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Facts
The assessee, a non-resident, was informed by the Income Tax Department about the purchase of mutual funds and interest income. The assessee did not file a return for AY 2012-13, leading to a best judgment assessment under section 144 r.w.s 147. The assessee appealed to the CIT(A), but the appeal was dismissed due to delay. The assessee then appealed to the Tribunal.
Held
The Tribunal acknowledged that the assessee's delay in filing the appeal before the CIT(A) was supported by sufficient cause and a pragmatic approach should be taken. The delay was condoned, and the case was remitted back to the CIT(A) for a fresh adjudication on merits, with an opportunity for the assessee to present evidence.
Key Issues
Whether the delay in filing the appeal before the CIT(A) was reasonable and should be condoned, and whether the CIT(A) erred in dismissing the appeal without considering the merits.
Sections Cited
143(3), 147, 250, 69A, 148, 142(1), 144, 5
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Income Tax Appellate Tribunal, “F” BENCH
Before: SHRI PAVAN KUMAR GADALE & SHRI GIRISH AGRAWALShri.Virendra Mughumal
सुनवाई क� तार�ख/Date of Hearing 30.05.2024 घोषणा क� तार�ख/Date of Pronouncement 31.05.2024 ORDER
PER PAVAN KUMAR GADALE, JM:
The assessee has filed the appeal against the order of the Commissioner of Income Tax (Appeals)(CIT(A)-57 Mumbai
(A.Y.: 2012-13) . Shri Virendra Mughumal Jangla, Mumbai passed u/sec 143(3) r.w.s 147 and u/sec 250 of the Act. The assessee has raised the following grounds of appeal:
1. The appeal order passed by the CIT(A) is bad in law, wrong on facts, ill- conceived, prejudicial to the Constitution of India, against the Law of Natural Justice.
2. THAT on the facts and circumstances of the case, the Ld CIT(A) erred to dismiss the appeal on the ground of delay in filling of the appeal, ignoring the fact that the assessment order was never served upon the assessse.
3. On the facts and circumstances of the case, the Ld CIT(A) as well as assessing officer erred in passing the order ignoring the fact that the total investment by the appellant is Nil while both of the authorities held that the appellant has made investment of Rs 1.49 Crore in Mutual Funds without giving any opportunity to the appellant and made an addition u/s 69A of the IT Act 1961. The whole of the assessment order as well as appeal order is void ab initio and against the law of natural justice.
4. The appellant authority and Ld Assessing officer has passed the order ignoring the correct fact that the appellant has denied his investment in Mutual Funds in his consolidated Account statement for FY 2011-12 of CAMS and erred in making addition of huge amount of 1.49 Crore u/s 69A to his income.
5. On the facts of the case the Ld CIT(A) has erred to pass appeal order without mentioning the service of the order to the appellant. The whole appeal order is against the law of natural justice.
6. On the facts of the case the AO passed the order on the basis of form 26AS which have no relevance to the appellant and thus the whole assessment order is bad in law, wrong on facts, against the law of natural justice.
On the facts of the case the appellate authority and assessment authority has passed the orders ignoring the judgment of Hon Supreme court in case of suo moto cognizance of extending the limitation period and also ignoring the (A.Y.: 2012-13) . Shri Virendra Mughumal Jangla, Mumbai circumstances during pandemic situation in the country as well as whole world.
8. On the facts and circumstances of the case the CIT(A) has erred to pass the appeal order without considering the fact that the appellant is an NRI and resident of DUBAI henceforth email and other postal addresses of the appellant were not verified and stated in the assessment order and the service of notices were presumed and passed order ex-parte which is against the law of evidence act and natural justice and against law of constitution of India.
9. On the facts and circumstances of the case the CIT(A) and Assessing officer has erred to serve the assessment order and appeal order on the assesse address as "81 Mittal Chambers, 228 Nariman Point Mumbai 21", while bank account of assesse, i-taxnet NMS form 26 AS of assesse clearly mentions address of the appellant as under 31 32 wing B ShreeJi Darshan 3rd Floor Sahantilal Modi Road Dubai Dubai 400067", thus the whole assessment proceeding and appeal proceedings are illegal and void 10. On the facts and circumstances of the case the CIT(A) and Assessing officer has erred to consider the residential status of the assesse in original assessment order as "Resident", while the assesse is a non-resident which was apparent on record mentioned on passport of the assesse, bank statement, but the same fact was ignored by Id assessing officer to wrongly assess the income of assesse, which is bad in law amd makes whole assessment null and void.
The assessee craves your indulgence to add amend or alter all or any grounds of appeal
before or at the time of hearing.".
2. The brief facts of the case are that, the asssessee is a Non Resident. The Income Tax Department has received information from NMS and AIR that, the assessee has purchased mutual funds for a consideration of Rs.1,49,99,900/- and has also received interest income of Rs.11,89,507/- in the F.Y 2011-12. Whereas the assessee
(A.Y.: 2012-13) . Shri Virendra Mughumal Jangla, Mumbai has not filed the return of income for the A.Y 2012-13 and the Assessing Officer (AO) has reason to believe that the income has escaped assessment and issued notice u/sec 148 of the Act. Subsequently, the AO has issued notice u/sec 142(1) of the Act on various dates referred at Para 2 of the assessment order through e-mail but no reply was filed in respect to notices by the assessee. Since there was no compliance to the notices by the assessee and no information was submitted. The AO relied on the information available on record and invoked the provisions of Sec. 144 of the Act and has made best judgment assessment by making addition of purchase of mutual funds of Rs.1,49,99,900/- and Interest on securities of Rs.11,89,507/- u/sec 69A of the Act and assessed the total income of Rs.1,61,89,407/- and passed the order u/sec 144 r.w.s 147 of the Act dated21.12.2019.
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 also there was delay in filling the appeal. Since there was partial compliance by the assessee and the delay in filling the appeal was not explained. Therefore the CIT(A) considering the information on record has not condoned the delay and dismissed the assessee appeal. Aggrieved by the order of the CIT(A), the assessee has filed an appeal before the Hon’ble Tribunal.
(A.Y.: 2012-13) . Shri Virendra Mughumal Jangla, Mumbai 4. 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 and has filed the appeal before appellate authorities and the delay was not a wanton act. Further the Ld.AR emphasized that the assessee has good case on merits and prayed for an opportunity to substantiate with the material evidences before the lower authorities. Contra, the Ld. DR supported 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 proper compliance by the assessee in spite of providing adequate opportunity of hearing and the delay in filling the appeal was not explained with the reasonable/ sufficient cause. Whereas the assessee has raised grounds of appeal challenging the additions by the A.O and there could be various reasons for no proper compliance. The Ld. AR emphasized that there are genuine reasons of the assessee for not filling the appeal before the CIT(A) in time and the delay was not wanton Act.The Ld.AR substantiated the facts with the affidavit of the assesse placed at Page 26 of the paper book for condonation of delay in filling before the CIT(A) as under:
(A.Y.: 2012-13) . Shri Virendra Mughumal Jangla, Mumbai
(A.Y.: 2012-13) . Shri Virendra Mughumal Jangla, Mumbai
We considering the facts mentioned in the affidavit and the provisions of the Act found that there is a reasonable cause explained and there is no benefit is derived in causing delay in (A.Y.: 2012-13) . Shri Virendra Mughumal Jangla, Mumbai filing appeal before the CIT(A). Whereas the Hon’ble Supreme Court in the case of B. Madhuri Goud vs. B. Damodar Reddy (2012) 12 SCC 693, has held that the 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. (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.
(A.Y.: 2012-13) . Shri Virendra Mughumal Jangla, Mumbai (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.”
7. 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 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
(A.Y.: 2012-13) . Shri Virendra Mughumal Jangla, Mumbai 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 find that the delay in filing the appeal before the CIT (Appeals) by the assessee is supported with sufficient cause and pragmatic approach should be considered for condonation of delay and accordingly the delay is condoned. Hence considering the principles of natural justice, we shall provide with one more opportunity of hearing to the assessee to substantiate the case along with the evidences. 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 on merits. The assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information for early disposal of appeal and 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 31.05.2024.