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Facts
The assessee's appeal was against the order of the ADDL/JCIT(A) for the assessment year 2017-18. The assessee sought condonation of a 39-day delay in filing the appeal, citing the death of their Chartered Accountant and a belief that an appeal could only be filed after effect was given to an order. The assessee also claimed that notices were sent via email, which went unnoticed, and no personal hearing was granted, violating natural justice.
Held
The Tribunal condoned the delay of 39 days, citing the circumstances and the principles laid down by the Supreme Court in Collector, Land Acquisition vs. MST Katiji & Ors, prioritizing substantial justice over technicalities. The Tribunal also noted that the ADDL/JCIT(A) had not adjudicated the issue on merits and had confirmed the AO's order based on non-response to email notices, despite the assessee having indicated they preferred physical notices. Therefore, the case was remitted back to the ADDL/JCIT(A) for fresh adjudication.
Key Issues
Whether the delay in filing the appeal should be condoned and whether the principles of natural justice were violated due to non-receipt of notices and denial of personal hearing by the appellate authority.
Sections Cited
250, 253(5), 11(1), 68, 115BBE, 234
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Income Tax Appellate Tribunal, BENGALURU “C” BENCH, BENGALURU
Before: SHRI KESHAV DUBEY
Assessee by: Sri. Neeraj S Mitran, CA Revenue by: Sri. V. Parithivel, JCIT Date of hearing: 25.07.2024 Date of pronouncement: 30.08.2024 O R D E R PER: KESHAV DUBEY, J.M.
This appeal, at the instance of the assessee is directed against the ADDL/JCIT(A)’s order dated 30.012024 vide DIN & Order No. ITBA/APL/S/250/2023-24/1060258125(1) passed under section 250 of the I.Tax Act, 1961 (the Act) for the assessment year 2017-18. The assessee has raised the following grounds of appeal:-
“1. Principles of Natural Justice 1.1 The notices that have been issued were through mails and no physical notices were issued thereby not gaining the attention of the institution. No personal hearing was granted by the CIT(Appeals), and hence, the principles of natural justice was not followed.
Jnanavaahini Shikshana Samsthe Mysore 2. Incorrect Disclosure in ITR 2.1 The learned AO erred in making the assessment in the manner done by the learned AO. The learned AO erred in making the additions as stated in para 2 of statement of facts, due to an error in the disclosure in the financial statements. 2.2 The learned AO having scrutinized the financial statements filed before him should have accepted the fact that there was no voluntary contribution received during the year. The learned AO should have appreciated the fact the voluntary contribution entered in ITR-7 in Sch-VC is by mistake or error and deleted said voluntary contribution of Rs. 74,25,000/- in computing the gross receipts of the trust.
3. Allowing Repayment of Loans and Assets purchase as Application. 3.1 The learned AO should have allowed the capital expenditure incurred by the trust as an application of income. 3.2 In the alternatively, the learned AO should have reduced the capital expenditure by net off borrowings made during the year and allowed the net capital expenditure as application of income.
4. Statutory Deduction u/s 11(1). 4.1 The learned AO should have allowed deduction of 15% on gross receipts of the trust i.e. before deducting any of the expenditure.
5. Additions u/s 68 and invoking Sec 115BBE. 5.1 The learned AO having observed that the trust had cash balance of Rs. 11,09,303/- on 8.11.2016 should have refrained from making additions U/s 68 read with sec 115BBE. 5.2 The appellant having explains the sources of income as out of cash balance on 8.11.2016, the provisions of section 68 become inapplicable.
Computation of Interest u/s 234. 6.1 The ld. AO has computed interest, which is consequential in nature, depending on the tax liability.
7. The appellant craves leave to add, amend, alter, omit or substitute any of the grounds of appeal at any stage before the appal is finally heard or adjudicated upon.”
Jnanavaahini Shikshana Samsthe Mysore 2. At the outset, the ld. AR of the assessee drew our attention on the application for condonation of delay filed under section 253(5) of the Act along with the affidavit dated 13/06/2024 stating the reasons for condonation of delay and submitted that there was a delay of 39 days’ in filing the appeal before this Tribunal. The ld. AR of the assessee submitted that the Senior Chartered Accountant of the assessee passed away well before the order under section 250 was passed by the First Appellate Authority. Further, the appellant was under the honest & bonafide belief that an appeal could only be filed after the issuance of order giving effect to the order of NFAC by the jurisdictional Assessing Officer and accordingly the appeal process was initiated only after understanding the correct process. The appellant also faced the challenges in accessing the consultant adept at handling appeals before the Hon'ble Income Tax Appellate Tribunal and this lack of immediate and expert guidance was a pivotal factor that led to the delay in filing the appeal and accordingly prayed that delay was due to the sufficient cause and not on account of negligence on the part of the assessee and prayed to condone the short delay of 39 days and admit the appeal for adjudication.
The ld. DR, on the other hand objected the contention of ld. AR by submitting that the assessee’s Chartered Accountant expired well before the order was passed under section 250 of the I.T. Act by the ld. ADDL/JCIT(A) and that has nothing to do with the delay in filing the present appeal before the Tribunal.
We have heard the rival submission and perused the material on record. In our opinion, the assessee was under the honest and bonafide belief that the appeal could only be filed after the issuance of order giving effect to the order of NFAC by the jurisdictional Assessing Officer. Due to this honest & bonafide belief it cannot be said that the assessee is very callous in his approach in filing the appeal. Further the Chartered Accountant who was Jnanavaahini Shikshana Samsthe Mysore looking after the cases of the assessee was expired before passing of order under section 250 of the Act by the ld. ADDL/JCIT(A) and the assessee had to access new Consultant for handling appeals before the Tribunal. In the case of Collector, Land Acquisition vs. MST Katiji & Ors (167 ITR 471), the Hon'ble Supreme Court laid down six principles. For the purpose of convenience, the principles laid down by the Hon'ble Apex Court are reproduced hereunder:-
(i) Ordinarily, a litigant does not stand to benefit by lodging an appeal late. (ii) 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. (iii) '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. (iv) 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 non-deliberate delay. (v) 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. (vi) 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.
Being so, 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 Jnanavaahini Shikshana Samsthe Mysore because of non-deliberate delay. In our opinion, this is a fit case to condone the short delay of 39 days’ in filing the appeal before this Tribunal. Accordingly, the delay is condoned and the appeal is admitted for the adjudication.
6. Further, during the course of hearing, the ld. AR of the assessee vehemently submitted that the ld. ADDL/JCIT(A) issued all the notices for hearing through emails only which went unnoticed and the assessee had also not been served with any physical notices inspite of the fact that in Form No. 35 filed before the ADDL/JCIT(A) /CIT(A) in response to whether notices/communication may be sent on email, the assessee has specifically mentioned “No”. Further, the ld. AR of the assessee submitted that no personal hearing was also granted by the ld. ADDL/JCIT(A) and thus the order passed by the ld. ADDL/JCIT(A) confirming the order of AO without adjudicating the same on merits is against the principles of natural justice and prayed before us that one more opportunity may be granted to the assessee to represent his case before the ld. ADDL/JCIT(A). A perusal of the facts of the present case shows that the assessee could not represent his case before the ld. ADDL/JCIT(A) at all, as a result of which , the ld. ADDL/JCIT(A) confirmed the order of AO holding that the assessee is not interested in pursuing the present appeal on merits. On perusal of the order of the ld. ADDL/JCIT(A), it is found that the ld. ADDL/JCIT(A) has also not adjudicated the issue on merits. It is an undisputed fact that while filing the Form 35 before the ld. CIT(A) / ADDL/JCIT(A), the assessee has specifically mentioned “No” in response to whether notices/communication may be sent on email. Further, we also note that the ld. ADDL/JCIT(A) also observed in his decision that all notices for hearing were duly served upon the appellant through emails only which the assessee is claiming to went unnoticed. It is found that as the appellant did not response to any of notices, the ld. ADDL/JCIT(A) has Jnanavaahini Shikshana Samsthe Mysore dismissed the appeal of the assessee by holding that assessee is not interested in pursuing the present appeal on merits and accordingly, in the absence of any evidence to rebut the assessment order, dismissed the appeal of the assessee. During the course of hearing, the ld. AR of the assessee requested that the assessee may be provided one more opportunity to represents its case before the ld. CIT(A), In view of the above and considering the prayer of the assessee, we deem it proper to remit the file to the ld. ADDL/JCIT(A) for de- novo adjudication, in accordance with law after affording due opportunity of hearing to the appellant. The assessee is also directed to cooperate with the proceedings before the ld. ADDL/JCIT(A)/ NFAC and to file the relevant submission and documents which would be essential and required by the First Appellate Authority for proper adjudication of the case. We clarify that in case of further default by the assessee, he shall not be entitled for any leniency.
In the result, the appeal filed by the assessee is partly allowed for statistical purposes.
Order pronounced in the open Court on 30th August, 2024.