PUKHRAJ BHOMAJI MUTHA,MUMBAI vs. ITO-19(2)(5), MUMBAI, MUMBAI
Facts
The assessee's appeal was filed against the ex-parte order of the CIT(A), which had confirmed the additions made by the Assessing Officer. There was a delay in filing the appeal before the Tribunal, and the assessee provided an affidavit explaining the reasons for the delay, citing issues with their previous tax representative and their own illiteracy. The Tribunal considered the affidavit and relevant legal precedents on condonation of delay.
Held
The Tribunal, considering the affidavit and legal precedents, found that there was a reasonable cause for the delay in filing the appeal. It acknowledged that the assessee, being illiterate and dependent on their tax advisor, could not be solely blamed for the delays and omissions. A pragmatic approach was taken, and the delay was condoned.
Key Issues
Whether the delay in filing the appeal can be condoned, and if so, whether the assessee should be granted another opportunity to present their case on merits.
Sections Cited
144, 147, 250, 148, 143(2), 142(1), 69, 68
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH
Before: SHRI PAVAN KUMAR GADALE & SHRI OMKARESHWAR CHIDARA
IN THE INCOME TAX APPELLATE TRIBUNAL, “C” BENCH MUMBAI BEFORE SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER & SHRI OMKARESHWAR CHIDARA, ACCOUNTANT MEMBER
ITA No. 2150/MUM/2024 (A.Y.2012-13)
Vs. ITO -19(2)(5), Pukhraj Bhomaji Mutha, Piramal Chambers, 1605, Siddesh Darshan, Lalbaug, 10th Khetwadi, Mumbai-400012. Mumbai – 400004. PAN/GIR No. AACPM4077H (अपीलाथ�/Appellant) (��यथ�/Respondent)
Appellant by Shri Rajkumar Singh.AR Respondent by Shri H.M Bhatt, Sr. DR
सुनवाई क� तार�ख/Date of Hearing 10.07.2024 घोषणा क� तार�ख/Date of Pronouncement 15.07.2024 ORDER PER PAVAN KUMAR GADALE, JM: “ The assessee has filed the appeal against the order of the National Faceless Appeal Centre, Delhi / CIT(A) passed u/sec 144 r.w.s 147 and U/sec 250 of the Act.
At the time of hearing, it was brought to the knowledge of the bench that there is a delay in filing the appeal before the Hon’ble Tribunal. The Assesse has filed an affidavit substantiating the facts for condonation of delay and we consider it is appropriate to refer to the notarised affidavit of the assessee read as under:
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“I Pukhraj Bhomaji Mutha an adult Indian habitant at present having PAN-AACPM4077H, having address at 1605, Siddhesh Darshan, 10" Khetwadi, Mumbai, Maharashtra-400004, and generally residing in native place at Village Jhab, District Sanchore, Rajasthan do hereby state and affirm on solemn oath as under: 1. That, I was born in year 1953, in a village named Jhab, District Sanchore in Rajasthan State and as per then traditionally prevalent situation during my childhood period in absence of any schools nearby to my native village, myself had no opportunity nor have received any formal education in my lifetime. 2. That, earlier myself was doing trading business of ferrous and non-ferrous metal, with the guidance of my relatives doing business in the same line and employees, in the name of M/s. Global Steel in Mumbai City which business since July, 2014 has completely been closed and thereafter I earn income from arings and investments made out of accumulated capital during my business tivity period. Due to closure of my business since July, 2014 myself generally ays at my native village Jhab situated in Rajasthan State. 3. That, all my income tax matters including assessment and appeals from October, 2012 till date was being handled by Tax Consultant, Mr. Yogesh Madhani of Madhani & Company having their office at 36 A 1 Fi Vijay Chambers, Opposite Dream Land Cinema, Grant Road Mumbai-400007. 4. That, myself regularly files the return of income and assessed to tax for last many years. My assessment of A.Y.2010-11, Α.Υ.2011-12 & A.Y.2012-13 was reopened by issue of notices u/s 148 dated 31/03/2017 by Id. Income Tax Officer-19(2)(5), Mumbai on information and allegation that life insurance premiums paid for purchase of life insurance policies from SBI Life Insurance Co. in all these assessment years was out of undisclosed sources of income not declared in the returns of income filed by me for the aforesaid assessment years. 5. That, all the notices issued u/s.148, 143(2) & 142(1) of the Income Tax Act, 1961 (hereafter referred as Act) in the reassessment proceedings initiated for the above stated assessment years and sent to my abovenamed tax
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representative despite assurance remain to be attended and not complied by him that too without my knowledge or intimation to me which has led the passing of ex-parte assessment orders for all the aforesaid assessment years by the Id. Id. Income Tax Officer- 19(2)(5), Mumbai u/s.144 r.w.s. 147 of the Act on 28-12-2017 making therein addition and disallowances. 6. That, on receipt of assessment orders for the above assessment years and sent to my abovenamed tax representative he, again assured me to take the corrective steps and filed the appeals before the Id. CIT (Appeals) against the assessment orders of these assessment years on 29-01-2018 which was within the prescribed period under the Act. However, my abovenamed tax representative again committed the same lapse and laxity and without any knowledge or information to me did not attend or make any submission in response to hearing notices issued by Id. 1st appellate authority in the appeals filed for the aforesaid assessment years resulting into passing of ex-parte appellate orders by National Faceless Appeal Centre (NFAC), Delhi on 20/03/2023 for A.Y. 2010-11, on 17/03/2023 for A.Y. 2011- 12 & on 18/07/2023 for A.Y.2012-13, dismissing all the appeals ex-parte without giving any relief. 7. That, physical copy of above stated appellate orders of the aforesaid assessment years was never sent or received by me and as stated above myself being an illiterate person knowing nothing about the online faceless income tax appeal proceeding and wholly dependent on advice and act of my above named tax advisor, has come to know about these appeal orders being dismissed when intimated by my above named tax advisor in the fag end of month, March, 2024 when recovery notice for tax demands raised and penalty show cause notices in respect of addition and disallowances made in the assessment orders for these assessment years were being issued online by the Income Tax Department in faceless manner.
That, when inquired and asked by me for remedial steps to be taken in these regards my abovenamed tax representative bluntly replied that now he cannot do anything and myself will
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be required to pay the tax and penalty demand raised Socked to hear the above stated reply from my tax representative myself decided and took back my income tax files & folders and after consultation with my friends & relative now, I have appointed M/s. DC Bothra & Co. LLP, the chartered accountancy firm to handle my income tax matters henceforth. 9. That, if the passing of impugned appellate orders on 20-03- 2023 for A.Υ.2010-11, on 17-03-2023 for A.Y.2011-12 & on 18-07-2023 for A.Y.2012 13 are considered as the service date then, there is delay of more than 308 days, 311 days & 187 days respectively in presenting the appeals for the aforesaid assessment years of Α.Υ.2010-11, Α.Υ. 2011-12 & Α. Y. 2012- 13 respectively before the hon'ble ITAT, Mumbai. 10. That, for the above stated bonafide and reasonable reasons and keeping in view particularly myself being an illiterate person, delay of 308 days, 311 days & 187 days taken place respectively in presenting the appeals before hon'ble Tribunal for the abovementioned assessment years of A.Y.2010-11, Α.Υ.2011-12 & Α.Υ.2012-13 respectively, neither being willful nor with any malafide intention, may kindly be condoned and respective appeals of the above assessment years may kindly be admitted for adjudication on merits of the case. 11. That whatsoever stated hereinabove is true to best of my knowledge and belief and myself shall always remain abide for the same. 3. We considering the facts, provisions and the contents of the affidavit found that there is a reasonable cause explained and there is no benefit is derived in causing delay in filing appeal before the Honble Tribunal. Further the Honble High Court Of Bombay in the case of Vijay Vishin Meghnani & Anr Vs. DCIT & Anr (398 ITR 0250)(Bombay) has observed under;
“Appeal-Condonation of Delay-Claim for deduction under Section 80-0 made by Assessee was disallowed by AO for Assessment Year 1993-94 and confirmed by the Commissioner
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of Income Tax (Appeals)-Against order of Commissioner, assessee preferred appeal before Tribunal-Tribunal restored matter back to file of AO for Assessment Year 1993-94-AO passed order allowing claim under that section of the I.T. Act, 1961-Assessee preferred rectification application to AO to rectify his order for Assessment Year 1994-95 and Assessment Year 1996-97-Rectification application was rejected by AO- CIT(A) upheld order of AO-Assessee filed application for condonation of delay in filling appeal against order of CIT(A)— Tribunal held that assessee simply put responsibility for delay on Revenue- Tribunal dismissed two appeals filed by assessee holding that same as barred by limitation-Tribunal held that delay of 2984 days in filling appeal could not be condoned- Held, Supreme Court in case of Concord of India Insurance Co. Ltd. Vs. Smt. Nirmala Devi and others held that legal advice tendered by a professional and litigant acting upon it one way or other could be sufficient cause to seek condonation of delay and coupled with other circumstances and factors for applying liberal principles and then said delay can be condoned-None should be deprived of an adjudication on merits unless the Court of law or the Tribunal/Appellate Authority found that litigant deliberately and intentionally delayed filing of appeal- Tribunal though aware of these principles but possibly carried away by fact that delay of 2984 days was incapable of condonation-In process Tribunal went about blaming assessee and professionals and equally Department-Tribunal's order did not meet requirement set out in law-Tribunal completely misdirected itself and had taken into account factors, tests and considerations which had no bearing or nexus with issue at hand-Tribunal, therefore, erred in law and on facts in refusing to condone delay-Explanation placed on affidavit was not contested nor Court found that from such explanation, High Court could not arrive at conclusion that assessee was at fault, he intentionally and deliberately delayed matter and had no bona fide or reasonable explanation for delay in filing proceedings-High Court condoned delay of 2984 days in filing appeals-Assessee's Appeals allowed. Held “
Similarly the Hon’ble Supreme Court in B. Madhuri Goud v. B. Damodar Reddy (2012) 12 SCC 693, has held that the
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following principles must be kept in mind while considering the application for condonation of delay;
(i) There should be a liberal, pragmatic, justice oriented, non-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 cause 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 encapsulate 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 attracted. That apart, the first one warrants strict approach whereas the second calls for a liberal delineation.
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(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 litigation. (xi) It is to be borne in mind that no one gets away with fraud, is representation 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.” 5. The Hon'ble supreme court in the case of Collector, Land Acquisition Vs. MST Katiji & others (167 ITR 471) (SC) has observed as under :
“ The legislature has conferred the power to condone delay by enacting s. 5 of the Limitation Act of 1963 in order to enable the Courts to do substantial justice to parties by disposing of matters on "merits". The expression "sufficient cause" employed by the legislature is adequately elastic to enable the Courts to apply the law in a meaningful manner which subserves the ends of justice—that being the life- purpose of the existence of the institution of Courts. The doctrine of equality before law demands that all litigants, including the State as a litigant, are accorded the same
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treatment and the law is administered in an even-handed manner. There is no warrant for according a step-motherly treatment when the "State" is the applicant praying for condonation of delay. In fact, experience shows that on account of an impersonal machinery (no one in charge of the matter is directly hit or hurt by the judgment sought to be subjected to appeal) and the inherent bureaucratic methodology imbued with the note-making, file- pushing, and passing-on-the-buck ethos, delay on its part is less difficult to understand though more difficult to approve. In any event, the State which represents the collective cause of the community does not deserve a litigant non grata status. The Courts, therefore, have to be informed of the spirit and philosophy of the provision in the course of the interpretation of the expression "sufficient cause". So also the same approach has to be evidenced in its application to matters at hand with the end in view to do even-handed justice on merits in preference to the approach which scuttles a decision on merits.”
We respectfully follow the observations and ratio of the decisions of Hon’ble Supreme Court and Honble High Court and find that the delay in filing the appeal before the Honble Tribunal by the assessee is supported with sufficient cause and a pragmatic approach should be considered for condonation of delay and accordingly the delay is condoned and we admit the appeals.
The assessee has raised the following grounds of appeal:
That both the Id. CIT (Appeal), NFAC and Id. Assessing Officer have erred on facts and in law in passing the ex-parte assessment order and appellate order without giving proper and reasonable opportunity of being heard.
That the Id. Assessing Officer and ld. CIT (Appeal) have erred in making and confirming the addition made u/s.69 at Rs 14,96,000/- treating the premium payments made for
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purchase of insurance policy from SBI Life Insurance as undisclosed investment. 3. That the ld. Assessing Officer and Id. CIT (Appeal), NFAC both have erred in making & confirming the addition u/s. 68 at 37,07,000/- treating the 1/3rd share of sale proceed (FMV) of property as unexplained cash credit. 4. That without prejudice to appeal ground No.3 both the lower income tax authorities have erred in taxing the 1/3rd share of sale proceed (FMV) of property u/s.68 as against the said sale proceed as per law ought to have been assessed as short-term capital gain after allowing the deduction of purcahse cost of the subject property. 5. That all the appeal grounds raised are independent grounds and without prejudice to each other. 6. That the appellant craves the leave to amend, alter, substitute any of the above appeal grounds and or to raise new or additional grounds of appeal at the time of hearing.
8.The brief facts of the case are that, the assessee is engaged in the business and has filed the return of income for the A.Y 2012-13 on 18.09.2012 disclosing a total income of Rs. 22,01,650/-. Whereas the Assessing Officer (AO) has received the information from ITO (Inv)/DDO that the assessee has made investments of Rs.14,96,000/- in SBI Mutual funds. Similarly the AO found that the assessee has sold immovable property along with two other persons for a consideration of Rs.90 lakhs but the market value/ guideline value of the property is Rs. 1,11,21,000/- and the assessee has not disclosed the capital gains in the return of income filed.. Therefore the AO reason to believe that the assessment has escaped assessment and issued notice u/sec 148 of the Act.
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Subsequently the assessee was issued notice u/s 142(1) of the Act to explain the sources of investments and explain the capital gains. Whereas the A.O found that in spite of providing opportunities of hearing, the assessee has not filed any information. Finally the AO based on the information available on record has invoked the provisions of Sec. 144 of the and made addition of investments of Rs. 14,96,000/- and the assessee’s share of market value of property Rs. 37,07,000/- and assessed the total income of Rs. 74,04,650/- and passed the order u/s 144 r.w.s 147 of the Act dated 28.12.2017.
Aggrieved by the order, the assessee has filed an appeal before the CIT(A), whereas the CIT(A) has considered the grounds of appeal, statement of facts and findings of the AO and has issued notices of hearing and since there was no compliance by the assessee to notices.. Therefore the CIT(A) considering the information on record has confirmed the action of the A.O and dismissed the appeal. Aggrieved by the order of the CIT(A), the assessee has filed an appeal before the Hon'ble Tribunal. At the time of hearing none appeared on behalf of the assessee and the Ld. DR supported the order of the CIT(A).
At the time of hearing, the Ld. AR submitted that the CIT(A) has not considered the facts that the assessee has received the A.O order u/sec143(3) r.w.s 147 of the Act and has filed the appeal before appellate authorities. The
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Ld.AR emphasized that the assessee has good case on merits with supporting evidences which goes to roots of the case and play a vital role in the decision making and prayed for an opportunity to substantiate before the lower authorities. Per Contra, the Ld. DR relied on the order of the CIT(A).
We heard the rival submissions and perused the material on record. Prima-facie the CIT(A) has passed the order considering the fact that there is no compliance nor appearance in spite of providing adequate opportunity of hearing and the notices were issued. Therefore, the CIT(A) was of the opinion that the assessee is not interested in prosecuting the appeal and dismissed the appeal ex-parte confirming the action of the assessing officer. The Ld. CIT(A) has issued the notices of hearing on 17.02.2021 and 27.06.2023 referred at Page 3 Para 5 of the order but there was no response and thus the Ld.CIT(A) came to a conclusion that the assessee is not interested and decided the appeal based on the information available on record. Whereas the assessee has raised grounds of appeal challenging the additions made by the A.O and there could be various reasons for non appearance which cannot be overruled. Therefore, considering the facts and principles of natural justice, we shall provide with one more opportunity of hearing to the assessee to substantiate the case with evidences and information subject to payment of cost of Rs.5000/- to the Income Tax
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Department within one month from the date of receipt of the order and produce the proof of payment. Accordingly, set aside the order of the CIT(A) and remit the entire disputed issues to the file of the CIT(A) to adjudicate afresh and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information for early disposal of the Appeal. Accordingly, we allow the grounds of appeal of the assessee for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 15.07.2024.
d/- Sd/- Sd/- Sd (OMKARESHWAR CHIDARA) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated: 15/07/2024 KRK Copy of the Order forwarded to: 1. The Appellant, 2. The Respondent 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file.
//True Copy//
BY ORDER,
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(Dy./Asstt. Registrar)ITAT, Mumbai
