT(A)-5, Bangalore which was belatedly filed by 323 days. The assessee filed a separate application for condonation of the aforesaid delay in filing the appeal submitting, inter alia, that he was not aware of the
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subsequent steps to be taken on completion of assessment proceedings and that the said delay was for reasons beyond his control. The ld CIT(A) rejected the assesse’s condonation application; refused to condone the delay in filing the appeal and consequently dismissed the assessee’s appeal in limine, without adjudicating on the grounds raised by the assessee on merits of the additions/disallowances made by the Assessing Officer (‘AO’) in the order of assessment for asst. year 2010-11.
Aggrieved by the order of the CIT(A)-5, Bangalore dated 31/1/2017 for asst. year 2010-11,the assessee has filed this appeal, raising the following grounds:-
“1. The order of the learned Commissioner of Income- tax (Appeals) passed under Section 250 of the Act in so far as it is against the Appellant is opposed to law, weight of evidence, probabilities, facts and circumstances of the Appellant's case. 2. The appellant denies to be assessed to an income over and above the income of Rs. 18,67,220/- on the facts and circumstances of the case. 3. The learned CIT(A) failed to appreciate that the delay of 323 days in filing the appeal was due to reasonable cause and the delay ought to have been condoned on the facts and circumstances of the case.
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The learned CIT(A) was not justified in dismissing the appeal of the on the ground of delay in filing the appeal and ought to have adjudicated on the merits of the matter on the facts and circumstances of the case. 5. The learned CIT(A) was not justified in ignoring the remand report of the Assessing Officer, in respect of the various additions made by the learned Assessing Officer and ought to have considered the same and granted relief to the appellant on the facts and circumstances of the case. 6. The learned CIT(A) was not justified in law in ignoring that the assessing officer has concluded the assessment without following the principles of natural justice is bad in law and the order of assessment was liable to be quashed on the facts and circumstances of the case. 7. The learned CIT(A) was not justified in law in ignoring that the assessing officer had erred in adding a sum of Rs,11,98,062/- as difference attributable to gross receipts as per 26AS and returned income for the assessment year 2010-11 on the facts and circumstances of the case. 8. The leaned CIT(A) was not justified in law in ignoring that the assessing officer has erred in denying deduction of Rs.1,50,000/- towards housing loan and Rs.1,00,000/- under section 80C of the Act, in
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computing the net taxable income of the appellant for the impugned Assessment year on the facts and circumstances of the case. 9. The learned CIT(A) was not justified in law in ignoring that the assessing officer has erred in making addition of Rs.14,40,130/- as unexplained cash deposit and Rs.4,18,200/- as unexplained credit card payment on the facts and circumstance of the case. 10. The learned CIT(A) was not justified in law in ignoring the fact that the cash deposits were made in Nellore branch, and the source of the cash deposits have been informed to the CIT(A), who chose not to adjudicate on the issues and dismissed the appeal of the appellant by not condoning the delay on the facts and circumstances of the case. 11. The learned CIT(A) failed to appreciate that the appellant has filed submission in respect of every aspect of the appeal and substantiated the same by way of documents and the CITA(A) ought to have allowed the petition of condonation of delay and adjudicated on the merits of the matter on the facts and circumstances of the case. 12. The learned CIT (A) failed to appreciate that the interest calculation u/s. 234B and 234C is not in accordance with the provisions of law on the facts and circumstances of the case. Further, the period, rate,
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quantum and method of calculation adopted on which interest is levied are all not discernable and are wrong on the facts of the case. 13. The Appellant craves leave to add, alter, substitute and delete any or all of the grounds of appeal urged above. 14. For the above and other grounds to be urged during the hearing of the appeal the Appellant prays that the appeal be allowed in the interest of equity and justice.”
4.1 Before us, the ld AR for the assessee reiterated the submissions put forth in the petition for condonation of delay filed before the ld CIT(A). According to the ld AR, the assessee is a salaried employee and the additions/disallowances made by the AO in the order of assessment are all explainable, verifiable and allowable; be it the claim of interest on repayment of housing loan u/s 24(6) of the Act; the deduction claimed u/s 80C of the Act, credit card payments, cash deposits and difference in 26AS of receipts. It is submitted that it is settled position that legitimate taxes alone have to be collected. It was further submitted that the assessee has not filed the appeal late intentionally or willfully as that would jeopardize his own case, which no normal person would do. The fact is that the assessee was actually unaware with regard to the next step to be taken after completion of the adverse assessment proceedings. Therefore, it cannot be said that there was any malafide intention on the part of the assessee to not file the appeal within time. It is prayed that in the
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facts and circumstances of the case, and in the interest of justice, the delay of 323 days in filing the appeal before the ld CIT(A) be condoned and the ld CIT(A) be directed to hear and dispose off the assessee’s appeal on merits. In this regard, reliance was placed on the decision of the Hon’ble Apex Court in the case of MST Katiji & Others (1987) 167 ITR 471 wherein the principles for dealing with matters of condonation of delay have been laid down.
4.2 The ld DR for Revenue contends that the explanation put forth by the assessee in the application for condonation of delay in filing the appeal before the ld CIT(A) are not sufficient for condonation and the ld CIT(A) has rightly declined to condone the delay of 323 days in filing the appeal. In support of the decision of the ld CTI(A) in impugned order, the ld DR placed reliance on the decisions of the Hon’ble Apex Court in the case of Brijesh Kuamr & others Vs. State of Haryana & Others in SLP No:6609 to 6613 of 2014 dated 24/3/2014 and the decision of the third Member of the ITAT, Chennai Bench in the case of JCIT Vs. Tractors & Farm Equipments Ltd., (104 ITD 149).
4.3 In rejoinder, the ld AR stated that the judicial pronouncements relied on by the ld DR are not applicable to the facts of the case on hand. It was submitted that the reasons put forth by the assessee for the delay in filing of the appeal has to be considered separately, having regard to the unique facts of each case. The ld AR submitted that the above the judicial pronouncements cited by the ld DR would
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have no application to the case on hand. Rather, the ratio and principles as laid out by the Hon’ble Apex Court in the case of Collector, Land Acquisition Vs Mst. Katiji and Others (1987) (167 ITR 471) (SC) ought to be applied to decide the matter in the case on hand.
4.4.1 We have heard the rival contentions and perused and carefully considered the material on record. We find that while the reasons put forth by the assessee for the delay of 323 days in filing the appeal before the ld CIT(A) find mention in the impugned order, the ld CIT(A) has rejected the assessee’s explanations for the said delay without controverting the facts as per the explanations put forth by the assessee. The undisputed facts are that the assessee is an individual mainly deriving income from salary. It appears to us, from a careful perusal of the assessee’s submissions in respect of the delay in filing the appeal before the CIT(A), that the assessee was not aware of the subsequent legal steps to be taken after receipt of the adverse order of assessment u/s 143(3) of the Act for asst. year 2010- 11. It does not stand to reason that any man would intentionally jeopardize his own case by deliberately filing the appeal belatedly; more so when his income was determined at Rs.51,73,610/-, almost 3 times more than his returned income of Rs.18,67,220/-, resulting in tax demand of Rs.14,81,440/- being raised. Further, as seen from the order of assessment and as contended by the assessee, the additions/disallowances made by the AO i.e disallowance of interest on repayment of housing loan; disallowance of deduction u/s 80C of
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the Act, credit card payment, cash deposits and different in 26AS as regards to gross receipts are basically factual in nature and can be examined and verified. We also notice that the order of assessment clearly evidences that the issues on which additions/disallowances have been made, have neither been discussed nor has any reasoned finding/speaking order been rendered by the AO on any issue in the order of assessment. On appeal also, the ld CIT(A) without going into and examining the merits of the various grounds raised by the assessee on the aforesaid disallowances/additions has dismissed the assessee’s appeal in limine by declining to condone the delay in filing the appeal.
4.4.2 The Hon’ble Apex Court in the case of Mst. Katiji and Others (Supra) has laid down the principles for examining petitions for condonation of delay in filing appeals, i.e, that substantial justices should prevail over technical considerations. It is settled position that while confirming ‘sufficient cause’ the court should take a liberal view in the interest of substantial justice, especially where it is found that the parties have not acted with malafide intentions and the reasons/explanations put forth are satisfactory. In the case on hand, the factual explanation put forth by the assessee as the reasons for delay in filing the appeal have not been controverted by Revenue, though the ld CIT(A) did not find that same sufficient enough to condone the delay. In our view, after a careful perusal of the explanations put forth for delay in filing the appeal, we find that the assessee’s default is neither intentional nor malafide, as by filing the
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appeal belatedly the assessee did not stand to benefit. In the factual and legal matrix of the case, we are of the considered opinion that the assesse’s explanation put forth establish sufficient cause for the delay of 323 days in filing the appeal before the CIT(A). In this view of the matter and respectfully following the ratio of the decision of the Hon’ble Apex Court in the case of Mst. Katiji & Others (Supra), we are of the opinion that this is a fit case for condonation of delay and condone the delay of 323 days in filing the appeal for asst. year 2010- 11 before the ld CIT(A).
4.4.3 We have carefully perused the decision of the Hon’ble Apex Court in the case of Brijesh Kumar & Others Vs. State of Haryana & Others in SLP No.6609 to 6613 of 2014 dated 24/3/2014, relied upon by the ld DR for Revenue. In this cited case there was an inordinate delay of approx. 10 years 2 months and 29 days in filing the appeals. The facts were that the petitioners had originally not preferred appeals before the Hon’ble High Court for enhancement of compensation, whereas other interested persons did so. It is only after the Hon’ble Court awarded enhanced compensation and other statutory benefits to those other interested parties who had filed the appeals in time, that the petitioners preferred appeals for enhanced compensation after a lapse of about 10 years 2 months and 29 days, which the Hon’ble Court refused to condone on grounds of inordinate delay. In our humble view, neither the facts and circumstances nor the period of delay in the cited case (Supra) are applicable to facts of the case on hand.
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4.4.4 The other decision cited by the ld DR for Revenue is of the Third Member decision of the ITAT, Chennai Bench in the case of JCIT Vs. Tractors & Farm Equipments Ltd., (104 ITD 149). In this cited case (Supra), the reason put forth by the Director of the Company for delay in filing the appeal was that the order of the CIT(A) was misplaced with some other papers and it is only on sorting out of unwanted papers that he found that no steps had been taken to file the appeal. In that case, Revenue established the fact that the Director who filed the affidavit was not authorized by the Managing Director to attend/represent tax matters of the company. In that factual matrix of the case the Tribunal came to the view that the reasons put forth for condoning the delay in filing the appeal were not bonafide and also the said delay was due to negligence and inaction on the part of the assessee. In the case on hand, we find that there is no deliberate or malafide intention on the part of the assessee in filing the appeal before the ld CIT(A) belatedly; more so when the assessee, a salaried employee has been fastened with a huge tax liability of Rs.14,81,440/- by a cryptic, non speaking order of assessment u/s 143(3) of the Act dated 15/3/2013 for asst. year 2010- 11 in which there is no discussion or finding rendered by the AO on any of the issues on which additions/disallowances were made. In our considered view, the Third Member decision of ITAT, Chennai Bench in the case of Tractors & Farm Equipments Ltd., (Supra) is not applicable to the facts of the case on hand.
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4.4.5 As mentioned and discussed at para 4.4.2 (Supra), the Hon’ble Apex Court in the case of Mst. Katiji & Others (Supra), has explained and laid down the principles 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 Hon’ble Court explained that every days 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 matter. Keeping in mind the aforesaid principles laid down by the Hon’ble Apex Court; the fact that a litigant does not stand to benefit by lodging the appeal late and also the fact that the condonation of the delay and directing that the appeal be adjudicated on merits would cause no loss to Revenue as legitimate taxes payable in accordance with law alone will be collected, we find that this is a fit case for condonation of delay of 323 days in filing the appeal before the ld CIT(A) and do so. We accordingly set aside the impugned order of the ld CIT(A) and restore the matter to the file of the ld CIT(A) for consideration and adjudication on merits of the grounds raised by the assessee. Needless to add, the ld CIT(A) will afford the assessee and the AO adequate opportunity of being heard on all issues raised by the assessee in the appeal before him before adjudicating thereon in accordance with law. We hold and direct accordingly.
In view of our order setting aside the impugned order of the ld CIT(A) and restoring the assesse’s appeal before the ld CIT(A) for
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adjudication on merits, we decline to adjudicate on the grounds raised by the asessee on various issues on merits as the same have not been considered by the authorities below.
In the result, the assessee’s appeal for asst. year 2010-11 is partly allowed for statistical purposes as indicated above.
Order pronounced in the open court on 27th September, 2017.
Sd/- Sd/- (VIJAYPAL RAO) (JASON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER Bangalore Dated : 27/9/2017 Vms Copy to :1. The Assessee 2. The Revenue 3.The CIT concerned. 4.The CIT(A) concerned. 5.DR 6.GF By order
Sr. Private Secretary, ITAT, Bangalore.