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Income Tax Appellate Tribunal, C BENCH: BANGALORE
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal by assessee is directed against order of CIT(A)/NFAC dated 27.07.2023 vide DIN & Order No.ITBA/NFAC/S/250/2023-24/1054657837(1) passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”) for the AY 2017-18. The assessee has raised following grounds of appeal: 1. “The impugned order u/s 250 of the Act dated 27.7.2023 passed by the NFAC, Delhi is opposed to law, facts and circumstances of the case.
2. The ld. CIT(A) has erred in passing an ex-parte appellate order on the ground of non-response to the Hearing notices without considering the merits of the case ground wise.
3. The ld. CIT(A) has erred in passing the appellate order ex-parte without providing sufficient opportunity.
Prathap Seetharama Reddy, Bangalore Page 2 of 14 4. The ld. CIT(A) has erred in passing the appellate order ex-parte without adjudicating the grounds of appeal except placing reliance on the reasons recorded in the assessment order.
5. The appellant craves leave to add, alter, amend and delete any of the grounds at the time of hearing.”
There is a delay of 344 days in filing the appeal before this Tribunal. The assessee has explained the delay before us by filing an application for condonation of delay as follows:
2.1 The assessee has also submitted an affidavit explaining the delay in filing the appeal with request to condone the delay, which is reproduced below:.
2.2 Further, the Auditor’s assistant employed with M/s. Jagannath & Associates has also filed an affidavit explaining the reasons for delay in filing the appeal before this Tribunal, explaining that the delay in filing the appeal is not attributable to the assessee but for their professional concern only, which is reproduced below:
Prathap Seetharama Reddy, Bangalore Page 7 of 14 2.3 Hence, the ld. A.R. for the assessee requested to admit the appeal for adjudication by condoning the delay in filing the appeal belatedly before this Tribunal as the delay was neither intentional nor deliberate.
The ld. D.R. vehemently argued not to condone the delay in filing the appeal belatedly and requested to dismiss the appeal of the assessee in limine.
We have heard the rival submissions and perused the materials available on record. The appeal is filed before this Tribunal by a delay of 344 days. We have carefully gone through the condonation petition filed by assessee and the affidavits filed by the assessee as well as by the Auditor’s assistant M. Dileep Kumar. 4.1 At this juncture, it is appropriate to mention the judgement of Hon’ble Supreme Court in the case of Concord of India Insurance Company Ltd. Vs. Smt. Nirmala Devi & Ors. Reported in 118 ITR 507 (SC), wherein it has been held that “the mistake of the counsel may in certain circumstances be taken into account in condoning the delay although there is no general proposition that mistake of counsel by itself is always a sufficient ground”. Accordingly, the Hon’ble Supreme Court has held that there is a mistake of the counsel and therefore, the delay in filing the appeal has been condoned. 4.2 It was also noted that Hon’ble Supreme Court in the case of N. Balakrishna Vs. Krishnamurthy reported in AIR 1998 (SC) 3222 given similar finding. 4.3 Further, Cochin Bench of Tribunal in the case of Midas Polymer Compounds Pvt. Ltd. dated 25.6.2018, wherein the Tribunal condoned the delay of 2819 days by observing as follows: “6. We have heard the rival submissions and perused the record. There was a delay of 2819 days in filing the appeal before the Tribunal. The assessee has stated the reasons in the condonation petition accompanied by an affidavit which has been cited in the earlier para. The assessee filed an affidavit explaining the reasons and prayed for condonation of delay. The reason stated by the assessee is due to Prathap Seetharama Reddy, Bangalore Page 8 of 14 inadvertent omission on the part of Shri Unnikrishnan Nair N, CA in taking appropriate action to file the appeal. He had a mistaken belief that the appeal for this year was filed by the assessee as there was separate Counsel to take steps to file this appeal before the ITAT. Therefore, we have to consider whether the Counsel’s failure is sufficient cause for condoning the delay. The Madras High Court considered an identical issue in the case of Sreenivas Charitable Trust v. Dy. CIT (280 ITR 357) and held that mixing up of papers with other papers are sufficient cause for not filing the appeal in time. The Madras High Court further observed that the expression "sufficient cause" should be interpreted to advance substantial justice. Therefore, advancement of substantial justice is the prime factor while considering the reasons for condoning the delay.
6.1 On merit the issue is in favour of the assessee. But there is a technical defect in the appeal since the appeal was not filed within the period of limitation. The assessee filed an affidavit saying that the appeal was not filed because of the Counsel’s inability to file the appeal. The Revenue has not filed any counteraffidavit to deny the allegation made by the assessee. While considering a similar issue the Apex Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) laid down six principles. For the purpose of convenience, the principles laid down by the Apex Court are reproduced hereunder:
(1) Ordinarily, a litigant does not stand to benefit by lodging an appeal late (2) Refusing to condone delay can result in a meritorious matter being thrown 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, commonsense and pragmatic manner.
(4) When substantial justice and technical consideration are pitted against each other, the 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 nondeliberate 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.
Prathap Seetharama Reddy, Bangalore Page 9 of 14 (6) It must be grasped that the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
6.2 When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of nondeliberate delay. In the case on our hand, the issue on merit regarding allowability of deduction u/s. 80IB of the Act was covered in favour of the assessee by the binding Judgment of the jurisdictional High Court. Moreover, no counter-affidavit was filed by the Revenue denying the allegation made by the assessee. It is not the case of the Revenue that the appeal was not filed deliberately. Therefore, we have to prefer substantial justice rather than technicality in deciding the issue. As observed by Apex Court, if the application of the assessee for condoning the delay is rejected, it would amount to legalise injustice on technical ground when the Tribunal is capable of removing injustice and to do justice. Therefore, this Tribunal is bound to remove the injustice by condoning the delay on technicalities. If the delay is not condoned, it would amount to legalising an illegal order which would result in unjust enrichment on the part of the State by retaining the tax relatable thereto. Under the scheme of Constitution, the Government cannot retain even a single pie of the individual citizen as tax, when it is not authorised by an authority of law. Therefore, if we refuse to condone the delay, that would amount to legalise an illegal and unconstitutional order passed by the lower authority. Therefore, in our opinion, by preferring the substantial justice, the delay of 2819 days has to be condoned.”
4.4 In our opinion, there is a reasonable cause in filing the appeal belatedly before us as delay was neither willful nor wanton but due to the circumstances beyond the control of the assessee. Even if we examine whether the reason stated by the assessee in condonation petitions are sufficient to condone the delay and there exists sufficient cause for not presenting the appeals within the period of limitation under the statute, the assessee must show that it was diligent in taking appropriate steps and the delay was caused notwithstanding with its due diligence. If it appears to be guilty of latches or negligence and does not take appropriate steps to pursue its remedy till about the close of the period prescribed for filing of appeal, it must be prepared to have its remedy barred without expecting condonation. Still, it is for the party concerned to explain Prathap Seetharama Reddy, Bangalore Page 10 of 14 the reasons for delay and it is not the function of concerned authorities often to find cause for delay. The Court/authority has to examine whether the sufficient cause has been shown by the party for condoning the delay and whether such cause is reasonable or not. This being the position, it constitutes a sufficient cause for filing the appeals belatedly. 4.5 Further, in the case of People Education & Economic Development Society Vs/ ITO reported in 100 ITD 87 (TM) (Chen), wherein held that “when substantial justice and technical consultation are pitted against each other, the cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of non-deliberate delay”.
4.6 The next question may arise whether delay was excessive or inordinate. There is no question of any excessive or inordinate when the reason stated by the assessee was a reasonable cause for not filing the appeal. We have to see the cause for the delay. When there was a reasonable cause, the period of delay may not be relevant factor. In fact, the Madras High Court in the case of CIT vs. K.S.P. Shanmugavel Nadai and Ors. (153 ITR 596) considered the condonation of delay and held that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation. Accordingly, the Madras High Court condoned nearly 21 years of delay in filing the appeal. When compared to 21 years, 93 days cannot be considered to be inordinate or excessive. Furthermore, the Chennai Tribunal by majority opinion in the case of People Education and Economic Development Society (PEEDS) v. ITO (100 ITD 87) (Chennai) (TM) condoned more than six hundred days delay. It is pertinent to mention herein that the view taken by the present author in that case was overruled by the Third Member.
Prathap Seetharama Reddy, Bangalore Page 11 of 14 4.7 The Madras High Court in the case of Sreenivas Charitable Trust (280 ITR 357) (Mad.) held that no hard and fast rule can be laid down in the matter of condonation of delay and the Court should adopt a pragmatic approach and the Court should exercise their discretion on the facts of each case keeping in mind that in construing the expression "sufficient cause" the principle of advancing substantial justice is of prime importance and the expression "sufficient cause" should receive a liberal construction. Therefore, this Judgment of the Madras High Court (supra) clearly says that in order to advance substantial justice which is of prime importance, the expression "sufficient cause" should receive a liberal construction. In this case, the issue on merit regarding granting of deduction u/s. 80IB was covered in favour of the assessee by the Judgment of the Madras High Court. Therefore, for the purpose of advancing substantial justice which is of prime importance in the administration of justice, the expression "sufficient cause" should receive a liberal construction. In our opinion, this Judgment of the Madras High Court is also squarely applicable to the facts of this case. A similar view was taken by the Madras High Court in the case of Venkatadri Traders Ltd. v. CIT (2001) 168 CTR (Mad) 81 : (2001) 118 Taxman 622 (Mad).
4.8 The Apex Court in the case of Mrs. Sandhya Rani Sarkar vs. Smt. Sudha Rani Debi (AIR 1978 SC 537) held that non-filing of affidavit in opposition to an application for condonation of delay may be a sufficient cause for condonation of delay. In this case, the Revenue has not filed any counter-affidavit opposing the application of the assessee, therefore, as held by the Apex Court, there is sufficient cause for condonation of delay. The Supreme Court observed that when the delay was of short duration, a liberal view should be taken. "It does not mean that when the delay was for longer period, the delay should not be condoned even though Prathap Seetharama Reddy, Bangalore Page 12 of 14 there was sufficient cause. The Apex Court did not say that longer period of delay should not be condoned. Condonation of delay is the discretion of the Court/Tribunal. Therefore, it would depend upon the facts of each case. In our opinion, when there is sufficient cause for not filing the appeal within the period of limitation, the delay has to be condoned irrespective of the duration/period. 4.9 In view of the above, we are condoning the delay in filing the appeal before us belatedly by 344 days and the appeal is admitted for adjudication by exercising the power u/s 253(5) of the Act. 4.10 Now coming to the merits of the case, at the time of hearing both the parties fairly conceded that the order of the ld. CIT(A)/NFAC is ex-parte without giving opportunity of being heard to the assessee. The ld. A.R. of the assessee vehemently submitted that during Covid period, one notice dated 27.12.2020 was issued by the ld. CIT(A). Thereafter, after a gap of almost two and half years another notice dated 5.7.2023 was issued by ld. CIT(A) to the email address of the Auditor and not to the assessee and thus, the assessee had no knowledge of the abovesaid hearing notice as well as impugned appellate order of the ld. CIT(A). In support of his claim the ld. A.R. of the assessee submitted the screen shot of the hearing notice dated 5.7.2023 sent to email id jagan.auditor@gmail.com along with the screen shot of the assessee’s e-mail id sp6869@gmail.com registered in the income tax portal but no notice was sent to the registered e- mail id of the assessee. 4.11 It is an undisputed fact that the first notice was sent by the ld. CIT(A) on 27.12.2020 during the Covid-19 pandemic time. Thereafter, after a gap of two and half years another notice was issued by the ld. CIT(A) on 5.7.2023 which the assessee claims to be sent on email id of the regular auditor. We also take a note of the fact that after issuing single notice u/s 250 of the Act, that too after a gap of two and half years, the ld. CIT(A) immediately jumped to the conclusion that the assessee is not aggrieved with the assessment Prathap Seetharama Reddy, Bangalore Page 13 of 14 order and is not interested in pursing the same and accordingly, dismissed the appeal for non-prosecution. 4.12 On perusal of the order of ld. CIT(A), we also found that ld. CIT(A) has also not adjudicated the issue on merits. Further, on perusal of the assessment order, we also found that AO had also observed that inspite of ample opportunities granted, the assessee has not furnished the requisite details/documents in support of his return. 4.13 During the course of hearing, the ld. A.R. of the assessee requested that the assessee may be provided one more opportunity to represent his case before the ld. AO. In view of the above and considering the prayer of the assessee and in the interest of justice and fair play, the issue involved in the present appeal is restored to the file of AO for fresh adjudication in accordance with law after granting the assessee adequate opportunity of being heard. The assessee is directed to cooperate with the proceedings before the revenue authorities and to file the relevant submissions/documents which would be essential and required by the revenue authorities for proper adjudication of the case. We clarify that in case of further default the assessee shall not be entitled for any leniency.